$18,150,000* central dauphin school district - pfmauction.com · no dealer, broker, salesman or...

PRELIMINARY OFFICIAL STATEMENT DATED JANUARY 16, 2014 NEW ISSUE—BOOK-ENTRY ONLY RATING: S&P: (Underlying) (See “RATING” herein)

In the opinion of 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 all regulations applicable thereunder, and subject to the conditions described in “TAX EXEMPTION AND OTHER TAX MATTERS” herein, interest on the Notes is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on corporations (as defined in the Code). Other provisions of the Code may affect the purchasers and holders of the Notes. Under the laws of the Commonwealth of Pennsylvania, as currently enacted and construed, the Notes are exempt from personal property taxes in Pennsylvania and the interest on the Notes is exempt from Pennsylvania personal income tax and Pennsylvania corporate net income tax.

$18,150,000* Central Dauphin School District

Dauphin County, Pennsylvania General Obligation Notes, Series of 2014

Dated: Date of Delivery Principal Due: December 1, as shown on inside cover Interest Due: June 1 and December 1 First Interest Payment: June 1, 2014

The General Obligation Notes, Series of 2014 (the “Notes”), in the aggregate principal amount of $18,150,000* will be issued in registered form in denominations of $5,000 or any integral multiple thereof. The Notes will be registered in the name of Cede & Co., as the registered owner and nominee of The Depository Trust Company ("DTC"), New York, New York. Beneficial ownership of the Notes may be acquired in denominations of $5,000 or any integral multiple thereof only under the book-entry only system maintained by DTC through brokers and dealers who are, or act through, DTC Participants. The purchasers of the Notes will not receive physical delivery of the Notes. For so long as any purchaser is the beneficial owner of a Note, that purchaser must maintain an account with a broker or a dealer who is, or acts through, a DTC Participant to receive payment of principal of and interest on the Notes. See "BOOK-ENTRY ONLY SYSTEM" herein. If, under the circumstances described herein, Notes are ever issued in certificated form, the Notes will be subject to registration of transfer, exchange and payment as described herein.

The Notes are general obligations of the Central Dauphin School District, Dauphin County, Pennsylvania (the "School District"), payable from its tax and other general revenues. 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 Notes for such year and will duly and punctually pay or cause to be paid from the sinking fund established under the Resolution or any other of its revenues or funds the principal of every Note and the interest thereon on the dates, at the place and in the manner stated in the Notes, and for such budgeting, appropriation and payment the School District irrevocably has pledged its full faith, credit and taxing power which taxing power presently includes the power to levy an annual ad valorem tax on all taxable real property within the School District, within the limits provided by law. (See “Security” and “Taxing Powers of the School District” infra).

Interest on each of the Notes is payable initially on June 1, 2014, and thereafter semiannually on June 1 and December 1 of each year until the maturity date of such Note or, if such Note is subject to redemption prior to maturity, until the date fixed for redemption thereof, if payment of the redemption price has been duly made or provided for. The School District has appointed TD Bank, N.A. (the “Paying Agent”), as paying agent and sinking fund depository for the Notes. So long as Cede & Co., as nominee for DTC, is the registered owner of the Notes, payments of the principal of, redemption premium, if any, and interest on the Notes, when due for payment, will be made directly to DTC by the Paying Agent, and DTC will in turn remit such payments to DTC Participants for subsequent disbursement to the Beneficial Owners of the Notes. If the use of the Book-Entry Only System for the Notes is ever discontinued, the principal of and redemption premium, if any, on each of the Notes will be payable, when due, upon surrender of such Note to the Paying Agent at its corporate trust office located in Harrisburg, Pennsylvania or Cherry Hill, New Jersey (or any successor paying agent at its designated office(s)) and interest on such Note will be payable by check made out and mailed to the person(s) in whose name(s) such Note is registered as of the Record Date with respect to the particular interest payment date (See “THE NOTES,” infra).

The Notes are not subject to optional redemption prior to maturity as described herein.

Proceeds of the Notes will be used to: (1) currently refund all of the School District’s outstanding General Obligation Notes, Series of 2004, (2) advance refund all of the School District’s outstanding General Obligation Bonds, Series of 2009, (3) advance refund a portion of the School District’s outstanding General Obligation Bonds, Series of 2010; and (4) pay the costs of issuing the Notes.

The Notes are an authorized investment for fiduciaries in the Commonwealth pursuant to the Pennsylvania Probate, Estate and Fiduciaries Code, Act of June 30, 1972, No. 164, P.L. 508, as amended and supplemented.

MATURITIES, AMOUNTS, RATES AND YIELDS/PRICES See Inside Front Cover

The Notes are offered when, as and if issued, subject to withdrawal or modification of the offer without notice, and subject to the approving legal opinion of McNees Wallace & Nurick LLC, of Harrisburg, Pennsylvania, Bond Counsel to the School District, to be furnished upon delivery of the Notes. Certain other legal matters will be passed upon for the School District by Shaffer & Engle Law Offices, of Harrisburg, Pennsylvania, as Solicitor to the School District. Public Financial Management, Inc., Harrisburg, Pennsylvania, serves as Financial Advisor to the School District in connection with the issuance of the Notes. It is expected that the Notes will be available for delivery through the Book-Entry Only System of DTC, New York, New York, on or about March 6, 2014.

Public Financial Management, Inc. Financial Advisor to the School District

*Estimate, subject to change.

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Dated: Date of Delivery Principal Due: December 1, as shown below Interest Due: June 1 and December 1 First Interest Payment: June 1, 2014

NOTE MATURITY SCHEDULE

Maturity Date

(December 1) Principal Interest

Year Amounts Rates Yields Prices

2014

2015

2016

2017

2018

2019

2020

2021

2022

(A portion of the Notes may be structured as Term Notes. See “Invitation to Bid”.)


CENTRAL DAUPHIN SCHOOL DISTRICT Dauphin County, Pennsylvania

BOARD OF SCHOOL DIRECTORS

Mr. Ford S. Thompson ........................................................................ President Mr. Brian Faleshock ............................................................................ Vice President Mrs. Janis Macut ................................................................................. Secretary Mrs. Erin Burlew................................................................................. Member Mr. Eric Epstein .................................................................................. Member Mr. Chris Judd .................................................................................... Member Mr. William Roberts, Jr. ..................................................................... Member Mrs. Kristine Saylor ............................................................................ Member Mr. Stephen Smith .............................................................................. Member

SUPERINTENDENT

DR. CAROL JOHNSON

DIRECTOR OF BUSINESS AFFAIRS MRS. KAREN L. MCCONNELL, MBA, CPA

SOLICITOR

SHAFER & ENGLE LAW OFFICES Harrisburg, Pennsylvania

BOND COUNSEL

MCNEES WALLACE & NURICK LLC Harrisburg, Pennsylvania

FINANCIAL ADVISOR

PUBLIC FINANCIAL MANAGEMENT, INC. Harrisburg, Pennsylvania

PAYING AGENT TD BANK, N.A.

Harrisburg, Pennsylvania or Cherry Hill, New Jersey

SCHOOL DISTRICT ADDRESS 600 Rutherford Road

Harrisburg, Pennsylvania 17109

i

No dealer, broker, salesman or other person has been authorized by the School District to give information or to make any representations, other than those contained in this Preliminary Official Statement, and if given or made, such other information or representations must not be relied upon. This Preliminary 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 Notes in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. The information set forth herein has been obtained from the School District and from other sources which are believed to be reliable but the School District does not guarantee the accuracy or completeness of information from sources other than the School District. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Preliminary Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in any of the information set forth herein since the date hereof.

TABLE OF CONTENTS Page Page

INTRODUCTION ............................................................................ 1

PURPOSE OF THE ISSUE ............................................................. 1

Current Refunding of the 2004 Notes ..................................... 1 Advance Refunding of the 2009 Bonds .................................. 1 Advance Refunding of a Portion of the 2010 Bonds .............. 1 Escrow Verification on the 2009 Bonds and Refunded 2010 Bonds ....................................................................................... 2 Sources and Uses of Note Proceeds ........................................ 2

THE NOTES ..................................................................................... 2

Description .............................................................................. 2 Payment of Principal and Interest ........................................... 2 Transfer, Exchange and Registration of Notes ....................... 3 Commonwealth Enforcement of Debt Service Payments ....... 3 Security .................................................................................... 4 Sinking Fund ........................................................................... 4

BOOK-ENTRY ONLY SYSTEM ................................................... 4

REDEMPTION OF NOTES ........................................................... 6

Optional Redemption .............................................................. 6 Mandatory Redemption ........................................................... 6

THE SCHOOL DISTRICT ............................................................. 6

Introduction ............................................................................. 6 School Building Facilities ....................................................... 7 Student Enrollments ................................................................ 7

SCHOOL DISTRICT FINANCES ................................................. 8

Introduction ............................................................................. 8 Financial Reporting ................................................................. 8 Budgeting Process as modified by Act 1 of 2006 (Taxpayer Relief Act) ................................. 8 Summary and Discussion of Financial Results ....................... 9 Revenue ................................................................................... 10

TAXING POWERS OF THE SCHOOL DISTRICT .................... 12

Status of the Notes Under Act 1 .............................................. 14 Act 130 of 2008 ....................................................................... 14 Act 48 of 2003 ......................................................................... 14 Tax Levy Trends ..................................................................... 15 Real Property Tax .................................................................... 16 Other Taxes ............................................................................. 17 Commonwealth Aid to School Districts ................................. 18

DEBT AND DEBT LIMITS ............................................................ 18

Debt Statement ........................................................................ 18

(1) See “Related Interest Rate Swap Agreement” herein. ........ 18 Debt Limit and Remaining Borrowing Capacity .................... 20 Related Interest Rate Swap Agreement .................................. 20 Debt Service Requirements ..................................................... 21 Future Financing ..................................................................... 21 School District Employees ...................................................... 22 Pension Program ..................................................................... 22 Other Post-Employment Benefits ........................................... 22

LITIGATION ................................................................................... 23

DEFAULTS AND REMEDIES ...................................................... 23

TAX EXEMPTION AND OTHER TAX MATTERS ................... 23

Federal Tax Exemption ........................................................... 23 Pennsylvania Tax Exemption ................................................. 24

CONTINUING DISCLOSURE UNDERTAKING ....................... 25

RATING ............................................................................................ 26

UNDERWRITING ........................................................................... 26

LEGAL OPINION ........................................................................... 26

FINANCIAL ADVISOR .................................................................. 26

MISCELLANEOUS ........................................................................ 27

APPENDIX A - DEMOGRAPHIC AND ECONOMIC INFORMATION

RELATING TO THE CENTRAL DAUPHIN SCHOOL DISTRICT

Introduction ............................................................................. A-1 Employment ............................................................................ A-2 Income ..................................................................................... A-4 Commercial Activity ............................................................... A-4 Retail Activity ......................................................................... A-4 Recreation ............................................................................... A-5 Transportation ......................................................................... A-5 Utilities .................................................................................... A-5 Higher Education .................................................................... A-5 Medical Facilities .................................................................... A-6

APPENDIX B

Form of Bond Counsel Opinion

APPENDIX C

Audited Financial Statements

[THIS PAGE INTENTIONALLY LEFT BLANK]

1

PRELIMINARY OFFICIAL STATEMENT



INTRODUCTION

This Preliminary Official Statement, including the cover page and inside cover page hereof and Appendices hereto, is furnished by Central Dauphin School District, Dauphin County, Pennsylvania (the “School District”), in connection with the offering of its $18,150,000*, General Obligation Notes, Series of 2014, dated as of March 6, 2014 (the "Notes"). The Notes are being issued pursuant to a Resolution of the Board of School Directors of the School District, adopted on January 27, 2014 (the "Resolution"), and in accordance with the Local Government Unit Debt Act, 53 Pa. C.S. Chs. 80-82 (the “Act”), of the Commonwealth of Pennsylvania (the “Commonwealth”).

PURPOSE OF THE ISSUE Proceeds of the Notes will be used to: (1) currently refund all of the School District’s outstanding General Obligation Notes, Series of 2004, currently outstanding in the principal amount of $15,645,000 (the “2004 Notes”), (2) advance refund all of the School District’s outstanding General Obligation Bonds, Series of 2009, currently outstanding in the principal amount of $3,420,000 (the “2009 Bonds”), (3) advance refund a portion of the School District’s outstanding General Obligation Bonds, Series of 2010, currently outstanding in the principal amount of $9,380,000 (the “2010 Bonds”) of which $1,235,000 shall be refunded (the “Refunded 2010 Bonds”); and (4) pay the costs of issuing the Notes. Current Refunding of the 2004 Notes

Subject only to the completion of delivery of, and settlement for, the Notes, the School District authorizes and directs a portion of the Notes to be irrevocably deposited in an escrow fund (the “2004 Escrow Fund”) established with Manufacturers and Traders Trust Company, as paying agent for the 2004 Notes, under and pursuant to the terms of the Escrow Agreement with the School District (the “Escrow Agreement”), dated as of March 6, 2014. A portion of the proceeds of the Notes so deposited will be used to purchase direct obligations of the United States of America, State and Local Government Series, which will mature and earn interest at such rates as will provide sufficient funds to pay the interest, maturing principal and the redemption price of the 2004 Notes, all as set forth in the Escrow Agreement. The 2004 Notes will be called for optional redemption on June 1, 2014, at a redemption price of 100% of the principal amount thereof plus accrued interest thereon, pursuant to the optional redemption provisions applicable to the 2004 Notes. Advance Refunding of the 2009 Bonds

Subject only to the completion of delivery of, and settlement for, the Notes, the School District authorizes and directs a portion of the Notes to be irrevocably deposited in an escrow fund (the “2009 Escrow Fund”) established with Manufacturers and Traders Trust Company, as paying agent for the 2009 Bonds, under and pursuant to the terms of the Escrow Agreement. A portion of the proceeds of the Notes so deposited will be used to purchase direct obligations of the United States of America, State and Local Government Series, which will mature and earn interest at such rates as will provide sufficient funds to pay the interest, maturing principal and the redemption price of the 2009 Bonds, all as set forth in the Escrow Agreement. The 2009 Bonds will be called for optional redemption on July 15, 2014, at a redemption price of 100% of the principal amount thereof plus accrued interest thereon, pursuant to the optional redemption provisions applicable to the 2009 Bonds. Advance Refunding of a Portion of the 2010 Bonds

Subject only to the completion of delivery of, and settlement for, the Notes, the School District authorizes and directs a portion of the Notes to be irrevocably deposited in an escrow fund (the “2010 Escrow Fund”) established with TD Bank, N.A., as paying agent for the 2010 Bonds, under terms of an Escrow Agreement with the School District (the “2010 Escrow Agreement, and together with the Escrow Agreement, the “Escrow Agreements”), dated as of March 6, 2014. A portion of the proceeds of the Notes so deposited will be used to purchase direct obligations of the United States of America, State and Local Government Series, which will mature and earn interest at such rates as will provide sufficient funds to pay the interest, maturing principal and the redemption price of the Refunded 2010 Bonds, all as set forth in the Escrow Agreement. The Refunded 2010 Bonds will be called for optional redemption on February 1, 2016, at a redemption price of 100% of the principal amount thereof plus accrued interest thereon, pursuant to the optional redemption provisions applicable to the Refunded 2010 Bonds. *Estimate, subject to change.

2

Escrow Verification on the 2009 Bonds and Refunded 2010 Bonds

The accuracy of the mathematical computations supporting the adequacy of the maturing principal amounts of, and interest earned on, the Government Obligations deposited pursuant to the Escrow Agreements to pay the principal of, and interest and premium, if any, when due on the 2009 Bonds and Refunded 2010 Bonds, and the accuracy of certain mathematical computations supporting the conclusion of Bond Counsel that the Notes will not be “arbitrage bonds” under Section 103(c) of the Internal Revenue Code, will be verified by BondResource Partners, LP, as a condition to the delivery of the Bonds. BondResource Partners, LP is wholly owned by PFM Asset Management LLC, a member of The PFM Group.

Sources and Uses of Note Proceeds The following is a summary of the sources and uses of the proceeds from the issuance of the Notes.

SOURCES: Totals Note Proceeds .................................................................................................. Net Original Issue Premium (Discount) ........................................................... Accrued Interest ............................................................................................... Total ...........................................................................................................

USES: Escrow Fund Deposit for the 2004 Notes ........................................................ Escrow Fund Deposit for the 2009 Bonds ....................................................... Escrow Fund Deposit for the Refunded 2010 Bonds ....................................... Costs of Issuance(1) .......................................................................................... Total ...........................................................................................................

(1)Includes legal, financial advisor, underwriter’s discount, printing, rating, CUSIP, paying agent, escrow agent, verification agent and miscellaneous costs.

THE NOTES Description The Notes will be issued in fully registered form in denominations of $5,000 and integral multiples thereof, will be in the aggregate principal amount of $18,150,000*, will be dated as of March 6, 2014, and will bear interest at the rates and mature in the amounts and on the dates set forth on the inside front cover of this Preliminary Official Statement. Interest on each of the Notes will be payable initially on June 1, 2014, and, thereafter, semiannually on June 1 and December 1 of each year until the maturity date of such Note or, if such Note is redeemable and is called for redemption prior to maturity, until the date fixed for redemption thereof, if payment of the redemption price has been duly made or provided for. When issued, the Notes will be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”), New York, New York. Purchasers of the Notes (the “Beneficial Owners”) will not receive any physical delivery of Note certificates, and beneficial ownership of the Notes 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 Notes, payments of principal of, redemption premium, if any, and interest on the Notes, 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, redemption premium, if any, and interest so paid. If the use of the Book-Entry Only System for the Notes is discontinued for any reason, Note certificates will be issued to the Beneficial Owners of the Notes and payment of principal, redemption premium, if any, and interest on the Notes shall be made as described in the following paragraphs: The principal of the Notes, when due upon maturity or upon any earlier redemption, will be paid to the registered owners of the Notes, or registered assigns, upon surrender of the Notes to TD Bank, N.A. (the “Paying Agent”), acting as paying agent and sinking fund depositary for the Notes, at its corporate trust office in Harrisburg, Pennsylvania or Cherry Hill, New Jersey (or to any successor paying agent at its designated office(s)).


