$9,045,000* EPHRATA AREA SCHOOL DISTRICT Lancaster

Transcription

PRELIMINARY OFFICIAL STATEMENT DATED APRIL 20, 2016
THIS PRELIMINARY OFFICIAL STATEMENT AND THE INFORMATION CONTAINED HEREIN ARE SUBJECT TO COMPLETION AND AMENDMENT. Under no circumstances shall this Preliminary
Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of such jurisdiction.
BOOK-ENTRY ONLY
Moody’s Rating: Underlying: “Aa3”
In the opinion of Stevens & Lee, P.C., Lancaster, Pennsylvania, Bond Counsel, assuming continuing compliance by the School District with certain
covenants to comply with provisions of the Internal Revenue Code of 1986, as amended (the “Code”) and any applicable regulations thereunder, interest on
the Bonds is not includible in gross income under Section 103(a) of the Code and interest on the Bonds is not an item of tax preference for purposes of the
federal individual and corporate alternative minimum taxes. See “TAX EXEMPTION AND OTHER TAX MATTERS” in this Official Statement and
“Appendix D – Form of Opinion of Bond Counsel,” to this Official Statement. Other provisions of the Code may affect the purchasers and holders of the
Bonds. See “TAX EXEMPTION AND OTHER TAX MATTERS - Federal Tax Laws” herein for a brief description of these provisions.
Under the laws of the Commonwealth of Pennsylvania, the Bonds and interest on the Bonds shall be free from taxation for State and local purposes within
the Commonwealth of Pennsylvania, but this exemption does not extend to gift, estate, succession or inheritance taxes or any other taxes not levied or
assessed directly on the Bonds or the interest thereon. Under the laws of the Commonwealth of Pennsylvania, profits, gains or income derived from the
sale, exchange or other disposition of the Bonds shall be subject to State and local taxation within the Commonwealth of Pennsylvania.
The School District has designated and determined under and for purposes of Section 265(b)(3) of the Code to qualify each of the Bonds as a “qualified taxexempt obligation” within the meaning of the Code.
$9,045,000*
EPHRATA AREA SCHOOL DISTRICT
Lancaster County, Pennsylvania
General Obligation Bonds, Series A of 2016
Dated: Date of Delivery
Due: March 1, as shown on inside cover
Denomination: Integral multiples of $5,000
Interest Payable: March 1 and September 1
First Interest Payment: September 1, 2016
Form: Book-Entry
Legal Investment for Fiduciaries in Pennsylvania: The Bonds (hereinafter defined) are a legal investment for fiduciaries in the Commonwealth
of Pennsylvania under the Probate, Estate and Fiduciaries Code, Act of June 30, 1972, No. 164, P.L. 508, as amended and supplemented.
Payable: The General Obligation Bonds, Series A of 2016, in the aggregate amount of $9,045,000* (the “Bonds”) will be issued by the Ephrata
Area School District, Lancaster County, Pennsylvania (the “School District” or “Issuer”) as fully registered bonds and, when issued, will be
registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities
depository for the Bonds. Purchases of the Bonds will be made only in book-entry form, and purchasers will not receive certificates representing
their interests in the Bonds. So long as DTC, or its nominee, Cede & Co., is the registered owner of the Bonds, payments of the principal and
interest on the Bonds will be made by the Paying Agent directly to DTC. Disbursement of such payments to the DTC Participants is the
responsibility of DTC, and disbursements of such payments to Beneficial Owners of the Bonds is the responsibility of the DTC Participants and the
Indirect Participants. See “BOOK-ENTRY ONLY SYSTEM” herein
Redemption: The Bonds are not subject to redemption prior to maturity.
Purpose: Proceeds of the Bonds are being issued to provide funds for the following: (1) to refund the School District’s outstanding General Obligation
Note, Series of 2014; and (2) to pay certain costs and expenses related to the issuing of the Bonds.
Security: The Bonds are payable from tax and other general revenues of the School District. The School District has covenanted that it will provide in its
budget in each year, and will appropriate from its general revenues in each such year, the amount of the debt service on the Bonds for such year and will
duly and punctually pay or cause to be paid from funds in the sinking fund established in the Resolution adopted by the School District on March 21, 2016,
authorizing and securing the Bonds, or from any other of its revenue funds, the principal of every Bond and the interest thereon at the dates and place and in
the manner stated in the Bonds, and for such budgeting, appropriation and payment the School District irrevocably has pledged its full faith, credit and
taxing power, which taxing power includes the power to levy ad valorem taxes on all taxable property within the School District, within limitations provided
by law (see “Security and Sources of Payment for the Bonds” and “Taxpayer Relief Act” herein).
The Bonds are offered for delivery when, as and if issued by the School District and received by the Underwriter, subject to the approving legal opinion of
Stevens & Lee, P.C., Lancaster, Pennsylvania, Bond Counsel, to be furnished upon delivery of the Bonds. Certain legal matters will be passed upon by Stevens
& Lee, P.C., Lancaster, Pennsylvania,, Solicitor for the School District. It is expected that the Bonds will be available for delivery, through the facilities of DTC,
on or about _________________.
The date of this Official Statement is ______________________.
*Preliminary, subject to change
$9,045,000*
Due: March 1, as shown below
Form: Book-Entry Only
Maturity Schedule
Year
2020
2021
2022
Principal
Amount
$
Coupon
%
Price
%
Year
ii
Principal
Amount
Coupon
Price
NO DEALER, BROKER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED BY THE SCHOOL DISTRICT OR THE
UNDERWRITER TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION, OTHER THAN THAT GIVEN OR MADE IN THIS
OFFICIAL STATEMENT, AND IF GIVEN OR MADE, ANY SUCH OTHER INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE SCHOOL DISTRICT OR THE UNDERWRITER. THIS OFFICIAL STATEMENT DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THE BONDS BY
ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE.
THIS OFFICIAL STATEMENT HAS BEEN APPROVED BY THE SCHOOL DISTRICT AND, WHILE THE INFORMATION SET FORTH IN THIS
OFFICIAL STATEMENT HAS BEEN FURNISHED BY THE SCHOOL DISTRICT AND OTHER SOURCES WHICH ARE BELIEVED TO BE
RELIABLE, SUCH INFORMATION IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS, AND IS NOT TO BE CONSTRUED AS A
REPRESENTATION BY THE UNDERWRITER OR, AS TO INFORMATION OBTAINED FROM OTHER SOURCES, BY THE SCHOOL DISTRICT.
THE INFORMATION AND EXPRESSIONS OF OPINION SET FORTH IN THIS OFFICIAL STATEMENT ARE SUBJECT TO CHANGE WITHOUT
NOTICE AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT NOR ANY SALE MADE UNDER THIS OFFICIAL STATEMENT
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE AFFAIRS OF THE SCHOOL DISTRICT HAVE REMAINED
UNCHANGED SINCE THE DATE OF THIS OFFICIAL STATEMENT.
THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT PURSUANT TO ITS RESPONSIBILITIES
TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS, BUT THE UNDERWRITER DOES NOT GUARANTEE THE ACCURACY OR
COMPLETENESS OF SUCH INFORMATION.
TABLE OF CONTENTS
Board of School Directors .......................................................................................................................................................
Summary Statement .................................................................................................................................................................
Introduction ..............................................................................................................................................................................
Purpose of the Issue .................................................................................................................................................................
Sources and Uses of Funds ......................................................................................................................................................
Description of the Bonds .........................................................................................................................................................
Book-Entry Only System.........................................................................................................................................................
Security and Sources of Payment for the Bonds .....................................................................................................................
Pennsylvania Budget Impact ...................................................................................................................................................
Tax Exemption and Other Tax Matters ...................................................................................................................................
Continuing Disclosure Undertaking ........................................................................................................................................
Miscellaneous ..........................................................................................................................................................................
Appendix A - Summaries of Financial Factors of the School District
Appendix B - School District Single Audit Report 2014-15
Appendix C - Description of the School District
Appendix D - Proposed Form of Opinion of Bond Counsel Opinion
Appendix E - Proposed Form of Continuing Disclosure Certificate
Appendix F - Bond Amortization Schedule
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2
3
4
5
6
7
8
Board of School Directors
Timothy Stayer............................................................................................................. President
Jenny Miller ........................................................................................................ Vice President
Kristee Reichard........................................................................................................ Treasurer*
Stephanie Gingrich ...................................................................................................Secretary *
Judy Beiler .................................................................................................................... Member
Ted Kachel .................................................................................................................... Member
Glenn Martin ................................................................................................................. Member
Neal Reichard................................................................................................................ Member
Robert Miller ................................................................................................................. Member
Tim Stauffer .................................................................................................................. Member
Chris Weber .................................................................................................................. Member
* Non-Voting
Administrative Staff
Dr. Brian Troop.................................................................................................. Superintendent
Kristee Reichard ........................................................................................... Business Manager
Bond Counsel
Stevens & Lee, P.C.
Lancaster, Pennsylvania
Solicitor
Stevens & Lee, P.C.
Underwriter
RBC Capital Markets, LLC
Paying Agent and Sinking Fund Depositary
Manufacturers and Traders Trust Company
Harrisburg, Pennsylvania
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SUMMARY PAGE
This Summary Statement is subject in all respects to more complete information in this Official Statement. No person
is authorized to detach this Summary Statement from this Official Statement or otherwise use it without the entire Official
Statement. A full review of the entire Official Statement should be made by potential bond purchasers.
School District .........................................
Ephrata Area School District, Lancaster County, Pennsylvania.
Bonds ........................................................
$9,045,000* aggregate principal amount of General Obligation Bonds, Series A of
2016, dated the date of delivery, maturing on March 1 in each of the years 2020
through 2022, inclusive, with interest payable initially on September 1, 2016, , and
thereafter semiannually on March 1, and September 1 of each year. See
“DESCRIPTION OF THE BONDS” herein.
Redemption Provisions...........................
The Bonds are not subject to redemption prior to maturity.
Form .........................................................
Fully registered bonds, without coupons, in the denominations of $5,000 principal
amount or any integral multiple thereof.
Application of Proceeds..........................
Proceeds of the Bonds are being issued to provide funds for the following: (1) to
refund the School District’s outstanding General Obligation Note, Series of 2014;
and (2) to pay certain costs and expenses related to the issuing of the Note.
Security.....................................................
The Bonds are general obligations of the Issuer, for the payment of which the
Issuer has pledged its full faith, credit and taxing power. See “SECURITY FOR
THE BONDS” and “TAXING POWERS OF THE SCHOOL DISTRICT” herein
Rating .......................................................
See “MISCELLANEOUS - Ratings” herein.
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OFFICIAL STATEMENT
$9,045,000*
INTRODUCTION
This Official Statement is furnished by the Ephrata Area School District, Lancaster County, Pennsylvania (the “School
District” or “Issuer”), in connection with the offering of its General Obligation Bonds, Series A of 2016, in the aggregate
principal amount of $9,045,000* (the “The Bonds”). The Bonds are being issued pursuant to a Resolution of the Board of
School Directors of the School District, adopted March 21, 2016 (the "Resolution"), and in accordance with the Act of the
General Assembly of the Commonwealth of Pennsylvania known as the Local Government Unit Debt Act (the "Act").
The Bonds shall be issued in fully registered form, without coupons, in the denomination of $5,000 or any integral
multiple thereof. Interest on the Bonds is payable semiannually, on March 1 and September 1 of each year, commencing
September 1, 2016. Interest on any Bond is payable by check mailed to the registered owner at the address as it appears on the
registration books on the appropriate Record Date (hereinafter defined). The principal of the Bonds is payable at the principal
corporate trust office of Manufacturers and Traders Trust Company (the “Paying Agent”), located in Harrisburg, Pennsylvania.
The Bonds are only transferable on the registration books maintained by the Paying Agent upon presentation and surrender
thereof (see "Description of the Bonds" herein). The Bonds are not subject to redemption prior to maturity.
The information that follows contains summaries of the Resolution, the School District's budget and the School
District's financial statements. Such summaries do not purport to be complete and reference is made to the Resolution, the
School District's budget and the School District's financial statements, copies of which are on file and available for examination
at the offices of the School District.
PURPOSE OF THE ISSUE
Proceeds of the Bonds are being issued to provide funds for the following: (1) to refund the School District’s
outstanding General Obligation Note, Series of 2014; and (2) to pay certain costs and expenses related to the issuing of the
Bonds
SOURCES AND USES OF FUNDS
SOURCES OF FUNDS
Par Amount of the Bonds
Plus Original Issue Premium
TOTAL SOURCES
$
$
USES OF FUNDS
Refunding Requirements 2014 Bonds
Costs of Issuance (1)
TOTAL USES
$
$
________________
(1) Includes legal fees, printing, rating fee, Underwriter’s discount, paying agent fees, escrow agent fees, CUSIP and
miscellaneous costs.
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DESCRIPTION OF THE BONDS
The Bonds are issued as fully registered bonds, without coupons, in the denominations of $5,000 principal amount or
any integral multiple thereof. Principal and interest are payable as set forth below.
When issued, the Bonds will be registered in the name of Cede & Co., as nominee for the Depository Trust Company
(“DTC”), New York, New York. Purchasers of the Bonds (the “Beneficial Owners”) will not receive any physical delivery of
bond certificates and beneficial ownership of the bonds will be evidenced only by book entries. See “Book-Entry Only System”
herein.
Payment of Principal and Interest
So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payments of principal of and
interest on the Bonds, when due, are to be made to DTC, and all such payments shall be valid and effective to satisfy fully
and to discharge the obligations of the School District with respect to, and to the extent of, principal and interest so paid. If
the use of the book-entry only system for the Bonds is discontinued for any reason, bond certificates will be issued to the
Beneficial Owners of the Bonds and payment of principal and interest on the Bonds shall be made as described in the
following paragraphs.
Principal of certificated Bonds will be paid to the registered owners thereof or registered assigns, when due, upon
surrender of such Bonds at the designated corporate trust office of the Paying Agent. Interest is payable to the registered owner
of a Bond from the interest payment date next preceding the date of registration and authentication of the Bond, unless: (a) such
Bond is registered and authenticated as of an interest payment date, in which event such Bond shall bear interest from said
interest payment date, or (b) such Bond is registered and authenticated after a Record Date (hereinafter defined) and before the
next succeeding interest payment date, in which event such Bond shall bear interest from such interest payment date, or (c) such
Bond is registered and authenticated on or prior to the Record Date (hereinafter defined) preceding September 1, 2016, in which
event such Bond shall bear interest from the dated date of the Bonds, or (d) as shown by the records of the Paying Agent, interest
on such Bond shall be in default, in which event such Bond shall bear interest from the date to which interest was last paid on
such Bond. Interest on each Bond shall be paid semiannually on March 1 and September 1 of each year, beginning September 1,
2016, until the principal sum is paid. Interest on each Bond is payable by check drawn on the Paying Agent, which shall be
mailed to the registered owner whose name and address shall appear, at the close of business on the fifteenth (15th) day (whether
or not a day on which the Paying Agent is open for business) next preceding each interest payment date, respectively (the
"Record Date"), on the registration books maintained by the Paying Agent, irrespective of any transfer or exchange of the Bond
subsequent to such Record Date and prior to such interest payment date, unless the School District shall be in default in payment
of interest due on such interest payment date. In the event of any such default, such defaulted interest shall be payable to the
person in whose name the Bond is registered at the close of business on a special record date for the payment of such defaulted
interest established by notice mailed by the Paying Agent to the registered owners of Bonds not less than ten (10) days preceding
such special record date. Such notice shall be mailed to the persons in whose names the Bonds are registered at the close of
business on the fifth (5th) day preceding the date of mailing.
If the date for the payment of the principal of or interest on any Bonds shall be a Saturday, Sunday, legal holiday or on
a day on which banking institutions in the Commonwealth are authorized or required by law or executive order to close, then the
date for payment of such principal or interest shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or
a day on which such banking institutions are authorized or required to close, and payment on such date shall have the same force
and effect as if made on the nominal date established for such payment.
Transfer, Exchange and Registration of Bonds
Subject to the provisions described below under “Book-Entry Only System”, each of the Bonds may be transferred or
exchanged by the registered owner thereof upon surrender of such Bond to the Paying Agent, at its designated corporate trust
office, accompanied by a written instrument or instruments in form, with instructions and with guaranty of signature satisfactory
to the Paying Agent, duly executed by the registered owner of such Bond or his attorney-in-fact or legal representative. The
Paying Agent shall enter any transfer of ownership of such Bond in the registration books and shall authenticate and deliver at
the earliest practicable time in the name of the transferee or transferees a new fully registered Bond or Notes of authorized
denomination of the same series, maturity date and interest rate for the aggregate principal amount which the registered owner is
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entitled to receive. The School District and the Paying Agent may deem and treat the registered owner of any Bond as the
absolute owner thereof (whether or not a Bond shall be overdue) for the purpose of receiving payment of or on account of
principal and interest and for all other purposes, and the School District and the Paying Agent shall not be affected by any notice
to the contrary.
Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the
same series, maturity date and interest rate.
Redemption of the Bonds
The Bonds are not subject to redemption prior to maturity.
BOOK-ENTRY ONLY SYSTEM
The information under this heading has been obtained from materials provided by DTC for such purpose. The
School District (herein referred to as the “Issuer”) and the Underwriter do not guaranty the accuracy or completeness of
such information and such information is not to be construed as a representation of the School District or the
Underwriter.
DTC, New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fullyregistered bonds registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by
an authorized representative of DTC. One fully-registered certificate will be issued for the Bonds of each separate maturity and
interest rate, in the aggregate principal amount of such maturity and interest rate, and will be deposited with DTC.
DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law,
a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a
“clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for
over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments
from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade
settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic
computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical
movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository
Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and
Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is owned by the users of its registered
subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating: AA+. The DTC Rules
applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be
found at www.dtcc.com.
Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a
credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series of 2011 Bond
(“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not
receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written
confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are
to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of
the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of
DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The
deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any
change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect
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only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial
Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Redemption notices will be sent to DTC. If less than all of the Bonds of a maturity are being redeemed, DTC’s practice
is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless
authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an
Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or
voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Payments of principal, premium, if any, and interest on the Bonds will be made to Cede & Co., or such other nominee
as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon
DTC’s receipt of funds and corresponding detail information from the Issuer or the Trustee, on payable date in accordance with
their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered
in “street name,” and will be the responsibility of such Participant and not of DTC, the Issuer or the Trustee, subject to any
statutory or regulatory requirements as may be in effect from time to time. Payments of principal, premium, if any, and interest
on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the Issuer or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable
notice to the Issuer or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, bond
certificates are required to be printed and delivered.
The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor
securities depository). In that event, bond certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that
Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.
Disclaimer of Liability for Failures of DTC
The School District and the Underwriter cannot and do not give any assurances that DTC, the Direct and Indirect
Participants or others will distribute payments of principal, interest or premium with respect to the Bonds paid to DTC or its
nominee as the owner of Bonds, or will distribute any redemption or other notices, to the Beneficial Owners, or that they will
do so on a timely basis or will serve and act in the manner described in this Official Statement. The School District and the
Underwriter are not responsible or liable for the failure of DTC or any Participant to make any payment or give any notice to
a Beneficial Owner with respect to the Bonds, or any error or delay relating thereto.
SECURITY FOR THE BONDS
The Bonds are general obligations of the School District and are payable from the general taxes and revenues of the
School District. The taxing powers of the School District are described more fully herein. The School District has covenanted
in the Resolution that it will provide in its budget for each fiscal year, and will appropriate in each such year, the amount of the
debt service on the Bonds for such year and will duly and punctually pay, or cause to be paid, the principal of every Bond and
the interest thereon on the dates, at the place and in the manner stated in the Bonds, and for such budgeting, appropriation and
payment, the School District has irrevocably pledged its full faith, credit and taxing power presently unlimited as to rate or
amount for such purpose. (But see “Taxing Powers of the School District” herein.)
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Sinking Fund
A Sinking Fund designated “Ephrata Area School District, Lancaster County, Pennsylvania, General Obligation Bonds,
Series A of 2016 Sinking Fund” (the “Sinking Fund”) created under the Resolution shall be held by the Paying Agent. The
School District shall deposit in the Sinking Fund, not later that the date when interest and/or principal is due on the Bonds, a
sufficient sum so that on each principal and interest payment date the Sinking Fund will contain, together with any other
available funds therein, sufficient money to pay in full interest and principal then due on such Bonds.
The Sinking Fund shall be secured and invested by the Paying Agent in securities or deposits authorized by the Debt
Act, upon direction of the School District, all as is provided in the Debt Act. Such deposits and securities shall be in the name of
the School District but subject to withdrawal or collection only by the Paying Agent, and such deposits and securities, together
with the interest thereon, shall be a part of the Sinking Fund.
The Paying Agent is authorized without further order from the School District to pay from the Sinking Fund, the
principal of and interest on the Bonds when due and payable.
Actions in the Event of Default
In the event the School District defaults in the payment of the principal of or the interest on any of the Bonds after same
shall become due, whether at the stated maturity or upon call for prior redemption, and such default shall continue for thirty
days, or if the School District fails to comply with any provision of the Bonds or the Resolution, the Act provides that the
holders of 25% in aggregate principal amount of the Bonds then outstanding may, upon appropriate action, appoint a trustee to
represent the Bondholders. The trustee may, and upon request of the holders of 25% in principal amount of the Bonds then
outstanding, and upon being provided with indemnity satisfactory to it, shall take such action on behalf of the Bondholders as is
more specifically set forth in the Act. Such representation by the trustee shall be exclusive.
Security for General Obligation Bonds Under Section 633
of the Public School Code of 1949
Section 633 of the Public School Code of 1949 (Act of March 10, 1949, P.L. 30, as amended by Act 150 of 1975) (the
"School Code") presently provides that if any school district fails to pay or to provide for the payment of any indebtedness, at the
date of maturity or mandatory redemption, or any interest due on such indebtedness, in accordance with the schedule under
which the Bonds or Bonds were issued, the Secretary of Education of the Commonwealth shall notify the board of school
directors of its obligation and shall withhold from any Commonwealth appropriation due such school district an amount equal to
the sum of such principal or interest due and shall pay such amount directly to the bank acting as sinking fund Depository for the
Bond issue.
The withholding provisions of Section 633 are not part of any contract with the registered owners of the Bonds and
may be amended or repealed by future legislation. The effectiveness of Section 633 may be limited by the application of other
withholding provisions contained in the Public School Code, such as provisions for withholding and paying over of
appropriations for payment of unpaid teachers' salaries. Enforcement may also be limited by bankruptcy, insolvency, or other
laws or equitable principles affecting the enforcement of creditors' rights generally.
PENNSYLVANIA BUDGET IMPACT
On December 29, 2015, the Commonwealth passed a budget for the 2015-2016 fiscal year commencing on July 1,
2015. As it relates to basic education funding, the budget, as enacted, contained an amount approximately sufficient to only
fund the first six months of the 2015-2016 fiscal year On March 17, 2016 the General Assembly passed a budget which
provided basic education funding to Commonwealth school districts for the 2015-2016 fiscal year which was at least equal to
the funding school districts received in the prior fiscal year. On March 27, 2016 that budget became law when the Governor
failed to sign or veto the bill within the ten (10) day period prescribed under the laws of the Commonwealth.
The proposed budget for fiscal year 2016-2017 was introduced by the Governor on February 9, 2016, and the
budgetary process for the 2016-2017 fiscal year has commenced. Future budget impasses may affect payments under the
withholding provisions of Section 633 of the Public School Code.
5
TAX EXEMPTION AND OTHER TAX MATTERS
Federal Tax Laws
Numerous provisions of the Internal Revenue Code of 1986, as amended (the “Code”), affect the issuers of state and
local government unit bonds, such as the School District, and impair or restrict the ability of the School District to finance
projects on a tax exempt basis. Failure on the part of the School District to comply with any one or more of such provisions
of the Code, or any regulations under the Code, could render interest on the Bonds includable in the gross income of the
owners thereof for purposes of federal income tax retroactively to the date of issuance of the Bonds. Among these provisions
are more restrictive rules relating to: (a) investment of funds treated as proceeds of the Bonds; (b) the advance refunding of
tax-exempt bonds; and (c) the use of proceeds of the Bonds to benefit private activities. In addition, under the Code, the
School District is required to file an information return with respect to the Bonds and, if applicable, to “rebate” to the federal
government certain arbitrage profits on an ongoing basis throughout the term of the issue constituting the Bonds. Bond
Counsel has not undertaken to determine (or to inform any person) whether any action taken (or not taken) or events
occurring (or not occurring) after the date of issuance of the Bonds may affect the tax status of interest on the Bonds.
Other provisions of the Code affect the purchasers and holders of certain state and local government bonds such as
the Bonds. Prospective purchasers of the Bonds should be aware that: (i) Section 265 of the Code denies a deduction for
interest on (a) indebtedness incurred or continued to purchase or carry certain state or local government bonds, such as the
Bonds, or, (b) in the case of a financial institution, that portion of a financial institution’s interest expense allocated to interest
on certain state or local government bonds, such as the Bonds, unless the issuer of the state or local government bonds
designates the bonds as “qualified tax-exempt obligations” for the purpose and effect contemplated by Section 265(b)(3)(B)
of the Code (the School District has designated the Bonds as “qualified tax exempt obligations” under Section 265(b)(3)(B)
of the Code, as such phrase is defined in the Code); (ii) with respect to insurance companies subject to the tax imposed by
Section 831 of the Code, Section 832(b)(5)(B)(1) reduces the deduction for loss reserves by 15% of the sum of certain items,
including interest and amounts treated as such on certain state or local government bonds such as the Bonds; (iii) interest on
certain state or local government bonds, such as the Bonds, earned by certain foreign corporations doing business in the
United States could be subject to a branch profits tax imposed by Section 884 of the Code; (iv) if a Subchapter S corporation
has passive investment income (which passive investment income will include interest on state and local government bonds
such as the Bonds) exceeding 25% of such Subchapter S corporation’s gross receipts and if such Subchapter S corporation
has Subchapter “C” earnings and profits, then interest income derived from state and local government bonds, such as the
Bonds, may be subject to federal income tax under Section 1375 of the Code; and (v) Section 86 of the Code requires
recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining gross
income receipts or accruals of interest on certain state or local government bonds such as the Bonds.
Tax Exemption
In the opinion of Bond Counsel, assuming continuing compliance by the School District with certain certifications
and agreements relating to the use of Bond proceeds and covenants to comply with provisions of the Code and any applicable
regulations thereunder, now or hereafter enacted, interest on the Bonds is not includable in the gross income of the holders of
the Bonds under Section 103(a) of the Code and interest on the Bonds is not an item of tax preference for purposes of the
federal individual and corporate alternative minimum taxes. Other provisions of the Code will affect certain purchasers and
holders of the Bonds. See “Federal Tax Laws” above.
The Bonds are designated, or “deemed designated”, as a “qualified tax-exempt obligation” for purposes and effect
contemplated by Section 265 of the Code (relating to expenses and interest relating to tax-exempt income of certain financial
institutions).
In the opinion of Bond Counsel under the laws of the Commonwealth, the Bonds and interest on the Bonds shall at
all times be free from taxation for State and local purposes within the Commonwealth, but this exemption shall not extend to
gift, estate, succession or inheritance taxes or any other taxes not levied directly on the Bonds or the interest thereon. Under
the laws of the Commonwealth, profits, gains or income derived from the sale, exchange or other disposition of the Bonds are
subject to State and local taxation within the Commonwealth of Pennsylvania.
The School District will issue its certificate regarding the facts, estimates and circumstances in existence on the date
of delivery of the Bonds and regarding the anticipated use of the proceeds of the Bonds. The School District will certify that,
on the basis of the facts, estimates and circumstances in existence on the date of issuance of the Bonds, the School District
6
does not reasonably expect to use the proceeds of the Bonds in a manner that would cause the Bonds to be or become
“arbitrage bonds” or “private activity bonds” as those terms are defined in Section 148 and Section 141 of the Code.
THE ABOVE SUMMARY OF POSSIBLE TAX CONSEQUENCES IS NOT EXHAUSTIVE. ALL PURCHASERS
OF THE BONDS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE POSSIBLE FEDERAL INCOME
TAX CONSEQUENCES OF OWNERSHIP OF THE BONDS. ANY STATEMENTS REGARDING TAX MATTERS
HEREIN CANNOT BE RELIED UPON BY ANY PERSON TO AVIOD TAX PENALTIES.
Regulations, Future Legislation
Under the provisions of the Code the Treasury Department is authorized and empowered to promulgate regulations
implementing the intent of Congress under the Code, which could affect the tax-exemption and/or tax consequences of
holding tax-exempt obligations, such as the Bonds. In addition, legislation may be introduced and enacted in the future which
could change the provisions of the Code relating to tax-exempt bonds of a state or local government unit, such as the School
District, or the taxability of interest in general.
No representation is made or can be made by the School District, or any other party associated with the issuance of
the Bonds as to whether or not any other legislation now or hereafter introduced and enacted will be applied retroactively so
as to subject interest on the Bonds to federal income taxes or so as to otherwise affect the marketability or market value of the
Bonds.
EACH PURCHASER OF THE BONDS SHOULD CONSULT HIS OR HER OWN TAX ADVISOR REGARDING
ANY CHANGES IN THE STATUS OF PENDING OR PROPOSED FEDERAL TAX LEGISLATION.
Proposed Federal Tax Legislation
Proposals to alter or eliminate the exclusion of interest on tax-exempt bonds from gross income for some or all
taxpayers have been made in the past and may be made again in the future. For example, on October 15, 2011, President Obama
submitted the “American Jobs Act of 2011” (the “Jobs Act”) to Congress. While the Jobs Act was not enacted in its original
form, certain measures in support of tax-reform continue to appear in the President’s fiscal 2016 budget request, released in
February 2012. The 2016 budget proposes a 28% cap on the value of tax preferences, including tax-exempt interest for
municipal bonds. There is much uncertainty regarding whether any legislation to effect tax-reform will be enacted now or in the
future. The impact of such legislation on the Bonds and the financial condition of the School District cannot be predicted.
Prospective purchasers of the Bonds should consult their own tax advisors regarding the potential consequences of the proposed
change to the treatment of interest on the Bonds.
Future legislation, if enacted into law, or clarification of the Code may cause interest on the Bonds to be subject,
directly or indirectly, to federal income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit
of the tax status of such interest. The introduction or enactment of any such future legislation or clarification of the Code may
also affect the market price for, or marketability of, the Bonds. PROSPECTIVE PURCHASERS OF THE BONDS SHOULD
CONSULT THEIR OWN TAX ADVISERS REGARDING ANY PROPOSED FEDERAL TAX LEGISLATION, AS TO
WHICH BOND COUNSEL EXPRESSES NO OPINION.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such
authorities, and represents Bond Counsel’s judgment as to the proper treatment of the Bonds for federal income tax purposes. It
is not binding on the IRS or the courts.
Bond Counsel’s engagement with respect to the Bonds ends with the issuance of the Bonds.
CONTINUING DISCLOSURE UNDERTAKING
In accordance with the requirements of Rule 15c2-12 (the “Rule”) promulgated by the Securities and Exchange
Commission (“SEC”), and the Resolution authorizing issuance of the Bonds, the School District will execute and deliver a
written continuing disclosure obligation with respect to the Bonds. See the form of the Continuing Disclosure Agreement
(the “Agreement”) at Appendix E to this Official Statement.
Under the terms of the Agreement, and as reflected in Appendix E, the School District will undertake to file with the
MSRB financial and other information concerning the School District (annual audited financial statements, annual budget,
7
updated of certain annual and financial information and notice of certain events affecting the School District). The School
District’s obligations with respect to continuing disclosure relative to the Bonds shall terminate upon the prior redemption or
payment in full of all of the Bonds.
The MSRB has been designated by the SEC to be the central and sole repository for continuing disclosure
information filed by issuers of municipal securities since July 1, 2009. Information and notices filed by municipal issuers
(and other “obligated persons” with respect to municipal securities issues) are made available through the MSRB’s Electronic
Municipal Market Access (EMMA) System, which may be accessed on the internet at http://www.emma.msrb.org
Under the School District's existing annual disclosure requirements under the Rule, the School District agreed to
provide updates to its audited financial statements, its budgets and certain financial and operational information relating to
the School District. The School District failed to file certain of its financial and operational information for fiscal years
ending June 30, 2011 through and including June 30, 2013. While this information was filed, it was not timely filed. The
School District has filed a separate notice with EMMA setting forth the School District’s failure to timely file such financial
and operational information. While this notice was filed, it was not timely filed.
The School District also failed to file, in a timely manner, notice of a rating upgrade from Standard & Poor’s Corp.
and notice of enhanced rating downgrades from Moody’s on certain of its outstanding bond issues. While this notice was
filed, it was not timely filed
The School District has implemented procedures to ensure that all future filings required by its continuing disclosure
undertakings will be made in a timely manner.
Bond Insurance Rating Downgrades and Upgrades by S&P and/or Moody’s
Some of the School District’s bond issues that have been outstanding during the past five (5) years have been
insured by various bond insurance companies that have received rating downgrades and upgrades by both S&P and Moody’s.
This information was publicly available from widely accepted information sources at the time of their respective downgrades
or upgrades.
MISCELLANEOUS
No Litigation
As a condition of settlement for the Bonds, the School District and its Solicitor will deliver a certificate stating that
there is no litigation, of any nature, pending or threatened against the School District to restrain or enjoin the issuance, sale,
execution or delivery of the Bonds, or if any such litigation is pending or threatened, an opinion of counsel satisfactory to the
Underwriter that any such litigation is without merit.
Legal Opinion
The issuance and delivery of the Bonds is subject to delivery of the unqualified approving legal opinion of Stevens &
Lee, P.C., Lancaster, Pennsylvania, Bond Counsel. Certain legal matters will be passed upon for the School District by Stevens
& Lee, P.C., Lancaster, Pennsylvania, Solicitor to the School District.
Ratings
Moody’s has assigned the School District an underlying rating of “Aa3”
The above rating is not a recommendation to buy, sell or hold the Bonds, and such rating may be subject to revision or
withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the above ratings may have an
adverse effect on the market price of the Bonds.
8
Underwriting
The underwriter of the Bonds is RBC Capital Markets, LLC (the “Underwriter”). The Underwriter has agreed, subject
to certain conditions, to purchase the Bonds at a purchase price of $______________(which consists of the aggregate
principal amount of the Bonds of $______________.00 less an Underwriter’s Discount of $______________ plus original
issue premium of $______________). The Purchase Contract for the Bonds provides that the Underwriter will purchase all
the Bonds, if any are purchased, in accordance with the terms of the Purchase Contract. The initial public offering price, set
forth on the cover page of this Official Statement, may be changed by the Underwriter from time to time without any
requirement of prior notice. The Underwriter reserves the right to join with other dealers in offering the Bonds to the public,
and said Bonds offered to other dealers may be at prices lower than those offered to the public. The Underwriter may also
receive a fee for conducting a competitive bidding process regarding the investment of certain proceeds of the Bonds.
The Underwriter has provided the following information for inclusion in this Official Statement: The Underwriter and
their respective affiliates are full service financial institutions engaged in various activities, that may include securities trading,
commercial and investment banking, municipal advisory, brokerage and asset management. In the ordinary course of business,
the Underwriter and their respective affiliates may actively trade debt and if applicable equity securities (or related derivative
securities) and provide financial instruments (which may include bank loans, credit support or interest rate swaps). The
Underwriter and its affiliates may engage in transactions for its own accounts involving the securities and instruments made the
subject of this securities offering or other offering of the School District. The Underwriter and their respective affiliates may
also communicate independent investment recommendations, market color or trading ideas and publish independent research
views in respect of this securities offering or other offerings of the School District. The Underwriter does not make a market in
credit default swaps with respect to municipal securities at this time but may do so in the future.
Paying Agent
The principal of the Bonds will be payable, when due, upon presentation and surrender of the Bonds at the corporate
trust office of Manufacturers and Traders Trust Company, located in Harrisburg, Pennsylvania. Interest on the Bonds will be