3

Interest on each of the Notes will be payable to the registered owner of such Note from the interest payment date next preceding the date of registration and authentication of the Note, unless: (a) such Note is registered and authenticated as of an interest payment date, in which event such Note shall bear interest from said interest payment date, or (b) such Note is registered and authenticated after a Record Date (hereinafter defined) and before the next succeeding interest payment date, in which event such Note shall bear interest from such interest payment date, or (c) such Note is registered and authenticated on or prior to the Record Date preceding June 1, 2014, in which event such Note shall bear interest from March 6, 2014, or (d) as shown by the records of the Paying Agent, interest on such Note shall be in default, in which event such Note shall bear interest from the date to which interest was last paid on such Note. Interest on each Note will be 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) calendar day (whether or not a day on which the Paying Agent is open for business) next preceding each interest payment date (the “Record Date”), on the registration books maintained by the Paying Agent, irrespective of any transfer or exchange of the Note 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 Note 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 owner of such Note not less than fifteen (15) days preceding such special record date. Such notice shall be mailed to the person in whose name such Note is registered at the close of business on the fifth (5th) day preceding the date of mailing. If the date for payment of the principal of or interest on any Notes shall be a Saturday, Sunday, legal holiday or 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 Notes Subject to the provisions described below under “Book-Entry Only System,” each of the Notes are transferable or exchangeable by the registered owners, thereof upon surrender of Notes to the Paying Agent, 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 Note or his attorney-in-fact or legal representative. The Paying Agent shall enter any transfer of ownership of Notes 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 Note or Notes of authorized denominations of the same series, maturity and interest rate for the aggregate principal amount which the registered owner is entitled to receive. The School District and the Paying Agent may deem and treat the registered owner of any Note as the absolute owner thereof (whether or not a Note 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. The School District and the Paying Agent shall not be required (a) to register the transfer of or exchange any Notes then considered for redemption during a period beginning at the close of business on the fifteenth (15th) day next preceding any date of selection of Notes to be redeemed and ending at the close of business on the day on which the applicable notice of redemption is mailed or (b) to register the transfer of or exchange any portion of any Note selected for redemption until after the redemption date. Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations of the same series, maturity and interest rate. Commonwealth Enforcement of Debt Service Payments Section 633 of the Pennsylvania Public School Code of 1949, as amended by Act 150 of 1975, and as further amended and supplemented (the “Public School Code”), presently provides that in all cases where the board of school directors of any school district fails to pay or to provide for the payment of any indebtedness at date of maturity or date of mandatory redemption or on any sinking fund deposit date, or any interest due on such indebtedness on any interest payment date or on any sinking fund deposit date, in accordance with the schedule under which the Notes were issued, the Secretary of Education shall notify such board of school directors of its obligation and shall withhold out of any Commonwealth appropriation due such school district an amount equal to the sum of the principal amount maturing or subject to mandatory redemption and interest owing by such school district, or sinking fund deposit due by such school district, and shall pay over the amount so withheld to the bank or other person acting as sinking fund depository for such Note issue. These withholding provisions are not part of any contract with the holders of the Notes, and may be amended or repealed by future legislation. There can be no assurance, however, that any payments pursuant to this withholding provision will be made by the date on which such payments are due to the Noteholders. The effectiveness of Section 633 of the Public School Code 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.

4

Security The Notes will be general obligations of the School District, payable from its tax and other general revenues. The School District has covenanted that it will provide in its budget for each year, and will appropriate from its general revenues in each such year, the amount of the debt service on the Notes for such year, and will duly and punctually pay or cause to be paid from its Sinking Fund, as hereinafter defined, or any other of its revenues or funds, the principal of each of the Notes and the interest thereon at the dates and place and in the manner stated on the Notes, 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 the limits provided by law (see “Taxing Powers of the School District” herein). The Act presently provides for enforcement of debt service payments as hereinafter described (see “Defaults and Remedies” herein), and the Public School Code presently provides for the withholding and application of subsidies in the event of failure to pay debt service (see “Commonwealth Enforcement of Debt Service Payments” herein). Sinking Fund A sinking fund for the payment of debt service on the Notes, designated as the “Sinking Fund – Central Dauphin School District, Dauphin County, Pennsylvania - Series of 2014” (the “Sinking Fund”), has been created under the Resolution and is maintained by the Paying Agent, as sinking fund depositary. The School District shall deposit in the Sinking Fund a sufficient sum not later than the date when interest and/or principal is to become due on the Notes so that on each payment date the Sinking Fund will contain an amount which, together with any other funds available therein, is sufficient to pay, in full, interest and/or principal then due on the Notes. The Sinking Fund shall be held by the Paying Agent, as sinking fund depositary, and invested by the Paying Agent in such securities or shall be deposited in such funds or accounts as are authorized by the Act, upon direction of the School District. Such deposits and securities shall be in the name of the School District, but subject to withdrawal or collection only by the Paying Agent, as sinking fund depositary, and such deposits and securities, together with the interest thereon, shall be a part of the Sinking Fund. The Paying Agent, as sinking fund depositary, is authorized without further order from the School District to pay from the Sinking Fund the principal of and interest on the Notes, as and when due and payable.

BOOK-ENTRY ONLY SYSTEM

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Notes. The Notes will be issued as fully-registered Notes 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 Note certificate will be issued for each maturity of the Notes, each in the aggregate principal amount of such issue maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a

“banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the Notes on DTC’s records. The Ownership interest of each actual purchaser of each Note (“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 Notes 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 rep resenting their ownership interests in Notes, except in the event that use of the book-entry system for the Notes is discontinued.

5

To facilitate subsequent transfers, all Notes 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 Notes with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Notes; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Notes 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. Beneficial Owners of Notes may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Notes, such as redemptions, tenders, defaults, and proposed amendments to the Note documents. For example, Beneficial Owners of Notes may wish to ascertain that the nominee holding the Notes for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Notes within an issue are being redeemed, DTC’s practice is to determine

by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Notes unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to 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 Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Notes 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 School District or Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the School District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the School District or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the Notes at any time by giving reasonable notice to the School District or Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Note certificates are required to be printed and delivered.

The School District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities

depository). In that event, Note 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 the School District believes to be reliable, but the School District takes no responsibility for the accuracy thereof.

NEITHER THE SCHOOL DISTRICT NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO

ANY DTC PARTICIPANT, INDIRECT PARTICIPANT OR BENEFICIAL OWNER OR ANY OTHER PERSON WITH RESPECT TO: (1) THE NOTES; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE NOTES; (4) THE DELIVERY TO ANY BENEFICIAL OWNER BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE RESOLUTION TO BE GIVEN TO NOTEHOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE NOTES; OR (6) ANY OTHER ACTION TAKEN BY DTC AS NOTEHOLDER.

The School District and the Paying Agent cannot give any assurances that DTC or the Participants will distribute payments of the

principal or redemption price of and interest on the Notes paid to DTC or its nominee, as the registered owner of the Notes, or any redemption or other notices, to the Beneficial Owners or that they will do so on a timely basis, or that DTC will serve and act in the manner described in this Preliminary Official Statement.

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REDEMPTION OF NOTES Optional Redemption The Notes are not subject to optional redemption prior to maturity. Mandatory Redemption Bidders may elect to structure the issue to include term Notes, which term Notes, if selected by the bidder, will be subject to mandatory redemption prior to maturity, in the years and amounts as shown in the Invitation to Bid dated as of January 16, 2014, as the same may be amended from time to time (the “Invitation to Bid”), upon payment of the principal amount of Notes to be redeemed, together with accrued interest to the date fixed for redemption, or upon maturity, as applicable. Notes to be redeemed shall be selected by lot by the Paying Agent. In lieu of such Mandatory Redemption, the Paying Agent, on behalf of the School District, may purchase from money in the Sinking Fund, at a price not to exceed the principal amount plus accrued interest, or the School District may tender to the Paying Agent, all or part of the Notes subject to being drawn for redemption in any such year.

THE SCHOOL DISTRICT Introduction The School District is located in Dauphin County, adjacent to the City of Harrisburg, the Capitol of the Commonwealth of Pennsylvania. The School District encompasses an area of 118.2 square miles in Dauphin County and is comprised of three boroughs and four townships: the Boroughs of Dauphin, Paxtang and Penbrook, and the Townships of Lower Paxton, Middle Paxton, Swatara and West Hanover. The area is characterized as a residential suburb with substantial commercial development. The 2010 population of the School District, according to the U.S. Census Bureau, is 90,401 persons. Organization and Administration Pursuant to the provisions of the School District Reorganization Law (Act 299 of the General Assembly of the Commonwealth, approved August 8, 1963, P.L. 564), school districts in Pennsylvania were required to reorganize effective July 1, 1966. The former school districts of the Boroughs of Dauphin, Paxtang and Penbrook and the Townships of Lower Paxton, Middle Paxton, Swatara and West Hanover formed the Central Dauphin School District. The Central Dauphin School District assumed all rights and obligations of the former school districts. The School District is governed by a board of nine School Directors (the “School Board”) who are residents within the School District and who are elected for four-year terms on a staggered basis. The daily operations and management of the School District are performed by a central administrative staff which is led by the School District Superintendent who is appointed by the School Board. The Superintendent is supported by a Board Secretary, Director of Business Affairs and Assistant Superintendent, which are further supported by coordinators and supervisors in specialty fields.

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School Building Facilities The School District presently operates thirteen elementary school buildings, four middle school buildings, two high school buildings, one administrative building, and one transportation facility. An inventory of existing facilities is listed as follows:

TABLE 1 CENTRAL DAUPHIN SCHOOL DISTRICT

SCHOOL FACILITIES

Original Addition / Rated Construction Renovation Grades Pupil 2013-14

Building Date Date (s) Housed Capacity Enrollment Elementary: Chambers Hill ...................................... 1959 1966/78/96 K-5 189 210 Lawnton ................................................ 1928 1950/59/90 K-5 308 221 Linglestown .......................................... 1954 1956/76/95 K-5 649 373 Middle Paxton ...................................... 1990 --- K-5 500 313 Mountain View ..................................... 1963 1994 K-5 500 378 North Side ............................................ 1958 1966/85/95 K-5 649 552 Paxtang ................................................. 1973 1999 K-5 288 228 Paxtonia ................................................ 1956 1963/84/95 K-5 640 634 E.H. Phillips ......................................... 1954 1954/77/96 K-5 379 359 Rutherford ............................................ 1997 --- K-5 600 443 South Side ............................................ 1958 1966/79/95 K-5 770 602 Tri-Community ..................................... 1971 1999 K-5 460 410 West Hanover ....................................... 1951 1963/2008 K-5 428 467 Elementary Totals: ........................................................................................................... 6,360 5,190

Secondary: Central Dauphin Middle School ........... 1954 1971/83/2008 6-8 1,378 707 Central Dauphin East Middle School ... 1963 1980/2008 6-8 1,054 652 Central Dauphin East High School ....... 1961 1971/80/91/92/2004 9-12 2,183 1,359 Central Dauphin High School............... 2004 --- 9-12 2,311 1,692 Linglestown Middle School ................. 1974 2008 6-8 911 663 Swatara Middle School......................... 1927 1956/83/92/03/2008 6-8 1,032 565 Secondary Totals: ............................................................................................................. 8,869 5,638 Grand Total: 15,229 10,828

Source: Central Dauphin School District officials. Student Enrollments Student enrollment trends for the School District are illustrated by the following five-year record of actual enrollments and projection of future enrollments, as reported by the School District’s Administrative officials.

TABLE 2

CENTRAL DAUPHIN SCHOOL DISTRICT ENROLLMENT TRENDS

Actual Enrollments (1) Projected Enrollments (2)

School School Year Elementary Secondary Total Year Elementary Secondary Total

2009-10 4,871 5,756 10,627 2014-15 5,346 5,696 11,042 2010-11 4,912 5,707 10,619 2015-16 5,485 5,727 11,212 2011-12 5,023 5,588 10,611 2016-17 5,604 5,796 11,400 2012-13 5,079 5,641 10,720 2017-18 5,692 5,892 11,584 2013-14 5,190 5,638 10,828 2018-19 5,784 6,036 11,820

(1) Actual Enrollments are as of December 3, 2013. Actual Enrollments are expected to increase as the school year progresses. (2) Excludes students in full-time out-of-district special education, comprehensive AVTSs, charter schools, state-owned schools, consortium-operated alternative high schools, and juvenile correctional institutions. Source: Central Dauphin School District officials.

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SCHOOL DISTRICT FINANCES Introduction The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and Director of Business Affairs and submitted to the School Board for approval prior to the beginning of the fiscal year on July 1. Financial Reporting The financial statements of the School District are prepared in accordance with accounting principles generally accepted in the United States of America. The School District’s reporting entity applies all relevant Governmental Accounting Standards Board (GASB) pronouncements. The government-wide and proprietary fund financial statements apply Financial Accounting Standards Board pronouncements and Accounting Principles Board opinions issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements, in which case, GASB prevails. The government wide statements report using the economic resources measurement focus and the accrual basis of accounting generally including the reclassification or elimination of internal activity (between or within funds). The School District utilizes the modified accrual basis of accounting under which expenditures other than interest on long term debt are recorded when incurred and revenues are recorded as received in cash unless susceptible to accrual. The School District’s financial statements are audited annually by a firm of independent certified public accountants, as required by Commonwealth law. Zelenkofske Axelrod LLC, of Harrisburg, Pennsylvania currently serves as the auditor. Budgeting Process as modified by Act 1 of 2006 (Taxpayer Relief Act)

In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education (“PDE”). An annual operating budget is prepared by school district administrative officials on a uniform form furnished by PDE and submitted to the board of school directors for approval prior to the beginning of each fiscal year on which commences July 1.

Procedures for Adoption of the Annual Budget. Unless the Simplified Procedures described below are utilized, under Pennsylvania Act No. 1 of the Special Session of 2006, as amended by Act 25 of 2011 (together “The Taxpayer Relief Act” or “Act 1”) all school districts of the first class A, second class, third class and fourth class must adopt a preliminary budget (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the primary election immediately preceding the beginning of each fiscal year. This preliminary budget 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 preliminary budget prior to its adoption. The board of school directors shall print the final budget and make it available for public inspection at least 20 days prior to its adoption and shall give public notice of its intent to adopt the final budget at least 10 days prior to adoption, and may hold a public hearing prior to adoption. Guidance from PDE suggests that the preliminary budget be converted to a proposed budget adopted by the board of school directors at least 30 days prior to the adoption of the final budget as required by the School Code. The School District follows the requirements of Act 1 and the guidance of PDE pursuant to the requirements of the Public School Code.

If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to 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 (Act 1)” herein) and within 10 days of the receipt of the information about the preliminary budget, 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 (Act 1)” 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.

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.

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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 and approved 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. Summary and Discussion of Financial Results A summary of the School District’s General Fund balance sheet and changes in fund balances are presented in Tables 3 and 4. Table 5 shows revenues and expenditures for the past five years and the 2012-13 budget. The budget for the 2012-13 school year, as adopted June 24, 2013, projected a balanced budget of $162,468,383 for revenue and expenditures.


SUMMARY OF COMPARATIVE GENERAL FUND BALANCE SHEET (Years ending June 30)

2009 2010 2011 2012 2013

ASSETS Cash and Cash Equivalents .............................. $12,485,581 $18,967,218 $9,139,456 $10,345,677 $15,342,394 Investments ...................................................... 0 2,315,547 12,901,754 12,975,130 13,049,611 Taxes Receivable.............................................. 2,338,106 2,604,738 2,579,848 2,622,293 11,988,639 Due from other funds ....................................... 2,131,988 2,755,885 1,230,775 1,123,011 1,052,472 Due from Intergovernmental ........................... 10,845,120 9,250,040 13,690,801 9,420,229 2,329,490 Other Receivables ............................................ 309,155 820,487 536,244 429,530 751,116 Inventory ......................................................... 225,615 252,145 203,798 180,404 175,211 TOTAL ASSETS ......................................... $28,335,565 $36,966,060 $40,282,676 $37,096,274 $44,688,933

LIABILITIES AND FUND EQUITIES Accounts Payables ............................................ $ 2,965,946 $ 2,886,437 $ 4,425,415 $ 4,293,236 $ 4,049,243 Due to other funds ............................................ 0 0 143,330 181,432 5,659,547 Accrued Salaries and Benefits .......................... 9,582,585 9,957,043 10,106,626 8,126,891 8,261,497 Payroll Deducts & Withholdings ...................... 1,171,905 1,206,451 1,307,827 1,838,102 2,501,682 Deferred income ............................................... 1,797,452 1,841,722 2,085,500 1,933,568 2,349,321 TOTAL LIABILITIES ............................... $15,517,888 $15,891,653 $18,068,698 $16,373,229 $22,821,290

FUND EQUITIES Non-spendable Fund Balance ........................... $ 225,615 $ 252,145 $ 203,798 $ 180,404 $ 175,211 Committed Fund Balance ................................. 0 16,790 6,186,009 6,186,009 6,186,009 Assigned Fund Balance .................................... 2,500,000 8,446,009 4,000,000 4,000,000 4,000,000 Unassigned Fund Balance ................................ 10,092,062 12,359,413 11,824,171 10,356,632 11,506,423 TOTAL FUND EQUITIES ....................... $12,817,677 $21,074,357 $22,213,978 $20,723,045 $21,867,643

TOTAL LIABILITIES AND FUND EQUITIES ............................ $28,335,565 $36,966,010 $40,282,676 $37,096,274 $44,688,933

TABLE 4

CENTRAL DAUPHIN SCHOOL DISTRICT GENERAL FUND* SUMMARY OF CHANGES IN FUND BALANCE

(Years Ending June 30)

Actual Budget 2009 2010 2011 2012 2013 2014(1)

Beginning Fund Balance ................. $13,354,994 $12,817,677 $21,074,356 $22,213,979 $20,723,045 $21,867,643 Revenues over (under) Expenditure .. (537,316) 8,256,680 1,156,413 803,290 1,144,594 0 Prior Period Adjustment ................... (2) 0 (16,791) (2,294,224) 4 0 Ending Fund Balance ...................... $12,817,677 $21,074,356 $22,213,979 $20,723,045 $21,867,643 $21,867,643

*Totals may not add due to rounding. (1)Budget, as adopted June 24, 2013. See “Budgeting Process” herein.

Source: School District Annual Financial Reports and Budget.

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Revenue The School District received $160,787,324 in revenue in 2012-13 and has budgeted revenue of $162,468,383 in 2013-14. Local sources contributed an increasing share of total revenue in the past five years, from 73.4 percent in 2008-09 to 75.9 percent 2012-13. Revenue from Commonwealth sources contributed a decreasing share of total revenue from 23.9 percent to 22.0 percent over this period. Federal and other revenue decreased slightly from 2.8 percent to 2.0 percent during the period.