paid by check mailed by the Paying Agent to the registered owners of the Bonds. (See “DESCRIPTION OF THE BONDS”
supra.)
Other
All references to the provisions of the Act, the Bonds, the Resolution and legal opinions and all documents and
certificates delivered at settlement for the Bonds described in this Official Statement are made subject to all the specific
provisions thereof, to which reference is hereby made for further information, and this Official Statement does not purport to be
a complete statement of any or all such provisions.
All information, estimates and assumptions herein have been obtained from officials of the School District, other
governmental bodies, trade and statistical services, and other sources that are believed to be reliable; but no representations
whatsoever are made that such estimates or assumptions are correct or will be realized. So far as any statements herein involve
matters of opinion, whether or not expressly so stated, they are intended as such and not representations of fact.
The School District has authorized the distribution of this Official Statement.
By:
President of the Board of School Directors
9
APPENDIX A
Summaries of Financial Factors
of
The School District
FINANCIAL REVIEW
The following Exhibit is a summary only and is not intended to be a complete report. For more complete information,
the individual financial statements and the 2015-16 budget of the School District should be reviewed at the Business Office,
Ephrata Area School District, Ephrata, Pennsylvania.
Accounting Method
The School District keeps its books and prepares its financial reports according to a modified accrual basis. Major
accrual items are payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues
receivable from other governmental units. Its financial statements are audited annually by a firm of independent certified public
accountants, as required by State law. The firm of Herbein & Co., Reading, Pennsylvania serves as the School District auditor.
Budgeting Process in School Districts under the Taxpayer Relief Act
In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania
Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form
furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal
year on July 1.
Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class A,
second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must
include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election
immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public
inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the
board must give at least 10 days’ public notice of its intent to adopt the final budget.
If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be
submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately
preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district’s
Index (see “The Taxpayer Relief Act” herein) and within 10 days, but not later than 75 days prior to the upcoming election,
inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a
proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for
the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The
Taxpayer Relief Act.
With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is
required (see “The Taxpayer Relief Act” herein), the school district must publish notice of its intent to seek PDE approval not
less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the
request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school
district’s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE
denies the school district’s request, the school district may submit a referendum question to the local election officials at least 50
days before the upcoming election, if it so chooses.
To use any of the referendum exceptions for which court approval is required under the Taxpayer Relief Act, the
school district must petition the court of common pleas no later than 75 days prior to the upcoming election, after giving one
week’s public notice of the intent to file such petition. The court may schedule a hearing on the petition, and the school district
must prove by clear and convincing evidence that it qualifies for the exception sought. The Taxpayer Relief Act requires that
the court rule on the petition and inform the school district of its decision no later than 55 days prior to the upcoming election.
Such Act provides that the court in approving the petition shall determine the dollar amount for which the exception is granted,
the tax rate increase required to fund the exception and the appropriate duration of the tax increase. If the court denies the school
district’s petition, such Act permits the school district to submit a referendum question to the local election officials at least 50
days before the upcoming election, if it so chooses.
If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it
first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum
question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an
increase in the tax rate greater than the applicable Index.
A-1
Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board
of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal
year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the
Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual
budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at
least ten (10) days’ public notice be given of the board’s intent to adopt the annual budget. No referendum exceptions are
available to a school district adopting such a resolution.
Comparative Statement of General Fund Financial
Condition for Fiscal Years Ending 2011-2016
Fiscal Year Ended June 30,
2011-12
Audited
2012-13
Audited
2013-14
Audited
2014-15
Audited
2015-16
Budgeted
Local Sources .............................................
State Sources ...............................................
Federal Sources ..........................................
Other Sources .............................................
$39,255,489
14,968,623
774,853
16,117
$41,191,050
15,544,941
876,825
0
$41,324,801
16,373,097
819,661
0
$42,168,864
17,228,628
861,696
0
$42,334,607
17,847,297
855,028
0
TOTAL REVENUE ................................
$55,015,082
$57,612,816
$58,517,559
$60,259,188
$61,036,932
Instruction ...................................................
Support Services ........................................
Non-instructional Services .........................
Facilities, Acquisition & Improvements ...
Other ............................................................
Debt Service ..............................................
Refund of Prior Year Receipts .................
Fund Transfers ..........................................
Budgetary Reserve ....................................
29,373,733
16,220,159
1,232,461
0
0
6,437,850
72,831
1,305,223
0
28,717,187
17,620,548
1,168,415
0
0
6,091,360
31,160
0
0
30,726,623
16,967,362
1,258,698
0
0
6,244,744
2,031
0
0
32,105,373
17,960,147
1,354,551
0
0
6,338,074
2,329
0
0
34,896,086
18,896,951
1,404,607
0
0
6,427,963
0
0
0
TOTAL EXPENDITURES ....................
$54,642,257
$53,628,670
$55,199,458
$57,760,474
$61,625,677
SURPLUS (DEFICIT)OF REVENUES
OVER EXPENDITURES ....................
372,825
3,984,146
3,318,101
2,498,714
$15,153,023
$15,525,848
$17,356,871
$17,709,082
REVENUE:
EXPENDITURES:
FUND BALANCE, BEGINNING OF YEAR
INCREASE (DECREASE) IN RESERVE
FOR INVENTORY
FUND BALANCE, END OF YEAR ............
_________________
Source: School District
0
$15,525,848
(588,745)
$17,369,378
0
$17,356,871
(1.) As Restated
A-2
$17,709,082
$17,369,378
$16,780,633
REVENUE FROM STATE SOURCES
Pennsylvania school districts receive financial assistance from the Commonwealth in a number of forms, all subject to
statutory provisions and annual appropriation by the Pennsylvania General Assembly.
A basic instructional subsidy is allocated to all school districts based on (1) the per pupil market value of assessable real
property in the school district; (2) the per pupil earned income in the school district; and (3) the school district's tax effort, as
compared with the tax effort of other school districts in the State. School districts also receive state aid for special education,
pupil transportation, vocational education, and health services, among other things.
State law presently provides that the School District will receive reimbursement from the State for a portion of the debt
service on the Bonds after said Bonds have received final approval of the Department of Education. State reimbursement is
based on the "Reimbursable Percentage" assigned to the Bonds and the School District's Market Value Aid Ratio (“Aid Ratio”)
or Capital Accounts Reimbursement Fraction (“CARF”), whichever is higher. In future years, this percentage may change as
the School District's Aid Ratio changes, or by future legislation. Aid Ratio is a function of the market value per weighted
average daily membership of the School District relative to that of the State. The School District’s 2015-16 Aid Ratio of .4658
is greater than its CARF of .4106.
SCHOOL DISTRICT PENSION PROGRAM
School districts in Pennsylvania are required to participate in a statewide pension program administered by the State
Public School Employees Retirement Board (the “Retirement Board”). All of the School District full-time employees, part-time
employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year are required to
participate in the program.
Beginning July 1, 1976, certain revisions were made in the pension program. The Retirement Board, previously under the
Department of Education of the Commonwealth, became an independent agency. However, the program is still guaranteed
by the Commonwealth. Currently, each party to the program contributes a fixed percentage of the employee’s salary.
Employees belonging to the Public School Employees Retirement System (“PSERS”) prior to July 22, 1983 contribute 5.25%
of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February
17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at
7.50% of the employee’s salary for those employees hired on or after July 1, 2001. Act 9 also provides an option for those
employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50%
if they were hired on or after July 22, 1983. Act 120 of 2010 was passed by the General Assembly on November 15 and
signed by Governor Rendell on November 23, 2010. The benefit reductions contained in this legislation will only impact
individuals who become new members of PSERS on or after July 1, 2011. New members will have the option of selecting
one of 2 new classes. The members selecting class T-E will contribute a base rate of 7.5% with “shared risk” contribution
levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F will contribute a base rate of
10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier or 2.5%. On December 9,
2014, the PSERS Board certified the employer rate, to be paid by the School District, of 25.84% for the 2015-16 fiscal year.
On December 8, 2015, the PSERS Board certified the employer rate, to be paid by the School District, of 30.03% for the
2016-17 fiscal year. Both the School District and the Commonwealth are responsible for paying a portion of the employer’s
share. School entities are responsible for paying 100% of the employer share of contributions to PSERS. The
Commonwealth reimburses school entities for one-half the payment for employees hired on or before June 30, 1994. School
entities are reimbursed by the Commonwealth based on a statutory formula for employees hired after June 30, 1994, but not
less than one-half of the payment.
School
Year_
School District
Contributions
2010-11 ......................................................................
2011-12 .......................................................................
2012-13 .......................................................................
2013-14
2014-15
2015-16 (Budgeted)
A-3
683,068
1,013,449
1,603,680
2,026,165
2,605,148
3,653,245
PSERS is the 20th largest state-sponsored defined benefit pension fund in the nation. PSERS is primarily
responsible for administering a defined benefit pension plan for public school employees in the Commonwealth of
Pennsylvania. In the fall of 2015, the PSERS completed its process of publishing financial statements for the year ended
June 30, 2015, in compliance with reporting standards established by the Government Accounting Standards Board’s
Statement No. 67 and Statement No. 68. PSERS’ total plan net position decreased by $1.4 billion from $53.3 billion at June
30, 2014 to $51.9 billion at June 30, 2015. This decrease was due in large part to deductions for benefits and administrative
expenses exceeding net investment income plus member and employer contributions. The change in total plan net position
from June 30, 2013 to June 30, 2014 was an increase of $4.0 billion from $49.3 billion at June 30, 2013 to $53.3 billion at
June 30, 2014. This increase was also due in large part to net investment income plus member and employer contributions
exceeding deductions for benefits and administrative expenses. The Fund’s complete report is available on the PSERS
website on the Internet: www.psers.state.pa.us.
In June 2012, the Government Accounting Standards Board (“GASB”) issued “Statement No. 68 Accounting and
Financial Reporting for Pensions – An Amendment of GASB Statement No 27.” The primary objective of this Statement is
to improve accounting and financial reporting by state and local governments for pensions. The new accounting standard
will require the School District to report in its government-wide financial statements its proportionate share of the new
pension liability of the pension systems to which it contributes. GASB 68 is effective for fiscal years beginning after June
15, 2014, which, in the case of the School District began with fiscal year ending June 30, 2015. Please see the School
District’s Audited Financial Statements for fiscal year ending June 30, 2015 in Appendix B for the net effects of the
implementation of GASB 68.
OTHER POST-EMPLOYMENT BENEFITS
The School District provides certain health care benefits for its retirees (commonly referred to as “other postemployment benefits” or “OPEB”). The School District annually appropriates funds to meet its obligation to pay such
benefits on a “pay-as-you-go” basis, and has not established any fund or irrevocable trust for the accumulation of assets with
which to pay such benefits in future years. In the fiscal year ended June 30, 2014, the School District’s OPEB cost was
approximately $253,452, and its fiscal year 2015 was approximately $247,567.
LABOR RELATIONS
There are presently 540 employees of the School District, including 295 teachers and 20 administrators, and 225
support personnel including secretaries, maintenance staff, cafeteria staff and aides.
The professional employees of the School District are represented by the Ephrata Area Education Association, an
affiliate of the Pennsylvania State Education Association (PSEA), under a contract with the School District that expires 6/30/18.
SCHOOL DISTRICT FINANCIAL HISTORY
The School District and its predecessors have never defaulted on the payment of lease rentals or debt service.
The status of the School District's present indebtedness is shown in the table entitled "Debt Summary and Related
Information," in Appendix A.
FUTURE FINANCING
At this time, the School District does not anticipate the need for additional long-term (non-refunding) debt financing
within the next three years.
A-4
SCHOOL DISTRICT BORROWING CAPACITY
The borrowing capacity of the School District is calculated in accordance with provisions of the Act, which describes
the applicable debt limits for local government units, including school districts and municipalities. Under the Act, the School
District may incur electoral debt, which is debt that is approved by a majority of the School District's voters at either a general or
special election, in an unlimited amount. Net nonelectoral debt, or debt not approved by the School District's electorate, net of
state aid, may not exceed 225% of the School District's "Borrowing Base". The Borrowing Base is calculated as the annual
arithmetic average of Total Revenues (as defined in the Act), for the three full fiscal years next preceding the date of incurring
debt. Combined net nonelectoral debt and net lease rental debt (debt represented by capital leases and other forms of agreement
net of state aid), incurred on behalf of the School District may not exceed 225% of the School District's Borrowing Base. The
Borrowing Base and borrowing capacity of the School District are as follows:
Total Revenues ...............................................................................
Less: Required Deductions
(a) Rental and Sinking Fund Reimbursement .....................
(b) Revenues for Self-Liquidating Debt ..............................
(c) Interest Earned on Sinking Funds ..................................
(d) Grant and Gifts for Capital Projects ..............................
(e) Sale of Equipment and Non-Recurring Items ................
Total Deductions.............................................................................
Total Revenues ...............................................................................
Total Net Revenues for Three Years...............................................
Borrowing Base–Average Net Revenues for Three-Year Period
2012-13
$57,612,816
2013-14
$58,517,559
2014-15
$60,259,188
291,761
315,803
313,293
19,172
310,933
57,301,883
175,420,824
58,473,608
26,082
341,885
58,175,674
2,628
315,921
59,943,267
DEBT STATEMENT AND BORROWING CAPACITY
(Under Local Government Unit Debt Act)
A. ELECTORAL DEBT ...........................................................................................................
$
0
B. NON-ELECTORAL DEBT
Computation of Net Non-Electoral Debt
a. Outstanding Principal (including the Bonds) .........................................................
b. Less: Deductions (described in the Act) (1) (2) ........................................................
c. Net Non-Electoral Debt ..........................................................................................
$48,525,000
0
$48,525,000
C. LEASE RENTAL DEBT
Computation of Net Lease Rental Debt
a. Outstanding Principal under Leases .......................................................................
b. Less: Deductions (described in the Act) (1) .............................................................
c. Net Lease Rental Debt ............................................................................................
$ 1,243,386
0
$ 1,243,386
Computation of Combined Borrowing Capacity
a. Debt Limit - 225% of Borrowing Base ..................................................................
$131,565,618
b. Less: Combined Net Lease Rental Debt and Net Non-Electoral Debt.................
49,768,386
c. Current Combined Borrowing Capacity – Before Reimbursement.......................
$ 81,797,232
________________________
1.
The School District may, at any time, claim a credit against the gross principal of debt outstanding equal to the amount
estimated to be reimbursed by State sources.
2.
Includes the Bonds, but not the Prior Bonds, which are being refunded.
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TAXING POWERS OF THE SCHOOL DISTRICT
Subject to certain limitations imposed by the Taxpayer Relief Act, Act No. 1 of the Special Session of 2006 (see
below), the School District is empowered by the School Code to levy the following taxes:
1.
A basic annual tax on all real property taxable for school purposes, not to exceed 25 mills on each dollar of assessed
valuation, to be used for general school purposes.
2.
An ad valorem tax on the property taxable for school purposes, presently limited by Special Session Act 1 of 2006
(Taxpayer Relief Act) described below, to provide funds:
a.
for minimum salaries and increments of the teaching and supervisory staff;
b.
to pay rentals due any municipality authority or non-profit corporation or due the State Public School
Building Authority;
c.
to pay interest and principal on any indebtedness incurred pursuant to the Local Government Unit Debt
Act, or any prior or subsequent act governing the incurrence of indebtedness of the school district; and
d.
to pay for the amortization of a bond or note issue which provided a school building prior to the first Monday
of July, 1959.
3.
An annual per capita tax on each resident or inhabitant over 18 years of age of not more than $5.00.
The School District may also levy additional taxes subject to division with other political subdivisions authorized to
levy similar taxes on the same person, subject, business, transaction or privilege, under Act No. 511, enacted December 31,
1965, as amended (“The Local Tax Enabling Act”). These taxes, which may include, among others, an additional per capita tax,
wage and other earned income taxes, real estate transfer taxes, gross receipts taxes, and occupation taxes, shall not exceed, in the
aggregate, an amount equal to the product of the market valuation of real estate in the School District (as certified by the State
Tax Equalization Board of the Commonwealth – “STEB”) multiplied by twelve mills.
The Local Tax Enabling Act was amended by Act 222 of 2004 to authorize all taxing authorities to exempt from per
capita, occupation, emergency and municipal service or earned income taxes any person whose total income from all source is
less than $12,000 per year.
PENNSYLVANIA ACTS AFFECTING CERTAIN LOCAL TAXING POWERS OF SCHOOL DISTRICTS
Act 1 of Special Session 2006 (“Taxpayer Relief Act”)
Pennsylvania Act No. 1 of the Special Session of 2006 (“Act 1”), which became effective June 27, 2006 provides,
inter alia, that a school district may not, in fiscal year 2007-2008 or in any subsequent fiscal year, levy any tax for the support
of the public schools which was not levied in the 2006-2007 fiscal year, raise the rate of any earned income and net profits
tax if already imposed under the authority of the Local Tax Enabling Act (Act 511), or increase the rate of any tax for school
purposes by more than the Index (defined below), unless in each case either (a) such increase is approved by the voters in the
school district at a public referendum or (b) one of the exceptions provided therein: On June 30, 2011, the General Assembly
adopted legislation (Act 25 of 2011) amending Act 1 eliminating several exceptions previously permitted under Act 1 and
providing for the rescission of certain prior approved referendum exceptions for disaster/emergency costs, implementation of
a court order, school construction and non-academic school construction (effective after the last payment of principal and
interest on debt incurred to finance same). (Act 1 together with Act 25 of 2011 will hereinafter be referred to as the
“Taxpayer Relief Act”). The exceptions available under The Taxpayer Relief Act are summarized as follows:
1.
to pay interest and principal on indebtedness incurred (i) prior to September 4, 2004, in the case of a school
district which had elected to become subject to the provisions of the prior Homeowner Tax Relief Act, Act
72 of 2004, or (ii) prior to June 27, 2006, in the case of a school district which had not elected to become
subject to Act 72 of 2004 (the School District did not so elect); to pay interest and principal on any
indebtedness approved by the voters at referendum;
A-6
2.
to pay costs incurred in providing special education programs and services to students with disabilities,
under specified circumstances;
3.
To make payments into the State Public School Employees’ Retirement System when the increase in the
actual dollar amount of estimated payments between the current year and the upcoming year is greater than
the Index.
A school district intending to utilize the foregoing exceptions is entitled to apply to the Pennsylvania Department of
Education (“PDE”) for approval thereof, if and to the extent a tax increase greater than the Index is needed in any particular
fiscal year. The Taxpayer Relief Act provides that PDE shall approve a school district’s request if a review of the data
demonstrates that the school district qualifies for the exception sought and the sum of the dollar amounts of all exceptions for
which the school district qualifies is not more than what is necessary to balance the budget after giving effect to the revenue
to be raised by the allowable increase under the Index. There can be no assurance, however, that approval will be given by
PDE to utilize a referendum exception in any future fiscal year or years.
Any revenue derived from an increase in the rate of any tax allowed under the exception numbered 1 above may not
exceed the anticipated dollar amount of the expenditure, and any revenue derived from an increase in the rate of any tax
allowed pursuant to any other exception enumerated above may not exceed the rate increase required, as determined by the
court or PDE, as the case may be. If a school district’s petition or request to increase taxes by more than the Index pursuant
to one or more of the allowable exceptions is not approved, the school district may submit the proposed tax increase to a
referendum.
The Index (to be determined and reported by PDE by September of each year for application to the following fiscal
year) is the average of the percentage increase in the statewide average weekly wage, as determined by the State Department
of Labor and Industry for the preceding calendar year, and the employment cost index for elementary and secondary schools,
as reported by the federal Bureau of Labor Statistics for the preceding 12-month period beginning July 1 and ending June 30.
If and when a school district has a Market Value/Income Aid Ratio greater than 0.40 for the prior school year, however, the
Index is adjusted upward by multiplying the unadjusted Index by the sum of 0.75 and such Aid Ratio.
The Index applicable to the School District for the current and previous fiscal years is as follows:
2016-17
2015-16
2014-15
2013-14
2012-13
2.9
2.3
2.6
2.1
2.1%
In accordance with the Taxpayer Relief Act, the Board of School Directors of the School District placed a
referendum on the ballot for the May 15, 2007 primary election seeking voter approval to levy (or increase the rate of) an
earned income tax or personal income tax and use the proceeds to reduce local real estate taxes by a homestead and farmstead
exclusion. The referendum was not approved by a majority of the voters at the primary election
A board of school directors may submit, but is not required to submit, a further referendum question to the voters at
the municipal election in 2009 or any later year seeking approval to levy or increase the rate of an EIT or a PIT for the
purpose of further funding homestead and farmstead exclusions, but the proposed rate of the EIT or PIT shall not exceed the
rate which, when combined with any tax rate authorized at the 2007 primary election, is required to provide the maximum
homestead and farmstead exclusions allowable under law.
Act 1 also provides for gaming revenues received by the Commonwealth to be accumulated in the Property Tax
Relief Reserve Fund (“Fund”). When the Fund has sufficient monies according to a formula, the Secretary of the
Commonwealth announces that funds are available for distribution to school districts. The monies received by school
districts from the Fund may only be used to provide a reduction in real estate taxes to qualified homestead/farmstead
properties. To qualify for a homestead and/or farmstead tax reduction, the property must be owner-occupied and used for
residential purposes. The monies received by the local school district from the Fund are offset on a dollar for dollar basis by
reductions in the local real estate tax payments from owners of qualified homestead and farmstead properties.
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THE FOREGOING SUMMARY OF THE TAXPAYER RELIEF ACT IS NOT INTENDED TO BE AN
EXHAUSTIVE DISCUSSION OF THE PROVISIONS OF THE TAXPAYER RELIEF ACT NOR A LEGAL
INTERPRETATION OF ANY PROVISION OF THE TAXPAYER RELIEF ACT, AND A PROSPECTIVE PURCHASER
OF THE BONDS SHOULD REVIEW THE FULL TEXT OF THE TAXPAYER RELIEF ACT AS A PART OF ANY
DECISION TO PURCHASE THE BONDS.
Application of Act 1 to the Bonds (Expected to be eligible for the exception for debt incurred prior to the Act 1
effective date)
The Bonds are being issued to refund indebtedness of the School District which was “incurred” under the Local
Government Unit Debt Act (prior to June 27, 2006, the effective date of Act 1. (The School District did not elect to become
subject to the provisions of the earlier Act 72 of 2004, that was repealed by Act 1). Under Act 1, the School District is
entitled to apply to the Pennsylvania Department of Education (PDE) for an approval to utilize a referendum exception
described in paragraph 1 above, if and to the extent a tax increase greater than the Index is needed to pay principal and
interest on the Bonds in any particular fiscal year (see “The Taxpayer Relief Act (Act 1)” and “Budgeting Process in School
Districts under the Taxpayer Relief Act” herein). Act 1 provides that PDE shall approve a school district's request if a review
of the data demonstrates that the school district qualifies for the exception sought and the sum of the dollar amounts of all
exceptions for which the school district qualifies is not more than what is necessary to balance the budget after giving effect
to the revenue to be raised by the allowable increase under the Index. There can be no assurance, however, that approval will
be given by PDE to utilize a referendum exception in any future fiscal year or years.
Act 130 of 2008
Act 130 of 2008 of the Commonwealth amended the Local Tax Enabling Act so as to authorize school districts
levying an occupation tax to replace that occupation tax with an increased earned income tax or, if the school district has
implemented a personal income tax in accordance with the Taxpayer Relief Act, an increased personal income tax, in a revenue
neutral manner. To so replace an occupation tax, the board of school directors must first hold at least one public hearing on the
matter and then place a binding referendum question on the ballot at a general or municipal election for approval by the voters.
The School District currently does not levy an occupation tax.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Act 48 of 2003
Pennsylvania Act No. 2003-48 (enacted December 23, 2003) prohibits a school district from increasing real property taxes for the
school year 2005-2006 or any subsequent school year, unless the school district has adopted a budget for such school year that includes an
estimated ending unreserved undesignated fund balance which is not more than a specified percentage of the total budgeted expenditures, as set
forth below:
Total Budgeted Expenditures:
Less than or equal to $11,999,999
Between $12,000,000 and $12,999,999
Between 13,000,000 and $13,999,999
Between $14,000,000 and $14,999,999
Between $15,000,000 and $15,999,999
Between $16,000,000 and $16,999,999
Between $17,000,000 and $17,999,999
Between $18,000,000 and $18,999,999
Greater than or equal to $19,000,000
Estimated Ending Unassigned Fund Balance as a Percentage of Total
budgeted Expenditures:
12.0%
11.5%
11.0%
10.5%
10.0%
9.5%
9.0%
8.5%
8.0%
“Estimated ending unassigned fund balance” is defined in Act 2003-48 as that portion of the fund balance which is appropriable for
expenditure or not legally or otherwise segregated for a specific or tentative future use, projected for the close of the school year for which a
school district’s budget was adopted and held in the general fund accounts of the school district.
The total budgeted expenditures in the School District’s budget for the 2015-16 fiscal year are $61,625,677 and the
School District’s estimated ending unassigned fund balance as a percentage of total budgeted expenditures for the 2015-16
fiscal year is 6.9%
SET FORTH ABOVE IS A SUMMARY OF PORTIONS OF ACT 48. THIS SUMMARY IS NOT INTENDED
TO BE AN EXHAUSTIVE DISCUSSION OF THE PROVISIONS OF ACT 48 NOR A LEGAL INTERPRETATION OF
ANY PROVISIONS OF ACT 48. A PROSPECTIVE PURCHASER OF THE BONDS SHOULD REVIEW THE FULL
TEXT OF ACT 48 AS A PART OF ANY DECISION TO PURCHASE THE BONDS.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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TAX REVENUES OF THE SCHOOL DISTRICT
Ten Largest Taxpayers in School District
The ten largest real estate taxpayers in the School District and their 2015 assessed valuation of their real estate are as
follows:
2015
Assessed
Valuation
Taxpayer
Wal Mart
Sharp Properties
Keystone Villas
GBR Ephrata Ltd Liability
Ephrata Community Hospital
Ephrata GF LP
Paul B Zimmerman Inc
Willow Creek Holdings LLC
Denver & Ephrata Telephone
United Church of Christ
$9,751,600
8,746,000
7,978,700
7,293,700
7,141,500
6,374,800
5,978,600
5,536,200
5,484,000
5,207,100
Total
$69,492,200
The top ten taxpayers represent approximately 3.2% of the Total Assessed Valuation of the School District for 2015.
_________________
Source: School District Officials.
Trends in Assessed Valuation
The trend in assessed valuation of real estate in the School District for the last ten fiscal years is shown below:
Year
Assessed Valuation
$1,710,659,600
1,752,162,300
1,773,930,400
1,787,959,700
1,809,913,800
1,834,086,200
1,852,116,600
1,860,478,000
1,884,239,500
Market Value
$2,253,833,465
2,134,180,633
2,315,836,031
2,429,293,071
2,449,139,107
2,438,944,415
2,031,188,112
2,038,877,496
2,078,977,466
Common Level
Ratio Percentage
75.9%
82.1
76.6
73.6
73.9
75.2
80.6
79.1
77.5
2006
2007
2008
2009
2010
2011
2012
2013
2014
_________________
Source: Pennsylvania State Tax Equalization Board (STEB). Valuations are certified in June of following year. Market Values
are based upon Common Level Ratio for Lancaster County as reported by STEB.
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Tax Collection Record
School
Year
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2012-13
2013-14
2014-15
Assessed
Valuation
1,318,756,700
1,340,761,200
1,359,704,200
1,384,770,100
1,681,153,300
1,723,920,800
1,766,901,300
1,725,794,784
1,804,961,600
1,826,698,700
1,806,368,415
1,817,189,026
1,844,806,837
Adjusted
Millage
14.04
15.69
16.44
17.29
15.53
16.53
17.20
18.09
18.52
19.02
19.41
19.60
19.60
Collected in
Year of Levy
Amount
%
17,973,903
97.1
20,401,788
97.0
21,775,443
97.4
23,631,294
98.7
25,489,455
97.6
27,699,721
97.2
29,478,677
97.0
30,122,777
96.5
30,910,141
95.8
32,231,957
95.6
33,044,660
94.5
34,323,654
96.4
34,958,457
96.7
Levy
18,515,344
21,036,543
22,353,537
23,942,681
26,108,311
28,496,411
30,390,702
31,219,630
32,410,105
33,727,917
35,061,611
35,616,895
36,158,214
Total Collections
Amount
%
18,211,075
98.4
20,663,531
98.2
22,006,012
98.4
23,929,481
99.9
25,746,510
98.6
28,496,151
99.9
30,588,858
99.9
31,218,580
99.9
32,365,440
99.8
33,670,767
99.8
35,056,230
99.9
35,611,514
99.9
35,902,586
99.3
2016 Tax Rates
Realty Tax (Mills)
Municipality
School
Akron Borough
Clay Township
Ephrata Borough
Ephrata Township
19.60
19.60
19.60
19.60
Municipal
2.750
1.300
2.070
1.370
County
3.735
3.735
3.735
3.735
Per Capita
School
Municipal
$5
5
5
5
$0
0
0
0
Earned Income
School
0.5%
0.5
0.5
0.5
Local Services Tax
Municipality
Akron Borough
Clay Township
Ephrata Borough
Ephrata Township
School
$0.00
0.00
0.00
0.00
Municipal
$ 0.00
52.00
52.00
52.00
Source: School District Officials; PA Department of Community and Economic Development.
A-11
Real Estate Transfer
Municipal
School
Municipal
0.5%
0.5
0.5
0.5
0.5%
0.5
0.5
0.5
0.5%
0.5
0.5
0.5
DEBT SUMMARY AND RELATED INFORMATION
Condition of School District Financing
The outstanding debt of the School District as of April __, 2016, is shown below.
General Obligation
Series A of 2005
Series of 2006
Series of 2007
Series A of 2008
Series of 2012
Series of 2013 (2)
Series of 2016
Series A. of 2016
Lease Rental
LCCTC
Project
Reimbursable
Percentage
Effective (1)
Reimbursement
Original
Amount
Final
Maturity
Amount
Outstanding
4,235,000
20,655,000
9,995,000
21,445,000
9,285,000
4,730,000
9,680,000
9,045,000*
4/15/13
4/15/19
3/1/22
10/15/16
3/1/21
3/1/20
3/1/22
4/15/19
955,000
3,250,000
9,775,000
2,100,000
9,265,000
4,455,000
9,680,000
9,045,000
0.00
9.93
0.00
16.90
0.00
0.00
9.93
0.00
0.00
4.59
0.00
7.81
0.00
0.00
4.59
0.00
0
149,175
0
164,010
0
0
444,312
955,000
3,100,825
9,775,000
1,935,990
9,265,000
4,455,000
9,235,688
9,045,000
1,243,386
28.50
14.25
57,071
1,186,315
814,568
$48,953,818
2,531,490
$
49,768,386
State
Share
$
Local
Share
_________________
(1) The Project Reimbursable Percentage multiplied by the School District’s 2015-16 MVAR (.4568).
(2) The Bonds.
(3) The Bonds to be refunded by the Series A of 2016.
Overlapping Indebtedness
Residents of the School District are responsible for the following debt indicated below, within the School District, the
municipalities within the School District and the County.
School District
Share
Overlapping Debt:
Lancaster County (1) ......................................................................................
Municipalities (2) ...........................................................................................
Total Overlapping Debt ......................................................................
$14,002,623
3,101,475
$17,104,098
_________________
(1) According to the most recent data available from the Department of Community and Economic Development (“DCED”), as
of February 1, 2016 the outstanding general obligation debt of Lancaster County totals $235,734,400. The School District’s
proportionate share, 5.94%, is determined by dividing the School District’s 2014 assessed value of $1,884,239,500, by the
total 2014 assessed values of the municipalities within Lancaster County.
(2) According to the most recent data available from DCED. Does not include debt approved for exclusion by DCED.
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Financial Factors of the School District
Market Value of Real Estate (2014) (1) .....................................................................................
Assessed Value of Real Estate (2014) (2) ..................................................................................
Ratio of Assessed Valuation to Market Value ..........................................................................
Population
2010 U.S. Census ...............................................................................................................
Direct Debt
General Obligation (3) .........................................................................................................
Lease-Rental .......................................................................................................................
Total Direct Debt ........................................................................................................
Ratio of Direct Debt to:
Market Value of Real Estate ...............................................................................................
Assessed Valuation of Real Estate .....................................................................................
Population (2010) ...............................................................................................................
$
32,978
$
$
48,525,000
1,243,386
49,768,386
$
2.39%
2.64%
1,509
Overlapping Debt
County – General Obligation (4) ..........................................................................................
Municipalities
Total Overlapping Debt ..............................................................................................
Total Direct and Overlapping Debt (Total Debt) ......................................................................
Ratio of Total Debt to:
Population (2010) ...............................................................................................................
Obligations of Residents after State Reimbursement
School District General Obligations & Lease Rental .........................................................
Overlapping Debt ...............................................................................................................
Total Obligations after State Reimbursement.............................................................
2,078,977,466
1,884,239,500
77.5%
14,002,623
3,101,475
17,104,098
$
66,872,484
$
3.22%
3.55%
2,028
$
48,953,818
17,104,098
66,057,916
Ratio of Total Obligations after State Reimbursement to:
Population (2010) ...............................................................................................................
$
3.18%
3.51%
2,003
Ratio to Population (2010) of:
$
$
63,041
57,136
_________________
(1) Market Value based upon the Common Level Ratios for Lancaster County.
(2) Assessed Value as stated by STEB.
(3) Includes the Bonds, but not the Prior Bonds, which are being refunded.
(4) School District proportional share for Lancaster County.
A-13
$
APPENDIX B
AUDITED FINANCIAL STATEMENT OF THE SCHOOL DISTRICT
Fiscal Year Ending June 30, 2015
FINANCIAL AND COMPLIANCE REPORT
Year Ended June 30, 2015
TABLE OF CONTENTS
Pages
INDEPENDENT AUDITOR'S REPORT............................................................................................
1-2
MANAGEMENT’S DISCUSSION AND ANALYSIS ..........................................................................
3 - 15
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position......................................................................................................
Statement of Activities...........................................................................................................
Fund Financial Statements
Balance Sheet - Governmental Funds ....................................................................................
Reconciliation of the Governmental Funds Balance Sheet to the
Government-Wide Statement of Net Position....................................................................
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds ...........................................................................................................
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures, and Changes in Fund Balances to the Government-Wide
Statement of Activities ........................................................................................................
Statement of Net Position - Proprietary Fund .......................................................................
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Fund..................................................................................................................
Statement of Cash Flows - Proprietary Fund .........................................................................
Statement of Net Position - Fiduciary Funds .........................................................................
Statement of Changes in Net Position - Fiduciary Fund.........................................................
Notes to Basic Financial Statements ......................................................................................
16
17
18
19
20
21
22
23
24 - 25
26
27
28 - 63
REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule for the General Fund ...........................................................
Schedule of District’s Proportionate Share of the Net Pension
Liability - Pension Plan.........................................................................................................
Schedule of District’s Contributions - Pension Plan .................................................................
Schedule of Funding Progress - Other Postemployment Benefits Plan....................................
Note to Required Supplementary Information.........................................................................
64
65
66
67
68
SUPPLEMENTARY INFORMATION
Schedule of Expenditures of Federal Awards ...........................................................................
Notes to Schedule of Expenditures of Federal Awards ............................................................
69
70
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.................................................
71 - 72
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR
PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE
REQUIRED BY OMB CIRCULAR A-133.......................................................................................
73 - 74
SCHEDULE OF FINDINGS AND QUESTIONED COSTS...................................................................
75 - 76
STATUS OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS ..................................................
77
Herbein + Company, Inc. 2763 Century Boulevard Reading, PA 19610 P: 610.378.1175 F: 610.378.0999 www.herbein.com INDEPENDENT AUDITOR’S REPORT
To the Board of School Directors
Ephrata Area School District
Ephrata, Pennsylvania
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the Ephrata Area School District, as of and for the year ended
June 30, 2015, and the related notes to the financial statements, which collectively comprise the District’s basic financial
statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial
position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund
information of the Ephrata Area School District, as of June 30, 2015, and the respective changes in financial position and,
where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted
in the United States of America.
Succeed With Confidence 1
Change in Accounting Principle
As described in Note 8 to the financial statements, effective July 1, 2014, the Ephrata Area School District adopted new
accounting guidance, Governmental Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for
Pensions and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. Our
opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and
analysis, budgetary comparison schedule for the general fund, and pension and other postemployment benefit information
on pages 65 through 67, be presented to supplement the basic financial statements. Such information, although not a part
of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. We have applied certain limited procedures to the required supplementary information in accordance
with auditing standards generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the
Ephrata Area School District’s basic financial statements. The schedule of expenditures of federal awards is presented for
purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
The schedule of expenditures of federal awards is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting and other records
used to prepare the basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the
schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial
statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November 16, 2015, on our
consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over
financial reporting and compliance.
Reading, Pennsylvania
November 16, 2015
MANAGEMENT’S DISCUSSION and ANALYSIS
The discussion and analysis of Ephrata Area School District’s financial performance provides an overall
review of the School District’s financial activities for the year ended June 30, 2015. The intent of this
discussion and analysis is to look at the School District’s financial performance as a whole. It should be read
in conjunction with the notes to the basic financial statements and the financial statements to enhance the
understanding of the School District’s financial performance.
Financial Highlights
Key financial highlights for 2015 are as follows:

Beginning July 1, 2014, the District has adopted Governmental Accounting Standards Board
Statements No. 68, Accounting and Financial Reporting for Pensions, and No. 71, Pension Transition
for Contributions Made Subsequent to the Measurement Date, to be in conformity with generally
accepted accounting principles. The adoption of these standards resulted in the restatement of the
beginning net position causing a decrease of $72.0 million. Therefore, taking this into consideration,
the 2014-15 change in net position is an increase of $1.9 million. This is in large part due to lower
debt from payoff of bond and refinancing of bank note. Net position of business type activities had
no significant change in 2014-2015.

Revenues totaled $62.7 million. General revenues accounted for $51.4 million in revenue or 82.0% of
total revenues. Program specific revenues in the form of charges for services and sales, grants, and
contributions accounted for $11.3 million or 18.0% of total revenues. The District’s operating grants
have increased by $1.1 million for 2014-15.

Total net position of governmental activities increased by $2.0 million. Assets decreased $.9 million.
Long term debt was reduced by $4.4 million, accrued salaries/benefits were increased by $0.3 million
and accounts payable was increased by $0.3 million.

The School District had $58.7 million in expenses related to total governmental activities; $9.2
million of these expenses were offset by program specific charges for services, grants, or
contributions.

Among major funds, the general fund had $60.3 million in revenues, $57.8 million in expenditures
and $3.0 million transferred to capital projects fund (for facilities upgrade, facilities repair or
technology purchases). The general fund’s fund balance decreased from the prior year’s amount by
$.3 million. Of the $17.4 million general fund balance; $0.1 million is non-spendable, $12.0 million is
committed, $0.6 is assigned and $4.8 million is unassigned. Taking this into consideration, the
District has 8.0% of expenditures available in unassigned fund balance. Legislation enacted by the
Commonwealth of Pennsylvania requires districts to target a fund balance of no more than 8% of
budgeted expenditures in a year in which an increase in the millage rate is approved. The District has
planned for a deficit budget in 2015-2016 to reduce this level.

The millage rate for the July 2015 tax levy was 20.05 mills (this was a 2.3% increase from 2014). In
July 2014, there was no tax increase. The tax levy was 19.60 mills.
3
(Continued)
Using this Annual Report
This annual report consists of a series of financial statements and notes to those statements. These statements
are organized so the reader can understand Ephrata Area School District as a financial whole.
The statement of net position and statement of activities provide information about the activities of the entire
School District, presenting both an aggregate view of the School District’s finances and a long-term view of
those finances. Fund financial statements provide the next level of detail. For governmental funds, these
statements tell how the services were financed in the short-term as well as what remains for future spending.
The fund financial statements also look at the School District’s most significant funds with all other nonmajor funds presented in total in one column. In the case of Ephrata Area School District, the general fund is
the most significant fund.
Reporting the School District as a Whole
The government-wide financial statements provide detailed information about the School District as a whole.
One of the most important questions asked about the School District’s finances is, “Is the School District as a
whole better off or worse off as a result of the year’s activities?” The statement of net position and the
statement of activities report information about the School District as a whole and about the activities in a
way that helps answer this question. These statements include all assets and liabilities using the accrual basis
of accounting. All of the current year’s revenues and expenses are taken into account regardless of when cash
is received or paid.
These two statements report the School District’s net position and changes in net position. The change in net
position is important because it tells the reader that, for the School District as a whole, the financial position
of the School District has improved or diminished. The causes of this change may be the result of many
factors.
In the statement of net position and the statement of activities, the School District’s financial information is
divided into two distinct kinds of activities:

Governmental Activities - Most of the School District’s programs and services are reported here
including instruction, support services, operation and maintenance of District, pupil transportation,
and extracurricular activities.