TABLE 5

CENTRAL DAUPHIN SCHOOL DISTRICT SUMMARY OF SCHOOL DISTRICT GENERAL FUND

REVENUES* (For years ending June 30)

Actual Budget

REVENUE: 2009 2010 2011 2012 2013 2014(1) Local Sources: Real Estate Taxes .................................................... $66,642,886 $69,217,433 $70,265,086 $70,181,853 $73,334,773 $73,045,768 Interim Real Estate .................................................. 605,899 303,969 420,214 241,284 305,751 300,000 Total Act 511 Taxes ................................................ 33,423,245 31,167,710 36,246,710 37,815,863 39,984,222 37,590,329 Payment in Lieu of Taxes ....................................... 43,365 47,780 47,393 44,610 46,265 47,000 Public Utility Realty Tax ........................................ 132,799 150,842 149,046 145,833 146,289 150,000 Delinquency on Taxes Levied ................................ 3,259,737 3,473,406 3,097,810 3,857,583 3,452,171 3,570,000 Earnings on Investments ......................................... 793,402 3,806,352 123,193 970,603 887,625 1,520,000 PA Rev. Rec'd.-Other PA Public Sch. .................... 13,301 11,095 174,705 129,028 140,261 0 Federal revenue from other schools ....................... 1,649,001 1,743,549 1,681,730 1,737,927 1,628,593 1,709,119 Federal ARRA IDEA Pass Through Revenue........ 0 504,000 0 128,031 69,731 0 Receipts from Other LEAs ..................................... 957,979 1,432,858 2,279,842 1,023,896 1,118,209 604,237 Refund of Prior Year's Expenditures ...................... 267,741 361,953 91,911 72,901 45,420 0 Rentals ..................................................................... 10,850 4,450 19,800 6,900 8,400 20,000 Contributions and Donations from Private Sources 4,548 0 0 100,000 41,000 0 All Other Local Revenues not Specified ................ 1,061,572 1,045,660 1,009,909 1,215,594 882,628 1,176,290 Total Local Sources .......................................... $108,866,325 $113,271,055 $115,607,349 $117,671,907 $122,091,337 $119,732,743 State Sources: Instructional Subsidy .............................................. $15,474,835 $14,202,921 $16,296,632 $15,565,467 $15,558,347 $15,940,815 State Subsidies for Charter Schools ....................... 567,066 648,890 598,364 0 0 0 Tuition for Orphans & Children ............................. 405,739 356,868 367,410 246,568 264,877 325,000 Vocational Education .............................................. 711 0 0 0 95 0 Alternative Education ............................................. 30,145 116,855 0 0 0 0 Ed. Empowerment/Sch. Improvement Grants ........ 18,000 0 0 0 0 0 Special Education ................................................... 5,172,942 5,210,769 5,157,997 5,177,527 5,129,786 5,104,137 Transportation ......................................................... 3,057,353 2,923,461 3,174,234 3,038,352 3,088,243 3,652,190 Rental & Sinking Fund Payments .......................... 2,313,343 2,101,932 1,690,052 1,833,251 1,905,735 1,624,967 Health Services ....................................................... 236,657 200,084 219,023 202,109 190,283 200,000 State Property Tax Reduction Allocation ............... 2,544,933 2,577,799 2,585,573 2,613,831 2,625,294 2,616,334 Revenue for Social Security ................................... 2,565,719 2,629,348 2,574,435 2,463,178 2,440,730 2,689,899 Revenue for Retirement .......................................... 1,766,838 1,763,143 2,016,834 2,256,536 3,864,506 5,899,884 Project 720/High School Reform ........................... 64,167 22,917 0 0 0 0 Classrooms for the Future ....................................... 207,881 0 0 0 0 0 PA Accountability Grant ........................................ 989,584 989,584 1,292,560 0 364,588 364,588 Additional Grants not listed elsewhere .................. 17,454 109,743 (2,309) 0 2,073 0 Other Sources .......................................................... 1,181 40 0 393 640 3,000 Total State Sources ........................................... $35,434,547 $33,854,355 $35,970,805 $33,397,212 $35,435,198 $38,420,814 Federal Sources: Total Federal Sources ....................................... $3,232,320 $5,807,428 $6,379,285 $3,057,737 $3,260,789 $2,587,919 Other Financing Sources: Total Other Sources .......................................... $852,756 $2,260,000 $699,474 $3,000 $0 $1,726,907 TOTAL REVENUE................................................ $148,385,948 $155,192,838 $158,656,913 $154,129,857 $160,787,324 $162,468,383

*Totals may not add due to rounding. (1)Budget, as adopted June 24, 2013. See “Budgeting Process” herein. Source: School District Annual Financial Reports and Budget.

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TABLE 5 (Continued)

CENTRAL DAUPHIN SCHOOL DISTRICT SUMMARY OF SCHOOL DISTRICT GENERAL FUND

EXPENDITURES* (For years ending June 30)

Actual Budget

EXPENDITURES: 2009 2010 2011 2012 2013 2014(1)

Instruction ............................................................... $86,503,320 $87,657,003 $92,166,073 $91,822,034 $91,482,615 $98,705,246

Pupil Personnel ....................................................... 4,725,204 4,896,001 5,276,001 5,192,671 5,433,037 6,021,596

Instructional Staff ................................................... 2,671,980 2,581,205 2,915,375 2,308,710 2,830,370 2,372,957

Administration ........................................................ 6,991,992 8,087,939 7,643,442 7,668,538 7,971,978 8,271,238

Pupil Health ............................................................ 1,587,419 1,609,055 1,715,357 1,735,603 1,936,987 2,098,263

Business .................................................................. 788,131 846,126 953,196 747,697 774,536 902,982

Operation and Maintenance .................................... 12,776,462 12,351,207 13,245,580 12,677,344 12,986,358 12,972,659

Student Transportation ........................................... 7,925,614 7,702,463 8,219,045 8,209,690 7,605,345 7,852,690

Central ..................................................................... 3,408,688 2,831,059 4,128,059 3,774,307 3,894,019 4,659,167

Other Support Services ........................................... 293,601 239,584 229,842 216,664 218,750 231,223

Non-Instructional Services ..................................... 956,461 852,822 2,534,273 2,606,386 2,613,773 837,191

Refund of Prior Years Receipts .............................. 229,798 68,896 252,194 46,051 116,420 0

Debt Service ............................................................ 18,537,818 15,706,453 15,371,593 15,694,971 16,137,542 16,009,077

Fund Transfer .......................................................... 1,526,776 1,506,345 2,850,470 625,901 5,641,000 1,534,094

TOTAL EXPENDITURES ............................... $148,923,264 $146,936,158 $157,500,500 $153,326,567 $159,642,730 $162,468,383

SURPLUS (DEFICIT) OF

REVENUES OVER EXPENDITURES .......... ($537,316) $8,256,680 $1,156,413 $803,290 $1,144,594 $0

*Totals may not add due to rounding. (1)Budget, as adopted June 24, 2013. See “Budgeting Process” herein.

Source: School District Annual Financial Reports and Budgets.

{THE REMAINER OF THIS PAGE INTENTIONALLY LEFT BLANK}

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TAXING POWERS OF THE SCHOOL DISTRICT In General 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 and other statutes 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 unlimited ad valorem tax on the property taxable for school purposes 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 Note 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. 4. 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, a wage and other earned income tax, a real estate transfer tax, a gross receipts tax, a local services tax and an occupation tax, 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. All local taxing authorities are required by the Local Tax Enabling Act to exempt disabled veterans and members of the armed forces reserve who are called to active duty at any time during the tax year from any local services tax and to exempt from any local services tax levied at a rate in excess of $10 those persons whose total income and net profits from all sources within the political subdivision is less than $12,000 for the tax year. The Local Tax Enabling Act also authorizes, but does not require, taxing authorities to exempt from per capita, occupation, and earned income taxes and any local services tax levied at a rate of $10 or less per year, any person whose total income from all sources is less than $12,000 per year (which include full time college students with respect to the per capita tax).

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The Taxpayer Relief Act (Act 1) Under the Taxpayer Relief Act (Act 1), a school district may not levy any tax for the support of the public schools which was not levied in the previous 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, 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 summarized below is applicable and the use of such exception is approved by PDE:

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 (“Act 72”), or (ii) prior to June 27, 2006, in the case of a school district which had not elected to become subject to Act 72 (as in the case of the School District); to pay interest and principal on any indebtedness approved by the voters at referendum (electoral debt); and to pay interest and principal on debt refunding or refinancing debt for which one of the above exceptions is permitted, as long as the refunding or refinancing incurs no additional debt other than for costs and expenses related to the refunding or refinancing and the funding of appropriate debt service reserves;

2. to pay costs incurred in providing special education programs and services to students with disabilities, under specified circumstances; and

3. to make payments into the State Public School Employees’ Retirement System when the increase in the estimated payments

between the current year and the upcoming year is greater than the Index, as determined by PDE in accordance with the provisions of Act 1.

Any revenue derived from an increase in the rate of any tax allowed under the exception numbered 3 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 Any revenue derived from an increase in the rate of any tax allowed under the exception numbered 3 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. In accordance with Act 1, the School District put a referendum question on the ballot at the May, 15, 2007, primary election seeking voter approval to levy (or increase the rate of) an earned income and net profits tax (“EIT”) or a personal income tax (“PIT”) and use the proceeds to reduce local real estate taxes by a homestead and farmstead exclusion. The referendum was NOT approved by the voters. A board of school directors may submit, but is not required to submit, a 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 funding homestead and farmstead exclusions, but the proposed rate of the EIT or PIT shall not exceed the rate that is required to provide the maximum homestead and farmstead exclusions allowable under law.

14

The School District previously elected to become subject to the annual tax increase limitations imposed by former Pennsylvania Act 72 of 2004 (“Act 72”) (Act 72 was repealed by Act 1), however, the Notes represent indebtedness authorized (“incurred”) by the board of school directors prior to the effective date of former Act 72. Consequently, the School District is entitled by Act 1 to apply to the Pennsylvania Department of Education (PDE) for approval to utilize an Act 1 referendum exception, if and to the extent a tax increase greater than the Index is needed to pay the principal and interest on the Notes in any particular fiscal year (see “The Taxpayer Relief Act” 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 tax 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. Status of the Notes Under Act 1 The Notes described in this Preliminary Official Statement are being issued to refund indebtedness that was incurred by the School District under the Local Government Unit Debt Act prior to June 27, 2006, the effective date of the Taxpayer Relief Act. The School District already has levied and has in place sufficient tax millage to provide for payment of the maximum annual debt service on the indebtedness being refunded. The maximum annual debt service on the Notes will not be more than the maximum annual debt service on the indebtedness being refunded by the Notes; and, therefore, it will not be necessary for the School District to levy any new tax or to increase the rate of any existing tax in order to provide for payment of the interest and principal of the Notes. 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 does not levy an occupation tax. 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

Estimated Ending Unreserved Undesignated Fund Balance as a Percentage of Total budgeted Expenditures:

Less than or equal to $11,999,999 12.0% Between $12,000,000 and $12,999,999 11.5% Between $13,000,000 and $13,999,999 11.0% Between $14,000,000 and $14,999,999 10.5% Between $15,000,000 and $15,999,999 10.0% Between $16,000,000 and $16,999,999 9.5% Between $17,000,000 and $17,999,999 9.0% Between $18,000,000 and $18,999,999 8.5% Greater than or equal to $19,000,000 8.0%

“Estimated ending unreserved 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.

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Tax Levy Trends Table 6 shows the recent trend of tax rates levied by the School District. Table 7 shows the comparative trend of real property tax rates for the School District, Dauphin County and the municipalities within the School District.

TABLE 6

CENTRAL DAUPHIN SCHOOL DISTRICT TAX RATES

Real Estate

Real Estate Earned Income Transfer Fiscal Year Mills (%) (%)

2009-10 ................................................... 13.8600 1.5% 0.5% 2010-11 ................................................... 13.8600 1.5% 0.5% 2011-12 ................................................... 13.8600 1.5% 0.5% 2012-13 ................................................... 14.3173 1.5% 0.5% 2013-14 ................................................... 14.3173 1.5% 0.5%

Source: School District officials.

TABLE 7

CENTRAL DAUPHIN SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES

(Mills on Assessed Value)(1)

2009-10 2010-11 2011-12 2012-13 2013-14 School District ......................................... 13.8600 13.8600 13.8600 14.3173 14.3173 Dauphin Borough .................................... 5.0000 5.0000 5.0000 5.0000 5.0000 Lower Paxton Township .......................... 0.5940 0.6815 0.9410 1.3000 1.3000 Middle Paxton Township ......................... 0.0000 0.0000 0.0000 0.0000 0.0000 Paxtang Borough ..................................... 9.6000 9.6000 9.6000 10.7300 10.7300 Penbrook Borough ................................... 8.0000 8.2000 8.4500 9.4500 9.4500 Swatara Township ................................... 1.8499 1.7900 1.7900 3.3957 3.7639 West Hanover Township ......................... 0.9149 0.9149 0.9149 1.1857 1.2534 Dauphin County(1) ................................... 6.8760 6.8760 6.8760 6.8760 6.8760

(1)Does not include County Library Tax. Source: Local Government Officials.

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Real Property Tax The real property tax (excluding delinquent collections) produced $73,334,773 in 2012-13, approximately 45.6 percent of revenues. The School District fiscal year is from July 1 through June 30 and tax bills are issued on July 1 of each year. Taxpayers who remit within two months of July 1 receive a 2 percent discount, and those who remit subsequent to October 31 are assessed a 10 percent penalty. The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. The countywide assessment in Dauphin County became effective in 2001.

TABLE 8 CENTRAL DAUPHIN SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA

Market Assessed Fiscal Year Value Value Ratio

2008-09 ..................................................... $5,903,013,843 $5,424,286,050 91.89% 2009-10 ..................................................... 5,989,113,835 5,491,664,750 91.69% 2010-11 ..................................................... 6,582,422,473 5,578,361,450 84.75% 2011-12 ..................................................... 6,637,491,946 5,621,115,973 84.69% 2012-13 ..................................................... 6,829,492,990 5,644,491,150 82.65%

Source: Pennsylvania State Tax Equalization Board.

TABLE 9

CENTRAL DAUPHIN SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY

2011-12 2011-12 2012-13 2012-13 Market Assessed Market Assessed Value Value Value Value

School District .......................... $ 6,637,491,946 $ 5,621,115,973 $ 6,829,492,990 $ 5,644,491,150 Dauphin Borough ...................... 35,724,747 30,901,400 36,864,687 30,887,300 Lower Paxton Township ........... 3,559,286,048 3,014,148,600 3,646,200,828 3,028,015,900 Middle Paxton Township .......... 366,035,132 307,972,300 379,233,677 309,966,600 Paxtang Borough ....................... 76,760,629 64,424,123 79,821,566 64,593,700 Penbrook Borough ..................... 101,516,179 88,544,750 110,139,384 88,793,750 Swatara Township ..................... 1,704,042,887 1,452,590,500 1,765,957,780 1,452,698,700 West Hanover Township ........... 794,126,324 662,534,300 811,275,068 669,535,200 Dauphin County ....................... 17,018,925,848 14,463,925,773 17,749,782,221 14,533,333,450



ASSESSMENT BY LAND USE

2008-09 2009-10 2010-11 2011-12 2012-13 Residential ..................... $3,512,763,000 $3,574,948,100 $3,649,886,500 $3,686,946,023 $3,712,965,000 Lots................................ 76,881,700 78,229,900 77,257,800 74,493,700 74,785,200 Industrial ....................... 272,858,100 287,075,700 287,277,000 281,898,800 284,778,500 Commercial ................... 1,478,462,350 1,475,498,950 1,489,369,950 1,495,686,650 1,487,336,850 Agriculture .................... 67,498,700 68,421,900 68,503,600 66,534,600 63,157,100 Land/Other .................... 6,014,400 7,490,200 6,066,600 5,805,500 11,721,700 Seasonal ........................ 1,727,700 0 0 1,625,900 1,638,200 Trailers .......................... 8,080,100 0 0 8,124,800 8,108,600 Totals ....................... $5,424,286,050 $5,491,664,750 $5,578,361,450 $5,621,115,973 $5,644,491,150


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TABLE 11

CENTRAL DAUPHIN SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA

Current Current Year Total Total

Assessed Adjusted Collections Collections Collections Collections Fiscal Year Valuation Mills Levied Amount(1) as Percent Amount(2) as Percent 2008-09 ................... $5,424,286,050 13.5480 $70,943,294 $66,642,886 93.94% $68,187,765 96.12% 2009-10 ................... 5,491,664,750 13.8600 76,114,473 69,217,433 90.94% 70,831,415 93.06% 2010-11 ................... 5,578,361,450 13.8600 77,316,090 70,265,086 90.88% 71,667,070 92.69% 2011-12 ................... 5,621,115,973 13.8600 77,908,667 70,181,853 90.08% 71,983,035 92.39% 2012-13 ................... 5,644,491,150 14.3173 80,813,873 73,334,773 90.75% 74,859,133 92.63% 2013-14 (Budgeted) . 5,702,559,450 14.3173 81,645,254 73,346,084 89.84% 74,870,444 91.70%

(1)Includes penalties less discounts and exonerations. (2)Includes delinquent realty taxes collected. Source: School District officials. The ten largest real property taxpayers, together with 2013-14 assessed values, are shown in Table 12. The aggregate assessed value of these ten taxpayers totals approximately 3.41 percent of total assessed value. Some of these major taxpayers have failed to pay taxes on a current basis, but have paid them with penalties.

TABLE 12

CENTRAL DAUPHIN SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS

2014

Assessed Owner Property Value Catalina Partners LP Colonial Park Shopping Center $ 30,343,500 CSC Colonial Commons Partnerships Colonial Commons 21,553,900 Gershman Joel Pennswood Apartments 20,955,500 Point Associates LP Point Shopping Mall 20,640,700 Lakewood Hills Partners LP Lakewood Hills Apartments 20,175,900 Prologis NA3 PA II LP Blue Mountain Logistics Warehouse 18,857,700 Harrisburg Mall LP Harrisburg Mall 17,650,000 SHH Partners LP Wyndham Hotel 15,813,000 Eagles Crest LLLP Eagle's Crest Apartments 14,453,700 Emerald Pointe LP Emerald Pointe Townhome Community 12,100,700 Total $192,544,600

Source: School District officials. Represents certain significant holdings as reported by local tax collectors. Other Taxes Under Act 511, the School District produced $39,984,222 in other taxes in 2012-13. Among the taxes authorized by Act 511, the School District currently levies the Wage & Income Tax, and Real Estate Transfer Tax. The Act 511 limit, for 2012-13 equal to 12 mills on the market value of real property, was $$81,953,916. Wage & Income Tax. The School District levies and receives a tax of 1.50%. In 2012-13 the collected portion of this tax yielded $38,053,945 or 23.7 percent of the School District’s total revenue. Real Estate Transfer. A tax of 0.50% of the value of real estate transfers in 2012-13 yielded $1,930,277 or less than one percent of the School District’s total revenue.

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Commonwealth Aid to School Districts 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 Commonwealth. Subsidies for special education, pupil transportation, vocational education, health service and debt service are also received by the school district. Commonwealth law presently provides that the School District will receive reimbursement from the Commonwealth for a portion of debt service on the Notes upon final approval of the Department of Education. Commonwealth reimbursement is based on the "Reimbursable Percentage" assigned to the Notes and the School District's Market Value Aid Ratio (“Aid Ratio”). The School District officials have estimated that the "Reimbursable Percentage" of the Notes will be a maximum of 21.31 percent. The School District Aid Ratio for the 2013-14 school year is currently 33.66 percent. The product of these two factors is 7.17 percent which is the maximum potential percentage of debt service which will be reimbursed by the Commonwealth. In future years, this percentage may change as the School District's Aid Ratio changes, or as a result of future legislation. Aid Ratio is a function of the market value per weighted average daily membership of the School District relative to that of other School Districts in the Commonwealth.