Business-Type Activities - These services are provided on a charge for goods or services basis to
recover all of the expenses of the goods or services provided. The School District’s food services are
reported as business activities.
Reporting the School District’s Most Significant Funds
The fund financial statements provide detailed information about the most significant funds - not the School
District as a whole. The School District’s three types of funds – governmental, proprietary and fiduciary - use
different accounting approaches.
4
(Continued)
Reporting the School District’s Most Significant Funds (Continued)
Governmental Funds - Most of the School District’s activities are reported in governmental funds, which
focus on how money flows into and out of those funds and the balances left at year-end are available for
spending in future periods. These funds are reported using an accounting method called modified accrual
accounting, which measures cash and all other financial assets that can readily be converted to cash. The
governmental fund statements provide a detailed short-term view of the School District’s general
government operations and the basic services it provides. Governmental fund information helps you
determine whether there are more or less financial resources that can be spent in the near future to finance
educational programs. The relationship (or differences) between governmental activities (reported in the
statement of net position and the statement of activities) and governmental funds is reconciled in the
financial statements. Governmental funds consist of the general fund, capital projects fund and debt service
fund.
Proprietary Funds - Proprietary funds use the same basis of accounting as business-type activities; therefore,
these statements will essentially match. Proprietary funds consist of the food service fund.
Fiduciary Funds - The District is the trustee, or fiduciary, for a small scholarship fund and student activities
fund. All of the District's fiduciary activities are reported in separate Statements of Fiduciary Net Position.
These activities are excluded from the District's other financial statement because the District cannot use
these assets to finance its operations.
The School District as a Whole
Recall that the statement of net position provides the perspective of the School District as a whole.
Table 1 provides a summary of the School District’s net position for 2015 compared to 2014 (restated for
comparison purposes due to the implementation of GASB Statements No. 68 and No. 71):
Table 1
Net Position
(In Millions)
Assets
Current and Other Assets
Capital Assets
Total Assets
Deferred Outflows of Resources
Liabilities
Current Liabilities
Long-Term Liabilities
Total Liabilities
Governmental
Business-Type
XActivitiesXl
XActivitiesXl
2015
2014
2015
2014
(Restated)
(Restated)
34.5
34.9
.5
.4
75.4
75.9
.4
.4
109.9
110.8
.9
.8
5.8
(11.0)
(112.5)
(123.5)
4.7
(11.1)
(117.5)
(128.6)
.1
.1
.0
(2.1)
(2.1)
.0
(2.0)
(2.0)
Total
2015
2014
(Restated)
35.0
35.3
75.8
76.3
110.8
111.6
5.9
(11.0)
(114.6)
(125.6)
4.8
(11.1)
(119.5)
(130.6)
5
(Continued)
The School District as a Whole (Continued)
Deferred Inflows of Resources
3.4
Net Position
Net Investment in Capital Assets
Restricted
Unrestricted
Total Net Position
34.4
11.0
(56.5)
(11.1)
.0
29.5
10.6
(53.2)
(13.1)
.1
.0
3.5
.4
.0
(1.5)
(1.1)
.4
.0
(1.5)
(1.1)
34.8
11.0
(58.0)
(12.2)
.0
29.9
10.6
(54.7)
(14.2)
Total position increased by $2.0 million. Cash and investments decreased by $.6 million while taxes
receivable and intergovernmental combined increased $.3 million. Capital assets decreased by $4.0 million.
The net position of the School District business-type activities had no significant changes in 2015. Food
service pricing has been consistent over the last few years with other school districts in the county. Gradual
increases in the prices have been made over the last four years in order to comply with federal regulations.
Table 2 shows the changes in net position for fiscal year 2015 compared to fiscal year 2014:
Table 2
Changes in Net Position
(In Millions)
Revenues
Program Revenues:
Charges for Services
Operating Grants
Capital Grants
General Revenue:
Property Taxes and Other Taxes
Levied for General Purposes
Grants and Entitlements
Other
Total Revenues
Expenses
Instruction
Support Services:
Instructional Student Support
Governmental
XActivitiesXl
2015
2014
Business-Type
XActivitiesXl
2015
2014
Total
2015
2014
.1
8.8
.3
.1
7.8
.3
0.8
1.2
.0
0.9
1.1
.0
0.9
10.0
.3
1.0
8.9
.3
41.6
9.6
.2
60.6
40.7
9.9
.3
59.1
.0
.0
.0
2.0
.0
.0
.0
2.0
41.6
9.6
.2
62.6
40.7
9.9
.3
61.1
33.5
30.8
.0
.0
33.5
30.8
4.7
4.2
.0
.0
4.7
4.2
6
(Continued)
Table 2
(Continued)
(In Millions)
Administration and Financial
Support Services
Central Support Services
Operation and Maintenance of
Plant Services
Pupil Transportation
Student Activities
Community Services and Improvement
Interest on Long-Term Debt
Unallocated Depreciation Expense
Food Service
Total Expenses
Prior Period Adjustment
Increase (Decrease) in Net Position
Governmental
XActivitiesXl
2015
2014
Business-Type
XActivitiesXl
2015
2014
Total
2015
2014
3.9
1.5
3.5
1.3
.0
.0
.0
.0
3.9
1.5
3.5
1.3
5.3
2.1
1.3
.0
1.5
4.9
.0
58.7
4.9
2.0
1.2
.0
1.8
4.8
.0
54.5
.0
.0
.0
.0
.0
.0
2.0
2.0
.0
.0
.0
.0
.0
.0
2.0
2.0
5.3
2.1
1.3
.0
1.5
4.9
2.0
60.7
4.9
2.0
1.2
.0
1.8
4.8
2.0
56.5
0.0
0.0
0.0
0.0
0.0
0.0
1.9
4.6
0.0
0.0
1.9
4.6
Expenses for governmental activities are partially offset by program revenues and general grants and
entitlements, but are primarily funded by tax revenues.
 Program revenues that offset expenses this year include state subsidies for special education,
transportation, and employee benefits. Also included are federal and state grants for specific
programs.
 Central Support Services is largely composed of our technology purchases and staff. The increase in
expenses is due to maintaining current technology, deployment of new technology and staff to
incorporate technology within the curriculum and classroom instruction.
The Ephrata Area School District Board of Directors has shown prudent fiscal management, the District has
been able to slow the rate of growth of its real estate tax millage rate. In the last ten years, the District has
dropped their millage rate from being the third highest to the sixth highest (based on 2015-16 tax rates) in
the county. Parallel to the financial performance that has been positive, performance of the students in
standardized tests and other indicators also have met state and federal expectations. The Ephrata Area High
School has the highest score on the School Performance Profile for the entire county for 2014-15.
7
(Continued)
The statement of activities shows the cost of program services and the charges for services and grants
offsetting those services. Table 3 shows, for governmental activities, the total cost of services and the net cost
of services. It identifies the cost of these services supported by tax revenue and unrestricted state
entitlements.
Table 3
Governmental Activities
(In Millions)
Total Cost of
Services
2015
2014
Instruction
Support Services:
Instructional Student Support
Administration and Financial Support Services
Operation and Maintenance of Plant Services
Pupil Transportation
Student Activities
Community Services
Total Expenses
Net Cost of
Services
2015
2014
33.5
30.8
26.9
24.9
4.7
3.9
1.5
5.3
2.1
1.3
.0
1.5
4.9
58.7
4.2
3.5
1.3
4.9
2.0
1.2
.0
1.8
4.8
54.5
3.9
3.6
1.4
5.0
1.3
1.2
.0
1.2
4.9
49.4
3.6
3.2
1.2
4.7
1.2
1.1
.0
1.5
4.8
46.2
The dependence upon tax revenues for governmental activities is apparent. Over 84% of District expenses
are supported through taxes and other general revenues. The community, as a whole, is by far the primary
source of financial support for Ephrata Area School District students.
Business-Type Activities - Business-type activities include food service operations. This program had
revenues of $2.0 million and expenses of $2.0 million for fiscal year 2015. Business activities receive no
support from tax revenues.
The School District’s Funds
Information shown on the District’s fund statement is accounted for using the modified accrual basis of
accounting. All governmental funds had total revenues of $60.7 million and expenditures of $60.9 million.
The fund balance for all governmental funds has increased by $0.1 million from 2014.
General Fund Budgeting Highlights
The School District’s budget is prepared according to Pennsylvania law and is based on accounting for certain
transactions on a basis of cash receipts, disbursements, and encumbrances. The most significant budgeted
fund is the general fund.
8
(Continued)
General Fund Budgeting Highlights (Continued)
The School District utilizes site-based budgeting and the budgeting systems are designed to tightly control
total site budgets but provide flexibility for site management.
For the general fund, budget basis revenue was $58.9 million with receipt of $60.3 million. The areas of
major variance are in the receipt of real estate taxes (current, interim and delinquent) and earned income tax.
The District experienced some changes in the top 25 taxpayers this year and some new retail centers and
retirement properties were built. This generated new tax revenue for the District. The District also
experienced an increase in earned income taxes higher than what the Lancaster County Tax Collection
Bureau forecasted. The District also attributes this to a rebound in the local economy.
The original expenditures appropriations of $59.8 million decreased to $57.8 million. The most significant
savings in expected expenditures is due to lower than budgeted costs in salaries and benefits and utilities. The
District continues to experience healthcare costs well below the norm in the industry. Also, the controls of
utilities in the buildings, purchasing fuels from the NYMEX exchange directly continue to enable the District
to experience significant savings. These savings are also due to the commitment of the Board and
Administration to reduce expenses while still providing an exceptional educational program to all students
and at the same time plan for future stability of the District in anticipation of the significant predicted rate
increases for PSER’s (Public School Employees’ Retirement System).
The School District’s ending unassigned general fund balance remained at $4.8 million since the savings
experienced was transferred to capital projects fund.
Capital Assets and Debt Administration
Capital Assets - At the end of fiscal 2015, the School District had $75.8 million invested in land, buildings,
equipment, and vehicles. Table 4 shows the fiscal 2015 balance compared to 2014:
Table 4
Capital Assets at June 30
(Net of Depreciation, in Millions)
Governmental
XActivitiesXl
2015
2014
Land
Construction in Progress
Buildings and Improvements
Furniture and Equipment
Vehicles
Totals
3.0
.5
65.3
6.5
.1
75.4
3.0
.3
65.7
6.8
.1
75.9
Business-Type
XActivitiesXl
2015
2014
.0
.0
.0
.4
.0
.4
.0
.0
.0
.4
.0
.4
Total
2015
2014
3.0
.5
65.3
6.9
.1
75.8
3.0
.3
65.7
7.2
.1
76.3
9
(Continued)
Capital Assets and Debt Administration (Continued)
Overall, the total for all activities has a net decrease of $0.5 million. This is due to the depreciation of our
assets of $4.9 million while new improvements and equipment increase for $4.2 million. A new turf field at
War Memorial Field, sound improvements to our MS auditorium and gymnasium along with technology
purchases were the majority of these increases. The Board and Administration is committed to offering the
latest technology that can contribute to the education experience of our students.
Debt Administration - At June 30, 2015, the School District had $40.8 million in bonds and notes
outstanding. Table 5 summarizes bonds and notes outstanding:
Table 5
Outstanding Debt at Year-End
(In Millions)
2015
2014
General Obligation Bonds:
Refunding Bonds, Series 2006(2001)
Refunding Bonds, Series 2008A (1998 A&C)
Refunding Bonds, Series 2013(2005&2008)
Refunding Note, Series 2014B (2005&2007)
13.1
0.0
4.1
9.3
4.5
9.8
40.8
15.5
9.6
6.1
9.3
4.7
0.0
45.2
The District has refunded the Bonds, Series 2007(2005) with a bank Note, Series 2014B during 2014-15. This
refunding will save the District approximately $908,000 in interest expense over the next 7 years.
Operations Information
Table 6
Property Values
Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Assessed Valuation
1,658,097,700
1,710,659,600
1,766,901,300
1,725,794,784
1,804,961,600
1,826,698,700
1,838,745,600
1,852,116,600
1,860,478,000
1,915,991,000
Current Market Value
1,323,780,500
1,566,886,100
1,613,516,700
1,789,490,952
1,778,872,852
1,927,229,029
1,948,002,415
2,031,188,112
2,038,877,496
N/A
% Assessed to
Market
125.25%
109.18%
109.51%
96.44%
101.47%
94.78%
94.39%
91.18%
91.25%
N/A
% Increase
3.17%
3.29%
-2.33%
4.59%
1.20%
0.66%
0.73%
0.45%
2.98%
10
(Continued)
Operations Information (Continued)
Source: All market values were obtained from STEB. 2014 has not yet been released as of 11/9/15.
Some assessed values were obtained there as well but not for all years. For the years where STEB
did not supply that number, the numbers were obtained from Lancaster County Tax Rolls.
Table 7
Twenty Five Largest Taxpayers in School District
Taxpayer
July 2014
Assessed
Valuation
Wal Mart Real Estate Business
9,751,600
Sharp Properties LTD Partnership
8,746,000
GBR Ephrata Limited Liability
7,293,700
7,141,500
Ephrata GF LP
6,374,800
Paul B. Zimmerman Inc.
5,978,600
5,536,200
Denver & Ephrata Tel & Tel Co.
5,484,000
United Church Christ Homes Inc.
5,207,100
Cover, Scott R
4,415,400
Mountain Springs Hotel LLC
3,959,700
UMH PA Lancaster County LLC
3,847,800
John F Martin & Sons
3,658,000
Stone Creek Holdings
3,497,500
Coal Capital Ephrata LLC
3,251,500
2101 Bedford Realty LLC
2,907,000
2,768,100
CK HP Cloister Gardens LP
2,754,800
US Bank NA
2,465,200
Cloister Associates LTD PRTN
2,388,300
DWF Real Estate LLC
2,330,000
Kurtz, Norman
2,271,100
Zimmerman, Paul B Inc.
2,257,200
HF Real Estate Partnership
2,226,800
Murrell Court Partners LP
TOTAL
2,185,700
$108,697,600
Source: Tax Collection System
11
(Continued)
Table 8
Tax Collection Record
School
Year
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
Assessed
Valuation
1,663,156,300
1,766,901,300
1,725,794,784
1,804,961,600
1,826,698,700
1,838,745,600
1,806,368,415
1,817,189,026
1,844,806,837
Mill
16.53
17.20
18.09
18.52
19.02
19.02
19.41
19.6
19.6
Levy
28,496,411
30,390,702
31,219,630
32,410,105
33,727,917
34,972,941
35,061,611
35,616,895
36,158,214
Current Collections
27,699,721
29,444,137
30,122,777
30,910,141
32,231,957
33,168,836
33,712,273
34,323,654
34,958,457
Percent
of Levy
97.20%
96.89%
96.49%
95.37%
95.56%
94.84%
96.15%
96.37%
96.68%
Source: Annual Financial Reports (PDE-2057) for Collections #'s and General Fund Budget (PDE-2028)
for Assessed Values, Millage and Levy #'s
Table 9
School Facilities and Financial Summary
School Year 2014-15
School Facilities
Grades
ELEMENTARY
Akron
Clay
Fulton
Highland
Intermediate School
K-4
K-4
K-4
K-4
5-6
Total ELEMENTARY
SECONDARY
Middle School
Senior High
2014-15
Enrollment
346
485
383
456
642
2312
7-8
9-12
617
1242
Total SECONDARY
1859
Total ALL SCHOOLS
4171
Source: EASD Child Accounting Office
12
(Continued)
Table 10
Pupil Enrollment History and Projections
School Year
Elementary
Secondary
Total
00-01
01-02
02-03
03-04
04-05
05-06
06-07
07-08
08-09
09-10
10-11
11-12
12-13
13-14
14-15
2236
1883
1752
1760
1795
1668
1724
1744
2095
2147
2172
2215
2297
2317
2312
2075
2405
2355
2267
2308
2290
2263
2256
1935
1933
1916
1905
1887
1888
1859
4311
4288
4107
4027
4103
3958
3987
4000
4030
4080
4088
4120
4184
4205
4171
Source: EASD Child Accounting Office
For the Future
Ephrata Area School District is financially strong. The School District continues to maintain a positive fund
balance in the general fund. This balance serves the School District by generating interest income and
providing needed cash later in the fiscal year when expenses exceed revenues. This fund balance has allowed
the District to maintain all current programs while navigating through the high increased rates from the
PSERS benefit program (please see explanation below). This fund balance has also allowed the District to
navigate through a lack of funding from the state during beginning of fiscal year 2015-16. Without this fund
balance, the District would have either cut programs during this time or secured another form of financing
from a financial institution.
The Ephrata Area School District has committed itself to financial excellence for many years. While the
School District’s system of budgeting and internal controls is well regarded, all its financial abilities will be
needed to meet future challenges.
13
(Continued)
For the Future (Continued)
Teacher Contract
The collective bargaining agreement between the School District and the Ephrata Area Education Association
(EAEA), the teachers’ local bargaining unit, expires on June 30, 2015. The average salary increase during
these years is 3.82%.
A new contract, effective July 1, 2015 and expiring June 30, 2018, was approved by both School Board and
Ephrata Area Education Association (EAEA) in April 2015. This new contract has salary increases of 2.9%,
2.8% and 2.7% and also makes significant changes to the healthcare plans. Currently, the School District and
the EAEA continue to enjoy positive labor relations as in the past.
Facilities
The District also upgraded the War Memorial Field to a synthetic turf facility during the summer of 2014.
The War Memorial Field has a football/baseball combination field. The District received an anonymous gift
of $1,000,000 for the upgrade to synthetic turf. Therefore, the net cost to the District was approximately
$500,000. During the summer of 2015, the District rebuilt new bathrooms at War Memorial Field. The
facilities that were removed had been built in the 1950’s. Also as part of this project, the asphalt was replaced
around the field and structures. The cost of the project was approximately $750,000. Also during the
summer of 2015, the War Memorial Association carried out a project as a donation for new backstop and
dugouts for the baseball field.
The District also updated the theatrical lighting to the auditoriums at the High School and Middle School.
The cost of the project was approximately $650,000. The cost included removing the old weighted rigging
system from the Middle School for safety concerns.
The District converted Highland Elementary boilers to gas/oil. This conversion allows the District to burn
natural gas for a significant savings as compared to oil.
Employee Benefits’ Costs
All school districts in the Commonwealth are facing the common problem of increasing employee benefit
costs. The two primary areas of concern are retirement (Public School Employees’ Retirement System PSERS) and self-insured medical and dental costs due to the federal health care reform bill. The financial
performance of the PSERS will determine, in large part, future increases in the employer contribution rate.
The rate for 2012-2013 was 12.36%, 2013-14 was 16.93%, 2014-15 was 21.40% and 2015-16 is 25.84% and is
forecasted to be 29.69% for 2016-17. The rate is expected to get to 32% before leveling off. For five
consecutive years, the District has experienced a $1.0 million increase in PSER’s contributions and the
District expects $1.0 million a year increases to continue for the next two years. Because of this the District’s
plan is to use funds that have been committed for this reason to gently absorb this cost into the District’s
annual budget. The cost of the retirement expense is shared between the School District and the
Commonwealth.
14
(Continued)
For the Future (Continued)
Medical costs continue to be a challenge for the School District as the projections remain for expenses to
increase along the national trends of 10-15% per year. The District’s trend has been lower than the national
average but due to national health care reform, the future expenses to the school district may be difficult to
forecast. The District has made significant changes to the health care plan that takes effect July 1, 2015 in
order to reduce future expenses.
Act 1
The passage of Act 1 has impacted the Ephrata Area School District like all other districts in the
Commonwealth. A major provision of the Act is the imposition of an annual index, calculated by the
Pennsylvania Department of Education and released in September for effect in the year starting July 1. This
index is the maximum percent increase of the millage rate that a School Board can approve without a voter
referendum.
In the first eight years under Act 1, the School District has stayed well within the index limit for its millage
rate increase. The adjusted index for the District for 2016-17 is 2.9% and the District expects to stay within
this index also.
Tax Assessment
Recently, the District has some new significant changes to some large tax payers. The first was a Giant
Supermarket shopping center being built within Ephrata Township. Second was the Keystone Villa
retirement community revitalizing part of the old Donecker’s property that had been vacated for many years.
The third being Paul B Zimmerman hardware store added a large addition to its property. These changes
caused an increase in revenue for the top 25 taxpayers by $160,203 for July 2014.
Charter Schools
The School District had been experiencing annual increases to this cost at an average of 26.4% from 2005-06
through 2010-11. Past years, the state has subsidized approximately 30% of the District’s cost. Beginning
2011-12, this subsidy no longer exists. In an effort to give students the virtual option, the District has
developed the Ephrata Virtual Academy (EVA) as an option to students and families. With this option,
students are able to have a totally virtual experience or mix virtual learning with classroom experiences. In
school year 2012-13 with this option in place, the District has started to see a decrease in this expense as more
students are opting for a blending learning experience that EVA allows for. The last three years the District
has seen a consistent annual cost of $650,000.
Contacting the School District’s Financial Management
This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general
overview of the School District’s finances and to show the School District’s accountability for the money it
received. If you have questions about this report or need additional financial information, please contact
Kristee Reichard, Business Manager at Ephrata Area School District, 803 Oak Boulevard, Ephrata, PA 17522
or via electronic mail at k_reichard@easdpa.org.
15
STATEMENT OF NET POSITION
June 30, 2015
BusinessType
Activities
Governmental
Activities
ASSETS
Cash and Investments
Taxes Receivable, Net
Internal Balances
Intergovernmental Receivables
Other Receivables
Prepaid Expenses
Inventories
Capital Assets Not Being Depreciated:
Land
Construction in Progress
Capital Assets, Net of Accumulated Depreciation:
Buildings and Building Improvements
Land Improvements
Furniture, Fixtures, and Equipment
Vehicles
$
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESOURCES
Deferred Charge on Bond Refunding
Pension Contributions made Subsequent to the
Measurement Date
TOTAL DEFERRED OUTFLOWS OF RESOURCES
LIABILITIES
Accounts Payable
Accrued Salaries and Benefits
Payroll Deductions and Withholdings
Accrued Interest
Unearned Revenues
Other Current Liabilities
Noncurrent Liabilities
Long-Term Liabilities Due Within One Year
Bonds and Note Payable, Net
Long-Term Portion of Compensated Absences
Net Pension Liability
Other Postemployment Benefits Obligation
TOTAL LIABILITIES
DEFERRED INFLOWS OF RESOURCES
Deferred Pension Expense
NET POSITION
Restricted for Capital Projects
Unrestricted (Deficit)
$
$
426,497
22,693
280
70,274
$
32,406,627
826,683
1,644,446
31,154
71,943
70,274
3,040,997
492,695
-
3,040,997
492,695
61,663,079
3,672,129
6,510,354
36,704
378,612
-
61,663,079
3,672,129
6,888,966
36,704
109,947,341
898,356
110,845,697
741,540
-
741,540
5,030,280
132,641
5,162,921
5,771,820
132,641
5,904,461
897,426
2,712,284
1,715,395
367,198
3,450
12,699
1,166
780
33,425
-
898,592
2,713,064
1,715,395
367,198
36,875
12,699
5,241,648
36,849,884
1,346,026
73,626,008
704,169
3,000
2,237
2,012,992
-
5,244,648
36,849,884
1,348,263
75,639,000
704,169
123,476,187
2,053,600
125,529,787
3,377,806
92,262
3,470,068
34,382,614
10,973,111
(56,490,557)
TOTAL NET POSITION (DEFICIT)
See accompanying notes.
31,980,130
826,683
(22,693)
1,644,446
30,874
71,943
-
Total
(11,134,832)
378,612
(1,493,477)
$
(1,114,865)
34,761,226
10,973,111
(57,984,034)
$
(12,249,697)
16
STATEMENT OF ACTIVITIES
For the Year Ended June 30, 2015
Functions/Programs
Governmental Activities:
Instruction:
Regular
Special
Vocational
Other Instructional Programs
Nonpublic School Programs
Pre-Kindergarten Programs
Total Instructional Services
Expenses
$
Support Services:
Pupil Personnel
Instructional Staff
Administration
Pupil Health
Business Services
Operation of Plant and Maintenance Services
Student Transportation Services
Other Support Services
Total Support Services
Noninstructional Services:
Student Activities
Community Services
Total Noninstructional Services
Total Governmental Activities
Business-Type Activities:
Food Services
Total Primary Government
Charges for
Services
$
24,998,178
7,261,406
939,531
314,018
7,692
20,544
33,541,369
$
27,854
27,854
Program Revenue
Operating
Grants and
Contributions
$
2,980,554
3,541,557
19,801
29,903
7,692
2,279
6,581,786
Capital
Grants and
Contributions
$
-
Net (Expense) Revenue and
Governmental
Activities
$
$
-
Total
$
(22,017,624)
(3,719,849)
(919,730)
(256,261)
(18,265)
(26,931,729)
2,409,810
1,588,173
3,125,519
557,901
767,806
5,292,208
2,103,467
1,486,056
30,645
17,361,585
30,600
30,600
460,174
115,232
232,953
131,676
55,236
254,190
786,300
94,089
2,129,850
-
(1,949,636)
(1,472,941)
(2,892,566)
(426,225)
(712,570)
(5,007,418)
(1,317,167)
(1,391,967)
(30,645)
(15,201,135)
-
(1,949,636)
(1,472,941)
(2,892,566)
(426,225)
(712,570)
(5,007,418)
(1,317,167)
(1,391,967)
(30,645)
(15,201,135)
1,319,999
44,683
1,535,604
4,857,412
7,757,698
51,629
51,629
98,853
3,046
101,899
313,293
313,293
(1,169,517)
(41,637)
(1,222,311)
(4,857,412)
(7,290,877)
-
(1,169,517)
(41,637)
(1,222,311)
(4,857,412)
(7,290,877)
58,660,652
110,083
8,813,535
313,293
(49,423,741)
-
(49,423,741)
2,069,094
816,128
1,208,253
-
60,729,746
$
926,211
$
10,021,788
$
-
313,293
(49,423,741)
General Revenues and Transfers:
General Revenues
Taxes:
Property Taxes
Public Utility Realty, Earned Income and Mercantile Taxes
Grants, Subsidies, and Contributions Not Restricted for
Specific Programs
Investment Earnings
Miscellaneous Income
Transfers
Total General Revenues and Transfers
Change in Net Position
Net Position (Deficit) - Beginning - Restated
(22,017,624)
(3,719,849)
(919,730)
(256,261)
(18,265)
(26,931,729)
Business-Type
Activities
Net Position (Deficit) - Ending
$
(44,713)
(44,713)
(44,713)
(49,468,454)
36,971,485
4,578,760
-
36,971,485
4,578,760
9,639,631
73,938
150,738
(16,090)
49
16,090
9,639,631
73,987
150,738
-
51,398,462
16,139
51,414,601
1,974,721
(28,574)
1,946,147
(13,109,553)
(1,086,291)
(14,195,844)
(11,134,832)
$ (1,114,865)
$
(12,249,697)
17
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2015
General
ASSETS
Taxes Receivable
Interfund Receivables
Intergovernmental Receivables
Other Receivables
Prepaid Expenditures
TOTAL ASSETS
Nonmajor
Fund
Debt Service
Capital
Projects
Total
Governmental
Funds
$ 23,778,484
834,625
1,644,446
30,874
71,943
$
8,201,646
3,000,000
-
$
-
$ 31,980,130
834,625
3,000,000
1,644,446
30,874
71,943
$ 26,360,372
$ 11,201,646
$
-
$ 37,562,018
$
$
$
-
$
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES
LIABILITIES
Interfund Payables
Accounts Payable
Payroll Deductions and Withholdings
Unearned Revenues
Current Portion of Compensated Absences
TOTAL LIABILITIES
3,022,693
668,891
2,712,284
1,715,395
3,450
316,648
12,699
228,535
-
3,022,693
897,426
2,712,284
1,715,395
3,450
316,648
12,699
8,452,060
228,535
-
8,680,595
538,934
-
-
538,934
71,943
11,950,000
588,745
4,758,690
10,973,111
-
-
71,943
10,973,111
11,950,000
588,745
4,758,690
TOTAL FUND BALANCES
17,369,378
10,973,111
-
28,342,489
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
$ 26,360,372
$ 11,201,646
-
$ 37,562,018
Unavailable Revenue - Taxes
FUND BALANCES
Nonspendable Fund Balance
Restricted Fund Balance
Committed Fund Balance
Assigned Fund Balance
Unassigned Fund Balance
$
18
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
GOVERNMENT-WIDE STATEMENT OF NET POSITION
June 30, 2015
Amounts reported for governmental activities in the statement of net position are different because:
TOTAL FUND BALANCES - GOVERNMENTAL FUNDS
$ 28,342,489
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported as assets in governmental
funds. The cost of the assets is $125,148,239 and the accumulated
depreciation is $49,732,281.
75,415,958
Taxes receivable will be collected this year, but are not available soon
enough to pay for the current period's expenditures and, therefore, are
reported as unavailable revenue in the funds.
530,992
The net pension and other postemployment benefit obligations are not
reflected on the fund financial statements.
(72,677,703)
Long-term liabilities, including bonds payable, are not due and payable
in the current period and, therefore, are not reported as liabilities in
the funds. Long-term liabilities at year-end consist of:
Bonds and Note Payable
Unamortized Bond Premium
Deferred Charge on Bond Refunding
Accrued Interest on Bonds
TOTAL NET POSITION (DEFICIT) - GOVERNMENTAL ACTIVITIES
$ (40,765,000)
(1,009,884)
741,540
(367,198)
(1,346,026)
(42,746,568)
$ (11,134,832)
19
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
General
REVENUES
Local Sources
State Sources
Federal Sources
$ 42,168,864
17,228,628
861,696
TOTAL REVENUES
Nonmajor
Fund
Debt Service
Capital
Projects
$
484,497
-
$
Total
Governmental
Funds
-
$ 42,653,361
17,228,628
861,696
60,259,188
484,497
-
60,743,685
32,105,373
17,960,147
1,354,551
-
10,091
3,070,258
77,351
-
32,115,464
18,037,498
1,354,551
3,070,258
4,655,000
1,683,074
2,329
-
-
4,655,000
1,683,074
2,329
TOTAL EXPENDITURES
57,760,474
3,080,349
77,351
60,918,174
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
2,498,714
(2,595,852)
(77,351)
(174,489)
2,628
62,395
187,649
(3,091,090)
3,000,000
-
9,825,000
(9,635,000)
75,000
(187,649)
9,825,000
(9,635,000)
2,628
62,395
3,262,649
(3,278,739)
TOTAL OTHER FINANCING SOURCES (USES)
(2,838,418)
3,000,000
77,351
238,933
NET CHANGE IN FUND BALANCES
(339,704)
404,148
-
64,444
17,709,082
10,568,963
-
28,278,045
$ 17,369,378
$ 10,973,111
-
$ 28,342,489
EXPENDITURES
Current
Instructional Services
Support Services
Operation of Noninstructional Services
Capital Outlay
Debt Service
Principal
Interest
Refund of Prior Year Revenues
OTHER FINANCING SOURCES (USES)
Refunding Notes Issued
Payment to Refunded Bond Escrow Agent
Sale of Capital Assets
Insurance Recoveries
Transfers In
Transfers Out
FUND BALANCES - BEGINNING
FUND BALANCES - ENDING
$
20
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE
GOVERNMENT-WIDE STATEMENT OF ACTIVITIES
Amounts reported for governmental activities in the statement of activities are different because:
NET CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS
$
64,444
Governmental funds report capital outlays as expenditures. However, in the
statement of activities, the cost of those assets is allocated over their estimated
useful lives as depreciation expense.
Capital Outlays
Less: Loss on Disposal
Less: Depreciation Expense
$ 4,338,367
(15,372)
(4,857,412)
Because some taxes will not be collected for several months after the District's yearend, they are not considered as "available" revenues in the governmental funds.
(534,417)
(89,893)
Issuance of long-term debt (e.g., bonds) provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds.
Repayment of Bond Principal
Payment to Refunded Bond Escrow Agent
Refunding Notes Issued
Amortization of Bond Discount
Amortization of Bond Premium
Amortization of Deferred Charge on Bond Refunding
4,655,000
9,635,000
(9,825,000)
(931)
231,534
(179,300)
4,516,303
Interest expense incurred on long-term debt in the statement of activities differs
from the amount reported in the governmental funds because interest is recognized
as an expenditure in the funds when it is due, and thus requires the use of current
financial resources.
96,167
In the statement of activities, certain operating expenses - compensated absences
(vacations and sick days) are measured by the amounts earned during the year.
(17,681)
Increase in net pension liability and other postemployment benefit obligation is
reflected as an adjustment to expense on the statement of activities, but not
included in the fund statements.
(2,060,202)
CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES
$ 1,974,721
21
PROPRIETARY FUND
June 30, 2015
Enterprise Fund
Food Service
ASSETS
CURRENT ASSETS
Other Receivables
Inventories
$
TOTAL CURRENT ASSETS
426,497
22,739
234
70,274
519,744
NONCURRENT ASSETS
Furniture, Fixtures, and Equipment, Net
378,612
TOTAL ASSETS
898,356
DEFERRED OUTFLOWS OF RESOURCES
Pension Contributions made Subsequent to the Measurement Date
132,641
LIABILITIES
CURRENT LIABILITIES
Accounts Payable
Unearned Revenues
Current Portion of Compensated Absences
1,166
780
33,425
3,000
TOTAL CURRENT LIABILITIES
38,371
NONCURRENT LIABILITIES
2,237
2,012,992
TOTAL NONCURRENT LIABILITIES
2,015,229
TOTAL LIABILITIES
2,053,600
Deferred Pension Expense
92,262
NET POSITION (DEFICIT)
Unrestricted (Deficit)
378,612
(1,493,477)
TOTAL NET POSITION (DEFICIT)
$
(1,114,865)
22
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUND
Enterprise Fund
Food Service
OPERATING REVENUES
Food Service Revenue
$
OPERATING EXPENSES
Salaries
Employee Benefits
Other Purchased Services
Supplies
Depreciation
Other Expenses
690,041
429,187
19,158
847,075
60,884
22,749
TOTAL OPERATING EXPENSES
2,069,094
OPERATING LOSS
(1,252,966)
NONOPERATING REVENUES
Local Sources - Earnings on Investments
State Sources
Federal Sources
49
157,920
1,050,333
TOTAL NONOPERATING REVENUES
1,208,302
LOSS BEFORE TRANSFERS
(44,664)
Transfers in
16,090
CHANGE IN NET POSITION
(28,574)
NET POSITION (DEFICIT) - BEGINNING - RESTATED
(1,086,291)
NET POSITION (DEFICIT)- ENDING
816,128
$
(1,114,865)
23
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
Enterprise Fund
Food Service
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Users
Payments to Employees for Services
Payments to Suppliers for Goods and Services
$
NET CASH USED FOR OPERATING ACTIVITIES
(887,883)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
State Sources
Federal Sources
Transfers from Other Funds
157,920
927,430
16,090
NET CASH PROVIDED BY
NONCAPITAL FINANCING ACTIVITIES
1,101,440
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of Capital Assets
(45,364)
CASH FLOWS FROM INVESTING ACTIVITIES
Earnings on Investments
49
NET INCREASE IN CASH AND CASH EQUIVALENTS
168,242
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS - END OF YEAR
956,643
(1,068,059)
(776,467)
258,255
$
426,497
24
STATEMENT OF CASH FLOWS - CONTINUED
PROPRIETARY FUND
Reconciliation of Operating Loss to Net Cash
Used For Operating Activities:
Operating Loss
Enterprise Fund
Food Service
$
(1,252,966)
Adjustments to Reconcile Operating Loss to
Net Cash Used For Operating Activities:
Depreciation
Donated Commodities Used
60,884
122,903
Changes in Assets and Liabilities:
Other Receivables
Inventories
Pension Contributions made Subsequent to the Measurement Date
Interfund Payables
Accounts Payable
Unearned Revenues
Compensated Absences
Deferred Inflows of Resources
127,641
999
(10,157)
(28,333)
(952)
721
(4,277)
11,875
(556)
(7,927)
92,262
Total Adjustments
365,083
NET CASH USED FOR OPERATING ACTIVITIES
$
(887,883)
NONCASH NONCAPITAL FINANCING ACTIVITIES
During the year, the District used $122,903 of commodities
from the U.S. Department of Agriculture.
25
FIDUCIARY FUNDS
June 30, 2015
Agency
Fund
(Student
Activities)
Private Purpose
Trust Fund
(Scholarships)
ASSETS
CURRENT ASSETS
$
TOTAL ASSETS
3,760
$
95,785
3,760
$
95,785
LIABILITIES
CURRENT LIABILITIES
Interfund Payables
Accounts Payable
TOTAL LIABILITIES
NET POSITION HELD IN TRUST FOR SCHOLARSHIPS
$
46
313
95,426
$
95,785
3,760
26
STATEMENT OF CHANGES IN NET POSITION
FIDUCIARY FUND
Private Purpose
Trust Funds
(Scholarships)
ADDITIONS
Contributions
$
DEDUCTIONS
Scholarships
200
CHANGE IN NET POSITION
2,731
NET POSITION - BEGINNING OF YEAR
1,029
NET POSITION - END OF YEAR
2,931
$
3,760
27
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2015
The Ephrata Area School District is located in Lancaster County, Pennsylvania. The District tax base consists of
the Ephrata Borough, Akron Borough, Ephrata Township, and Clay Township.
The Ephrata Area School District is governed by a board of nine school directors who are residents of the school
district and who are elected every two years, on a staggered basis, for a four-year term.
The board of school directors has the power and duty to establish, equip, furnish, and maintain a sufficient
number of elementary, secondary, and other schools necessary to educate every person, residing in such
district, between the ages of six and twenty-one years, who may attend.
In order to establish, enlarge, equip, furnish, operate, and maintain any school herein provided, or to pay any
school indebtedness which the School District is required to pay, or to pay an indebtedness that may at any time
hereafter be created by the School District, the board of school directors are vested with all the necessary
authority and power annually to levy and collect the necessary taxes required and granted by the legislature, in
addition to the annual state appropriation, and are vested with all necessary power and authority to comply
with and carry out any or all of the provisions of the Public School Code of 1949.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
As required by generally accepted accounting principles, the financial statements of the reporting entity
include those of the District (the primary government) and its component units.
The District used guidance contained in generally accepted accounting principles to evaluate the possible
inclusion of related entities (authorities, boards, etc.) within its reporting entity. The criteria used by the
District for inclusion are financial accountability and the nature and significance of the relationships. In
determining financial accountability in a given case, the District reviews the applicability of the following
criteria. The District is financially accountable for:

Organizations that make up the legal District entity.