DEBT AND DEBT LIMITS Debt Statement Table 13 shows the debt of the School District as of January 1, 2014, including the issuance of the Notes.

TABLE 13

CENTRAL DAUPHIN SCHOOL DISTRICT

DEBT STATEMENT*

Gross NONELECTORAL DEBT Outstanding General Obligation Notes, Series of 2014 ................................................. $ 18,150,000* General Obligation Bonds, Series of 2012 ................................................ 4,250,000 General Obligation Bonds, Series of 2011 ................................................ 5,455,000 General Obligation Bonds, Series of 2010 (remaining portion) ................ 8,145,000 General Obligation Notes, Series of 2006(1) .............................................. 75,205,000 General Obligation Bonds, Series A of 2006 ............................................ 37,135,000 TOTAL NONELECTORAL DEBT................................................ $148,340,000

LEASE RENTAL DEBT Total Lease Rental Debt ............................................................................ $ 0

TOTAL PRINCIPAL OF DIRECT DEBT(1) ................................. $148,340,000

*Includes the estimated Notes offered through this Preliminary Official Statement. Excludes the 2004 Notes, the 2009 Bonds and the portion of the 2010 Bonds being refunded.

(1) See “Related Interest Rate Swap Agreement” herein.

(2)In addition, the School District is obligated to annually appropriate and pay over to the Dauphin County Vocational-Technical School its allocable share of all costs of the Dauphin County Vocational-Technical School, which includes its allocable share of debt service on certain School Lease Revenue Bonds, Series of 2007. As of January 1, 2014, the School District’s remaining portion of the 2007 School Lease Revenue Bonds is $9,625,315.

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Table 14 presents the overlapping indebtedness and debt ratios of the School District. After issuance of the Notes, the principal of direct debt of the School District will total $148,340,000. After adjustment for available funds and estimated Commonwealth Aid, the local effort of direct debt will total $134,826,769.


NOTE AND BOND INDEBTEDNESS AND DEBT RATIOS*

Local Effort or Net of

Available Funds and Estimated

Gross Commonwealth Outstanding Aid(1)

DIRECT DEBT Nonelectoral Debt ........................................................................................... $148,340,000 $134,826,769 Lease Rental Debt .......................................................................................... 0 0 TOTAL DIRECT DEBT ........................................................................... $148,340,000 $134,826,769

OVERLAPPING DEBT Dauphin County, General Obligation(2) .......................................................... $186,544,185 $186,544,185 Municipal Debt ............................................................................................... 136,437,689 136,437,689 TOTAL OVERLAPPING DEBT .............................................................. $322,981,874 $322,981,874

TOTAL DIRECT AND OVERLAPPING DEBT.......................................... $471,321,874 $457,808,643

DEBT RATIOS Per Capita (2010) ............................................................................................ $5,213.68 $5,064.20 Percent 2012-13 Assessed Value .................................................................... 8.35% 8.11% Percent 2012-13 Market Value ....................................................................... 6.90% 6.70%

*Includes the estimated Notes offered through this Preliminary Official Statement. Excludes the 2004 Notes, the 2009 Bonds and the portion of the 2010 Bonds being refunded.

(1)Does give effect to current appropriations for payment of debt service and expected future Commonwealth Reimbursement of School District sinking fund payments based on current Aid Ratio. See “Commonwealth Aid to School Districts”. (2)Pro rata 38.48 percent share of $484,826,423 principal amount outstanding.

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Debt Limit and Remaining Borrowing Capacity The statutory borrowing limit of the School District under the Act is computed as a percentage of the School District’s “Borrowing Base”. The “Borrowing Base” is defined as the annual arithmetic average of “Total Revenues” (as defined by the Act) for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing base and borrowing capacity as follows:

Total Revenues for 2010-11 .................................................................................................................. $156,267,387 Total Revenues for 2011-12 .................................................................................................................. 152,293,606 Total Revenues for 2012-13 .................................................................................................................. 158,881,589 Total ................................................................................................................................................. $467,442,582 Annual Arithmetic Average (Borrowing Base) ..................................................................................... $155,814,194

Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District's Borrowing Base produces the following products: Remaining Legal Net Debt Borrowing Limit Outstanding* Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $350,581,937 $148,340,000 $202,241,937 *Includes the estimated Notes described herein, does not reflect credits against gross indebtedness that may be claimed for a portion of principal of debt estimated to be reimbursed by Commonwealth Aid. Excludes the 2004 Notes, the 2009 Bonds and the portion of the 2010 Bonds being refunded. Related Interest Rate Swap Agreement On May 25, 2010, the School District entered into a fixed to floating rate swap (the “2010 Variable Rate Swap”) with the Royal Bank of Canada (“RBC”), relating to a portion of the School District’s General Obligation Notes, Series of 2006 (the “2006 Notes”). The 2010 Variable Rate Swap is in the amount of $45,000,000. The School District entered into contract with RBC, or swap counterparty, which granted RBC the option, if exercised, to place the School District in a swap where the School District will pay to RBC the Securities Industry and Financial Markets Association Municipal Swap Index Rate (“SIFMA”), while RBC will pay to the School District a fixed interest rate of 4.00% per annum. RBC will pay the District an option premium which will be eight semi-annual payments of $257,350 (for a total of $2,058,800) made on August 1 and February 1, beginning on August 1, 2010 and ending on February 1, 2014. RBC has the option on February 28, 2014 (the “Exercise Date”), which is 30 days prior to April 1, 2014 (the “Effective Date”) to place the District into the fixed receiver swap. If RBC does not exercise the option, the option expires and the 2010 Swap terminates and RBC loses its right to place the District into the fixed receiver swap. If the option is exercised, the 2010 Variable Rate Swap will remain in effect until February 1, 2030, the final maturity date of the 2006 Notes, or as long as the 2006 Notes are outstanding, unless terminated under the provisions of the 2010 Variable Rate Swap. The School District has pledged its full faith, credit and taxing power for the budgeting, appropriation and payment of periodic scheduled payments (not termination payments) due under the 2010 Variable Rate Swap Agreement on a parity basis with principal and interest payments due on the 2006 Notes.

On October 14, 2010, the School District entered into a floating to floating interest rate swap (the “2010 Basis Swap”) agreement with RBC, relating to a portion of the 2006 Notes. The notional amount of the 2010 Basis Swap is in the amount of $45,000,000. The School District entered into this contract with RBC, the provisions of which provide that the School District will pay to RBC the SIFMA rate, while RBC pays to the School District 70% of three-month LIBOR plus 0.50%. The 2010 Basis Swap on will remain in effect until February 1, 2030, the final maturity date of the 2006 Notes, or as long as the 2006 Notes are outstanding, unless terminated under the provisions of the 2010 Basis Swap. The 2010 Basis Swap may also become related to any subsequent refunding of the 2006 Notes. The School District will pledge its full faith, credit and taxing power for the budgeting, appropriation and payment of periodic scheduled payments (not termination payments) due under the 2010 Basis Swap Agreement on a parity basis with principal and interest payments due on the 2006 Notes.

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Debt Service Requirements Table 15 presents the debt service requirements on the School District’s outstanding general obligation and lease rental indebtedness including debt service on the Notes. Table 16 presents data on the extent to which Commonwealth Aid provides coverage for debt service and lease rental requirements. The School District has never defaulted on the payment of debt service.

TABLE 15

CENTRAL DAUPHIN SCHOOL DISTRICT DEBT SERVICE REQUIREMENTS(1)

Other General Series of

Obligation 2014 Total

Year Debt Principal Interest Subtotal Requirements

2013-14 $ 14,042,000 2014-15 14,283,308 2015-16 14,921,778 2016-17 14,322,866 2017-18 13,626,922 2018-19 13,625,595 2019-20 7,313,738 2020-21 9,064,746 2021-22 12,083,994 2022-23 12,087,865 2023-24 11,465,264 2024-25 11,468,322 2025-06 11,436,732 2026-27 11,437,794 2027-28 11,435,182 2028-29 11,435,461 2029-30 11,437,624 2030-31 793,482

Total $206,282,673

(1)Totals may not add due to rounding.


COVERAGE OF DEBT SERVICE AND LEASE RENTAL REQUIREMENTS BY COMMONWEALTH AID*

2012-13 Commonwealth Aid Received ................................................................................................... $35,435,198 2012-13 Debt Service Requirements ........................................................................................................ 16,137,542 Maximum Future Debt Service Requirements after Issuance of Notes .................................................... Coverage of 2012-13 Debt Service Requirements ................................................................................... 2.20 times Coverage of Maximum Future Debt Service Requirements after Issuance of Notes ............................... *Assumes current Commonwealth Aid Ratio. See “Commonwealth Aid to School Districts.”

Future Financing The School District does not anticipate issuing additional long-term (non-refunding) debt within the next two years.

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LABOR RELATIONS School District Employees The teachers, nurses, and guidance counselors of the School District are represented by the Central Dauphin Education Association (CDEA) which is part of the Pennsylvania State Education Association. The CDEA currently represents 856 professionals. The professional employees are working under the terms of a five-year contract until June 30, 2014. There are approximately 73 administrative and confidential employees who are covered by an agreement, which has been extended until June 30, 2014. The custodial and maintenance personnel (approximately 90 employees) are represented by District Council 90 of the American Federation of State, County and Municipal Employees (AFSCME). Their four-year contract expires June 30, 2016. The School District clerical workers (approximately 221 employees) are represented by Central Dauphin Education Support Personnel Association (PSEA). Their two-year contract expires on June 30, 2015. Pension Program

School Districts in Pennsylvania are required to participate in a statewide pension program administered by the Public School Employees Retirement System (PSERS). All of the School District's 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 participate in the program. However, please note a Pennsylvania Supreme Court decision has removed the hourly de minimis requirement for current members of PSERS regarding the purchase of credit for their part-time school service rendered prior to their being members of PSERS, for purposes of increasing their pension benefits.

The PSERS Board of Trustees has set the fiscal year 2013-14 employer retirement contribution rate at 16.93 percent of payroll. Both the

School District and the Commonwealth are responsible for paying a portion of the employer's share. Employers are divided into two groups; school entities and non-school entities. School entities are responsible for paying 100 percent of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. Recent School District payments have been as follows:

2008-09 $ 3,533,676 2009-10 3,425,251 2010-11 3,926,461 2011-12 5,880,622 2012-13 8,009,692 2013-14 (Budget) 11,745,282

The School District is current in all payments. Other Post-Employment Benefits

The School District is obligated under collective bargaining agreements to provide future health insurance coverage for current and future retired employees, and to provide retirement severance pay for existing employees. The School District has become subject to the requirements of GASB Statements No. 43 and 45 commencing with the School District’s annual financial statements for the fiscal year ending June 30, 2009. For a full description, see “Appendix C - Audited Financial Statements – Notes to Financial Statements - Note 15 – Postemployment Benefits Plan”.

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LITIGATION At the time of the issuance and delivery of the Notes, the School Board and the Solicitor will deliver a certificate stating that there is no litigation pending with respect to the Notes, the Resolution or the right of the School District to issue the Notes.

DEFAULTS AND REMEDIES In the event of failure of the School District to pay or cause to be paid the interest on or principal of the Notes, as the same becomes due and payable, the holders of the Notes shall be entitled to certain remedies provided by the Act. Among the remedies, if the failure to pay shall continue for 30 days, holders of the Notes shall have the right to recover the amount due by bringing an action in assumpsit in the Court of Common Pleas of the county in which the School District is located. The Act provides any judgment shall have an appropriate priority upon the funds next coming into the treasury of the School District. The Act also provides that upon a default of at least 30 days, holders of at least 25 percent of the Notes may appoint a trustee to represent them. The Act provides certain other remedies in the event of default, and further qualifies the remedies hereinbefore described.

TAX EXEMPTION AND OTHER TAX MATTERS

Federal Tax Exemption

In the opinion of Bond Counsel, under existing statutes, regulations, rulings and court decisions, and assuming continuing compliance by the School District with certain certifications and agreements relating to the use of the Note proceeds and covenants to comply with provisions of the Internal Revenue Code of 1986, as amended (the "Code") and all applicable regulations thereunder, now or hereafter enacted, interest on the Notes is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. However, such interest is includable in adjusted current earnings for purposes of the federal alternative minimum tax imposed on certain corporations (as defined in the Code). Bond counsel expresses no opinion regarding other federal tax consequences of ownership or disposition of, or the accrual or receipt of interest on, the Notes. The Notes have not been designated as "qualified tax-exempt obligations." The Notes maturing on __________ are offered at a discount ("original issue discount") equal generally to the difference between public offering price and principal amount. For federal income tax purposes, original issue discount on a Note accrues periodically over the term of the Note as interest with the same tax exemption and alternative minimum tax status as regular interest. The accrual of original issue discount increases the holder's tax basis in the Note for determining taxable gain or loss from sale or from redemption prior to maturity. Holders should consult their tax advisers for an explanation of the accrual rules. The Notes maturing on _________ are offered at a premium ("original issue premium") over their principal amount. For federal income tax purposes, original issue premium is amortizable periodically over the term of a Note through reductions in the holder's tax basis for the Note for determining taxable gain or loss from sale or from redemption prior to maturity. Amortization of premium does not create a deductible expense or loss. Holders should consult their tax advisers for an explanation of the amortization rules. The opinion of Bond Counsel on federal tax matters will be based upon and will assume the accuracy of certain representations and certifications, and compliance with certain covenants, of the School District to be contained in the transcript of proceedings for the issuance of the Notes and that are intended to evidence and assure that the Notes are and will remain obligations the interest on which is excludable from gross income for federal income tax purposes. Bond Counsel will not independently verify the accuracy of those certifications and representations or covenants. The Code prescribes a number of qualifications and conditions for the interest on state and local obligations to be and to remain excludable from gross income for federal income purposes, some of which require future or continued compliance after issuance of the obligations in order for the interest to be and to continue to be so excluded from the date of issuance. Noncompliance with these requirements by the School District may cause the interest on the Notes to be included in gross income for federal income tax purposes and thus to be subject to federal income tax retroactively to their date of issuance. The School District has covenanted to take the actions required of it for the interest on the Notes to be and to remain excludable from gross income for federal income tax purposes and not to take any actions that would adversely affect that exclusion. Bond Counsel has not undertaken to evaluate, determine or inform any person, including any holder of the Notes, whether any actions taken or not taken, events, events occurring or not occurring, or other matters that might come to attention of Bond Counsel, would adversely affect the value of, or tax status of the interest on, the Notes. 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 Notes. In addition, legislation may be introduced and enacted in the future which could change the provisions of the Code relating to the tax exempt bonds of a state or local government unit, such as the School District, or the taxability of interest in general.

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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. Future legislation, if enacted into law, or clarification of the Code may cause interest on the Notes 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 Notes. 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 Notes for federal income tax purposes. It is not a guarantee of any result, and is not binding on the Internal Revenue Service (the “IRS”) or the courts. Bond Counsel's engagement with respect to the Notes ends with the issuance of the Notes. No representation is made or can be made by the School District or any other party associated with the issuance of the Notes 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 Notes to federal income taxes or so as to otherwise affect the marketability or market value of the Notes. Pennsylvania Tax Exemption

Under the laws of the Commonwealth as presently enacted and construed, the Notes are exempt from personal property taxes in the Commonwealth and the interest on the Notes is exempt from Pennsylvania personal income tax and Pennsylvania corporate net income tax. The Notes and the interest thereon may be subject to state or local taxes in jurisdictions other than the Commonwealth under applicable state or local tax laws. THE ABOVE SUMMARY OF POSSIBLE TAX CONSEQUENCES IS NOT EXHAUSTIVE OR COMPLETE. ALL PURCHASERS OF BONDS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE POSSIBLE FEDERAL, STATE AND LOCAL INCOME TAX CONSEQUENCES OF OWNERSHIP OF THE BONDS AND ANY CHANGES IN THE STATUS OF PENDING OR PROPOSED FEDERAL TAX LEGISLATION. ANY STATEMENT REGARDING TAX MATTERS HEREIN CANNOT BE RELIED UPON BY ANY PERSON TO AVOID TAX PENALTIES.

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CONTINUING DISCLOSURE UNDERTAKING

The School District covenants to provide, pursuant to Rule 15c2-12(b) (the “Rule”) promulgated by the Securities and Exchange Commission, for the benefit of the holders of the Notes certain financial and operating data on an annual basis in accordance herewith. Under the terms of the Rule, the School District (being an “obligated person” within the meaning of the Rule) agrees:

(i) to provide at least annually to the Municipal Securities Rulemaking Board (the “MSRB”), the following annual financial information and operating data with respect to the School District for each of its fiscal years, beginning with the fiscal year ending June 30, 2014, within 180 days following the end of such fiscal year:

- the financial statements for the most recent fiscal year, prepared in accordance with generally accepted accounting

principles for local government units and audited in accordance with generally accepted auditing standards; - a summary of the budget for the new fiscal year; - - the aggregate assessed value and aggregate market value of all taxable real estate for the new fiscal year; - the taxes and millage rates imposed for the new fiscal year; - 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);

- a list of the ten (10) largest real estate taxpayers and, for each, the total assessed value of real estate for the new fiscal

year; and - pupil enrollment figures, including enrollment at the end of the most recent fiscal year, current enrollment and projected

enrollment for the beginning of the next fiscal year, including a breakdown between elementary and secondary enrollment (to the extent reasonably feasible);

(ii) in a timely manner not in excess of ten business days after the occurrence of the event, to file with the MSRB, notice of the

occurrence of any of the following events with respect to the Note: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax-exempt status of the Notes, or other material events affecting the tax-exempt status of the Notes; (7) modifications to rights of holders of the Notes, if material; (8) Note calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Notes, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the School District; (13) 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; (14) appointment of a successor or additional trustee or the change of name of a trustee, if material;

(iii) to provide, in a timely manner, to the MSRB, notice of the failure of the School District to provide the information set forth in

subparagraph (i) above on or before the date specified above. The School District may from time to time choose to provide notice of the occurrence of certain other events, in addition to those listed above, but the School District does not commit to provide any such notice of the occurrence of any events except those specifically listed above.