Legally separate organizations if District officials appoint a voting majority of the organizations'
governing body and the District is able to impose its will on the organization, or if there is a potential
for the organization to provide specific financial benefits to, or impose specific financial burdens on,
the District as defined below.
Impose its will - If the District can significantly influence the programs, projects or activities of, or
the level of services performed or provided by, the organization.
Financial benefit or burden - exists if the District (1) is entitled to the organization's resources; (2) is
legally obligated or has otherwise assumed the obligation to finance the deficits of, or provide
support to, the organization; or (3) is obligated in some manner for the debt of the organization.
28
June 30, 2015
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
A. Reporting Entity - continued

Organizations that are fiscally dependent on the District. Fiscal dependency is established if the
organization is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt
without approval by the District.
Based on the foregoing criteria, the District has determined it has no component units.
Governments commonly enter into special arrangements with each other to provide or obtain needed
services. A common type of such an arrangement is a joint venture. In addition to joint ventures,
governments also enter into contracts to plan for and address certain activities for their mutual benefits;
i.e., a jointly governed organization. The District has one of each of these relationships:
Joint Venture: The District is a participating member of the Lancaster County Career & Technology
Center. See Note 10 for details of involvement and financial information of the joint venture.
Jointly Governed Organizations: The District is a participating member of the Lancaster Lebanon
Intermediate Unit (LLIU). The LLIU is run by a joint committee consisting of members from each
participating district. No participating district appoints a majority of the joint committee. The board
of directors of each participating district must approve LLIU’s annual operating budget.
The LLIU is a self-sustaining organization that provides services for fees to participating districts. As
such, the District has no ongoing financial interest or responsibility in the LLIU. The LLIU contracts
with participating districts to supply special education services, computer services, and to act as a
conduit for certain federal programs.
B. Basis of Presentation - Government-Wide Financial Statements
Government-wide financial statements (i.e., the statement of net position and the statement of activities)
display information about the reporting entity, except for its fiduciary activities. All fiduciary activities are
reported only in the fund financial statements. The government-wide statements include separate
columns for the governmental and business-type activities of the primary government, as well as any
discretely presented component units. Governmental activities, which normally are supported by taxes,
intergovernmental revenues, and other nonexchange transactions are reported separately from businesstype activities which rely to a significant extent, on fees and charges for support. Likewise, the primary
government is reported separately from the legally separate component units for which the primary
government is financially accountable.
29
June 30, 2015
B. Basis of Presentation - Government-Wide Financial Statements - continued
The statement of activities demonstrates the degree to which the direct expenses of a given function to the
District are offset by the program revenues related to that function. Direct expenses are those that are
directly related to and clearly identified with a function. Program revenues include 1) charges to customers
or others who purchase, use or directly benefit from services or goods provided by a given function or 2)
grants and contributions that are restricted to meet the operational or capital requirements of a function.
Taxes and other items properly not included in program revenues are reported as general revenues.
As a general rule the effect of interfund activity has been eliminated from the government-wide financial
statements. Exceptions to this general rule are the contributions made to any component units from the
District’s governmental funds and transfers between governmental funds and business-type and fiduciary
funds. Elimination of these contributions would distort the direct costs and program revenues reported for
the various functions concerned.
C. Basis of Presentation - Fund Financial Statements
The fund financial statements provide information about the government’s funds, including its fiduciary
funds. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary
funds. The emphasis of fund financial statements is on major governmental and enterprise funds, each
displayed in a separate column. All remaining governmental funds are aggregated and reported as
nonmajor funds. Major individual governmental and enterprise funds are reported as separate columns in
the fund financial statements.
The District Reports the Following Major Governmental Funds:
General Fund: This fund is established to account for resources devoted to financing the general
services that the District performs. Intergovernmental revenues and other sources of revenue used to
finance the fundamental operations of the District are included in this fund. The fund is charged with all
costs of operating the District for which a separate fund has not been established.
Capital Projects Fund: This fund is established to account for financial resources to be used for the
acquisition or construction of major capital equipment and facilities (other than those financed by
proprietary funds).
30
June 30, 2015
C. Basis of Presentation - Fund Financial Statements - continued
The District has the Following Major Enterprise Fund:
Food Service Fund: This fund accounts for all revenues, food purchases, and costs and expenses for the
food service program. The food service fund is the District’s only major enterprise fund where the
intent of the governing body is that the costs of providing food services are covered by user charges and
subsidies received.
Additionally, the District Reports the Following Fund Type:
Fiduciary Funds: The District’s fiduciary funds are trust funds and agency funds. Trust funds are used to
account for assets held by the District under a trust agreement for individuals, private organizations, or
other governments and are therefore, not available to support the District’s own programs. The
District’s only trust funds are the private-purpose trusts. Agency funds are custodial in nature (assets
equal liabilities) and do not involve measurement of results of operations. The District’s student activity
fund is an agency fund.
During the course of operations, the government has activity between funds for various purposes. Any
residual balances outstanding at year-end are reported as interfund receivables/payables and advances
to/from other funds. While these balances are reported in fund financial statements, certain eliminations
are made in the preparation of the government-wide financial statements. Balances between the funds
included in governmental activities are eliminated so that only the net amount is included as internal
balances in the governmental activities column. Similarly, balances between the funds included in
business-type activities (i.e., the enterprise funds) are eliminated so that only the net amount is included as
internal balances in the business-type activities column.
Further, certain activity occurs during the year involving transfers of resources between funds. In fund
financial statements these amounts are reported at gross amounts as transfers in/out. While reported in
fund financial statements, certain eliminations are made in the preparation of the government-wide
financial statements. Transfers between the funds included in governmental activities are eliminated so
that only the net amount is included as transfers in the governmental activities column. Similarly, balances
between the funds included in business-type activities are eliminated so that only the net amount is
included as transfers in the business-type activities column.
31
June 30, 2015
D. Measurement Focus and Basis of Accounting
The accounting and financial reporting treatment is determined by the applicable measurement focus and
basis of accounting. Measurement focus indicates the type of resources being measured such as current
financial resources or economic resources. The basis of accounting indicates the timing of transactions or
events for recognition in the financial statements.
The government-wide financial statements are reported using the economic resources measurement focus,
and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when
a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as
revenue in the year for which they are levied. Grants and similar items are recognized as revenue as soon
as all eligibility requirements imposed by the provider have been met.
The governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they
are both measurable and available. Revenues are considered to be available when they are collectible
within the current period or soon enough thereafter to pay liabilities of the current period. For this
purpose, the government considers revenues to be available if they are collected within 60 days of the end
of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under
accrual accounting. However, debt service expenditures, as well as expenditures related to compensated
absences, and claims and judgments, are recorded only when payment is due. General capital asset
acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and
acquisitions under capital leases are reported as other financing sources.
Property taxes and interest associated with the current fiscal period is considered to be susceptible to
accrual and so has been recognized as revenue of the current fiscal period. Expenditure-driven grants are
recognized as revenue when the qualifying expenditures have been incurred and all other eligibility
requirements have been met, and the amount is received during the period or within the availability period
for this revenue source (within 60 days of year-end). All other revenue items are considered to be
measurable and available only when cash is received by the government.
The proprietary fund is reported using the economic resources measurement focus and the accrual basis of
accounting. The trust fund is reported using the accrual basis of accounting. The agency fund has no
measurement focus but utilizes the accrual basis of accounting for reporting its assets and liabilities.
32
June 30, 2015
E. Budgetary Process
An operating budget is adopted prior to the beginning of each year for the General Fund on the modified
accrual basis of accounting. The General Fund is the only fund for which a budget is legally required.
In accordance with Act 1 of 2006, the board shall annually, but not later than the first business meeting of
January, decide the budget option to be used for the following fiscal year. The board shall approve either
the Accelerated Budget Process Option or the Board Resolution Option.
Accelerated Budget Process Option
Under this option, a preliminary budget must be prepared 150 days prior to the primary election. Under
this option, the preliminary budget must be available for public inspection at least 110 days prior to the
primary election. The board shall give public notice of its intent to adopt the preliminary budget at least 10
days prior to the adoption. The adoption must occur at least 90 days prior to the primary election.
If the primary budget exceeds the increase authorized by the Index, an application for an exception may be
filed with either a Court of Common Pleas with jurisdiction of PDE and made available for public inspection.
The board may opt to forego applying for an exception by submitting a referendum question seeking voter
approval for a tax increase, in accordance with Act 1.
The final budget shall include any necessary changes from the adopted preliminary budget. Any reduction
required as the result of the failure of referendum shall be clearly stated. The final budget shall be made
available for public inspection at least 20 days prior to final adoption. The board shall annually adopt the
final budget by a majority vote of all members of the board prior to June 30.
Board Resolution Option
Under the Board Resolution Option, the board shall adopt a resolution that it will not raise the rate of any
tax for the following fiscal year by more than the Index. Such resolution shall be adopted no later than 110
days prior to the primary election. At least 30 days prior to adoption of the final budget the board shall
prepare a proposed budget. The proposed budget shall be available for public inspection at least 20 days
prior to adoption of the budget. The board shall give public notice of its intent to adopt at least 10 days
prior to adoption of the proposed budget. The board shall annually adopt the final budget by a majority
vote of all members of the board by June 30.
Legal budgetary control is maintained at the sub-function/major object level. The PA School Code allows
the school board to make budgetary transfers between major function and major object codes only within
the last nine months of the fiscal year, unless there is a two-thirds majority of the board approving the
transfer. Appropriations lapse at the end of the fiscal period. Budgetary information reflected in the
financial statements is presented at or below the level of budgetary control and includes the effect of
approved budget amendments.
33
June 30, 2015
E. Budgetary Process- continued
The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts
in the PDE 2028 when the original appropriations were adopted. The amounts reported as the final
budgeted amounts in the budgetary statements reflect the amounts after all 2014/15 budget transfers.
F. Assets, Liabilities, Deferred Inflows/Outflows of Resources, and Net Position/Fund Balance
1.
For purposes of the statement of cash flows, the proprietary fund type considers all highly-liquid
investments with a maturity of three months or less when purchased to be cash equivalents.
Investments are stated at fair value, except:
a) Nonparticipating interest earning investment contracts are recorded at amortized cost;
b) Money market investments and participating interest earning investment contracts that mature
within one year of acquisition are recorded at amortized cost; and,
c) Investments held in 2a7-like pools (Pennsylvania Local Government Investment Trust and
Pennsylvania School District Liquid Asset Fund) are recorded at the pool’s share price.
2.
Receivables/Payables
Activity between funds that is representative of lending/borrowing arrangements outstanding at the
end of the year are referred to as “interfund receivables/payables.” Any residual balances
outstanding between the governmental and business-type activities are reported in the governmentwide financial statements as “internal balances.”
3.
Inventories and Prepaid Items
On government-wide financial statements, inventories are presented at the lower of cost or market
on a first-in, first-out basis and are expensed when used.
34
June 30, 2015
F. Assets, Liabilities, Deferred Inflows/Outflows of Resources, and Net Position/Fund Balance - continued
3.
Inventories and Prepaid Items - continued
Inventories of the governmental funds, consisting principally of textbooks and instructional supplies,
are not valued since it is the policy of the District to charge these items to expense upon acquisition.
Inventories of the Enterprise Fund consisting of food and paper supplies are carried at cost, using the
first-in, first-out method. Federal donated commodities are valued at their fair market value as
determined by the U.S. Department of Agriculture at the date of donation. The inventories on hand at
June 30, 2015, consist of the following:
Purchased food and supplies
Donated commodities
$ 57,051
13,223
$ 70,274
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as
prepaid items in both the government-wide and fund financial statements. The cost of prepaid items
is recorded as expenditures/expenses when consumed rather than when purchased.
4.
Capital Assets, Depreciation, and Amortization
The District’s property, plant, and equipment, with useful lives of more than one year are stated at
historical cost and comprehensively reported in the government-wide financial statements.
Proprietary capital assets are also reported in their respective financial statements. The reported
value excludes normal maintenance and repairs which are essentially amounts spent in relation to
capital assets that do not increase the capacity or efficiency of the item or extend its useful life beyond
the original estimate. In the case of donations, the government values these capital assets at the
estimated fair value of the item at the date of its donation.
The District generally capitalizes assets with cost of $5,000 or more as purchase and construction
outlays occur. Management has elected to include certain homogeneous asset categories with
individual assets less than $5,000 as composite groups for financial reporting purposes. Assets
purchased or constructed with long-term debt may be capitalized regardless of the threshold
established. The costs of normal maintenance and repairs that do not add to the asset value or
materially extend useful lives are not capitalized. Capital assets, including those of component units,
are depreciated using the straight-line method. When capital assets are disposed, the cost and
applicable accumulated depreciation are removed from the respective accounts, and the resulting
gain or loss is recorded in operations.
35
June 30, 2015
4.
Capital Assets, Depreciation, and Amortization - continued
Estimated useful lives, in years, for depreciable assets are as follows:
Assets
Buildings and improvements
Land improvements
Furniture, fixtures, and equipment
Vehicles
Years
10 - 40
20
5 - 20
5
Interest costs incurred during the construction phase of capital assets are capitalized when incurred by
proprietary funds and similar component units on debt where proceeds were used to finance the
construction of assets.
5.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position will sometimes report a separate section for
deferred outflows of resources. This separate financial statement element, deferred outflows of
resources, represents a consumption of net position that applies to a future period(s) and so will not
be recognized as an outflow of resources (expense/expenditure) until then. The District has two items
that qualify for reporting in this category, which are a deferred charge on bond refunding and a
deferred pension contribution reported in the government-wide statement of net position. A
deferred charge on bond refunding results from the difference in the carrying value of refunded debt
and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the
refunded or refunding debt. A deferred pension contribution results from contributions made to the
pension plan subsequent to the measurement date and prior to the District’s year-end. The
contributions will be recognized as a reduction in net pension liability in the following year.
36
June 30, 2015
5.
Deferred Outflows/Inflows of Resources- continued
In addition to liabilities, the statement of net position will sometimes report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net position that applies to a future period(s) and so will not be
recognized as an inflow of resources (revenue) until that time. The government has two types of
items that qualify for reporting in this category. The first item, deferred pension expense, relates to
the District’s net pension liability and pension expense and arises from changes in assumptions, actual
versus expected results, changes in benefits, variances in expected versus actual investment earnings,
changes in the employer’s proportion, or differences between employer contributions and the
proportionate share of total contributions reported by the pension plan. These amounts are deferred
and amortized over either a closed five-year period or the average remaining service life of all
employees depending on what gave rise to the deferred inflow. The second item, unavailable
revenue, arises only under a modified accrual basis of accounting and is reported only in the
governmental funds balance sheet. The governmental funds report unavailable revenues from two
sources - property taxes and per capita taxes. These amounts are deferred and recognized as an
inflow of resources in the period that the amounts become available.
6.
Unearned Revenues
Revenues that are received but not earned are reported as unearned revenues in the governmentwide, governmental funds, and enterprise funds financial statements. Unearned revenues arise when
resources are received prior to the incurrence of qualifying expenditures. In subsequent periods,
when both revenue recognition criteria are met, or when the District has legal claim to the resources,
the liability for unearned revenue is removed from the respective financial statements and revenue is
recognized.
37
June 30, 2015
7.
Net Position
Net position represents the difference between assets and deferred outflows of resources less
liabilities and deferred inflows of resources. Net investment in capital assets component of net
position is comprised of capital assets, net of accumulated depreciation, reduced by the outstanding
balances of any borrowings used for the acquisition, construction or improvement of those assets. In
addition, any deferred outflows of resources and/or deferred inflows of resources related to such
capital assets or liabilities associated with the capital assets should also be added to or deducted from
the overall net investment in capital assets. The restricted component of net position is used when
there are limitations imposed on their use either through the enabling legislation adopted by a higher
governmental authority or through external restrictions imposed by creditors, grantors, or laws or
regulations of other governments. The remaining component of net position is unrestricted.
The District applies restricted resources first when an expense is incurred for purposes for which both
the restricted and unrestricted components of net position are available.
8.
Fund Balance Policies and Flow Assumptions
Fund balance of governmental funds is reported in various categories based on the nature of any
limitations requiring the use of resources for specific purposes. The government itself can establish
limitations on the use of resources through either a commitment (committed fund balance) or an
assignment (assigned fund balance).
The committed fund balance classification includes amounts that can be used only for the specific
purposes determined by a formal action of the government’s highest level of decision-making
authority. The board of school directors is the highest level of decision-making authority for the
government that can, by adoption of a resolution prior to the end of the fiscal year, commit fund
balance. Once adopted, the limitation imposed by the resolution remains in place until a similar
action is taken (the adoption of another resolution) to remove or revise the limitation.
Amounts in the assigned fund balance classification are intended to be used by the government for
specific purposes but do not meet the criteria to be classified as committed. The business manager
and finance committee of the board of school directors may assign fund balance. Unlike
commitments, assignments generally only exist temporarily. In other words, an additional action does
not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an
additional action is essential to either remove or revise a commitment.
38
June 30, 2015
8.
Fund Balance Policies and Flow Assumptions- continued
The District’s unassigned fund balance of the General Fund should not be less than five percent of the
following year’s budgeted expenditures.
Sometimes the government will fund outlays for a particular purpose from both restricted and
unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to
calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in
the governmental fund financial statements, a flow assumption must be made about the order in
which the resources are considered to be applied. It is the District’s policy to consider restricted fund
balance to have been depleted before using any of the components of unrestricted fund balance.
Further, when the components of unrestricted fund balance can be used for the same purpose, the
District’s policy places no restrictions on the order of the unrestricted fund balances used. The order
of the unrestricted fund balances used for disbursements is at the discretion of the business manager.
G. Revenues and Expenditures/Expense
1.
Program Revenues
Amounts reported as program revenues include 1) charges to customers or applicants who purchase,
use, or directly benefit from goods, services, or privileges provided by a given function or segment and
2) grants and contributions (including special assessments) that are restricted to meeting the
operations or capital requirements of a particular function or segment. All taxes and other internally
dedicated resources are reported as general revenues rather than as program revenues.
2.
Compensated Absences
Vacation Leave
Vacation is earned by all eligible administrators, secretarial/clerical, and custodial/maintenance
employees. The amount of vacation earned varies based on employment classification and years of
service. In the event of termination, an employee is reimbursed for any unused accumulated
vacation. Vacation is generally required to be used within one year of being earned.
39
June 30, 2015
G. Revenues and Expenditures/Expense - continued
2.
Compensated Absences- continued
Personal Leave
Personal leave is earned by all eligible employees. Members of the bargaining unit are eligible to
receive a cash benefit for any unused personal leave upon meeting certain eligibility requirements. At
retirement, accumulated personal leave will be paid out at the daily substitute teacher rate in effect,
currently $100 per diem.
Sick Pay
The District allows all eligible employees to accumulate unused sick leave. Members of the bargaining
unit and administrators are eligible to receive a cash benefit for any unused sick leave upon meeting
certain eligibility requirements. At retirement, up to a maximum of 200 days of accumulated sick
leave will be paid out at the per diem rate of $45 for bargaining unit employees; $25 for secretaries,
IT, food service, and buildings and grounds employees; and $50-$100 for administrators.
Special Retirement Benefit
The District pays severance pay to members of the bargaining unit and administrators at retirement
based on years of service. Eligible members of the bargaining unit with a minimum of fifteen years of
service credited with PSERS and with ten years of that service rendered as an employee of the District
receive $180 per year of PSERS service. Members of the bargaining unit who have completed a
minimum of twenty-five years of service with the District receive an additional $30 per year with the
district. Eligible department chairs serving ten of the last eleven years prior to retirement receive
$100 per year as department chair at retirement. Eligible administrators receive $150 per year of
service credited with PSERS and $400 per year of service as an administrator at the District, upon
retirement.
3.
Proprietary Funds Operating and Nonoperating Revenues and Expenses
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund’s principal ongoing operations. The principal operating revenues
of the food service fund are charges to customers for meals and services provided. Operating
expenses for proprietary funds include the cost of sales and services, administrative expenses, and
depreciation on capital assets. All revenues and expenses not meeting this definition are reported as
nonoperating revenues and expenses.
40
June 30, 2015
H. Other Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
NOTE 2 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Compliance with finance related legal and contractual provisions
The District has no material violations of finance related legal and contractual provisions.
B. Deficit fund balance or net position of individual funds
Deficit Fund Balance - Proprietary Fund (Food Service)
For the year ended June 30, 2015, the implementation of GASB No. 68, Accounting and Financial Reporting
for Pensions and GASB No. 71, Pension Transition for Contributions Made Subsequent to the Measurement
Date created a deficiency in net position at year-end of $1,114,865. The District will fund this deficiency in
future years through contributions to the Pennsylvania Public School Employees’ Retirement Plan (PSERS)
at a rate required by PSERS.
C. Excess of expenditures over appropriations in individual funds
No individual fund, which had a legally adopted budget, had an excess of expenditures over appropriations.
D. Budgetary compliance
The District’s only legally adopted budget is for the General Fund. All budgetary transfers were made
within the last nine months of the fiscal year. The District cancels all purchase orders open at year-end;
therefore, it does not have any outstanding encumbrances at June 30, 2015. In addition, the District
includes a portion of the prior year’s fund balance represented by unappropriated liquid assets remaining
in the fund as budgeted revenue in the succeeding year. The results of operations on a GAAP basis do not
recognize the fund balance allocation as revenue as it represents prior period’s excess of revenues over
expenditures.
41
June 30, 2015
NOTE 3 - CASH AND INVESTMENTS
The deposit and investment policy of the District adheres to state statutes. There were no deposits or
investment transactions during the year that were in violation of either the state statutes or the policy of the
District.
The breakdown of total cash and investments at June 30, 2015 is as follows:
Petty Cash
Cash
Pooled Cash and Investments
$
1,900
19,320
32,484,952
$ 32,506,172
Deposits
Custodial Credit Risk
Custodial credit risk is the risk that in the event of a bank failure, the government’s deposits may not be
returned to it. The District does have a policy for custodial credit risk on deposits. At June 30, 2015, the carrying
amount of the District’s deposits was $19,320 and the bank balance was $20,332. The bank balance was entirely
covered by federal depository insurance.
Investments
Under Section 440.1 of the Public School Code of 1949, as amended, the District is permitted to invest funds in
the following types of investments:
Obligations of (a) the United States of America or any of its agencies or instrumentalities backed by the full
faith and credit of the United States of America, (b) the Commonwealth of Pennsylvania or any of its
agencies or instrumentalities backed by the full faith and credit of the commonwealth, or (c) any political
subdivision of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the
full faith and credit of the political subdivision.
Deposits in savings accounts, time deposits, or share accounts of institutions insured by the Federal Deposit
Insurance Corporation to the extent that such accounts are so insured and, for any amounts above the
insured maximum, provided that approved collateral as provided by law, therefore, shall be pledged by the
depository.
As of June 30, 2015, the District had the following investments:
Reconciling
Items
Fair Value
PA School District Liquid Asset Fund
$ 32,239,431
$
245,521
Carrying
Value
$ 32,484,952
42
June 30, 2015
NOTE 3 - CASH AND INVESTMENTS - CONTINUED
A portion of the District’s investments are in the Pennsylvania School District Liquid Asset Fund (PSDLAF).
Although not registered with the Securities and Exchange Commission and not subject to regulatory oversight,
the funds act like money market mutual funds in that their objective is to maintain a stable net asset value of $1
per share, is rated by a nationally recognized statistical rating organization, and is subject to an independent
annual audit.
Interest Rate Risk
The District does have a formal investment policy that limits investment maturities as a means of managing its
exposure to fair value losses arising from increasing interest rates.
Credit Risk
The District has an investment policy that would limit its investment choices to certain credit ratings. As of
June 30, 2015, the District’s investments were rated as follows:
Investments
PA School District Liquid Asset Fund
Standard
& Poor's
AAA
Concentration of Credit Risk
The District does have a policy that would limit the amount they may invest in any one issue. All of the District’s
investments are issued or guaranteed by the U.S. Government and investments in mutual pools and excluded
from this risk.
Custodial Credit Risk
For an investment, custodial credit is the risk that, in the event of the failure of the counterparty, the District will
not be able to recover the value of its investments or collateral security that are in the possession of an outside
party. The District has no investment subject to custodial credit risk.
43
June 30, 2015
NOTE 4 - TAXES RECEIVABLE AND UNAVAILABLE REVENUE
The District collects its own real estate taxes. Assessed values are established by the County Board of
Assessment. All taxable real property was assessed at $1,896,831,900. In accordance with Act 1 of 2006, the
District received $1,018,782 in property tax reduction funds for the 2014/2015 fiscal year. The District tax rate
for the year ended June 30, 2015 was 19.60 mills ($19.60 per $1,000 of assessed valuation) as levied by the
board of school directors. The schedule for real estate taxes levied for each fiscal year is as follows:
July 1
July 1 - August 31
September 1 - October 31
November 1 - January 14
January 15
Levy date
2% discount period
Face payment period
10% penalty period
Lien date
The District, in accordance with generally accepted accounting principles, recognized the delinquent and unpaid
taxes receivable reduced by an allowance for uncollectible taxes as determined by administration. A portion of
the net amount estimated to be collectible which was measurable and available within 60 days was recognized
as revenue and the balance reported as unavailable revenue under deferred inflows of resources in the fund
financial statements.
The balances at June 30, 2015 are as follows:
Gross
Taxes
Receivable
Real estate
Real estate transfer
Per capita
Allowance for
Uncollectible
Taxes
Estimated
to be
Collectible
Tax
Revenue
Recognized
Unavailable
Revenue
Taxes
$
626,513
65,941
142,171
$
7,942
-
$
618,571
65,941
142,171
$
229,423
65,941
327
$
397,090
141,844
$
834,625
$
7,942
$
826,683
$
295,691
$
538,934
44
June 30, 2015
NOTE 5 - INTERGOVERNMENTAL RECEIVABLES
The following schedule represents intergovernmental receivables at June 30, 2015:
General
Fund
Name of Governmental Unit
Lancaster Lebanon Intermediate Unit - IDEA
Lancaster Lebanon Intermediate Unit - Title III
PDE - Social Security
PDE - Retirement
PDE - Safe Schools Grant
PDE - Rental Subsidy
PDE - Transportation Subsidy
PDE - Food Service Program
Federal Subsidies - Title I
Federal Subsidies - ACCESS Admin
Federal Subsidies - ACCESS
Federal Subsidies - Food Service Programs
Other Local Education Agencies
TOTAL
$
4,534
11,460
199,773
941,899
13,339
135,804
10,171
1,187
33,273
1,847
113,322
21,686
156,151
$ 1,644,446
45
June 30, 2015
NOTE 6 - CHANGES IN CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2015 was as follows:
Capital assets not being depreciated:
Land
Construction in progress
Total assets not being depreciated
Beginning
Balance
$
3,040,997
343,519
3,384,516
(Reclass)
Decrease
Increase
$
2,909,058
2,909,058
$
Ending
Balance
(2,759,882)
(2,759,882)
$
3,040,997
492,695
3,533,692
Capital assets being depreciated:
Land improvements
Vehicles
Totals being depreciated
96,918,905
2,838,772
17,401,674
447,591
117,606,942
936,306
1,649,467
1,603,418
4,189,191
(181,586)
(181,586)
97,855,211
4,488,239
18,823,506
447,591
121,614,547
Less accumulated depreciation for:
Land improvements
Vehicles
Total accumulated depreciation
33,332,024
683,159
10,646,479
379,421
45,041,083
2,860,108
132,951
1,832,887
31,466
4,857,412
(166,214)
(166,214)
36,192,132
816,110
12,313,152
410,887
49,732,281
TOTAL CAPITAL ASSETS BEING
DEPRECIATED, NET
72,565,859
(668,221)
(15,372)
71,882,266
GOVERNMENTAL ACTIVITIES,
CAPITAL ASSETS, NET
$ 75,950,375
$
2,240,837
$ (2,775,254)
$ 75,415,958
$
$
45,364
$
$
Business-Type Activities
Capital Assets being Depreciated:
Accumulated depreciation for:
BUSINESS-TYPE ACTIVITIES
CAPITAL ASSETS, NET
1,649,788
1,255,656
$
394,132
60,884
$
(15,520)
(42,534)
(42,534)
$
-
1,652,618
1,274,006
$
378,612
Depreciation expense of $4,857,412 in governmental activities was unallocated for the year ended June 30,
2015.
46
June 30, 2015
NOTE 7 - LONG-TERM LIABILITIES
General obligation bonds and notes outstanding are as follows at June 30, 2015:
General Obligation Bonds - Series of 2006:
The District is liable for general obligation bonds issued on February 15, 2006, in the aggregate
amount of $20,655,000, for the purpose of advance refunding the outstanding General Obligation
Bonds, Series A of 2001 and to pay debt issuance costs. Principal maturities occur on April 15
through the year 2019. Interest is payable semi-annually on April 15 and October 15. Interest rates
range from 3.15% to 5.00%.
$ 13,095,000
General Obligation Bonds - Series of 2008A:
The District is liable for general obligation bonds issued on July 15, 2008, in the aggregate amount of
$21,445,000, for the purpose of currently refunding the outstanding General Obligation Bonds, Series
A of 1998 and Series C of 1998 and to pay debt issuance costs. Principal maturities occur on April 15
through the year 2011 and October 15 through the year 2016. Interest is payable semi-annually on
April 15 and October 15. Interest rates range from 2.50% to 5.00%.
4,120,000
The District is liable for general obligation bonds issued on December 27, 2012, in the aggregate
amount of $9,285,000, for the purpose of currently refunding a portion of the outstanding General
Obligation Bonds, Series of 2008 and to pay debt issuance costs. Principal maturities occur on
March 1 through the year 2021. Interest is payable semi-annually on March 1 and September 1.
Interest rates range from 1.00% to 3.00%. This District realized cash flow savings of $738,525 and
economic savings of $709,200 on the current refunding.
9,270,000
The District is liable for general obligation bonds issued on February 6, 2013, in the aggregate amount
of $4,730,000, for the purpose of advance refunding the outstanding General Obligation Bonds,
Series of 2005, currently refunding the outstanding General Obligation Bonds, Series of 2008, and to
pay debt issuance costs. Principal maturities occur on March 1 through the year 2020. Interest is
payable semi-annually on March 1 and September 1. Interest rates range from 0.50% to 4.00%. The
District realized cash flow savings of $383,528 and economic savings of $382,568 on the refundings.
4,455,000
General Obligation Note - Series of 2014B:
The District is liable for general obligation note, series B of 2014 issued on March 2, 2015, in the
aggregate amount of $9,825,000, for the purpose of currently refunding the outstanding General
Obligation Bonds, Series of 2007, and to pay debt issuance costs. Principal maturities occur on
March 1 through the year 2022. Interest is payable semi-annually on March 1 and September 1 at a
rate of 2.20% per annum. The District realized cash flow savings of $1,145,357.
9,825,000
$ 40,765,000
47
June 30, 2015
NOTE 7 - LONG-TERM LIABILITIES - CONTINUED
Maturities on long term liabilities for the years ending June 30 are as follows:
General
Obligation
Bonds Series of
2006
2016
2017
2018
2019
2020
2021 - 2022
$
General
Obligation
Bonds Series A
of 2008
General
Obligation
Bonds Series of
2012
2,605,000
2,710,000
4,850,000
2,930,000
-
$ 2,020,000
2,100,000
-
$
5,000
5,000
5,000
5,000
5,350,000
3,900,000
$ 13,095,000
$ 4,120,000
$ 9,270,000
General
Obligation
Bonds Series of
2013
$
290,000
305,000
410,000
2,705,000
745,000
-
$ 4,455,000
General
Obligation
Note Series B of
2014
$
5,000
140,000
145,000
150,000
155,000
9,230,000
$ 9,825,000
Total
General
Long-Term
Debt
$
Total
Interest
4,925,000
5,260,000
5,410,000
5,790,000
6,250,000
13,130,000
$ 1,322,964
1,128,821
968,079
738,370
513,770
466,360
$ 40,765,000
$ 5,138,364
Long-term liability balance and activity, except for the net pension liability and other postemployment benefit
obligation, for the year ended June 30, 2015 was as follows:
Beginning
Balance
Bonds and note payable
Discounts
Premiums
Total Bonds Payable
Compensated absences
TOTAL GOVERNMENTAL
ACTIVITIES
Business Type Activities:
Compensated absences
Additions
Reductions
Ending
Balance
Due Within
One Year
$
45,230,000
(11,409)
1,241,418
46,460,009
1,604,213
$ 9,825,000
9,825,000
58,461
$ 14,290,000
(11,409)
231,534
14,510,125
-
$
40,765,000
1,009,884
41,774,884
1,662,674
$ 4,925,000
4,925,000
316,648
$
48,064,222
$ 9,883,461
$ 14,510,125
$
43,437,558
$ 5,241,648
$
5,793
$
$
$
5,237
-
556
$
3,000
Payment for bonds and note payable is made by the general fund. The compensated absences liabilities will be
liquidated by the general and the proprietary funds. Total interest paid during the year ended June 30, 2015
was $1,683,074.
Defeased Debt
During the year ended June 30, 2015, all previously outstanding defeased debt was paid in full with escrow
balances held. As of June 30, 2015, the District has no outstanding defeased debt.
48
June 30, 2015
NOTE 8 - EMPLOYEE RETIREMENT PLANS
Restatement of Beginning Net Position
Effective July 1, 2014, the District adopted Governmental Accounting Standards Board Statements No. 68,
Accounting and Financial Reporting for Pensions and No. 71, Pension Transition for Contributions Made
Subsequent to the Measurement Date, to be in conformity with generally accepted accounting principles.
Statement No. 68 establishes standards for measuring and recognizing liabilities, deferred outflows of resources,
deferred inflows of resources, and expenditures in order to improve accounting and financial reporting by
governments for pensions. The statement also enhances note disclosure and required supplementary
information for government pension plans.
Statement No. 71 establishes standards for recording and reporting contributions made to a defined benefit
plan after the measurement date of the government’s beginning net pension liability.
The adoption of these standards resulted in the District restating beginning net position as of July 1, 2014 in
governmental activities for $70,100,977 and the food service fund for $1,916,611 to account for the net pension
liability as of June 30, 2014 (measurement date of June 30, 2013) and deferred outflows for pension
contributions made subsequent to the measurement date. Governmental Activities net position decreased from
$56,991,424 to ($13,109,553) and business-type activities net position decreased from $830,320 to
($1,086,291).
Employee Defined Benefit Pension Plan
Summary of Significant Accounting Policies
Pension Plan
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of
resources related to pensions, and pension expense, information about the fiduciary net position of the Public
School Employees’ Retirement System (PSERS) and additions to/deductions from PSERS’s fiduciary net position
have been determined on the same basis as they are reported by PSERS. For this purpose, benefit payments
(including refunds of employee contributions) are recognized when due and payable in accordance with the
benefit terms. Investments are reported at fair value.
49
June 30, 2015
NOTE 8 - EMPLOYEE RETIREMENT PLANS - CONTINUED
General Information about the Pension Plan
Plan Description
PSERS is a governmental cost-sharing multi-employer defined benefit pension plan that provides retirement
benefits to public school employees of the Commonwealth of Pennsylvania under Title 24 Part IV of the
Pennsylvania General Assembly. The members eligible to participate in the System include all full-time public
school employees, part-time hourly public school employees who render at least 500 hours of service in the
school year, and part-time per diem public school employees who render at least 80 days of service in the school
year in any of the reporting entities in Pennsylvania. PSERS issues a publicly available financial report that can be
obtained at www.psers.state.pa.us.
Benefits Provided
PSERS provides retirement, disability, and death benefits. Members are eligible for monthly retirement benefits
upon reaching (a) age 62 with at least one year of credited service; (b) age 60 with 30 or more years of credited
service; or (c) 35 or more years of service regardless of age. Act 120 of 2010 (Act 120) preserves the benefits of
existing members and introduced benefit reductions for individuals who become new members on or after July
1, 2011. Act 120 created two new membership classes, Membership Class T-E (Class T-E) and Membership Class
T-F (Class T-F). To qualify for normal retirement, Class T-E and Class T-F members must work until age 65 with a
minimum of three years of service or attain a total combination of age and service that is equal to or greater
than 92 with a minimum of 35 years of service. Benefits are generally equal to 2 percent or 2.5 percent,
depending upon membership class, of the member’s final average salary (as defined in the Code) multiplied by
the number of years of credited service. For members whose membership started prior to July 1, 2011, after
completion of five years of service, a member’s right to the defined benefits is vested and early retirement
benefits may be elected. For Class T-E and Class T-F members, the right to benefits is vested after ten years of
service.
Participants are eligible for disability retirement benefits after completion of five years of credited service. Such
benefits are generally equal to 2 percent or 2.5 percent, depending upon membership class, of the member’s
final average salary (as defined in the Code) multiplied by the number of years of credited service, but not less
than one-third of such salary nor greater than the benefit the member would have had at normal retirement
age. Members over normal retirement age may apply for disability benefits.
50
June 30, 2015
Death benefits are payable upon the death of an active member who has reached age 62 with at least one year
of credited service (age 65 with at least three years of credited service for Class T-E and Class T-F members) or
who has at least five years of credited service (ten years for Class T-E and Class T-F members). Such benefits are
actuarially equivalent to the benefit that would have been effective if the member had retired on the day before
death.
Contributions
The contribution policy is set by the state statute and requires contributions by active members, employers, and
the Commonwealth of Pennsylvania.
Member Contributions:
Active members who joined the System prior to July 22, 1983, contribute at 5.25 percent (Membership Class TC) or at 6.50 percent (Membership Class T-D) of the member’s qualifying compensation.
Members who joined the System on or after July 22, 1983, and who were active or inactive as of July 1, 2001,
contribute at 6.25 percent (Membership Class T-C) or at 7.50 percent (Membership Class T-D) of the member’s
qualifying compensation.
Members who joined the System after June 30, 2001 and before July 1, 2011, contribute at 7.50 percent
(automatic Membership Class T-D). For all new hires and for members who elected Class T-D membership, the
higher contribution rates began with service rendered on or after January 1, 2002.
Members who joined the System after June 30, 2011, automatically contribute at the Membership Class T-E rate
of 7.5 percent (base rate) of the member’s qualifying compensation. All new hires after June 30, 2011, who
elect Class T-F membership, contribute at 10.3 percent (base rate) of the member’s qualifying compensation.
Membership Class T-E and Class T-F are affected by a “shared risk” provision in Act 120 of 2010 that in future
fiscal years could cause the Membership Class T-E contribution rate to fluctuate between 7.5 percent and 9.5
percent and Membership Class T-F contribution rate to fluctuate between 10.3 percent and 12.3 percent.
Employer Contributions:
The District’s contractually required contribution rate for fiscal year ended June 30, 2015 was 20.50 percent of
covered payroll, actuarially determined as an amount that, when combined with employee contributions, is
expected to finance the costs of benefits earned by employees during the year, with an additional amount to
finance any unfunded accrued liability. The rate was certified by the PSERS board of trustees. Contributions to
the pension plan from the District were $5,162,921 for the year ended June 30, 2015.
51
June 30, 2015
The District is also required to contribute a percentage of covered payroll to PSERS for healthcare insurance
premium assistance. For the year ended June 30, 2015, the contribution rate was 0.90 percent of covered
payroll and the District contributed $226,665.
Under the current legislation, the Commonwealth of Pennsylvania reimburses the District for approximately
one-half of the employer contributions made, including contributions related to both pension and healthcare.
The total reimbursement recognized by the District for the year ended June 30, 2015 was $2,715,478.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pensions
At June 30, 2015, the District reported a liability of $75,639,000 for its proportionate share of the net pension
liability. The net pension liability was measured as of June 30, 2014, and the total pension liability used to
calculate the net pension liability was determined by rolling forward the System’s total pension liability as of
June 30, 2013 to June 30, 2014. The District’s proportion of the net pension liability was calculated utilizing the
employer’s one-year reported covered payroll as it relates to the total one-year reported covered payroll. At
June 30, 2014, the District’s proportion was 0.1911 percent, which was a decrease of 0.0056 percent from its
proportion measured as of June 30, 2013.
For the year ended June 30, 2015, the District recognized pension expense of $7,091,480. At June 30, 2015, the
District reported deferred outflows of resources and deferred inflows of resources related to pensions from the
following sources:
Deferred
Outflows
of
Resources
Net difference between projected and actual
investment earnings
Changes in proportions
Difference between employer contributions and
proportionate share of total contributions
Contributions subsequent to the measurement date
$
Deferred
Inflows
of
Resources
1,847,000
$ 5,407,000
-
89,932
5,162,921
-
$ 7,099,853
$ 5,407,000
52
June 30, 2015
The $5,162,921 reported as deferred outflows of resources related to pensions resulting from District
contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability
in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred
inflows of resources related to pensions will be recognized in pension expense as follows for the years ending
June 30:
2016
2017
2018
2019
2020
$
884,517
884,517
884,517
884,517
(68,000)
$ 3,470,068
Actuarial Assumptions
The total pension liability as of June 30, 2014 was determined by rolling forward the System’s total pension
liability as of the June 30, 2013 actuarial valuation to June 30, 2014 using the following actuarial assumptions,
applied to all periods included in the measurement:




Actuarial cost method - Entry Age Normal - level percent of pay
Investment return - 7.50 percent, includes inflation at 3.00 percent
Salary increases - Effective average of 5.50 percent, which reflects an allowance for inflation of 3.00
percent, real wage growth of 1 percent, and merit or seniority increases of 1.50 percent
Mortality rates were based on the RP-2000 Combined Healthy Annuitant Tables (male and female)
with age set back three years for both males and females. For disabled annuitants the RP-2000
Combined Disabled Tables (male and female) with age set back seven years for males and three years
for females.
The actuarial assumptions used in the June 30, 2013 valuation were based on the experience study that was
performed for the five-year period ended June 30, 2010. The recommended assumption changes based on this
experience study were adopted by the board at its March 11, 2011 board meeting, and were effective beginning
with the June 30, 2011 actuarial valuation.
The long-term expected rate of return on pension plan investments was determined using a building-block
method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension
plan investment expense and inflation) are developed for each major asset class. These ranges are combined to
produce the long-term expected rate of return by weighting the expected future real rates of return by the
target asset allocation percentage and by adding expected inflation.
53
June 30, 2015
The pension plan’s policy in regard to the allocation of invested plan assets is established and may be amended
by the board. Plan assets are managed with a long-term objective of achieving and maintaining a fully funded
status for the benefits provided through the pension.
Asset Class
Public markets global equity
Private markets (equity)
Private real estate
Global fixed income
U.S. long treasuries
TIPS
High yield bonds
Cash
Absolute return
Risk parity
MLPs/Infrastructure
Commodities
Financing (LIBOR)
Target
Allocation
19%
21%
13%
8%
3%
12%
6%
3%
10%
5%
3%
6%
(9%)
Long-Term
Expected Real
Rate of Return
5.0%
6.5%
4.7%
2.0%
1.4%
1.2%
1.7%
0.9%
4.8%
3.9%
5.3%
3.3%
1.1%
100%
The above was the board’s adopted asset allocation policy and best estimates of geometric real rates of return
for each major asset class as of June 30, 2014.
Discount Rate
The discount rate used to measure the total pension liability was 7.50 percent. The projection of cash flows
used to determine the discount rate assumed that contributions from plan members will be made at the current
contribution rate and that contributions from employers will be made at contractually required rates, actuarially
determined. Based on those assumptions, the pension plan’s fiduciary net position was projected to be
available to make all projected future benefit payments of current plan members. Therefore, the long-term
expected rate of return on pension plan investments was applied to all periods of projected benefit payments to
determine the total pension liability.
54
June 30, 2015
Sensitivity of the District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability, calculated using the discount rate of 7.50 percent, as well as
what the net pension liability would be if it were calculated using a discount rate that is 1-percentage point
lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:
District's proportionate share of the
net pension liability
1% Decrease
6.50%
Discount Rate
7.50%
1% Increase
8.50%
$ 94,349,000
$ 75,639,000
$ 59,665,000
Pension Plan Fiduciary Net Position
Detailed information about PSERS’ fiduciary net position is available in PSERS Comprehensive Annual Financial
Report which can be found on the System’s website at www.psers.state.pa.us.
Payables to the Pension Plan
At June 30, 2015, the District had an accrued balance due to PSERS of $1,882,843. This amount represents the
District’s contractually obligated contributions for wages earned in April 2015 through June 2015. The balance
will be paid in September 2015.
403(b) Tax Shelter Plan
The District has established a 403(b) tax shelter plan permitting the establishment of accounts for school
employees to voluntarily set aside monies to supplement their retirement income. All school employees are
eligible to participate. The District does not contribute to the Plan.
55
June 30, 2015
NOTE 9 - INTERFUND BALANCES AND TRANSFERS
The following is a summary of interfund receivables and payables at June 30, 2015:
Interfund
Receivables
General Fund
Capital Projects Fund
Enterprise Fund - Food Service
Agency Fund - Student Activities
Interfund
Payables
$
3,000,000
22,739
-
$
3,022,693
46
$
3,022,739
$
3,022,739
Interfund receivables and payables exist as a result of the time lag between dates when goods and services were
provided and payments between funds are made. All will be paid within one year.
Interfund transfers are summarized as follows at June 30, 2015:
Transfers In
General Fund
Capital Projects Fund
Debt Service Fund
Enterprise Fund - Food Service
Transfers Out
$
187,649
3,000,000
75,000
16,090
$
3,091,090
187,649
-
$
3,278,739
$
3,278,739
Transfers were made to move sinking fund cash from debt service fund to general fund to pay interest expense,
to reimburse the food service fund for equipment purchased, and to move funds to the capital projects fund for
future capital needs.
56
June 30, 2015
NOTE 10 - JOINT VENTURE
The District, along with sixteen other school districts in Lancaster County, established the Lancaster County
Career & Technology Center (LCCTC). The LCCTC provides career and technology education to students in
Lancaster County.
The District is obligated to pay a pro rata share of the LCCTC’s operating expenses based on a three-year average
of student enrollment from the District’s attendance area. The District is also obligated to pay a pro rata share
of the LCCTC’s capital expenditures. The District’s contribution for the year ended June 30, 2015 was $844,268.
The District is obligated to pay an allocated portion of the LCCTC’s debt service in the form of lease payments to
the Lancaster County Vo-Tech School Authority. The District’s authority lease payments will vary as a result of
changes in each member school district’s real estate assessed market values. Authority lease payments totaled
$78,825 for the year ended June 30, 2015.
Summary financial information as of June 30, 2014 (most recent available) is as follows:
Lancaster Lebanon Career & Technology Center - Governmental Activities
Total Assets
Total Liabilities
Total Net Position
$ 47,220,667
22,662,697
$ 24,557,970
Separate financial statements of the Lancaster County Career & Technology Center have been prepared and are
available.
57
June 30, 2015
NOTE 11 - OTHER POSTEMPLOYMENT BENEFITS
Plan Description
The Ephrata Area School District administers a single-employer defined benefit healthcare plan (the Retiree
Health Plan). The Plan provides healthcare insurance for eligible retirees and their spouses through the District’s
health insurance plan, which covers both active and retired members until the member reaches Medicare age.
Benefit provisions are established through negotiation with the District and the unions representing the
District’s employees. The Retiree Health Plan does not issue a publicly available financial report.
Funding Policy
Contribution requirements are negotiated between the District and union representatives. The required
contribution is based on pay-as-you-go financing. For all employees with 30 years of PSERS service or upon
superannuation retirement (age 60 with 30 years of service, age 62 with one year of service, or 35 years of
service regardless of age), the retired plan member pays the premium determined for the purpose of COBRA.
The retired plan member may elect to continue coverage for themselves and their dependents until the retired
plan member reaches Medicare age. For the fiscal year ended June 30, 2015, the District contributed $247,567
to the plan related to retirees.
Annual OPEB Cost and Net OPEB Obligation
The District’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual
required contribution of the employer (ARC), an amount actuarially determined in accordance with the
parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is
projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over
a period not to exceed thirty years. The following table shows the components of the District’s annual OPEB
cost for the year, the amount actually contributed to the plan, and changes in the District’s net OPEB obligation:
Annual required contribution
Interest on net OPEB obligation
Adjustment to annual required contribution
Annual OPEB Cost
Contributions made (estimated)
Estimated increase in net OPEB obligation
Net OPEB obligation - beginning of year
$
443,678
23,244
(31,710)
435,212
(247,567)
187,645
516,524
Net OPEB obligation - end of year
$
704,169
58
June 30, 2015
NOTE 11 - OTHER POSTEMPLOYMENT BENEFITS - CONTINUED
The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB
obligation as of June 30 is as follows:
Fiscal Year
Ended
6/30/2015
6/30/2014
6/30/2013
Annual
OPEB Cost
$
435,212
419,150
421,145
Percentage of
Annual OPEB
Cost
Contributed
56.9%
60.5%
71.1%
Net OPEB
Obligation
$
704,169
516,524
350,826
Funded Status and Funding Progress
As of July 1, 2014, the most recent actuarial valuation date, the Plan was unfunded. The actuarial accrued
liability for benefits was $3,668,888, and the actuarial value of assets was $0, resulting in an unfunded actuarial
accrued liability (UAAL) of $3,668,888. The covered payroll (annual payroll of active employees covered by the
Plan) was $22,677,507, and the ratio of the UAAL to the covered payroll was 16.18 percent.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the
plan and the annual required contributions of the employer are subject to continual revision as actual results are
compared with past expectations and new estimates are made about the future. The schedule of funding
progress, presented as required supplementary information following the notes to the financial statements,
presents information about actuarial value of plan assets and actuarial accrued liabilities for benefits.
The District has committed $2,200,000 of fund balance in the general fund to offset the unfunded actuarial
accrued liability.
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the time of
each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to
that point. The actuarial methods and assumptions used include techniques that are designed to reduce the
effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the
long-term perspective of the calculations.
59
June 30, 2015
NOTE 11 - OTHER POSTEMPLOYMENT BENEFITS - CONTINUED
In the July 1, 2014 actuarial valuation, the entry age normal actuarial cost method was used. The actuarial
assumptions included a 4.5 percent investment rate of return (net of administrative expenses) and an annual
healthcare cost trend rate of 6.5 percent in 2014, decreasing 0.5 percent per year to 5.5 percent in 2016. Rates
gradually decrease from 5.3 percent in 2017 to 4.2 percent in 2089 and later based on the Society of Actuaries
Long-Run Medical Cost Trend Model. The unfunded actuarial accrued liability is being amortized using single
period amortization as of the end of the year based on level dollar, thirty-year open period.
NOTE 12 - RISK MANAGEMENT
The District is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets;
errors and omissions; injuries to employees; and natural disasters. Significant losses are covered by commercial
insurance for all major programs. The District’s Worker’s Compensation policy is a retrospectively rated policy;
the final total premium is based on the actual payroll for the policy year and is determined by the insurance
carrier. For insured programs, there were no significant reductions in insurance coverages for the 2014/15 year.
Settlement amounts have not exceeded insurance coverage for the current year or the three prior years. The
District has no unfunded liability.
NOTE 13 - LEASE COMMITMENT
In May 2013, the District entered into an operating-type lease agreement with a company to lease office
equipment. Future annual minimum lease payments under the noncancelable operating lease are as follows for
the years ending June 30:
2016
2017
2018
$
49,212
49,212
49,212
$
147,636
Operating lease payments for the general fund for the year ended June 30, 2015 totaled $49,212.
60
June 30, 2015
NOTE 14 - FUND BALANCE
Details of the District’s governmental fund balance reporting and policy can be found in Note 1, Summary of
Significant Accounting Policies. Fund balance classifications for the year ended June 30, 2015 were as follows:
Nonspendable
Inventory
Prepaid Items
Restricted
Capital Projects
Committed
Retirement Rate Increases
Healthcare Costs
Other Postemployment Benefit Costs
Assigned
2015/16 Expenditures
Unassigned
Total Fund Balance
Capital
Projects
General
$
26,172
45,771
$
Totals
-
$
26,172
45,771
-
10,973,111
10,973,111
5,250,000
4,500,000
2,200,000
-
5,250,000
4,500,000
2,200,000
588,745
4,758,690
-
588,745
4,758,690
$ 17,369,378
$ 10,973,111
$ 28,342,489
The capital projects fund restricted funds are comprised of surplus moneys transferred from the general fund for
the acquisition or construction of capital facilities and qualifying capital assets as authorized by Municipal Code
P.L. 145 Act of April 30, 1943.
The committed funds noted above were authorized through resolution by the board of school directors’ motion
to set aside resources.
NOTE 15 - COMMITMENTS
At June 30, 2015, the District has $1,537,327 in contracts relating to the high school and middle school
auditorium stage projects and the high school field house project. As of June 30, 2015, $111,335 of costs have
been incurred on these contracts, leaving a commitment remaining of $1,425,992. Monies available in the
capital projects fund will be used to cover these commitments.
61
June 30, 2015
NOTE 16 - OTHER INFORMATION
Lincoln Benefit Trust
The District is a member of Lincoln Benefit Trust. The trust is a claims servicing pool which pays claims for
hospital benefits, medical coverage for physicians’ services, certain dental coverage, major medical coverage,
and certain other benefits submitted by employees of the twenty-two participating School Districts. Each
participating employer contributes to the trust amounts determined by actuarial principles which will be
adequate to cover annual claim costs, operating costs, and reserves sufficient to provide stated benefits.
Because Lincoln Benefit Trust acts as a claim-servicing pool, the District remains responsible for the economic
risk of providing stated benefits to employees. However, claims incurred between $100,000 and $300,000 are
paid from the Trust minipool. Claims incurred for $300,000 to $2,500,000 are paid from a stop loss insurance
policy purchased by the Trust.
Under provisions of GASB No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance
Issues, the District must record a liability for claims when the loss is probable, it can be reasonably estimated,
and it exceeds cumulative contributions. The contingent liability, if any, cannot be fully determinable until such
time that the District withdraws from the trust. As of June 30, 2015, a liability is not required because the
District’s cumulative contributions to the Trust exceed the accrued and incurred claims.
Changes in net position for the District’s account were as follows for the years ended June 30, 2015 and 2014:
June 30, 2015
June 30, 2014
Net position - Beginning of Year
Contributions and interest income
Claims paid
Stop-loss insurance
Minipool premium
Minipool reimbursement
Stop-loss experience refund
Stop-loss reimbursement
Other deductions
Administrative fees
$
5,007,291
6,538,848
(5,351,111)
(372,819)
(112,489)
250,717
(15,624)
(263,489)
$
3,987,876
6,552,507
(5,821,472)
(355,204)
(87,687)
421,240
21,197
513,701
(10,704)
(214,163)
Net position - End of Year
$
5,681,324
$
5,007,291
Overall, the Lincoln Benefit Trust had net assets of $77,470,194 at July 01, 2014 and $86,013,863 at June 30,
2015, which resulted in an increase in net position of $8,543,669. Financial statements for Lincoln Benefit Trust
are available at the school district.
62
June 30, 2015
NOTE 17 - NEW ACCOUNTING PRONOUNCEMENTS
The Government Accounting Standards Board (GASB) has issued the following standards which have not yet
been implemented:

Statement No. 72, Fair Value Measurement and Application - The requirements of this statement will
enhance comparability of financial statements among governments by requiring measurement of
certain assets and liabilities at fair value using a consistent and more detailed definition of fair value and
accepted valuation techniques. This statement also will enhance fair value application guidance and
related disclosures in order to provide information to financial statement users about the impact of fair
value measurements on a government's financial position. This statement is required to be
implemented by the year ended June 30, 2016.