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The School District reserves the right to terminate its obligation to provide annual financial information and notices of material events, as set forth above, if and when the School District no longer remains an “obligated person” with respect to the Notes within the meaning of the Rule. The School District acknowledges that its undertaking pursuant to the Rule described herein is intended to be for the benefit of the holders or beneficial owners of the Notes and shall be enforceable by the holders or beneficial owners of such Notes; provided that the Noteholders’ right to enforce the provisions of this undertaking shall be limited to a right to obtain specific enforcement for the School District’s obligations hereunder and any failure by the School District to comply with the provisions of this undertaking shall not be an event of default with respect to the Notes. The School District may modify from time to time the specific types of information provided or the format of the presentation of such information, as a result of a change in legal requirements or change in the nature of the School District; provided that any such modification will be done in a manner consistent with the SEC Rule 15c2-12 including amendments thereto and will not, in the opinion of nationally recognized Bond Counsel, violate the Rule, as amended. Any filing under this Section may be made solely by transmitting such filing to the MSRB through its Electronic Municipal Market Access (EMMA) system for municipal securities disclosures.

The School District has complied with all of its prior written undertakings under the Rule to provide timely ongoing disclosure of annual financial information and notice of material events affecting its securities and is current with undertakings under the Rule.

RATING

Standard & Poor’s Ratings Group is expected to assign its underlying municipal note rating of “ ” to this issue of Notes. Such rating reflects only the view of such organization and any desired explanation of the significance of such rating should be obtained from the rating agency furnishing the same, at the following address: 55 Water Street, New York, New York 10041-0003. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that any such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by the rating agency, if circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Notes.

UNDERWRITING

The Underwriter has agreed to purchase the Notes from the School District, subject to certain conditions precedent, and will purchase all of the Notes if any of such Notes are purchased. The Notes will be purchased for a purchase price of $ , equal to the par value of the Notes less an underwriters’ discount of $ plus a net original issue premium of $ , plus accrued interest from the dated date to the date of delivery of the Notes.

LEGAL OPINION The Notes are offered subject to the receipt of the unqualified approving legal opinion of McNees Wallace & Nurick LLC, Harrisburg, Pennsylvania, as Bond Counsel to the School District. Certain legal matters will be passed upon for the School District by Shaffer & Engle Law Offices, Harrisburg, Pennsylvania, School District Solicitor.

FINANCIAL ADVISOR

The School District has retained Public Financial Management, Inc., Harrisburg, Pennsylvania, as financial advisor (the “Financial Advisor”) in connection with the preparation, authorization and issuance of the Notes. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Preliminary Official Statement. Public Financial Management, Inc. is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities.

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MISCELLANEOUS This Preliminary Official Statement has been prepared under the direction of the School District by Public Financial Management, Inc., Harrisburg, Pennsylvania, in its capacity as Financial Advisor to the School District. The information set forth in this Preliminary Official Statement has been obtained from the School District and from other sources believed to be reliable. Insofar as any statement herein includes matters of opinion or estimates about future conditions, it is not intended as representation of fact, and there is no guarantee that it is, or will be, realized. Summaries or descriptions of provisions of the Notes, the Resolution, and all references to other materials not purporting to be quoted in full are only brief outlines of some of the provisions thereof. Reference is hereby made to the complete documents, copies of which will be furnished by the School District or the Financial Advisor upon request. The information assembled in this Preliminary Official Statement is not to be construed as a contract with holders of the Notes. Use of the words “shall,” “will,” must,” or other words of similar import or meaning in summaries of documents or law in this Preliminary Official Statement to describe future events or continuing obligations is not intended as a representation that such event will occur or such obligations will be fulfilled, but only that the document or law requires or contemplates such event to occur or such obligation to be fulfilled. The School District has authorized the distribution of this Preliminary Official Statement. CENTRAL DAUPHIN SCHOOL DISTRICT Dauphin County, Pennsylvania By: President, Board of School Directors

APPENDIX A Demographic and Economic Information

Relating to the Central Dauphin School District

A-1

Introduction The School District lies within the County of Dauphin in south central Pennsylvania, approximately 100 miles west of Philadelphia, 200 miles east of Pittsburgh and adjacent to the City of Harrisburg, the county seat and capitol of the Commonwealth. The School District is the 13th largest school district in the Commonwealth based upon Weighted Average Daily Membership. The School District is the largest of the ten school districts located in the County and contains 23% of the land area, 33% of the population, and 38% of the assessed valuation in Dauphin County. The School District encompasses an area of 118.2 square miles and is comprised of three boroughs and four townships: the Boroughs of Dauphin, Paxtang and Penbrook, and the Townships of Lower Paxton, Middle Paxton, Swatara and West Hanover. The School District is located in the fifth largest metropolitan area in the Commonwealth and is part of the Harrisburg Standard Metropolitan Statistical Area (the “MSA”) which includes Dauphin, Cumberland and Perry Counties. The School District has experienced dramatic growth in both population and assessed valuation. The strategic location of the School District combined with the existence of major railroads, airports and an extensive network of Federal and State highways has contributed to the development of commercial and service activities throughout the School District. The proximity to Harrisburg and the availability of suitable land has led to the rise in the population of the School District from 83,750 in 2000 to 90,401 in 2010. Land use in the School District, according to a 2012-13 analysis by the Pennsylvania State Tax Equalization Board, has been classified as 65.78% residential, 26.35% commercial, 5.05% industrial, 1.32% lots, 1.12% agricultural, 0.21% land, 0.14% trailers and 0.03% seasonal.

TABLE A-1 RECENT POPULATION TRENDS

Compound Average Annual Percentage Change Area 2000 2010 2000-2010 School District ........................................ 83,750 90,401 0.85% Dauphin County ...................................... 251,798 268,100 0.70% Pennsylvania ........................................... 12,281,054 12,702,379 0.38%

Source: US Bureau of the Census, Decennial Census and Pennsylvania State Data Center, 2000 & 2010 General Population and Housing Characteristics: Pennsylvania.

TABLE A-2 AGE COMPOSITION

0-17 18-64 65+ Persons Per

Years Years Years Household

Dauphin County ....................... 24.3% 61.5% 14.2% 2.54

Pennsylvania ............................ 23.8% 60.6% 15.6% 2.57

Source: Pennsylvania State Data Center, 2000 General Population and Housing Characteristics: Pennsylvania.

A-2

Employment Overall employment data are not compiled for the School District or municipalities, but such data are compiled for Cumberland County which is included within the MSA. Table A-3 shows Non-farm Jobs for November 2013.

TABLE A-3 Harrisburg-Carlisle Metropolitan Statistical Area

(Cumberland, Dauphin, and Perry Counties) Non-farm Jobs by Industry

Industry Employment Net Change From:

ESTABLISHMENT DATA Nov. 2013 Oct. 2013 Sept. 2013 Nov. 2012 Oct. 2013 Nov. 2012

Total Nonfarm .......................................................................... 328,200 326,600 324,300 327,100 1,600 1,100

Total Private ............................................................................. 267,900 266,500 264,700 265,700 1,400 2,200

Goods Producing ...................................................................... 31,700 31,200 31,100 31,000 500 700

Mining, Logging, and Construction....................................... 11,600 11,100 10,900 10,700 500 900

Manufacturing ......................................................................... 20,100 20,100 20,200 20,300 0 -200 Durable Goods ...................................................................... 10,500 10,500 10,600 10,700 0 -200 Non-Durable Goods .............................................................. 9,600 9,600 9,600 9,600 0 0 Food mfg. ......................................................................... 5,300 5,400 5,300 5,400 -100 -100

Service-Producing .................................................................... 296,500 295,400 293,200 296,100 1,100 400

Private Service-Providing ....................................................... 236,200 235,300 233,600 234,700 900 1,500

Trade, Transportation, and Utilities ..................................... 65,100 64,100 63,600 65,700 1,000 -600 Wholesale Trade ................................................................... 11,800 11,800 11,800 11,800 0 0 Retail Trade ........................................................................... 32,000 31,200 30,700 32,900 800 -900 General merchandise stores ............................................. 5,600 5,200 5,000 5,600 400 0 Transportation, Warehousing, and Utilities ......................... 21,300 21,100 21,100 21,000 200 300 Transportation and Warehousing .................................... 20,500 20,300 20,400 20,100 200 400 Truck Transportation .................................................. 9,000 8,800 8,800 8,500 200 500 Warehousing and Storage ........................................... 6,000 6,000 5,900 5,800 0 200

Information .............................................................................. 5,100 5,000 5,000 4,900 100 200

Financial Activities .................................................................. 22,400 22,400 22,300 22,300 0 100 Finance and Insurance .......................................................... 19,500 19,500 19,500 19,500 0 0

Professional and Business Services ........................................ 43,600 43,800 42,000 43,000 -200 600 Professional and Technical Services .................................... 15,600 15,400 14,700 15,500 200 100 Management of Companies and Enterprises ........................ 8,300 8,400 8,100 8,200 -100 100 Administrative and Waste Services ...................................... 19,700 20,000 19,200 19,300 -300 400

Education and Health Services .............................................. 52,500 52,400 51,900 51,200 100 1,300 Educational Services ............................................................. 8,500 8,400 8,200 8,500 100 0 Health Care and Social Assistance ....................................... 44,000 44,000 43,700 42,700 0 1,300 Hospitals ..................................................................... 15,500 15,700 15,600 15,100 -200 400

Leisure and Hospitality ........................................................... 29,600 29,800 31,000 30,000 -200 -400 Accommodation and Food Services ..................................... 23,900 24,100 24,300 23,500 -200 400 Food Services and Drinking Places ............................ 19,200 19,300 19,300 18,700 -100 500

Other Services .......................................................................... 17,900 17,800 17,800 17,600 100 300

Government .............................................................................. 60,300 60,100 59,600 61,400 200 -1,100 Federal Government ............................................................. 7,100 7,100 7,100 7,500 0 -400 State Government ................................................................. 32,900 32,800 32,700 33,100 100 -200 Local Government ................................................................ 20,300 20,200 19,800 20,800 100 -500 Local Government Educational Services ................... 13,200 13,100 12,600 13,600 100 -400 Local Government Excluding Educational Services .. 7,100 7,100 7,200 7,200 0 -100

Data benchmarked to March 2012 ***Data changes of 100 may be due to rounding***

Source: Pennsylvania State Employment Service.

A-3

Table A-4 shows recent trends in labor force, employment and unemployment for Dauphin County and the Commonwealth.

TABLE A-4 RECENT TRENDS IN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT

(Dauphin County)

Compound

Average

Annual %

Dauphin County 2008 2009 2010 2011 2012 2013(1) Rate

Civilian Labor Force (000) ..... 137.9 137.8 134.9 137.8 139.3 137.2 -0.10%

Employment (000) .................. 131.4 127.4 123.7 127.3 128.6 128.1 -0.51%

Unemployment (000) .............. 6.5 10.3 11.2 10.5 10.7 9.1 6.96%

Unemployment Rate ............... 4.7% 7.5% 8.3% 7.6% 7.7% 6.6%

Pennsylvania

Civilian Labor Force (000) ..... 6,229.0 6,169.0 6,390.0 6,386.0 6,458.0 6,487.0 0.81%

Employment (000) .................. 5,890.0 5,818.0 5,849.0 5,879.0 5,988.0 5,973.0 0.28%

Unemployment (000) .............. 339.0 351.0 541.0 507.0 470.0 513.0 8.64%

Unemployment Rate ............... 5.4% 5.7% 8.5% 7.9% 7.3% 7.9% (1)As of November 2013. Source: Pennsylvania State Employment Service. Major employers located within the School District include: Name Product/Service Central Dauphin School District Education Pinnacle Health Center Health Care (Community General Osteopathic) Abel Personnel Personnel Services Sears Retail Red Star Express Lanes Trucking Macy’s Retail Source: School District Officials Other larger employers located within commuting distance of the School District include: Name Product/Service Commonwealth of Pennsylvania* Government Milton S. Hershey Medical Center Health Care Hershey Entertainment and Resorts Amusement parks, golf, resorts, hotels The Hershey Company Manufacturer of Confections Pinnacle Health Systems Health Care PA Higher Education Assistance Agency Higher Education Federal Government Government Tyco Electronics Corporation Manufacturer Pennsylvania State University Education Central Dauphin School District Education *State Government includes all state employment except Pennsylvania State University, SEPTA, System of Higher Education, PA College of Technology and PHEAA. Source: Center for Workforce Information & Analysis website (1st Quarter - 2013).

A-4

Income The data on Table A-5 shows trends in per capita income for the School District, the County and the Commonwealth over the 2000-2010 period.

TABLE A-5

TRENDS IN PER CAPITA INCOME* Percentage Change

2000 2010 2000-2010

School District ....................................... $23,898 $30,708 2.54% Dauphin County ..................................... 22,134 27,727 2.28% Pennsylvania .......................................... 20,880 27,049 2.62% *Income is defined by the Bureau of the Census as the sum of wage and salary income, non-farm self-employment income, net self-employment income, Social Security and Railroad retirement income, public assistance income, interest, dividends, pensions, etc. before deductions for personal income taxes, Social Security, etc. School District income is the population-weighted average for political subdivisions. Source: U.S. Census Bureau - American FactFinder 2. Commercial Activity Table A-6 presents total retail sales over the past five years for the MSA, County and for the Commonwealth.

TABLE A-6

TOTAL RETAIL SALES ($000)

2010 2011 2012 2013 2014

Dauphin County ....... $ 4,323,994 $ 4,595,850 $ 4,594,147 $ 4,294,807 $ 5,646,558 MSA ........................ 8,433,071 8,957,202 8,955,938 9,022,586 11,683,993 Pennsylvania ............ 174,483,292 188,193,104 188,149,727 187,412,600 199,975,257

Source: Sales and Marketing Management Magazine Retail Activity The School District serves as the center of retail activity in Dauphin County. County residents are served by four major shopping malls, which are located in the School District. The Harrisburg Mall, located in Swatara Township, is the largest shopping mall in the County and contains an enclosed space of over 1,013,000 square feet. The Colonial Park Shopping Center, located in Lower Paxton Township, in an area of approximately 710,000 square feet. The Point Mall, also located in Lower Paxton Township, contains an area 325,000 square feet. Colonial Commons, a retail outlet mall, is located in Lower Paxton Township. The Paxton Town Square, a retail outlet mall, is located in Lower Paxton Township.

A-5

Recreation Sports and recreation play a major role in the growth and activity of the School District. The Hershey Park amusement complex and the Penn National Racetrack at Hollywood Casino located at the Penn National Race Track. Dauphin County is the home of the Hershey Bears of the American Hockey League. Harrisburg is home to the Harrisburg Senators, the Washington Nationals class AA affiliate. Excellent fishing is available in the many limestone trout streams of the County and the Susquehanna River. Skiing is available during the winter at nearby Ski Roundtop, Snow Peak, Eagles Rock and Ski Liberty. There are many historical homes, inns, farms, churches and restaurants dispersed throughout the County. The eight colleges in the Harrisburg MSA host many varied cultural events including plays, lectures, arts and crafts exhibits and numerous sporting events. The County’s first developed park, Fort Hunter Mansion and Park, a gift to the County by the Fort Hunter Foundation on July 15, 1980, is located on a scenic 35 acre river front site. Fort Hunter offers professionally guided tours of the elegantly restored mansion, picnic pavilions, play equipment, free walking tour brochure, river front walk and a Pennsylvania Canal trail. Transportation The School District is served by Interstate 81 which connects it with Scranton and Wilkes-Barre in Pennsylvania, and Binghamton and Syracuse in New York to the north, and major cities to the south; Interstate 78 which connects the School District with Allentown, Bethlehem and Easton in Pennsylvania and New York City to the east; Interstate 76 (Pennsylvania Turnpike) which connects the School District with Philadelphia and Pittsburgh in Pennsylvania; and Interstate 83 which connects the School District with York, Pennsylvania, Baltimore, Maryland, and Washington, D.C. to the south. U.S. Routes 22, 322 and 422 and PA 283 also serve the School District. The Harrisburg International Airport (HIA) is located in Middletown. The Airport has a 10,000 foot runway and can handle the nation’s largest commercial and military aircraft. The U.S. Commerce Department has simplified export procedures for the Harrisburg Port-of-Entry, so that cargo may now be flown directly from Harrisburg to foreign countries as well as any domestic point. Harrisburg International Airport is served by several major airlines, including Air Canada, Allegiant, American Eagle, Delta Air Lines, Frontier Airlines, United Airlines and US Airways which provide daily, nonstop service to 13 destinations with one-stop connections to cities around the world. General aviation service is also available at the Capital City Airport and three other airports in the Harrisburg metropolitan area. . Norfolk Southern facilities, which include the mainline of the former Conrail, offer freight transportation to and from the Harrisburg area. The yard at Enola in Cumberland County is one of the largest classification yards on the Norfolk Southern system. AMTRAK operates regular daily passenger service through the County to major eastern, southern and western cities. The Harrisburg Transportation Center serving AMTRAK and Greyhound Bus Lines completed a $26 million renovation and restoration. The Capital Area Transit Authority provides regional mass transportation services throughout the School District. Utilities Those utilities serving the School District include PPL Utilities, which provides electric service; Verizon which provides telephone services; and U.G.I. Corporation which provides natural gas service. Dauphin Consolidated Water Company provides water service to a majority of the School District. Higher Education The School District and surrounding area have a number of institutions of higher learning including the Penn State Milton S. Hershey Medical Center, in Hershey, the Harrisburg Area Community College, Penn State Harrisburg Campus in Middletown, Penn State Dickinson Law School, Messiah College and the University Center at Harrisburg which consists of extension programs offered by a consortium of five institutions of higher learning including Pennsylvania State University and the University of Pennsylvania. Temple University has a branch campus in Harrisburg and Widener Law School has a campus in Susquehanna Township. The largest of these schools in terms of enrollment is the Harrisburg Area Community College (“HACC”), which was the first comprehensive Community College to be established in the Commonwealth and serves the MSA. Founded in 1964 and fully accredited, this two-year college occupies a campus of 157 acres. Since HACC’s inception in 1964, HACC has grown from a single campus of 426 students into a multi-campus institution which enrolls nearly 15,000 credit students each semester, in campuses throughout the MSA including Harrisburg, Gettysburg, Lancaster, Lebanon and York.

A-6

Penn State Harrisburg, located in Middletown, Pennsylvania, is an undergraduate college and graduate school of The

Pennsylvania State University, one of the largest and most widely recognized institutions in the nation. The Harrisburg campus enrolls nearly 3,800 students and offers two associate, 30 baccalaureate, 21 masters, and two doctoral degrees as well as certificate and certification programs.

The Pennsylvania State University Dickinson School of Law, also located in Carlisle, is the second oldest law school in the Commonwealth having been founded in 1834. Present enrollment for the three year juris doctorate program is about 542 students. Messiah College is a liberal arts institution located in Grantham with current enrollment of approximately 2,700 students.

Residents of the School District also have access to a variety of trade and technical schools such as The Academy of Medical Arts and Business, Electronic Institutes, National Education Center, Thompson Institute, Central Pennsylvania College and the MTA Technical School. Medical Facilities

The residents of the School District are served by six major medical institutions: Pinnacle Health Systems which consists of four facilities within the system and the County; Community General Osteopathic Hospital, Harrisburg Hospital, Fredricksen Outpatient Center, and Seidle Hospital. Also located within commuting distance of the School District are Penn State Milton S. Hershey Medical and Holy Spirit Hospital.