Statement No. 74, Financial Reporting for Postemployment Benefits Other Than Pension Plans - The
objective of this statement is to improve the usefulness of information about other postemployment
benefits other than pensions included in the general purpose external financial reports of state and local
governmental OPEB plans for making decisions and assessing accountability. This statement is required
to be implemented by the year ended June 30, 2017.

Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions - This statement replaces the requirements of Statement No. 45, Accounting and Financial
Reporting by Employers for Postemployment Benefits Other Than Pensions. The scope of this statement
addresses accounting and financial reporting for OPEB that is provided to the employees of state and
local governmental employers. This statement establishes standards for recognizing and measuring
liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures.
This statement is required to be implemented by the year ended June 30, 2018.

Statement No. 77, Tax Abatement Disclosures - The requirements enhances the disclosure of
information about the nature and magnitude of tax abatements will make these transactions more
transparent to financial statement users. As a result, users will be better equipped to understand (1)
how tax abatements affect a government's future ability to raise resources and meet its financial
obligations and (2) the impact those abatements have on a government's financial position and
economic condition. This statement is required to be implemented by the year ended June 30, 2017.
The District has not yet completed the analysis necessary to determine the actual financial statement impact of
these new pronouncements.
63
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISON SCHEDULE FOR THE GENERAL FUND
Final
ACTUAL
(GAAP Basis)
$ 40,836,464
17,178,026
849,698
$ 40,836,464
17,178,026
849,698
$ 42,168,864
17,228,628
861,696
58,864,188
58,864,188
60,259,188
1,395,000
24,995,882
7,212,018
844,646
459,023
63,185
24,972,355
7,212,018
844,646
459,023
16,144
63,185
23,795,086
7,046,091
923,951
312,128
7,692
20,425
1,177,269
165,927
(79,305)
146,895
8,452
42,760
33,574,754
33,567,371
32,105,373
1,461,998
2,375,157
1,637,833
2,935,491
572,842
821,110
5,689,811
2,259,761
2,120,503
32,000
2,375,157
1,636,333
2,935,491
572,842
821,110
5,689,811
2,259,761
2,122,503
32,000
2,290,932
1,508,436
2,914,773
524,676
737,906
5,243,207
2,102,512
2,607,060
30,645
84,225
127,897
20,718
48,166
83,204
446,604
157,249
(484,557)
1,355
18,444,508
18,445,008
17,960,147
484,861
1,258,227
31,100
1,257,927
38,283
1,310,513
44,038
(52,586)
(5,755)
1,289,327
1,296,210
1,354,551
(58,341)
6,483,451
-
6,483,451
-
6,338,074
2,329
145,377
(2,329)
59,792,040
59,792,040
57,760,474
2,031,566
2,498,714
3,426,566
Original
REVENUES
Local Sources
State Sources
Federal Sources
TOTAL REVENUES
EXPENDITURES
INSTRUCTION
Regular Programs - Elementary/Secondary
Special Programs - Elementary/Secondary
Vocational Education Programs
Other Instructional Programs - Elementary/Secondary
Nonpublic School Programs
Pre-Kindergarten Programs
TOTAL INSTRUCTION
SUPPORT SERVICES
Pupil Personnel
Instructional Support
Administration
Pupil Health
Business
Operation and Maintenance of Plant Services
Student Transportation Services
Support Services - Central
Other Support Services
TOTAL SUPPORT SERVICES
OPERATION OF NONINSTRUCTIONAL SERVICES
Student Activities
Community Services
TOTAL OPERATION OF
NONINSTRUCTIONAL SERVICES
DEBT SERVICE
REFUND OF PRIOR YEAR REVENUES
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF
REVENUES OVER EXPENDITURES
(927,852)
OTHER FINANCING SOURCES (USES)
Sale of Capital Assets
Insurance Recoveries
Transfers In
Transfers Out
TOTAL OTHER FINANCING SOURCES (USES)
REVENUES AND OTHER FINANCING
SOURCES OVER (UNDER) EXPENDITURES
AND OTHER FINANCING USES
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - END OF YEAR
See note to required supplementary information.
BUDGET
$
(927,852)
VARIANCE
Final to Actual
$
1,332,400
50,602
11,998
-
-
2,628
62,395
187,649
(3,091,090)
2,628
62,395
187,649
(3,091,090)
-
-
(2,838,418)
(2,838,418)
(927,852)
$
(927,852)
(339,704)
$
588,148
17,709,082
$ 17,369,378
64
SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PENSION PLAN
June 30, 2015
2015
District's proportion of the net pension liability
2014
0.1911%
0.1855%
District's proportionate share of the net pension liability
$
75,639,000
$
75,937,000
District's covered employee payroll
$
24,392,132
$
23,810,749
District's proportionate share of the net pension liability as a
percentage of its covered employee payroll
Plan fiduciary net position as a percentage of the
total pension liability
310.10%
318.92%
57.24%
54.50%
The District's covered employee payroll noted above is as of the measurement date of the net
pension liability (June 30, 2014 and 2013).
Note: This schedule is to present the requirement to show information for ten years. However, until a full ten-year
trend is compiled, information for only those years for which information is available is shown.
65
SCHEDULE OF DISTRICT CONTRIBUTIONS - PENSION PLAN
2015
Contractually required contribution
$
Contributions in relation to the
contractually required contribution
2014
5,162,921
$
5,162,921
Contribution deficiency (excess)
$
District's covered employee payroll
$ 25,113,497
Contributions as a percentage of
covered employee payroll
-
20.56%
2013
3,919,411
$
3,919,411
$
-
$ 24,392,132
16.07%
2012
2,778,803
$
2,778,803
$
-
2011
1,914,865
$
1,914,865
$
-
2010
1,210,000
$
1,210,000
$
-
2009
929,153
$
929,153
$
-
2008
922,216
$
922,216
$
-
1,382,329
1,382,329
$
-
$ 23,810,749
11.67%
Note:
This schedule is to present the requirement to show information for ten years. However, until a full ten-year
trend is compiled, information for only those years for which information is available is shown.
66
SCHEDULE OF FUNDING PROGRESS - OTHER POSTEMPLOYMENT BENEFITS PLAN
Actuarial
Value of
Assets
(a)
Actuarial
Valuation
Date
Eligible Employees
Eligible Employees
Eligible Employees
7/1/2014
7/1/2012
7/1/2010
$
-
Actuarial
Accrued
Liability
(AAL) Entry Age
(b)
Unfunded
AAL
(UAAL)
(b - a)
$ 3,668,888
3,602,585
2,852,148
$ 3,668,888
3,602,585
2,852,148
Funded
Ratio
(a / b)
0.00%
0.00%
0.00%
Covered
Payroll
(c)
$ 22,677,507
21,616,257
21,436,833
UAAL as a
Percentage
of Covered
Payroll
((b - a) / c)
16.18%
16.67%
13.30%
67
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
June 30, 2015
BUDGETARY DATA
The budget for the general fund is adopted on the modified accrual basis of accounting which is consistent with
generally accepted accounting principles.
68
SUPPLEMENTARY INFORMATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2015
Federal Grantor/Pass‐Through
Grantor/Program Title
U.S. DEPARTMENT OF EDUCATION
Passed through the State Department of Education:
Title I ‐ Grants to Local Educational Agencies
Title I ‐ Grants to Local Educational Agencies
Total Title I
Title II ‐ Improving Teacher Quality State Grant
Title II ‐ Improving Teacher Quality State Grant
Total Title II
Passed through the Lancaster Lebanon Intermediate Unit:
Special Education Cluster (IDEA)
Special Education ‐ Grants to States
Special Education ‐ Preschool Grants
Special Education ‐ Preschool Grants
Total Special Education Cluster (IDEA)
English Language Acquisition Grants (Title III)
English Language Acquisition Grants (Title III)
Total Title III
Source
Code
Federal
CFDA
Number
Federal
Pass‐through
Grantor's
Number
Program or
Award
Amount
Grant Period
Beginning/Ending
Dates
Receipts
for the
Year
Accrued
(Unearned)
Revenue at
July 1, 2014
Revenue
Recognized
Expenditures
Accrued
(Unearned)
Revenue at June 30, 2015
I
I
84.010
84.010
013‐14‐0138
013‐15‐0138
$ 544,388
607,753
08/15/13‐09/30/14
07/01/14‐09/30/15
$ 76,035
559,839
635,874
$ 64,463
‐
64,463
$ 11,572
593,112
604,684
$ 11,572
593,112
604,684
$ ‐
33,273
33,273
I
I
84.367
84.367
020‐14‐0138
020‐15‐0138
133,776
133,691
08/15/13‐09/30/14
07/01/14‐09/30/15
9,464
133,828
143,292
9,464
‐
9,464
‐
133,691
133,691
‐
133,691
133,691
‐
(137)
(137)
I
I
I
84.027
84.173
84.173
062‐15‐0‐013
N/A
N/A
854,204
4,084
4,534
07/01/14‐06/30/15
07/01/13‐06/30/14
07/01/14‐06/30/15
854,204
4,084
‐
858,288
‐
4,084
4,084
854,204
‐
4,534
858,738
854,204
‐
4,534
858,738
‐
‐
4,534
4,534
12,600
‐
12,600
12,600
‐
12,600
‐
11,460
11,460
‐
11,460
11,460
‐
11,460
11,460
1,650,054
90,611
1,608,573
1,608,573
49,130
I
I
84.365
84.365
N/A
N/A
12,600
11,460
07/01/13‐09/30/14
07/01/14‐09/30/15
TOTAL U.S. DEPARTMENT OF EDUCATION
U.S DEPARTMENT OF HEALTH & HUMAN SERVICES
Passed through the State Department of Welfare:
Medical Assistance Reimbursement for
Administration, Revenue Code 8820
Medical Assistance Reimbursement for
Administration, Revenue Code 8820
I
93.778
N/A
15,616
07/01/13‐06/30/14
4,109
4,109
‐
‐
‐
I
93.778
N/A
9,998
07/01/14‐06/30/15
8,151
‐
9,998
9,998
1,847
12,260
4,109
9,998
9,998
1,847
TOTAL U.S. DEPARTMENT OF
HUMAN AND HEALTH SERVICES
U.S. DEPARTMENT OF AGRICULTURE
Child Nutrition Cluster
National School Lunch Program
School Breakfast Program
I
I
I
I
10.555
10.553
10.555
10.553
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
07/01/13‐06/30/14
07/01/13‐06/30/14
07/01/14‐06/30/15
07/01/14‐06/30/15
21,546
5,209
694,724
161,591
21,546
5,209
‐
‐
‐
‐
708,197
165,242
‐
‐
708,197
165,242
‐
‐
13,473
3,651
I
10.555
N/A
N/A
07/01/14‐06/30/15
120,173
(15,953)
122,903
122,903
(13,223)
1,003,243
10,802
996,342
996,342
3,901
20,155
29,274
‐
‐
24,717
29,274
24,717
29,274
4,562
‐
TOTAL U.S. DEPARTMENT OF AGRICULTURE
1,052,672
10,802
1,050,333
1,050,333
8,463
TOTAL FEDERAL AWARDS
$ 2,714,986
$ 105,522
$ 2,668,904
$ 2,668,904
$ 59,440
Passed through the State Department of Agriculture:
National School Lunch Program ‐ Donated Commodities
TOTAL CHILD NUTRITION CLUSTER
Fresh Fruit and Vegetable Program
FNS Equipment Grant
I
I
10.582
10.579
N/A
113‐36‐2603
24,942
29,274
07/01/14‐06/30/15
07/01/14‐06/30/15
69
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
NOTE 1 - BASIS OF ACCOUNTING
The accompanying schedule of expenditures of federal awards is presented using the accrual basis of
accounting, which is the same basis used for the basic financial statements.
NOTE 2 - FOOD COMMODITIES
Nonmonetary assistance is reported in the schedule at the fair market value of the commodities received and
disbursed. At June 30, 2015, the District had $13,223 of food commodity inventory.
70
Herbein + Company, Inc. 2763 Century Boulevard Reading, PA 19610 P: 610.378.1175 F: 610.378.0999 www.herbein.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
We have audited, in accordance with the auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards issued by the
Comptroller General of the United States, the financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of Ephrata Area School District
as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively
comprise Ephrata Area School District’s basic financial statements, and have issued our report thereon dated
November 16, 2015.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Ephrata Area School District's
internal control over financial reporting (internal control) to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not
for the purpose of expressing an opinion on the effectiveness of Ephrata Area School District’s internal control.
Accordingly, we do not express an opinion on the effectiveness of Ephrata Area School District’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial
statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal
control that we consider to be material weaknesses. However, material weaknesses may exist that have not
been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Ephrata Area School District's financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of
our tests disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and
the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or
on compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the District’s internal control and compliance. Accordingly, this communication is not
suitable for any other purpose.
November 16, 2015
Herbein + Company, Inc. 2763 Century Boulevard Reading, PA 19610 P: 610.378.1175 F: 610.378.0999 www.herbein.com Independent Auditor’s Report on Compliance For Each Major Program
and on Internal Control Over Compliance Required by OMB Circular A-133
Report on Compliance for Each Major Federal Program
We have audited Ephrata Area School District’s compliance with the types of compliance requirements
described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on
each of Ephrata Area School District’s major federal programs for the year ended June 30, 2015. Ephrata Area
School District’s major federal programs are identified in the summary of auditor’s results section of the
accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants
applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of Ephrata Area School District’s major federal
programs based on our audit of the types of compliance requirements referred to above. We conducted our
audit of compliance in accordance with auditing standards generally accepted in the United States of America;
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and
Non-Profit Organizations. 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 Ephrata Area School District's compliance with those
requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal
program. However, our audit does not provide a legal determination of Ephrata Area School District's
compliance.
Opinion on Each Major Federal Program
In our opinion, Ephrata Area School District complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major federal
programs for the year ended June 30, 2015.
Report on Internal Control Over Compliance
Management of Ephrata Area School District is responsible for establishing and maintaining effective internal
control over compliance with the types of compliance requirements referred to above. In planning and
performing our audit of compliance, we considered Ephrata Area School District’s internal control over
compliance with the types of requirements that could have a direct and material effect on a major federal
program to determine the auditing procedures that are appropriate in the circumstances for the purpose of
expressing an opinion on compliance for each major federal program and to test and report on internal control
over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on
the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the
effectiveness of Ephrata Area School District’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance
does not allow management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a
timely basis. A material weakness in internal control over compliance is a deficiency, or combination of
deficiencies, in internal control over compliance, such that there is a reasonable possibility that material
noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected
and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance requirement of a
federal program that is less severe than a material weakness in internal control over compliance, yet important
enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over compliance
that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal
control over compliance that we consider to be material weaknesses. However, material weaknesses may exist
that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of
internal control over compliance and the results of that testing based on the requirements of OMB Circular A133. Accordingly, this report is not suitable for any other purpose.
November 16, 2015
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Section I - Summary of Auditor's Results
Financial Statements
Type of Auditor's Report Issued:
Internal Control Over Financial Reporting:
Material weakness(es) identified?
Significant deficiency(ies) identified not considered to be
material weaknesses?
Unmodified
Noncompliance material to financial statements noted?
yes
X
no
yes
X
none reported
yes
X
no
yes
X
no
yes
X
none reported
X
no
Federal Awards
Internal Control Over Major Programs:
Material weakness(es) identified?
Significant deficiency(ies) identified not considered to be
material weaknesses?
Type of Auditor's Report Issued on Compliance
for Major Programs:
Unmodified
Any audit findings disclosed that are required to be reported
in accordance with Circular A-133, Section .510(a)?
yes
Identification of Major Program(s):
CFDA Number(s)
Child Nutrition Cluster
10.553
10.555
Name of Federal Program or Cluster
Dollar Threshold used to distinguish between Type A and Type B Programs:
$300,000
Auditee qualified as low-risk auditee?
no
X yes
75
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Section II - Financial Statement Findings
There were no financial statement findings.
Section III - Federal Award Findings and Questioned Costs
There were no federal award findings or questioned costs reported.
76
STATUS OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
Section III - Federal Award Findings and Questioned Costs
There were no federal award findings or questioned costs reported.
77
APPENDIX C
Description of the School District
DESCRIPTION OF THE SCHOOL DISTRICT
General
The Ephrata Area School District is located in northern Lancaster County at the junction of U.S. Highway Routes 222
and 322, approximately six miles south of the Reading-Lancaster Interchange of the Pennsylvania Turnpike and is completely
surrounded by the Township of Ephrata. The School District lies in the midst of Lancaster County's rich farming area in the
heart of the Pennsylvania Dutch Country approximately twelve miles north of Lancaster, nineteen miles south of Reading, fortyfour miles east of Harrisburg and sixty-three miles west of Philadelphia in the Lancaster Metropolitan Area (Lancaster County).
The School District is a School District of the Third Class, organized and existing under the laws of the
Commonwealth of Pennsylvania (the "Commonwealth").
The governing body of the School District is a board of nine school directors who are each elected for a four-year term.
The daily operation and management of the School District is carried out by the administrative staff of the School District,
headed by the Superintendent of Schools who is appointed by the Board of School Directors.
School Facilities
The school plant presently operated by the School District consists of one senior high school (grades 9-12), one middle
school (grades 7-8)one intermediate school (grades 5-6), and four elementary schools (grades K-4).
School Year 2014-15
School Facilities
2014-15
Enrollment
Grades
ELEMENTARY
Akron Elementary ......................K-4 .............................. 346
Clay Elementary..........................K-4 .............................. 485
Fulton Elementary.......................K-4 .............................. 383
Highland Elementary ..................K-4 .............................. 456
Intermediate School .....................5-6 .............................. 642
TOTAL ELEMENTARY ................. ........................... 2,312
SECONDARY
Middle School ..............................7-8 .............................. 617
Senior High School ....................9-12 ........................... 1,242
TOTAL SECONDARY ................... ........................... 1,859
TOTAL.............................................. ........................... 4,171
C-1
Pupil Enrollment - History
School Year
2000-2001
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
Elementary
2,236
1,883
1,752
1,760
1,795
1,668
1,724
1,744
2,095
2,147
2,172
2,215
2,297
2,317
2,312
Secondary
2,075
2,405
2,355
2,267
2,308
2,290
2,263
2,256
1,935
1,933
1,916
1,905
1,887
1,888
1,859
Total
4,311
4,288
4,107
4,027
4,103
3,958
3,987
4,000
4,030
4,080
4,088
4,120
4,184
4,205
4,171
Source: School District Officials
Demographic Characteristics
The following tables provide population trends, age, wealth and housing indices for the School District, the County and
the Commonwealth.
Source: The Pennsylvania State University Data Center
Population and Density
Ephrata ASD
Lancaster County
Commonwealth
2000
30,458
150,336
12,281,054
2010
32,978
148,289
12,702,379
Age Composition
(2010)
Ephrata ASD
Lancaster County
Commonwealth
Under 18
24.4%
20.1
22.0
65 or Over
14.9%
18.1
15.4
Income
(2010-5 Year Estimates)
Akron Borough
Clay Township
Ephrata Borough
Ephrata Township
Lancaster County
Commonwealth
Median Family Income
$64,493
69,611
53,773
70,587
64,672
61,890
C-2
Families Below
Poverty Level
1.4%
5.4
3.9
3.6
6.7
9.3
Occupied Housing
(2010)
Total
Housing
Units
Lancaster County
Commonwealth
13,310
209,952
5,567,315
Occupied
Housing
Units
12,802
193,602
5,018,904
(%)
Owner-Occupied
Housing
Units
(%)
96.2%
95.4
90.1
8,889
132,703
3,491,722
66.8%
65.4
62.7
Utilities
The County has been furnished with electric energy and related services by PPL since 1930. PPL, the second largest
electric utility in the state, services approximately 900,000 customers throughout 10,000 square miles of central eastern
Pennsylvania. PPL and eleven neighboring electric utilities have formed the Pennsylvania-New Jersey-Maryland
interconnection which serves as a high capacity power pool fully integrating the generation and transmission systems of the
participating utilities.
Natural gas is delivered to the County by UGI Corporation. UGI has been in operation for more than eighty years and
has over 356 miles of distribution mains in the County.
Higher Education
Lancaster County has a number of institutions of higher learning including:
Elizabethtown College, a privately owned institution in Elizabethtown, which offers an undergraduate liberal arts
education; Franklin and Marshall College, a coeducational liberal arts college in Lancaster; Millersville University, a
State-owned institution in Millersville; the Lancaster campus of Harrisburg Area Community College; the Lancaster
Campus of Penn State; Pennsylvania College of Art and Design, a member of the National Association of Schools of
Art & Design; Lancaster Bible College, a four-year Christian career college unaffiliated with any denomination;
Thaddeus Stevens College of Technology and the Lancaster General College of Nursing and Health Sciences.
In addition, the Lancaster Theological Seminary, and three vocational-technical schools are located within the County.
Transportation
All of the County's major highways converge on the City of Lancaster with the exception of the Pennsylvania Turnpike which
traverses the County in an east-west direction, 15 miles to the north. U.S. Route 30 crosses the Susquehanna River at Columbia,
Pennsylvania, and meets Interstate Route 83 at York, Pennsylvania, 23 miles west of Lancaster. Interstate Route 83 provides a
route to Washington and Baltimore. U.S. Route 222 runs in a north-south direction and connects with Reading, Allentown and
Easton, and intersects the Pennsylvania Turnpike approximately 15 miles north of the City of Lancaster. Other major highways
include U.S. Route 283 connecting Lancaster to Harrisburg, and State Route 501 which intersects the area providing access to
Allentown, Bethlehem and Easton via the northeast extension of the Pennsylvania Turnpike to the east, and Wilkes-Barre,
Scranton and Binghamton, New York, via U.S. Route 81 to the north.
C-3
Medical Facilities
There are 4 general acute care hospitals and one rehabilitation hospital that serve Lancaster County. These hospitals,
their licensed bed capacities and number of employees (full-time and part-time) are as follows:
Institution
Lancaster County
Heart of Lancaster Regional Medical Center
Lancaster General Hospital
Lancaster Regional Medical Center
Lancaster Rehabilitation Hospital
Location
Licensed Beds
Ephrata
Lititz
Lancaster
Lancaster
Lancaster
130
148
630
214
59
Staff
Full-Time
Part-Time
1,457
662
356
73
4727
1,356
538
79
183
124
_________________
Source: Pennsylvania Department of Health, Bureau of Health Statistics; 2014 reporting period.
Tourism
Travel and tourism is among the Commonwealth’s and the County’s leading industries employing, both directly and
indirectly, nearly 40,000 people in Lancaster County. The Pennsylvania Dutch Convention and Visitors Bureau estimates 11
million visitors travel to the County in 2007, spending $1.8 billion in direct economic impact and nearly $460 million in indirect
economic impact. Additionally, travel and tourism generates about $460 million in tax revenues.
Source: Pennsylvania Dutch Convention and Visitors Bureau
C-4
ECONOMY
Classification of Employment by Industry
The following is a breakdown of employment in Lancaster County for 2013 from the Pennsylvania Department of
Labor & Industry. Average annual earnings for workers are included.
Average
Average
Monthly
Total Wages Average Annual
Quarterly Units Employment
(1000s)
Wage
Industry
Lancaster County
AGRICULTURE, FORESTRY, FISHING AND HUNTING
MINING
12,566
219,903
$8,960,106
$40,746
185
17
2,365
373
79,565
18,612
33,643
49,899
8
176
15,953
90,643
CONSTRUCTION
MANUFACTURING
1,557
13,875
715,108
51,539
884
35,517
1,848,461
52,044
WHOLESALE TRADE
713
1,829
11,791
29,006
541,485
701,019
45,924
24,168
TRANSPORTATION AND WAREHOUSING
396
9,221
381,753
41,400
INFORMATION
114
2,985
129,690
43,447
FINANCE AND INSURANCE
REAL ESTATE AND RENTAL AND LEASING
605
6,469
436,161
67,423
335
1,835
70,990
38,687
PROFESSIONAL AND TECHNICAL SERVICES
966
8,376
487,030
58,146
90
3,738
322,083
86,165
567
104
8,535
3,520
233,599
142,995
27,370
40,612
HEALTH CARE AND SOCIAL ASSISTANCE
ARTS, ENTERTAINMENT, AND RECREATION
1,560
35,224
1,483,422
42,114
172
3,746
63,707
17,007
ACCOMMODATION AND FOOD SERVICES
1,000
18,634
280,601
15,059
OTHER SERVICES (EXCEPT PUBLIC ADMINISTRATION)
1,167
6,807
191,584
28,145
70
1,202
69,767
58,042
LOCAL GOVERNMENT
268
15,647
698,870
44,665
STATE GOVERNMENT
31
2,064
117,456
56,907
UTILITIES
RETAIL TRADE
MANAGEMENT OF COMPANIES AND ENTERPRISES
ADMINISTRATIVE AND WASTE SERVICES
EDUCATIONAL SERVICES
FEDERAL GOVERNMENT
_________________
Source: Pennsylvania Department of Labor & Industry, report completed May 2015.
* Data that might be identified with an individual employer and/or data involving fewer than twenty-five employees are not published.
C-5
Trends in Lancaster Labor Market Area Employment and Unemployment
Year
2000 ...........
2001 ...........
2002 ...........
2003 ...........
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015 (Dec)
Civilian
Labor Force
246,300
249,900
260,100
255,400
266,700
270,400
267,300
267,400
271,800
269,700
267,200
266,400
268,800
268,600
270,200
276,000
Total
Employment
240,200
241,900
250,100
245,300
256,200
260,600
257,700
258,400
260,200
250,200
247,100
248,100
251,000
252,100
257,900
267,700
County
2.5
3.2
3.8
4.0
4.0
3.6
3.6
3.4
4.3
7.2
7.5
6.8
6.6
6.1
3.6
3.0
Source: Pennsylvania Department of Labor and Industry
Top Employers in Lancaster County
Name
Description
Lancaster General Hospital
Health Care Services
Mutual Assistance Group
Insurance
County of Lancaster
Government
RR Donnelley & Sons Company
Printing
THLP CO Inc.
Dairy Products
Dart Container Corporation
Foodservice Products
Masonic Villages of the Grand Lodge
Retirement Housing
Armstrong World Industries Inc.
Manufacturing
School District of Lancaster
Education
_________
Source: Pennsylvania Center for Workforce Information & Analysis 2nd Quarter 2015.
C-6
Percentage Unemployed
Pennsylvania
U.S.
4.2
4.0
4.7
4.8
5.7
5.8
5.6
6.0
5.5
5.5
5.0
5.1
4.7
4.6
4.4
4.6
5.4
5.8
8.1
9.3
8.7
9.6
7.9
8.5
7.9
8.1
7.4
7.4
4.8
5.0
4.1
4.8
APPENDIX D
Proposed Form of Bond Opinion
STEVENS & LEE
LAWYERS & CONSULTANTS
111 North 6th Street
P.O. Box 679
Reading, PA 19603-0679
(610) 478-2000 Fax (610) 376-5610
www.stevenslee.com
May __, 2016
Re:
TO:
Ephrata Area School District, Lancaster County, Pennsylvania
dated as of May __, 2016
THE REGISTERED OWNERS OF THE ABOVE-CAPTIONED BONDS
We have served as Bond Counsel in connection with the issuance by the Ephrata Area
School District, Lancaster County, Pennsylvania (the “School District”), of its $_________
aggregate principal amount General Obligation Bonds, Series A of 2016, dated as of and bearing
interest from May __, 2016 (the “Bonds”). The Bonds are being issued, without the assent of the
electors, in fully registered form, without coupons, in denominations of $5,000 each or multiples
thereof, pursuant to the provisions of the Local Government Unit Debt Act of the
Commonwealth of Pennsylvania, as reenacted and amended (the “Act”). The Bonds are being
issued pursuant to the provisions of a resolution adopted by the Board of School Directors of the
School District on March 21, 2016 (the “Resolution”).
The Bonds are being issued to provide funds for (i) the current refunding of a portion of
the School District’s General Obligation Notes, Series of 2014 (the “2014 Notes”), and (ii) the
payment of the costs and expenses of issuing the Bonds, as described more completely in the
Resolution.
The School District has covenanted in the Resolution that it will make no use of the
proceeds of the Bonds and it has neither done nor suffered and will neither do nor suffer any
other action which, if such use or action had been reasonably expected on the date of issue of the
Bonds, would cause the Bonds to be “arbitrage bonds” or “private activity bonds,” as those terms
are defined in the Internal Revenue Code of 1986, as amended (the “Code”), and the applicable
regulations thereunder. The School District has further covenanted that it will comply with the
requirements of Section 148 and Section 141 of the Code and with the applicable regulations
thereunder throughout the term of the Bonds. Further, the School District has designated the
Bonds as “qualified tax-exempt obligations” within the meaning and for the purposes of
Section 265(b)(3) of the Code.
In the Resolution, the School District has covenanted that (1) it will include in its budget
in each fiscal year the amount required to pay debt service on the Bonds for such year, (2) it will
appropriate from its general revenues in each such fiscal year the amount required to pay debt
service on the Bonds for such year, and (3) it will duly and punctually pay or cause to be paid
Philadelphia
 Reading
Wilkes-Barre