APPENDIX B Form of Bond Counsel Opinion

Appendix B Form of Bond Counsel Opinion

Below is the Proposed Form of Bond Counsel Opinion Expected to be Delivered in Connection

with the Issuance of the Notes

[Date of Issuance of the Notes]

Central Dauphin School District Dauphin County, Pennsylvania

Re: $__________ Central Dauphin School District, Dauphin County, Pennsylvania General Obligation Notes, Series of 2014

You have requested our opinion as to the legality of the above general obligation bonds (the "Notes"). The Notes are issued by the Central Dauphin School District, Dauphin County, Pennsylvania (the "School District"), under the provisions of the Local Government Unit Debt Act, 53 Pa. Cons. Stat. §8001 et seq., as amended (the "Act"), and pursuant to a resolution duly adopted by the Board of School Directors of the School District (the "Resolution"). The Notes are being issued for the purpose of providing funds to pay the cost of (i) the current refunding of all of the School District's outstanding General Obligation Notes, Series of 2004, (ii) the advance refunding of all of the School District's outstanding General Obligation Bonds, Series of 2009, (iii) the advance refunding of a portion of the School District's outstanding General Obligation Bonds, Series of 2010, and (iv) the issuing of the Notes.

The School District has covenanted in the Resolution (i) to include the amount of debt service for the Notes for each fiscal year in which such sums are due and payable in its budget for that year; (ii) to appropriate such amounts from its general revenues for the payment of such debt service; and (iii) to duly and punctually pay, or cause to be paid, from its sinking fund or any other of its revenues or funds, the principal of, and interest on, the Notes at the dates and places and in the manner stated in the Notes, according to the true intent and meaning thereof; for such budgeting, appropriation and payment the School District in the Resolution has pledged its full faith, credit and taxing power.

As Bond Counsel to the School District we have examined originals or certified copies of the transcript of the proceedings of the School District filed with and approved by the Department of Community and Economic Development (the "Department") of the Commonwealth of Pennsylvania (the "Commonwealth"), the Resolution, the form of the Notes, such constitutional and statutory provisions and such other certificates, instruments and documents as we have deemed necessary or appropriate in order to enable us to render an informed opinion as to the matters set forth herein.

In rendering this opinion we have examined and relied upon (i) the opinion of counsel to the School District with respect, inter alia, to the due adoption by the School District of

2

the Resolution in accordance with applicable laws; and (ii) the accuracy of the statements and representations and the performance by the School District of its covenants set forth in the Resolution and the School District's Tax Certificate delivered on this date in connection with the issuance of the Notes.

As to questions of fact material to our opinion, we have relied upon the representations of the School District contained in the Resolution and in the certified proceedings and other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation.

Based on the foregoing, it is our opinion that:

1. The School District is authorized under the provisions of the Constitution and laws of the Commonwealth to issue the Notes for the purposes above set forth, and the School District has authorized the issuance thereof.

2. As indicated in the School District's debt statement filed with the Department in connection with the issuance of the Notes, outstanding debt of the School District, including debt represented by the Notes, is within the debt limitations of the Act.

3. The Notes are valid and binding general obligations of the School District payable from the revenues of the School District from whatever source derived, which revenues at the time of the issuance and sale of the Notes, include ad valorem taxes levied upon all the taxable property within the School District, within limitations provided by law.

4. Under the laws of the Commonwealth of Pennsylvania as presently enacted and construed, the Notes are exempt from personal property taxes in Pennsylvania, and interest on the Notes is exempt from Pennsylvania personal income tax and corporate net income tax.

5. Interest on the Notes, and accruals of original interest discount, are excludable from gross income for federal income tax purposes under existing laws as enacted and construed on the date of initial delivery of the Notes. Interest on the Notes is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinions set forth in the preceding two sentences are subject to the condition that the School District comply with all the requirements of the Code that must be satisfied subsequent to the issuance of the Notes in order that interest on the Notes be (or continue to be) excluded from gross income for federal income tax purposes. Failure to comply with such requirements could cause the interest on the Notes to be included in gross income retroactively to the date of issuance of the Notes. The School District has covenanted in the Resolution to comply with all such requirements. We express no opinion regarding other federal tax consequences arising with respect to the Notes.

It is to be understood that the rights of the owners of the Notes and the enforceability of the Notes may be subject to bankruptcy, insolvency, reorganization, moratorium or other laws now or hereafter enacted by any state or the federal government affecting the enforcement of creditors' rights generally, and "enforceable in accordance with its

3

(their) terms" shall not mean that specific performance would necessarily be available as a remedy in every situation.

We have not been engaged to express and do not express any opinion herein with respect to the adequacy of the security for the Notes or the sources of payment for the Notes. We express no opinion herein as to the accuracy, adequacy or completeness of the Official Statements relating to the Notes. We express no opinion with respect to any matters not specifically set forth herein.

This opinion letter is limited to the matters set forth herein. This opinion is subject to future changes in applicable law and we do not undertake any obligation to update any of the opinions expressed in this letter. No opinion may be inferred or implied beyond the matters expressly stated herein, and our opinions expressed herein must be read in conjunction with the assumptions, limitations, exceptions and qualifications set forth herein. The law covered by the opinions expressed herein is limited to the laws of the Commonwealth and the federal law of the United States of America.

MCNEES WALLACE & NURICK LLC

{THIS PAGE INTENTIONALLY LEFT BLANK}

APPENDIX C Audited Financial Statements


HARRISBl)RG, PENNSYLVANIA

FINANCIAL STATEMENTS

YEAR ENDED JUNE 30, 2013

CENTRAL DAUPHIN SCHOOL DISTICT

YEAR ENDED JUNE 30,2013

TABLE OF CONTENTS

INDEPENDENT AUDITORS' REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

BASIC FINANCIAL STATEMENTS:

GOVERNMENT-~EFINANCIALSTATEMENTS

STATEMENT OF NET POSITION

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS:

BALANCESHEET-GOVERNMENTALFUNDS

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL

FUNDS TO THE STATEMENT OF NET POSITION

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN

FUNDBALANCE-GOVERNMENTALFUNDS

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

TO THE STATEMENT OF ACTIVITIES

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND

BALANCE- BUDGET AND ACTUAL- GENERAL FUND

STATEMENT OF NET POSITION- PROPRIETARY FUND TYPES

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN

NET POSITION- PROPRIETARY FUND TYPES

STATEMENT OF CASH FLOWS- PROPRIETARY FUND TYPES

STATEMENT OF FIDUCIARY NET POSITION

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

NOTES TO FINANCIAL STATEMENTS

1-3

4-20

22

23

24

25

26

27

28 29

30

31

32

33

34-66

REQUIRED SUPPLEMENTAL INFORMATION

SCHEDULE OF FUNDING PROGRESS FOR POSTEMPLOYMENT BENEFITS

OTHER THAN PENSIONS

OTHER SUPPLEMENTAL INFORMATION

COMBINING BALANCE SHEET- PRIVATE PURPOSE TRUST FUNDS

COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES

IN NET POSITION - PRIVATE PURPOSE TRUST FUNDS

SCHEDULE OF REVENUES AND OTHER FINANCING SOURCES - GENERAL FUND

SCHEDULE OF EXPENDITURES AND OTHER FIANCING USES -GENERAL FUND

SCHEDULE OF REVENUES AND EXPENDITURES -GENERAL FUND

- LAST TEN YEARS

SCHEDULE OF DEBT SERVICE REQUIREMENTS -PRINCIPAL PAYMENTS

SCHEDULE OF DEBT SERVICE REQUIREMENTS -INTEREST PAYMENTS

SCHEDULE OF STATISTICAL INFORMATION - GENERAL FUND -

TEN YEARS (UNAUDITED)

68

70

71

72

73-80

81

82

83

84

Zelenko(ske Axelrod LLC •

INDEPENDENT AUDITORS' REPORT

Board of School Directors Central Dauphin School District Harrisburg, 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 CENTRAL DAUPHIN SCHOOL DISTRICT (the "District"), as of and for the year ended June 30, 2013, 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.

Auditors' 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 fmancial 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 auditors' 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 auditors consider 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 financial statement presentation of the financial statements.

Harrisburg 830 Sir Thomas Court, Suite 100

Harrisburg, PA 17109 717.561.9200 Fax 717.561.9202

Lehigh Valley 1101 West Hamilton Street Allentown, PA 18101-1043

610.871.5077 Fax 717.561.9202

Philadelphia 2370 York Road, Suite A-5

Jamison, PA 18929 215.918.2277 Fax 215.918.2302

Pittsburgh 3800 McKnight E. Drive, Suite 3805

Pittsburgh, PA 15237 412.367.7102 Fax 412.367.7103

Zelenkofske Axelrod LLC Board of School Directors Central Dauphin School District Page2

•

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 fmancial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the District, as of June 30, 2013, and the respective changes in financial position, and, where applicable, cash flows thereof and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Adoption of Governmental Accounting Standards Board Pronouncements

As described in Note 1 to the financial statements, in 2013 the District adopted the provisions of Governmental Accounting Standards Board's Statement No. 60, "Accounting and Financial Reporting for Service Concession Arrangements", Statement No. 61, "The Financial Reporting Rntity: Omnibus- an amendment of GASB Statements No. 14 and No. 34", Statement No. 62, "Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and A/CPA Pronouncements", and Statement No. 63, "Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position". Our opinion is not modified with respect to these matters.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, schedule of funding progress for postemployment benefits other than pensions, and budgetary comparison schedules on pages 4 through 20 and page 68 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 fmancial 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 inquires of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic fin!)llcial statements, and other knowledge we obtained during our audit of the basic financial statements.

Zelenko(ske Axelrod LLC Board of School Directors Central Dauphin School District Page3

•

We do not express an opinion or provide any assurance on the required supplementary information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's basic financial statements. The combining private purpose trust fund financial statements and General Fund schedules on pages 70 through 80 and the statistical schedules on pages 81 through 84 are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining private purpose trust fund financial statements and General Fund schedules are the responsibility. of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic fmancial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certairt 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 combining private purpose trust fund financial statements and General Fund schedules are fairly stated in all material respects in relation to the basic financial statements as a whole.

The statistical schedules have not been subjected to the auditing procedures applied in the audit of the basic fmancial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 19, 2013 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.

Harrisburg, Pennsylvania December 19, 2013

~ ,4/eaL.../ 1-t..f.:

ZELENKOFSKE AXELROD LLC

CENTRAL DAUPHIN SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS

JUNE 30. 2013

dD The discussion and analysis of the Central Dauphin School District's financial performance provides an overall review of the District's financial activities for the fiscal year ended June 30, 2013. The intent of this discussion and analysis is to look at the District's financial performance as a whole. Readers should also review the notes to the basic financial statements and the financial statements to enhance their understanding of the District's financial performance.

Management's Discussion and Analysis (MD&A) is an element of the reporting model adopted by the Governmental Accounting Standards Board (GASB) in their Statement Number 34, Basic Financial Statementsand Management's Discussion and Analysis- for State and Local Governments. Comparative information between the current year and the prior year is required to be presented in the MD&A.

Background

Central Dauphin School District is a dynamic, suburban community of approximately 83.000 residents with a current student population of 10,825 as of November 4, 2013. It is located northeast of the city of Harrisburg within the County of Dauphin in South Central Pennsylvania. The school district is the 14th largest in the Commonwealth of Pennsylvania and is the largest of the 10 school districts located in the county. Encompassing an area of 118.2 square miles, the district is comprised of three boroughs (Dauphin, Paxtang, and Penbrook) and four townships (Lower Paxton, Middle Paxton, Swatara and West Hanover). Our students attend one of thirteen elementary schools, four middle schools and two high schools; and are transported from urban, suburban and rural areas. Centro.! Dauphin Schoo! District strives to provide ~~quality to the core II educational opportunities to ensure that all students achieve success.

Mission Statement

Central Dauphin School District, a uniquely diverse school district, ensures all students a challenging and dynamic curriculum that prepares them to succeed in a changing, global society by inspiring lifelong learning in a caring, collaborative community.

Belief Statements

The Central Dauphin School District believes ...

• Students are our most precious resource. • All students regardless of race, ethnicity, gender, sexual orientation, age, disability or religion, deserve a

quality education. • All children can learn. • Learning should be an enjoyable experience. • All students must be given the opportunity to reach their potential. • All students must be active participants in their education. • All students must be respected and valued. • Healthy school communities respect differences, welcome diversity and promote cultural plurality. • Good citizenship requires responsibility, self-discipline and appropriate decision making. • Open and continual communication is essential and must be encouraged. • Personal and professional growth of all staff within our school district is important. • Outstanding staff demonstrates enthusiasm, innovation, caring, and commitment. • A successful school experience requires the involvement of students, parents, caregivers, educators and

the community. • A safe, orderly and clean environment is essential for teaching and learning.

Page4

• The district has the responsibility to strive for excellence in academics, activities, and athletics. • Excellence in education requires a commitment to continuous improvement.

Organizational Goals

I. Recruit and maintain a quality staff. 2. Strive to provide a cultural and ethnic diversity among staff to reflect the student population. 3. Develop a systematic professional development plan that allows all staff to become outstanding

educators. 4. Develop programs for underachievers, at-risk, gifted and difficult students. 5. Continue to develop and maintain a curriculum that exceeds state standards and an evaluation system

that promotes excellence within the curriculum review plan. 6. Provide technology upgrades with state-of-the-art equipment and provide staff development for its use

in the classroom and ready access for students. 7. Analyze business practices to become more fiscally responsible.

Strategic Plan I Academic Standards and Assessment Report

In 2010, the District adopted an Academic Standards and Assessment Report that has focused our purpose and resources. A team of administrators, principals, teachers, and parents assembled to create the report and develop organizational goals.

GOALS: The Central Dauphin School District has developed goals that will guide the district in a process that will provide appropriate educational services to district students that will provide the necessary achievement for all students.

I. Goal: Achievement for all students Description: Cultivate an interactive learning environment to afford all students the opportunity to be successful in the 2 1'' Century.

2. Goal: four-Year Graduation Rate Description: Graduation rate will meet an 80% threshold and /or show growth.

3. Goal: Mathematics Description: By the year 2014, the number of all students proficient in mathematics will meet federal guidelines.

4. Goal: Reading Description: By the year 2014, the number of all students proficient in reading will meet federal guidelines.

5. Goal: Science Description: By the year 2014, the number of students proficient in Science will meet federal guidelines.

6. Goal: Student Attendance {any school that does not graduate seniors) Description: Student attendance will meet a 90% threshold and/or show growth.

7. Goal: Student Participation in State Assessments Description: At least 95% of eligible students will participate in required state-wide assessments.

PageS

Financial Highlights

• In the budgeting process, the Central Dauphin School District Board of Directors balanced the budget with a millage rate increase of .4573 mills or 3.30%. The 2012-13 budget, totaling $155,838,650 was a $3,922,646, or 2.58% increase from the prior year.

• The District's total net position was $93,624,561 at June 30,2013. This represents an increase of $5,746,097, or 6.54% from last year.

• The District's general fund experienced an increase in fund balance in the amount of $1,144,598, or 0.73% of the 2012-13 operating budget. Additional information regarding the operating surplus is provided in the revenues and expenses budget variance section.

• The District's general fund total revenue increased by $6,773,072 or 4.39% over prior year revenues. Local revenues increased by $2,865,860 or 2.45% over prior year. Property taxes, which include current and interim real estate taxes, increased by $3,217,387 or 4.57%. Real estate transfer tax collections increased by $586,350 or 43.63%, delinquent tax collections decreased by $404,860 or { 1 0.50%), and earned income tax collections increased by $1 ,582,008 or 4.34%. State revenues increased by $2,037,986 or 6.10% over prior year. This is attributable to the state's mandatory retirement contribution from the increase in the employer contribution rate for the Public School Employees Retirement System {PSERS). Federal revenues also increased by $1.831,646 or 59.90% over prior year.

• The District's general fund total expenses increased by $6.431,763, or 4.19% over prior year expenses. Major increases /decreases by category compared to the prior year include salaries, which decreased by $1,127,193 or {1.66%), employee benefits which increased by $1,159,318, or 3.77%, professional /contracted services increased by $602,582, or 14.29%, purchased property services decreased by $45,531. or [ 1.52%), tuitions to other local educational agencies, charter schools, cyber schools, vocational technical school. and community college increased by $200.599. or 1.38%, general supplies, books and periodicals decreased by $6,904, or {0.00%), new and replacement equipment decreased by $410,719, or {33.62%), and debt service/transfers increased by $5.454,718, or 30.05%.

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FINANCIAL STATEMENTS

The financial statements consist of three parts: management's discussion and analysis. the basic financial statements. and required supplementary information. The basic financial statements include two kinds of statements that present different views of Central Dauphin School District. The first two statements are government-wide financial statements- the statement of net position and the statement of activities. These provide both long-term and short-term information about the District's overall financial status.

The remaining statements are fund financial statements that focus on individual parts of the District's operations in more detail than the government-wide statements. The governmental funds statements tell how the District's services were financed in the short-term as well as what remains for future spending. Proprietary fund statements offer short and long-term financial information about the activities that the District operates like a business. For the District, this is the food service fund. Fiduciary fund statements provide information about financial relationships where the District acts solely as a trustee or agent for the benefit of others. to whom the resources in question belong.

The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and reports the financial statements with the comparison of Central Dauphin School District's budget for the year.

Figure A-1 shows how the required parts of the financial report are arranged and relate to one another:

Summary

Figure A-1 Required Components of

Central Dauphin School District's Financial Report

Management's Discussion and

Analysis

.......... ········

Government-Wide

Financial Statements

........... ·······

Basic Financial

Statements

Fund Financial

Statements

Page7

Required Supplementary

Information

············· ............ ···········

Notes to the Financial

Statements

......

Detail

Financial Statements (Continued) Figure A-2 summarizes the major features of the District's financial statements, including the portion of the District they cover and the types of information they contain. The remainder of this overview section of the management's discussion and analysis explains the structure and contents of each of the statements.