Valley Forge
Princeton
 Allentown 

Charleston
Harrisburg 

New York
A PROFESSIONAL CORPORATION
Lancaster  Scranton

Wilmington
STEVENS & LEE
May __, 2016
Page 2
when due, from its sinking fund or any other of its revenues or funds, the principal of and interest
on every Bond at the dates and place and in the manner stated therein, according to the true
intent and meaning thereof. For such budgeting, appropriation and payment, the School District
has irrevocably pledged its full faith, credit and taxing power, subject to such limitations
provided by law. In addition, the School District has established with Manufacturers and Traders
Trust Company (the “Paying Agent”), as paying agent and sinking fund depositary, a sinking
fund, and has covenanted to deposit into such sinking fund amounts sufficient to pay the
principal of and interest on the Bonds as the same shall become due and payable.
In our capacity as Bond Counsel, we have reviewed: (a) a certified copy of each
Resolution; (b) the sworn debt statement and borrowing base certificate of the School District
filed with the Department of Community and Economic Development of the Commonwealth of
Pennsylvania (the “Department”) in accordance with the provisions of the Act; (c) the
proceedings of the School District and the various proofs of publication in connection with the
advertisement of the Resolution, all of which were filed with the Department as required by the
provisions of the Act; (d) the approval of the Department; (e) a specimen copy of one of the
Bonds; (f) the Nonarbitrage Certificate of the School District executed and delivered pursuant to
the provisions of the Code and the regulations applicable thereto; (g) the General Certificate
signed by officials of the School District; (h) a completed and executed Form 8038-G to be filed
with the Internal Revenue Service; (i) the Certificate of RBC Capital Markets, LLC (the
“Purchaser”), dated the date hereof; and (j) the other documents, certificates and opinions
executed and delivered at the closing held this day.
Based and in reliance upon our review of the foregoing, our attendance at the closing held
this day and subject to the qualifications set forth herein, it is our opinion that, as of the date
hereof, under existing law:
1. The School District is empowered under provisions of the Constitution and laws of
the Commonwealth of Pennsylvania to issue the Bonds.
2. The Resolution was duly adopted by the Board of School Directors of the School
District and continues to be in full force and effect as of the date hereof.
3. The Bonds have been duly authorized and executed and constitute valid and binding
obligations of the School District, enforceable in accordance with their terms, except
as the legality, validity, binding nature and enforceability thereof may be limited by
(a) applicable bankruptcy, insolvency or other laws or equitable principles now or
hereafter affecting the enforcement of creditors’ rights generally or (b) general
principles of equity.
STEVENS & LEE
May __, 2016
Page 3
4. Interest on the Bonds is not includable in gross income for federal income tax
purposes under Section 103(a) of the Code.
5. Under the laws of the Commonwealth of Pennsylvania, the Bonds and interest on the
Bonds shall be free from taxation for State and local purposes within the
Commonwealth of Pennsylvania, but this exemption shall not extend to gift, estate,
succession or inheritance taxes or other taxes not levied directly on the Bonds or the
interest thereon. Under the laws of the Commonwealth of Pennsylvania, profits,
gains or income derived from the sale, exchange or other disposition of the Bonds, are
subject to State and local taxation within the Commonwealth of Pennsylvania.
6. The Bonds are qualified tax-exempt obligations within the meaning of
Section 265(b)(3) of the Code, and, therefore, in the case of certain financial
institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is
allowed for 80% of that portion of such financial institution’s interest expense
allocable to interest on the Bonds in accordance with Section 291(a)(3) of the Code.
7. Under the Code, interest on the Bonds held by persons other than corporations (as
defined for federal tax purposes) does not constitute an item of tax preference under
Section 57 of the Code and thus is not subject to alternative minimum tax for federal
income tax purposes.
8. Under the Code, interest on the Bonds held by a corporation (as defined for federal
tax purposes) does not constitute an item of tax preference under Section 57 of the
Code; however, corporations subject to alternative minimum tax will be required to
include, among other things, amounts treated as interest on the Bonds as an
adjustment in computing alternative minimum taxable income in the manner provided
in Section 56 of the Code.
________________________
In connection with providing the foregoing opinions, we call to your attention the
following:
A. As to questions of fact material to our opinion, we have relied upon the certified
proceedings and other documents, agreements, instruments, reports and certificates
furnished to us at or in connection with the issuance of the Bonds (including, without
limitation, certificates and agreements by the School District as to the expected use of
proceeds of the Bonds, and as to its continuing compliance with the Code to assure
that the Bonds do not become “arbitrage bonds” or “private activity bonds,” as
defined in Sections 148 and 141 of the Code and the Regulations thereunder, and its
STEVENS & LEE
May __, 2016
Page 4
expectations with respect to the issuance of additional, tax-exempt obligations within
this calendar year) without undertaking to verify the same by independent
investigation. We have also relied upon the accuracy of the representations and
warranties and the performance of the covenants and agreements of the School
District set forth in the Resolution and the various certificates and other agreements
delivered at or in connection with the closing held this day.
B. In providing the opinion set forth in paragraph 4 above, we have assumed continuing
compliance by the School District with the requirements of the Code and applicable
regulations thereunder which must be met subsequent to the issuance of the Bonds in
order that the interest thereon be and remain excluded from gross income for federal
income tax purposes. Failure to comply with such requirements could cause the
interest on the Bonds to be included in gross income retroactive to the date of
issuance of the Bonds.
C. In providing the opinion set forth in paragraph 6 above, we have assumed continuing
compliance by the School District with the requirements of the Code and the
applicable regulations thereunder that must be met subsequent to the issuance of the
Bonds in order that the Bonds continue to constitute qualified tax-exempt obligations
for purposes of Section 265(b)(3) of the Code. Failure to comply with such
requirements could cause the Bonds to cease to constitute qualified tax-exempt
obligations with the result that no deduction would be allowed for that portion of a
financial institution’s interest expense allocable to interest on the Bonds retroactive to
the date of issuance of the Bonds.
D. In providing the opinions set forth in paragraphs 7 and 8 above, we have assumed
continuing compliance by the School District with the requirements of the Code and
applicable regulations thereunder which must be met subsequent to the issuance of
the Bonds in order that the interest thereon not constitute an item of tax preference
under Section 57 of the Code. Failure to comply with such requirements could cause
the interest on the Bonds to constitute an item of tax preference under Section 57 of
the Code retroactive to the date of issuance of the Bonds.
E. Except as specifically set forth above, we express no opinion regarding other federal
income tax consequences arising with respect to the Bonds, including, without
limitation, the treatment for federal income tax purposes of gain or loss, if any, upon
the sale, redemption, or other disposition of the Bonds prior to maturity of the Bonds
subject to original issue discount or premium and the effect, if any, of certain other
provisions of the Code which could result in collateral federal income tax
consequences to certain investors as a result of adjustments in the computation of tax
liability dependent on tax-exempt interest.
STEVENS & LEE
May __, 2016
Page 5
F. We have not been engaged to verify, nor have we independently verified, the
accuracy, completeness or truthfulness of any statements, certifications, information
or financial statements set forth in the Preliminary Official Statement ________, 2016
(the “Preliminary Official Statement”), or the Official Statement, dated ________,
2016 (the “Official Statement”), or otherwise used in connection with the offer and
sale of the Bonds or set forth in or delivered by School District officials. We express
no opinion with respect to whether the School District, in connection with the sale of
the Bonds or the preparation of the Preliminary Official Statement or the Official
Statement, has made any untrue statement of a material fact or omitted to state a
material fact necessary in order to make any statements made not misleading.
G. We have not verified, and express no opinion as to the accuracy of, any “CUSIP”
identification number which may be printed on any Bond. We have also assumed the
genuineness of the signatures appearing upon all the certificates, documents and
instruments executed and delivered at closing.
STEVENS & LEE, P.C.
APPENDIX E
Proposed Form of Continuing Disclosure Certificate
$_________
AGGREGATE PRINCIPAL AMOUNT
LANCASTER COUNTY, PENNSYLVANIA
GENERAL OBLIGATION BONDS, SERIES A OF 2016
CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed
and delivered by the Ephrata Area School District, Lancaster County, Pennsylvania (the “School
District”), in connection with the issuance of its $_________ aggregate principal amount General
Obligation Bonds, Series A of 2016, (the “Bonds”). The Bonds are being issued pursuant to a
Resolution of the School District, dated March 21, 2016 (the “Resolution”). The School District
covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is
being executed and delivered by the School District for the benefit of the Bondholders and in
order to assist the Participating Underwriter in complying with the Rule (hereinafter defined).
SECTION 2. Definitions. In addition to the definitions set forth in the
Resolution, which apply to any capitalized term used in this Disclosure Certificate unless
otherwise defined in this Section, the following capitalized terms shall have the following
meanings:
“Annual Report” shall mean any Annual Report provided by the School District
pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Bondholders” or “Holders” shall mean the registered owners of the Bonds and, if
registered in the name of Cede & Co., through The Depository Trust Company, New York, New
York (“DTC”), any Beneficial Owners (as such term is used by DTC to define holders other than
nominees) of the Bonds, unless the Rule, or an authoritative interpretation thereof by the
Securities and Exchange Commission (the “Commission”) or its staff, does not require this
Disclosure Certificate to be for the benefit of such Beneficial Owners.
“Commission” shall mean the Securities and Exchange Commission.
“Dissemination Agent” shall mean any person or entity designated from time to
time in writing by the School District and which has filed with the School District a written
acceptance of such designation and of the duties of the Dissemination Agent under this
Disclosure Certificate.
“EMMA” shall mean the Electronic Municipal Market Access system as
described in 1934 Act Release No. 59062 and maintained by the MSRB for purposes of the Rule
as further described in Section 13 hereof.
“Filing” shall mean, as applicable, any Annual Report or Listed Event filing or
any other notice or report made public under this Disclosure Certificate made with each
NRMSIR or the MSRB and the SID, if any, together with a completed copy of a cover sheet in
1
such form acceptable to each NRMSIR, the MSRB or SID, if applicable, describing the event by
checking the box in said form when filing pursuant to the pertinent sections of this Disclosure
Certificate.
“Listed Events” shall mean any of the events listed in Section 5(a) of this
Disclosure Certificate.
“MSRB” shall mean the Municipal Securities Rulemaking Board, or any
successor thereto for purposes of the Rule. Currently, MSRB’s address, phone number and fax
number for purposes of the Rule are:
MSRB
c/o CDINet
1900 Duke Street
Suite 600
Alexandria, VA 22314
Phone: (703) 797-6000
Fax: (703) 683-1930
“NRMSIR” shall mean any Nationally Recognized Municipal Securities
Information Repository recognized for purposes of the Rule and the MSRB, as reflected on the
website of the Securities and Exchange Commission at www.sec.gov. As of the date of this
Disclosure Certificate, the sole NRMSIR shall be the MSRB, through the operation of
EMMA, as provided in Section 13 hereof.
“Participating Underwriter” shall mean any of the original underwriters of the
Bonds required to comply with the Rule in connection with offering of the Bonds.
“Repository” shall mean each NRMSIR and the SID, if any.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Commission under the
Securities Exchange Act of 1934, as the same may be amended from time to time.
“SID” shall mean any public or private state information depositary or entity
designated by the Commonwealth of Pennsylvania as a state information depositary for the
purpose of the Rule, if any. As of the date of this Disclosure Certificate, no SID has been
designated.
SECTION 3. Provision of Annual Reports.
(a)
The School District shall not later than 180 days after the end of
each fiscal year of the School District, commencing with the fiscal year ending June 30, 2016,
provide directly or through the Dissemination Agent to each Repository an Annual Report which
is consistent with the requirements of Section 4 of this Disclosure Certificate. In connection
therewith, not later than fifteen (15) Business Days prior to said date, the School District shall
provide the Annual Report to the Dissemination Agent (if one has been designated by the School
District under this Disclosure Certificate). The Annual Report may be submitted as a single
document or as separate documents comprising a package, and may cross-reference other
2
information as provided in Section 4 of this Disclosure Certificate; provided that the audited
financial statements of the School District may be submitted separately from the remainder of the
Annual Report when such audited financial statements are available. If the audited financial
statements are not submitted as part of the Annual Filing to each Repository pursuant to this
Section 3(a), the School District shall provide to each Repository such audited financial
statements when they are available to the School District.
(b)
If the School District is unable to provide to the Repositories an
Annual Report by the date required in subsection (a), the School District shall send or cause the
Dissemination Agent to send a notice to each NRMSIR and the SID in substantially the form
attached as Exhibit A.
(c)
The School District or the Dissemination Agent, if applicable,
shall:
(i) determine each year prior to the date for providing the Annual
Report the name and address of each NRMSIR and the SID, if any; and
(ii) if a Dissemination Agent has been designated hereunder, file a
report with the School District certifying that the Annual Report has been provided
pursuant to this Disclosure Certificate, stating the date it was provided and listing all the
Repositories to which it was provided.
(iii) The School District shall promptly file a notice of any change
in its fiscal year and the new annual filing date with each NRMSIR and the SID.
(d)
If the Dissemination Agent does not receive the Annual Report
from the School District by the fifteenth Business Day specified in Section 3(a) above, the
Dissemination Agent shall provide a written reminder notice to the School District with respect
to the School District’s obligations under Section 3(a) above no later than five (5) Business Days
after such fifteenth Business Day.
SECTION 4. Content of Annual Reports. The School District’s Annual Report
shall contain or incorporate by reference the following:
(a)
a copy of the School District’s annual financial statements
prepared in accordance with the guidelines adopted by the Government Accounting Standards
Board and the American Institute of Certified Public Accountants’ Audit Guide, Audits of State
and Local Government; and
(b)
a summary of (or a copy of ) the budget for the current fiscal year;
(c)
the aggregate assessed value and aggregate market value of all
taxable real estate for the current fiscal year;
(d)
the taxes and millage rates imposed for the current fiscal year;
3
(e)
the real property tax collection results for the most recent fiscal
year, including (1) the real estate levy imposed (expressed both as a millage rate and an
aggregate dollar amount), (2) the dollar amount of real estate taxes collected that represented
current collections (expressed both as a percentage of such fiscal year's levy and as an aggregate
dollar amount), (3) the amount of real estate taxes collected that represented taxes levied in prior
years (expressed as an aggregate dollar amount), and (4) the total amount of real estate taxes
collected (expressed both as a percentage of the current year's levy and as an aggregate dollar
amount); and
(f)
a list of the ten (10) largest real estate taxpayers and, for each, the
total assessed value of real estate for the current fiscal year.
Any or all of the items listed above may be incorporated by reference from other
documents, including official statements of debt issues of the School District or related public
entities, which have been submitted to each of the Repositories or the Commission. If the
document incorporated by reference is a final official statement, it must be available from the
MSRB. The School District shall clearly identify each such other document so incorporated by
reference. The School District reserves the right to modify from time to time specific types of
information provided hereunder or the format of the presentation of such information, to the
extent necessary or appropriate; provided, however, that any such modification will be done in a
manner consistent with the Rule.
SECTION 5. Reporting of Significant Events.
(a)
The occurrence of any of the following events with respect to a
particular series of the Bonds constitutes a “Listed Event” only with respect to such series of the
Bonds. This Section 5 shall govern the giving of notices of the occurrence of any of the
following events:
(i) Principal and interest payment delinquencies;
(ii) Nonpayment related defaults, if material;
(iii) Unscheduled draws on debt service reserves reflecting
financial difficulties;
(iv) Unscheduled draws on credit enhancements reflecting
financial difficulties;
(v) Substitution of credit or liquidity providers, or their failure to
perform;
(vi) adverse tax opinions, the issuance by the Internal Revenue
Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS
Form 5701-TEB) or other material notices or determinations with respect to the taxexempt status of the Bonds, or other material events affecting the tax status of the Bonds;
(vii) Modifications to rights of securities holders, if material;
4
(viii) Bond calls, if material, and tender offers for the Bonds;
(ix) Defeasances;
(x) Release, substitution, or sale of property securing repayment of
the securities, if material;
(xi) Rating changes;
(xii) Bankruptcy, insolvency, receivership or similar events of the
School District;
(xiii) The consummation of a merger, consolidation, or acquisition
involving the School District or the sale of all or substantially all of the assets of the
School District, other than in the ordinary course of business, the entry into a definitive
agreement to undertake such an action or the termination of a definitive agreement
relating to any such actions, other than pursuant to its terms, if material;
(xiv) Appointment of a successor or additional trustee or paying
agent or the change of name of a trustee or paying agent, if material; and
(xv) Failure to provide annual financial information as required.
(b)
Whenever the School District obtains knowledge of the occurrence
of a Listed Event, the School District shall as soon as possible (with respect to those Listed
Events where a determination of materiality by the School District is applicable) determine if
such event would constitute material information for Holders of Bonds under applicable federal
securities laws.
(c)
If (i) a Determination of materiality by the School District is not
relevant to the obligation to give notice of a Listed Event or (ii) the School District determines
(with respect to those Listed Events where a determination of materiality by the School District
is applicable) that knowledge of the occurrence of a Listed Event would be material under
applicable federal securities laws, the School District shall promptly file in a timely manner, not
in excess of ten (10) business days after the occurrence of the Listed Event, or cause the
Dissemination Agent to so file (if a Dissemination Agent has been designated hereunder) a
notice of such occurrence with each NRMSIR and the SID, if any, with a copy to the Paying
Agent.
(d)
For purposes of the Listed Events in Section 5(a)(xii), the School
District and the Dissemination Agent acknowledge the following interpretive note which the
Commission has set forth in the Rule: “Note: for the purposes of the event identified in
subparagraph (b)(5)(i)(C)(12), the event is considered to occur when any of the following occur:
the appointment of a receiver, fiscal agent or similar officer for an obligated person in a
proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal
law in which a court or governmental authority has assumed jurisdiction over substantially all of
the assets or business of the obligated person, or if such jurisdiction has been assumed by
leaving the existing governmental body and officials or officers in possession but subject to the
5
supervision and orders of a court or governmental authority, or the entry of an order confirming
a plan of reorganization, arrangement or liquidation by a court or governmental authority
having supervision or jurisdiction over substantially all of the assets or business of the obligated
person;”
SECTION 6. Termination of Reporting Obligation. The School District’s
obligations under this Disclosure Certificate shall terminate upon the defeasance, prior
redemption or payment in full of all of the Bonds.
In the event that any person or entity subsequent to the execution hereof becomes
an “obligated person,” as such term is defined in the Rule, with respect to the Bonds, the School
District covenants to use its best effort to cause such obligated person to enter into a written
undertaking to comply with the provisions of the Rule or to cause this Disclosure Certificate to
be amended and to cause such obligated person to join in the execution of such amendment.
SECTION 7. Dissemination Agent. The School District may, from time to time,
appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this
Disclosure Certificate, and may discharge any such Dissemination Agent, with or without
appointing a successor Dissemination Agent. The School District shall cause the Dissemination
Agent appointed hereunder and any successors to execute and deliver an acknowledgment of
acceptance of the designation and duties of Dissemination Agent under this Disclosure
Statement.
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Certificate, the School District may amend this Disclosure Certificate, and any
provision of this Disclosure Certificate may be waived, if such amendment or waiver is
supported by an opinion of counsel expert in federal securities laws to the effect that such
amendment or waiver would not, in and of itself, cause the undertakings herein to violate the
Rule if such amendment or waiver had been effective on the date hereof but taking into account
any subsequent change in or official interpretation of the Rule, as well as any change in
circumstances.
SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall
be deemed to prevent the School District from disseminating any other information, using the
means of dissemination set forth in this Disclosure Certificate or any other means of
communication, or including any other information in any Annual Report or notice of occurrence
of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the
School District chooses to include any information in any Annual Report or notice of occurrence
of a Listed Event in addition to that which is specifically required by this Disclosure Certificate,
the School District shall have no obligation under this Agreement to update such information or
include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the School District to comply
with any provision of this Disclosure Certificate, any Bondholder may take such actions as may
be necessary and appropriate, including seeking mandate or specific performance by court order,
to cause the School District to comply with its obligations under this Disclosure Certificate. A
default under this Disclosure Certificate shall not be deemed an event of default under the Bonds
6
or the Resolution, and the sole remedy under this Disclosure Certificate in the event of any
failure of the School District to comply with this Disclosure Certificate shall be an action to
compel performance.
SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent, if
other than the School District. The Dissemination Agent shall have only such duties as are
specifically set forth in this Disclosure Certificate, and the School District agrees to indemnify
and save the Dissemination Agent, its officers, directors, employees and agents, harmless against
any loss, expense and liabilities which it may incur arising out of or in the exercise or
performance of its powers and duties hereunder, including the costs and expenses (including
attorneys fees) of defending against any claim of liability, but excluding liabilities due to the
Dissemination Agent’s negligence or willful misconduct. The obligations of the School District
under this Section shall survive resignation or removal of the Dissemination Agent and payment
of the Bonds.
SECTION 12. Undertaking with Respect to Certain Procedures and Policies. The
School District agrees to begin the process of establishing internal policies and procedures for
the purpose of continuing disclosure compliance. Without intending to preclude the adoption of
other necessary or useful policies and procedures, a single School District official will be
designated with ultimate responsibility for continuing disclosure compliance and will oversee the
process of informing and training appropriate deputies and other School District employees with
respect to the School District’s continuing disclosure undertakings.
SECTION 13. EMMA. Filings shall be made to the continuing disclosure
service portal provided through EMMA as provided at http://www.emma.msrb.org, or any
similar system that is acceptable to the Commission.
SECTION 14. Alternative Filing. Notwithstanding the other provisions of this
Disclosure Certificate, any filing under this Disclosure Certificate, and any additional
supplements hereto, may be made with such depositories and using such electronic filing systems
as may be approved by the Untied States Securities and Exchange Commission (in lieu of the
procedures currently in this Disclosure Certificate).
7
SECTION 15. Beneficiaries. This Disclosure Certificate shall inure solely to the
benefit of the School District, the Paying Agent, the Dissemination Agent (if any), the
Participating Underwriter and the Holders from time to time of the Bonds, and shall create no
rights in any other person or entity.
(SEAL)
By:
President
Attest:
Secretary
Date: May __, 2016
8
EXHIBIT A1
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer:
Name of Bond Issue: Ephrata Area School District
$_________ aggregate principal amount General Obligation Bonds,
Series A of 2016 (the “Bonds”)
Date of Issuance:
May __, 2016
NOTICE IS HEREBY GIVEN that the Ephrata Area School District, Lancaster
County, Pennsylvania (the “School District”), has not provided an Annual Report with respect to
the above-named Bonds as required by Section 3 of the Continuing Disclosure Certificate, dated
May __, 2016, executed by the School District. The School District anticipates that the Annual
Report will be filed by _______________________.
Dated: ___________________
EPHRATA AREA SCHOOL DISTRICT,
LANCASTER COUNTY, PENNSYLVANIA, [OR
DISSEMINATION AGENT ON BEHALF OF
THE EPHRATA AREA SCHOOL DISTRICT,
LANCASTER COUNTY, PENNSYLVANIA]
cc:
Paying Agent
1
The substantive content of this notice shall be provided in any applicable notice filing.
Appropriate modifications may be made to accommodate the electronic submission format
requirements of the EMMA system or other successor electronic filing system.
A-1
APPENDIX F
Bond Amortization Schedules
$9,045,000
Due: March 1, as shown below
Maturing
Principal
Payment
Date
September 1, 2016
March 1, 2017
September 1, 2017
March 1, 2018
September 1, 2018
March 1, 2019
September 1, 2019
March 1, 2020
September 1, 2020
March 1, 2021
September 1, 2021
March 1, 2022
Total
Form: Book-Entry Only
Coupon
$
$
$
Debt
Service
Interest
Fiscal
Year
Ended
June 30
Fiscal
Debt Service
$
%
$
$
$
$

$9,045,000* EPHRATA AREA SCHOOL DISTRICT Lancaster

Transcription

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