FigureA-2 Major Features of Central Dauphin School District's Government-Wide and Fund Financial Statements

Fund Statements

GovernmentWide Statements Governmental Funds Proprietary Funds Fiduciary Funds

:s~o'Pe_ .......... -·-TE~!k'eni~iri~£ -·- -T'file.ac!i¥i!ies <iriil~- --A.~~;~;~;~~·~'h~-s~h'~~~-· Ti~;t;;;:;~~~;;;-~hi~h'-t:h~- -·-·: 1 I I I I

j f (except fiduciary ! School that are not operates similar to i School is the trustee or t

! . funds). proprietary or private business- l agent to someone else's ! · fiduciary, such as ,' ! food services. : resources - student education, !

r r r administration and ! activity funds & 1

j ! ! communitv services. j scholarship funds. f t-·------------------------·-··+--------------------------------·-··r··-··-··-··-··--~.! .. _________________ t-··-··-··-··-··-··-··-··-··-··-··-··--·-t-----·-··-··--·-··-··-··-··--·-··--·-··-··-··-· i Required Statement of net ! Balance sheet; Statement of net Statement of fiduciary net i financial position [ statement of position; position; i statements. Statement of j revenues, statement of f h · · statement o c anges m i activities. \ expenditures, and j j changes in fund revenues~ expenses fiduciary net position. i i b 1 and changes in net i i a ance. i 1 i position. i ! ! Statement of cash i ! ! ! ! flows. ! ! r-··----·-----··-:··-··--·------r-·-··--·----·-----------··-:··-··-··i-··-·--··-:··-·-----·---·-··-··-··-·--·r··-··-··--·-··-·---·--·-·-----··-··--·-t-··--·-··-··--·-··-··-··-··--·-··-··-··-··--·-··j j Accountmg [ Accrual accountmg ! Modtfied accrual ! Accrual accounting ! Accrual accounting and j ! basis and ! and economic ! accounting and [ and economic l economic resources focus i I I C: I fi • I I ' I ! measurement j resources 1.0CUS. ! current mancml ! resources focus. j ! ~.f.C!.~~~-'--·---·-------·---·~·--··-··--·-··-··-··-··--·----·---·~-~~~-<?.1:!!.~.~~--f?.~.~-~:-.. - .. - .. -.~---··-··--·-··-··-··-··-··-··-··--·--·-~----·--------·----·---·-··-··-··-·-----··-··-· i i Type of i All assets and i Only assets expected i All assets and i All assets and liabilities ' ~sset/lia~ility ! liabilit.ies, both ' t? be u.sed up and ! liabilities, both ! both short-term and lo~g-

mformatwn. i financial and habiiittes that come i fi 'a! and ca 'tal i : . : nanc1 p1 , . term. ! capital, and short- due during the year ! d h d i term and long-term. or soon thereafter; no [ an s art-term an j capital assets ~ long-term.

!..------·---·-··--·----·-------L·--·---·--------·-··-·---·-··-··--·.!--~~~~~~-~-=-·-·--·---·-··-··-·---L·---·-··-··-··-··-··-·------·-··-··-··-!..·--·---·-··-·--··-··-··--·--·--·-··-··--·--·-··· i Type of inflow- ! All revenues and Revenues for which All revenues and l All revenues and expenses i ! outflow expenses during cash is received expenses during year, ~ during year, regardless of

information. year, regardless of during or soon after f h ' regardless o w en j when cash is received or when cash is the end of the year; ; 'd received or paid. expenditures when cash is received or ~ pal .

goods or services paid. have been received

l and payment is due ! during the year or ' -----·----·--··-----·----·----L·--·-·------·-··--·-··----··-··-··l.·~-4:?.~~-~J.!~!~~f!~!:._ .. ________ !..._. _____________________________________ !.._. ____________________________________________ _

Page 8

OVERVIEW OF FINANCIAL STATEMENTS

Government-Wide Statements The government-wide statements report information about the District as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the government's assets and liabilities. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid.

The two governmental-wide statements report the District's net position and how it has changed. Net position, the difference between the District's assets and liabilities, is one way to measure the District's financial health or position.

Over time, increases or decreases in the District's net position is an indication of whether its financial health is improving or deteriorating, respectively.

To assess the overall health of the School, you need to consider additional factors, such as changes in the member school district contributions and the projected enrollment of the students.

The government-wide financial statements of the District are divided into two categories:

• Governmental Activities- All of the District's basic services are included here, such as instruction, instruction student support, administration and financial support services, operation and maintenance of plant services, pupil transportation, student activities, community services, and debt service. Property taxes, public utility realty, earned income taxes levied for general purposes, operating grants and contributions, and state and federal subsidies finance these activities.

• Business-Type Activities- The District operates a food service operation and charges fees to staff, students, and visitors to help it cover the costs of the food service operation. The district also maintains an internal service fund to administer the district's self-funded health insurance program.

Fund Financial Statements The District's fund financial statements provide detailed information about the most significant funds, not the District as a whole. Some funds are required by state law and by bond requirements.

• Governmental Funds - Most of the District's activities are reported in governmental funds, which focus on the determination of financial position and change in financial position, not on income determination. They 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 District's operations and the services it provides. Governmental fund information helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the District's 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.

Page9

• Proprietary Funds- These funds are used to account for the District's activities that are similar to business operations in the private sector; or where the reporting is on determining net income, financial position, changes in financial position, and a significant portion of funding through user charges. When the District charges customers for services it provides, whether to outside customers or to other units in the District. these services are generally reported in proprietary funds. The food service fund is used to account for the financial transactions related to food service operations. The internal service fund is used to account for the financial transactions related to the District's self-insurance program for health care benefits. The food service fund and internal service fund are the District's proprietary funds and are the same as the business-type activities reported in the government-wide statements, but provides more detailed and additional information, such as cash flows.

• Fiduciary Funds -The District is the trustee, or fiduciary, for assets that belong to others, such as scholarship funds or student activity funds. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The District excludes these activities from the other financial statements because it cannot use these assets to finance its operations.

FINANCIAL ANALYSIS OF THE DISTRICT- GOVERNMENT-WIDE STATEMENTS

The District's total net position was $93,624,561 at June 30,2013. This represents an increase of $5.746,097, or 6.54% over last year. The following table presents condensed financial information for the net position of the District as of June 30,2013 and June 30,2012.

Governmental Business-Type

Activities Activities YTD Total YTD Total

2013 2012 2013 2012 2013 2012

Assets:

Current and Other Assets $ 70,987,552 $ 63,315,303 $ 1.168,582 $ 811,897 $ 72.156,134 $ 64,127,200

Capitol Assets, Net 227,789,969 238,273,533 618.709 644,308 228.408,678 238,917,841

Total Assets 298.777.521 301.588,836 1.787,291 1.456,205 300,564,812 303,045,041

Liabilities:

Current and Other Liabilities 28.718.443 27,556,376 20,564 25,888 28.739,007 27,582,264

Long-Term Liabilities 178,001.919 187,371.817 199,325 212.496 178,201.244 187,584,313

Total Liabilities 206,720,362 214,928,193 219,889 238,384 206,940,251 215,166,577

Net Position:

Net Investment in Capital Assets 61.886,297 64,543,379 618,709 644,308 62,505,006 65,187,687

Unrestricted (Deficit! 30,170,862 22,117,264 948,693 573,513 31.119,555 22,690.777

Total Net Position $ 92,057,159 $ 86,660,643 $ 1,567.402 $ 1.217,821 $ 93,624,561 $ 87,878.464

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FINANCIAL ANALYSIS OF THE DISTRICT- GOVERNMENT-WIDE STATEMENTS (CONTINUED)

The results of this year's operations as a whole are reported in the Statement of Activities. All expenses are reported in the first column. Specific charges, grants, revenues and subsidies that directly relate to specific expense categories are represented to determine the final amount of the District's activities that are supported by other general revenues. The largest revenues are property taxes, local taxes and the state basic education subsidy.

The following table represents condensed financial information for the Statement of Activites in a different format so that you can see our total revenues for the year.

Page 11

Change in Net Position

Governmental Activites Business-Type Activities Total Total 2013 2012 2013 2012 2013 2012

Revenues: Program Revenues:

Charges for Services and Sales $ 2,032,224 $ 2,556,811 $ 2,500,371 $ 2,867,967 $ 4,532,595 $ 5,424,778 Operating Grants and Contributions 41,115,883 39,121,658 2,451,719 2,236,297 43,567,602 41,357,955 Capital Grants and Contributions

Total Program Revenues 43,148,107 41,678,469 4,952,090 5,104,264 48,100,197 46,782,733 General Revenues:

Property Taxes 79,311,447 75,553,276 - 79,311,447 75,553,276 Income Taxes 38,246,499 36,662,381 38,246,499 36,662,381 Interest 153,195 1,089,603 790 473 153,985 1,090,076 Miscellaneous 560,321 824,125 625,901 560,321 1,450,026

Total General Revenues 118,271,462 114,129,385 790 626,374 118,272,252 114,755,759 Total Revenues 161,419,569 155,807,854 4,952,880 5,730,638 166,372,449 161,538,492

Program Expenses: Instruction 95,255,201 95,630,218 95,255,201 95,630,218 Support Services:

Pupils and Instructional Staff 14,117,859 13,211,024 14,117,859 13,211,024 Board of Education, Administration and Fiscal 14,539,288 13,926,605 - 14,539,288 13,926,605 Operation and Maintenance of Plant 13,751,791 13,928,779 13,751,791 13,928,779 Pupil Transportation 8,368,065 8,729,475 - 8,368,065 8,729,475 Student Activities 2,305,475 2,050,516 - - 2,305,475 2,050,516 Community Services 363,878 303,123 363,878 303,123

Interest and Fiscal Charges 7,321,496 7,790,277 7,321,496 7,790,277

Food Services - 4,603,299 5,226,094 4,603,299 5,226,094 -Total Expenses 156,023,053 155,570,017 4,603,299 5,226,094 160,626,352 160,796,111 Increase (Decrease) in Net Position $ 5,396,516 $ 237,837 $ 349,581 $ 504,544 $ 5,746,097 $ 742,381

Page 12

REVENUE

Local Sources

State Sources

Federal Sources

Other Sources

Revenues and other financing sources, which total $160,902,928, increased $6,773,072 or 4.39% over the prior year revenues. The following table reflects a comparison of current year revenues to prior year revenues:

$

$

$

$

$

Sources 74.44%

Increase Revenue %of (Decrease)

2013 Total From2012

119,773,552 74.44% $ 2,865,860

35.435,198 22.02% $ 2,037,986

4,889,383 3.04% $ 1,831,646

804.795 0.50% $ 37,580

160,902,928 100.00% $ 6.773,072

Distribution of Funding Sources

~""u'"' Sources 22.02%

~----Federal Sources 3.04%

Page 13

Percentage Increase

(Decrease)

2.45%

6.10%

59.90%

4.90%

EXPENSES

Expenditures and other financing sources. which total $159,758,330, increased $6.431,763 or 4.19% over the prior year expenditures. These expenditures were segregated into various programs depending upon the function of the activity. These programs arid the costs associated with each, as well as_ comparison to the costs incurred in the prior year and the final 201 2-13 budget, are as follows:

Increase Percentage Expenditures %of (Decrease} Increase

2013 Total 2012 (Decrease!

Instruction $ 91,482,613 57.26% $ (602.293) ·0.65% Instructional Student Support 10,200,392 6.38% 963,413 10.43% Administrative & Financial Support 12,859,282 8.05% 452,073 3.64% Operation & Maintenance of Plant 12,986,361 8.13% 307,849 2.43% Pupil Transportation 7,605,345 4.76% (340,307) -4.28% Student Activities 2,249,896 1.41% (53.369) -2.32% Community Services 363,877 0.23% 60.755 20.04% Debt Service and other 22,0\0,564 13.78% 5,643,642 34.48%

$ 159,758,330 100.00% $ 6.431.763

Distribution of Expenditures by Function

Debt Service and Other

13.

Community Services

0,23%

Student Acllivities . ./ 1,41%

Transportation 4,76%

Operation & Maintenance of

Plant 8.13%

Page 14

Instruction 57.26%

Student Support 6,38%

'...Admiinistralilre & Financial Support

8.05%

GENERAL FUND BUDGET

During the fiscal year, the School Board of Directors authorizes revisions to the original budget to accommodate differences from the original budget to the actual expenditures of the District. All adjustments to the general fund budget are provided to the school board of directors on a monthly basis. The District uses a site-based, line-item budget. The budgeting systems are designed to tightly control total site budgets, but provide flexibility for site management. During the past year, the administrators implemented a budget freeze and only permitted purchases of necessary student materials and supplies.

A schedule showing the District's original and final budget amounts compared with amounts actually paid and received is provided on the next page.

Page 15

Table 3

Spending Review

Budgeted Amounts 2013 Variance 2012

Original Final Actual Budgetary With Actual Budgetary

Budget Budget Basis Final Budget Basis

REVENUES

local Sources $ 115.521.231 $ 115,521,231 $ 119.773.552 $ 4.252.321 $ 116.907.692

State Sources 36.381.260 36,38\,260 35.435.198 (946.062) 33.397.212

Federal Sources 2.436,159 2.436.159 4.889.383 2.453,224 3,057,737

Other Sources 1.500.000 1,500,000 804.795 (695.205) 767.215

Total Reve"nues 155.838.650 155,838,650 160,902,928 5,064,278 154.129.856

EXPENDITURES

Instruction:

1100 Regular Programs 64.940.366 64,864,355 62,239,\63 2,625,193 64.396.070

1200 Special Programs 18.290.037 18,288,537 20,231,043 (1.942.505) 18.079.757

1300 Vocational Programs 6,230,527 6,230,527 5.393.635 836.893 5,923.382

1400 Other Instructional Programs 1,667,018 1,666.808 1,600.249 66,559 1,705,812

1700 Community CoUege 2,018,216 2.018.216 2,018,523 (307) 1,979,885

Support Services:

2100 Pupil Personnel 5,515,460 5.515.210 5.433.035 82.175 5,192,671

2200 Instructional Staff Services 2,874,233 2.910,674 2,830,370 80,304 2,308,710

2300 Administrative Services 7.773.225 7,772,261 7,971,978 (199.717) 7.668.538

2400 Pupil Health 1,839.935 1.840.185 1,936.987 (96.802) 1.735,603

2500 Business Services 843,509 864,072 774.535 891537 747,697

2600 Operation & Maintenance

of Plant 12,829,034 12,825,534 12,986,361 (160.827) 12,678,510

2700 Student Transportation 7,689,272 7,689,272 7,605,345 83,927 7,945,653

2800 Central 4.459.882 4,477,237 3.894.019 583.218 3.774.307

2900 Other Support 233,648 233.648 218.750 14.898 216,664

Noninstructional Services:

3200 Student Activities 2.180.228 2,180,652 2.249,896 (69.244) 2.303.263

3300 Community Setvices 306,808 314.210 363.877 (49.667) 303,123

Other:

5110 Debt Service 16.147.252 16,147,252 16,137,542 9,710 15.694.970

5130 Refund of Prior Year Receipts 373,022 (373.Q22) 46,051

5.500.000 (5.500.000) 625,901

Total Expenditures $ 155,838,650 $ 155,838,651 $ !59 .758,330 $ (3,919,679) $ 153,326,567

Page 16

Spending Review Highlights

REVENUES

For the general fund, final budgeted revenues and other financing sources were $155,838,650 while actual revenues were $160,902,928. Total revenues exceeded the budget by $5,064,278, or 3.25%. Budget variances include:

Local Sources- During the past year, the District realized $4,252,321, or 3.68%, over budgeted amounts for local revenues. The largest variance was attributable to earned income taxes. Under the provisions of Act 32, a new county-wide earned income tax collector was appointed January 1. 2012. As a result of this change, the District continued to experience an overall increase in the speed of processing earned income tax revenues. The earned income tax collector also updated its listing of taxpayers in the District and implemented the mandatory collection provisions of Act 32. As a result, the District was over budget $5,494,7 41, or 16.87% for earned income tax revenues. Other local tax revenue variances were: Regular real estate taxes over budget by $674,075, or .0093%. Due to a sale of a large commercial property complex, real estate transfer taxes were over budget $480,272, or 33.12%. Delinquent real estate taxes were under budget by $47,941, or (1.37%). Due to continued low interest rates, interest earnings were under budget by $737,170, or (89.90%). Tuition payments from other school districts exceeded the budget by $513,972, or 85.06%.

State Sources- During the past year, the District realized $946,062 under budgeted amounts for state revenues. The shortfall in state revenues was applicable to transportation subsidy under budget by $485,328, or (13.581%), social security reimbursement under budget by $160,217, or (6.16%), and retirement reimbursement under budget by $337,809, or (8.039%).

Federal Sources- During the past year, the District realized $2,453,321 over budgeted amounts for federal programs. During the past year, the District received the third and final year of the Title I. School Improvement Grant for Central Dauphin East High School in the amount of $699,963. The respective revenues and expenses were not included in the general fund budget.

Other Sources- During the past year, the District was under budget by $695,205. The budget included a $1,500,000 transfer from the District's internal service fund. Due to the increase in earned income tax revenue, as identified above, the District did not perform this transfer.

EXPENDITURES

For the general fund, expenditures and other financing uses were budgeted at $155,838,650 while actual expenditures were $159,758,330. Expenditures exceeded the budget by $3,919,680, or 2.52%. Budget variances include:

Regular Programs- During the past year, the District was under budgeted amount for regular programs by $2,625,193. Items exceeding the budget were student materials/supplies $216,198 and new /replacement equipment $223,711. Items under budget were salaries and wages $456,572, employee benefits $1 ,350,808 and student tuition $1,334,755.

Special Programs- During the past year, the District exceeded its budgeted amount for special programs by $1.942,505. Items exceeding the budget were professional services $469,336 and student tuition $1.718,671. Items under budget were salaries and wages $152,205, employee benefits $70,201, and general supplies and books $22,393.

Curriculum and Instruction Services- During the past year, the District exceeded its budgeted amount by $567,733. During the past year, the District implemented a comprehensive district-wide program that includes needs assessment and strategic planning, professional development and learning opportunities for teachers and leaders, intensive instructional and leadership coaching, resources and related training materials, and ongoing project management.

Page 17

Legal Services - During the past year, the District exceeded its budgeted amount for legal services in the amount of $174,664.

Business Support Services - During the past year, the District was under its budgeted amount for business services in the amount of $89,537. Items under budget were salaries and wages $6,282, employee benefits $12,078, professional services $12,822, postage $40.750, and general supplies $14,604.

Operation & Maintenance of Plant- During the past year, the District exceeded its budgeted amount by $160,827. Items exceeding the budget were professional services $114,078, lawn care services $204,975, construction projects $248,904, maintenance supplies $95,643, and electricity $106,392. Items under budget were salaries and wages $48,089, repair and inspection costs $185,127, water and sewer $32,381, maintenance and custodial supplies $256,034, and natural gas $66,056.

Student Transportafion- During the past year, the District was under budget by $83,927.

Human Resources- During the past year, the District was under its budgeted amount by $351 ,436. This variance is attributable to retiree health insurance costs under budget by $427, 141 . Other professional services exceeded the budget by $80,623.

Debt Service- During the past year, the District was under its budgeted amount by $9.710. This was attributable to refunds of prior year expenditures.

Fund Transfers- During the past year, the District transferred $4,000,000 for Capital Projects and Technology. The District also transferred $1 ,500,000 for future Public School Employee Retirement System {PSERS) obligations. Both transfers were not included in the budget.

A detailed analysis of budgeted to actual revenues and expenses is included within the Statement of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual- General Fund.

CAPITAL ASSETS

At June 30,2013, the District had $228,408,678 invested in a broad range of capital assets, including land, land improvements, buildings, machinery and equipment, and vehicles. This amount represents a net decrease {including additions, deletions and depreciation) of $10,509,163 or {4.40%) from last year.

The following schedule depicts the change in capital assets for the period July 1, 2012 through June 30,2013.

Capital Assets at June 30, 2013

(Net of Depreciation)

Governmental Business-Type

Adivities Activities YTD Total

2013 2012 2013 2012 2013 2012

land $ 4.783,289 $ 4.783,289 $ $ $ 4.783.289 $ 4.783.289

Constuction in Progress 463,289 50.994 463,289 50,994

Site Improvements 3.511.156 3.743.205 3.511.156 3,743,205

Buildings and Improvements 213,905,520 222,894,830 213.905.520 222.894.830

Furniture and Equipment 4,813.535 6,561,546 618.709 644.308 5,432,244 7,205,854

Vehicles 313,180 239.669 313.180 239.669

Totals $ 227,789,969 $ 238,273,533 $ 618,709 $ 644,308 $ 228.408,678 $ 238.917.841

Page 18

DEBT ADMINISTRATION

At June 30,2013 the District had $168,998,055 in outstanding bonds, notes, and authority lease obligation payable, a decrease of $8,679,890 over last year.

Bond Rating

The Central Dauphin District prides itself in maintaining a respectable credit rating. As of April13, 2012, Standard & Poor's ratings services assigned and affirmed its 'AA' rating to the Central Dauphin School District, Harrisburg, Pennsylvania. The outlook for the District is stable. Key rating factors include S&P's assessment of the district's:

• Stable property tax base with very strong wealth and strong income indicators; • Strong unreserved general fund balance at fiscal year-end 2011, surplus projected for 20 12; and • Moderate overall debt burden.

OTHER LONG-TERM LIABILITIES

Other obligations include accrued vacation pay and severance for specific employees of the District. More detailed information about long-term liabilities is included in the notes to the financial statements.

FACTORS BEARING ON CENTRAL DAUPHIN SCHOOL DISTRICT'S FUTURE

• The mandated retirement contribution to the Pennsylvania Schoo! Employees Retirement System (PSERS} is projected to increase greatly in the future. The estimated increases as provided by PSERS are as follows: 2014-15, 21.25%, 2015-16 25.56%, 2016-17 26.26%, 2017-18 26.86%, and 2018-19 27.53%. The projected increases in retirement rates will be a burden and hardship for the District. The District will be forced to consider future tax increases and utilization of its savings in future years.

• The District continues to forecast revenues and expenditures five years forward utilizing a five-year budget model. This provides the District some direction to address all known future changes in revenue collection patterns and spending needs. Due to the mandatory increases in funding levels for retirement contributions, the District will be forced to consider future lax increases and utilization of its savings in future years.

• Under GASB 68, the District will have to report its proportionate share of the Pennsylvania School Employees Retirement System (PSERS) net pension liability on its Statement of Net Position. This is effective beginning with the June 30, 2015 year end. The proportionate share for employers will be based on 100% of PSERS' net position liability, not 50%, since school districts are responsible for paying 100% of the employer contributions. The Central Dauphin School District's proportional share of PSERS' net pension liability is estimated to be $206,516,291. The District fundamentally disagrees with the provisions of GASB 68. The Commonwealth of Pennsylvania, not the District, is ultimately responsible for the pension program.

• The Affordable Care Act of 2010 contains provisions that require additional reporting requirements and regulations that will cause the Central Dauphin School District to incur additional costs and fees to be in compliance with that Act. The Affordable Care Act regulations are expected to be effective January 1,2014.

Page 19

• The Central Dauphin School District is considering debt refunding of the Central Dauphin School District Series 2004 Notes and a portion of the Central Dauphin School District 201 0 Bonds. The present value savings for these transactions is estimated to be $1,988,850. The District is also considering the possible defeasance of the Central Dauphin School District 2009 Bonds. The net savings for this transaction is estimated to be $130,000.

FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, parents, students, investors and creditors with a general overview of the District's finances and to show the Board of Director's accountability for the money it receives. If you have questions about this report or wish to request additional financial information, please contact Mrs. Karen L. McConnell, CPA, MBA, Assistant Superintendent for Finance and Administrative Operations, Central Dauphin School District, 600 Rutherford Road, Harrisburg, PA 17109, (717) 545-4703.

Page 20

BASIC FINANCIAL STATEMENTS


STATEMENT OF NET POSlTION JUNE30,2013

GOVERNMENTAL BUSINESS-TYPE

ACTIVITIES ACTIVITY TOTAL

~

Current assets:

Cash and cash equivalents $ 29,I42,344 $ 881,979 $ 30,024,323

lnvesnnents 13,356,911 13,356,911

Restricted cash 4,835,058 4,835,058

Restricted invesnnents 964,971 964,971

Taxes receivables, net 11,988,639 11,988,639

Internal balances 73,1l4 (73,114) Receivable for option premium installment 514,700 514,700

Due from other governments 2,329,490 43,333 2,372,823

Other receivables 751,117 31,659 782,776

Deposit with third party 5,326,283 200,000 5,526,283

Inventories 175,211 76,854 252,065

Other current assets 7,871 7,871

Total cummt assets 69,457,838 1,168,582 70,626,420

Noncurrent assets: Capital assets, net of accumulated depreciation

L~d 4,783,289 4,783,289 Construction in Progress 463,289 463,289

Site improvements 3,511,156 3,51l,l56 Buildings and improvements 213,905,520 213,905,520

Furniture and equipment 4,813,535 618,709 5,432,244

Vehicles 313,180 313,180

Unamortized deferred loss, net of amortization 694,051 694,051

Notes issuance costs, net of amortization 835,663 835,663

Total noncurrent assets 229,319,683 618,709 229,938,392

TOTAL ASSETS $ 298,777,521 $ 1,787,291 $ 300,_564,~12

LIABILITIES AND NET POSITION

Current liabilities:

Accounts payable $ 6,152,949 $ 16,868 $ 6,169,817

Accrued salaries and benefits 8,26!,497 8,261,497 Payroll deductions and withholdings 2,501,682 2,501,682

Accrued interest payable 1,982,074 1,982,074

Bonds and notes payable 8,840,000 8,840,000

Authority lease obligation 388,248 388,248

Otl1er 400,000 400,000 Unearned revenue 191,993 3,696 195,689

Total current liabilities 28,718,443 20,564 28,739,007

Noncurrent liabilities: Bonds and notes payable, net 152,855,644 152,855,644

Authority lease obligation 9,619,807 9,619,807

Compensated absences 2,981,232 2,981,232 Other postemployment benefits liability 12,545,236 199,325 12,744,561

Total noncurrent liabilities 178,001,919 199,325 178,201,244

Total liabilities 206,720,362 219,889 206,940,251

Net position: Net investment in capital assets 61,886,297 618,709 62,505,006 Unrestricted 30,170,862 948,693 3l,l19,555

Total net assets 92,057,159 1,567,402 93,624,561

TOTAL NET POSITION AND LIABILITIES ' 298,777,521 $ 1,787,291 $ 300,564,812

See Notes to Financial Statements

Page 22

CENTRAL DAUPHfN SCHOOL DISTRICT

STATEMENT OF ACTIVITIES FOR THE YEARENDEDJUNE30,2013

NET (EXPENSE) REVENUE AND PROGRAM REVENUES CHANGES IN NET POSITION

CHARGES OPERATING FOR GRANTS AND GOVERNMENTAL BUSINESS-TYPE TOTAL

Function/Pro~ EXPENSES SERVICES CONTRIBUTIONS ACTfVITIES ACTIVITY

Governmental activities: Instruction $ 95,255,201 $ 1,769,870 $ 27,097,617 $ (66,387,714) $ $ (66,387,714) lnstTuctional student support 14,117,859 2,815,577 (11,302,282) (11,302,282) Administrative and financial support services 14,539,288 6,208,711 (8,330,577) (8,330,577) Operation and maintenance of plant services 13,751,791 8,400 1,905,735 (11,837,656) (11,837,656) Pupil transportation 8,368,065 3,088,243 (5,279,822) (5,279,822) Student activities 2,305,475 253,954 (2,051,521) (2,051,521) Community services 363,878 (363,878) (363,878) Interest on long-term debt 7,321,4% ~7.321.496) (7,321,496)

Total governmental activities !56,023,053 2,032,224 41,115,883 (112,874,946) (112,874,946)

Business-type activity;

Food service 4,603,299 2,500,371 2,451,719 348,791 348,791

Total business-type activity 4,603,299 2,500,371 2,451,719 348,791 348,791

Total $ 160,626,352 $ 4,532 595 $ 43,567,602 (I 12,874,946) 348,791 (112,526,155)

General revenues: Taxes:

Property taxes, levied for general purposes, net 79,311,447 79,.311,447 Public utility realty and earned income taxes

levied for general purposes, net 38,246,499 38,246,499 Investment earnings 153,195 790 153,985 Option revenue 278,834 278,834 Miscellaneous income 335,466 335,466

Loss on disposal of capital assets (53,979) ~531979)

Total general revenues 118,271,%2 790 118,272,252

Changes in net pllsition 5,396,5\6 349,581 5,746,097

Net position- beginning 86,660,643 1,217,821 87,878,464

Net position· ending _$ ___ 92,057,159 $ 1,567,402 $ 93,624,561


Page 23


BALANCE SHEET GOVERNMENTAL FUNDS

JUNE 30, 2013

TOTAL

CAPITAL GOVERNMENTAL

GENERAL PROJECTS FUNDS

ASSETS: Cash and cash equivalents $ I5,342,394 $ 1,281,004 $ 16,623,398 Restricted cash 4,835,058 4,835,058 Investments 13,049,611 6,023 13,055,634 Restricted investments 964,971 964,97I Taxes receivable, net 11,988,639 11,988,639 Due from other governments 2,329,490 2,329,490 Due from other funds I,052,472 4,000,000 5,052,472 Other receivables 75I,II6 75I,II6 Inventories I75,2I1 175,2II

Total assets $ 44,688,933 $ 11,087,056 $ 55,775,989

LIABILITIES AND FUND BALANCES: Liabilities:

Accounts payable $ 4,049,243 $ 283,628 $ 4,332,871 Due to other funds 5,659,547 5,659,547 Accrued salaries and benefits 8,26I,497 8,26I,497 Payroll deductions and withholdings 2,50I,682 2,501,682 Deferred revenues 2,349,32I 2,349,321

Total liabilities 22,821,290 283,628 23,104,9I8

Fund Balances: Nonspendable:

Inventories 175,211 175,21I Restricted for:

Capital projects 5,516,40I 5,516,40I Committed to:

Retirement liabilities 2,500,000 2,500,000 Capital projects I,287,027 1,287,027 Debt service expenditures 3,686,009 3,686,009

Assigned to: Postemployment liabilities other than pensions 4,000,000 4,000,000 Capital projects 4,000,000 4,000,000

Unassigned 11,506,423 11,506,423

Total fund balances 21,867,643 10,803,428 32,671,071

TOTAL $ 44,688,933 $ 11,087,056 $ 55,775,989


Page 24


RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION

JUNE 30, 2013

TOTAL FUND BALANCES, GOVERNMENTAL FUNDS

Amounts reported for governmental activities in the statement of net position is different because:

Capital assets used in governmental activities are not fmancial resources and therefore are not reported as assets in governmental funds. The cost of assets is $365,850,164 and the accumulated depreciation is $138,060,195

The funds record only the tax revenue received through a period of 60 days subsequent to year end. The statement of net position includes a receivable for the District's anticipated collections on the levy

Bond and note issuance costs are deferred and amortized over the life of the underlying obligation in the governmental activities. Issuance costs totaled is $1,406,602 with accumulated amortization of$570,939

Net position of the Internal Seivice Fund are included in governmental activities since they primarily benefit the District's governmental activities

Assets/Liabilities not available to pay for current period's expenditures and therefore not reported in the funds.

Receivable for option premium installment Unearned revenue - derivative instrument Investment in derivative instrument

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

Accrued interest payable Bonds and notes payable Deferred loss Authority lease obligation Other Compensated absences Other post employment benefits liability

TOTAL NET POSITION, GOVERNMENTAL ACTIVITIES


Page 25

$ 32,671,071

227,789,969

2,222,042

835,663

16,705,340

514,700 (64,713) 301,277

(1,982,074)

(161,695,644) 694,051

(10,008,055) (400,000)

(2,981,232) (12,545,236)

$ 92,057,159


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS

FOR THE YEAR ENDEDJUNE30, 2013 TOTAL

CAPITAL GOVERNMENTAL GENERAL PROJECfS FUNDS

REVENUES:

Local sources $ 119,773,552 $ 19,052 $ 119,792,604

Slate sources 35,435,198 35,435,198

Federal sources 4,889,383 4,889,383

Total revenues 160,098,133 19,052 160,ll7,185

EXPENDITURES: Instruction 91,482,613 91,482,613

Support services 43,651,380 43,651,380

Operation of noninstructional services 2,613,773 2,613,773

Facilities acquisition, construction and

improvement services 544,962 544,962

Debt service

Principal 8,739,718 8,739,718

Interest 7,397,824 7,397,824

Other 373,022 148 373,770

Total expenditures 154,258,330 545,710 154,804,040

EXCESS (DEFICIENCY) OF REVENUES

OVER EXPENDITURES 5,839,803 (526,658) 5,313,145

OTHER FINANCING SOURCES (USES}: Swap Proceeds 804,795 804,795

Transfers in 4,000,000 4,000,000

Transfers out (5,500,000) (5,500,000)

Total other financing sources

(uses) (4,695,205) 4,000,000 (695,205)

NET CHANGE IN FUND BALANCES 1,144~98 3,473,342 4,617,940

FUND BALANCE, BEGINNING 20,723,045 7,330,086 28,053,131

FUND BALANCE , ENDING $ 21,867,643 $ 10,803.428 $ 32,671,071

Sec Notes to Financial Statements

Page26


RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN

FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2013

NET CHANGE IN FUND BALANCE- GOVERNMENTAL FUNDS

Amounts reports for governmental activities in the statement of activities are different because:

Govenunental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is aJlocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period Capital outlays Less: depreciation expense Loss on disposal of fixed assets

Revenues in the statement of activities that do not provide current financial resources are not reposted as revenues in the funds. This amount is the net change in revenues accrued betWeen the prior and current year:

Property Taxes Receivable for option premium installment Option revenue

Repayment of the principaJ of long-tenn obligations consumes the current financial resources of governmental funds

Bond principal payments Authority lease payments Capital lease payments

Governmental funds report the effect of issuance costs and premiums, when debt is frrst issued, whereas these amounts are deferred and amortized in the statement of activities

Amortization of debt issue costs Amortization of debt premium Amortization of Joss on refunding

Change in accrued interest on bonds and notes payable

Some expenses reported in the statement of activities do not require the use of current :financiaJ resources and, therefore, are not reported as expenditures in governmental funds

Decrease in compensated absences Increase in other postemployment benefits Decrease in fair value of derivative instrument

Net income of the Internal Service Fund is included in governmental activities since it primarily benefits the District's governmental activities

CHANGES IN NET POSITION OF GOVERNMENTAL ACTIVITIES


Page 27

$

$

4,617,940

1,982,587 (12,412,172)

(53,979)

288,477 (514,700) 294,522

8,300,000 379,890 59,828

(116,125) 461,561

(359,173)

90,065

291,329 (616,748) (254,297)

2,957,511

5,396,516


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES TN FUND BALANCE

BUDGET AND ACTUAL- GENERAL FUND

FOR THE YEAR ENDED JUNE 30, 2013

VARIANCE WITH FINAL BUDGET-

POSITIVE ORIGINAL FINAL ACTUAL (NEGATIVE)

REVENUES: Local sources $ tl5,521,231 $ I 15,521,231 $ 119,773,552 $ 4,252,321 State sources 36,38I,260 36,38I,260 35,435,198 (946,062)

Federal sources 2,436,159 2,436,159 4,889,383 2,453,224

Tota1 revenues 154,338,650 154,338,650 160,098,133 5,759,483

EXPENDITURES:

Instruction: Regular programs 64,940,366 64,864,355 62,239,163 2,625,192 Special programs 18,290,037 18,288,537 20,231,043 (!,942,506)

Vocational educational program 6,230,527 6,230,527 5,393,635 836,892 Other instructional programs 1,667,018 1,666,808 1,600,249 66,559 Community/Junior College education programs 2,018,216 2,018,216 2,018,523 (307)

Total instruction 93,146,164 93,068,443 91,482,613 1,585,830

Support services:

Pupil personnel 5,515,460 5,515,210 5,433,035 82,175

Instructional staff 2,874,233 2,910,674 2,830,370 80,304

Administration 7,773,225 7,772,261 7,971,978 (I99,7!7) Pupil health 1,839,935 1,840,185 1,936,987 (96,802)

Business 843,509 864,072 774,535 89,537 Operation and maintenance of plant services 12,829,034 12,825,534 12,986,361 (160,827)

Student transportation services 7,689,272 7,689,272 7,605,345 83,927 Central 4,459,882 4,477,237 3,894,019 583,218

Other support services 233,648 233,648 218,750 14,898

Total support services 44,058,198 44,128,093 43,651,380 476,713

Operation ofnoninstructional services: Student activities 2,180,228 2,180,652 2,249,896 (69,244) Community services 306,808 314,2\0 363,877 (49,667)

Total operation ofnoninstructional

services 2,487,036 2,494,862 2,613,773 (ll8,9ll)

Debt service 16,147,252 16,147,252 16,137,542 9,710 Other 373,022 (373,022)

Total expenditures 155,838,650 155,838,650 154,258,330 1,580,320

EXCESS OF REVENUES

OVER EXPENDITURES (I,500,000) (1,500,000) 5,839,803 7,339,803

OTIIER FINANCING SOURCES (USES):

Swap Proceeds 804,795 804,795 Transfers In 1,500,000 1,500,000 (1,500,000)

Transfers Out (5,500,000) (5,500,000)

Total other financing sources/( uses) 1,500,000 1,500,000 (4,695,205) (6,I95,205)

NET CHANGE IN FUND BALANCE $ $ $ 1,144,598 $ 1,144,598


Page 28


STATEMENT OF NET POSITION PROPRIETARY FUND TYPES

JUNE 30, 2013 FOOD INTERNAL

SERVICE SERVICE

ASSETS:

Current assets: Cash and cash equivalents $ 881,979 $ 12,518,946 Due from other governments 43,333 Other receivables 31,659 Deposit with Third Party 200,000 5,326,283 Inventories 76,854 Other Current Assets 7,871 Due from other funds 680,189

Total current assets 1,241,696 18,525,418

Noncurrent assets: Furniture and equipment, net 618,709

TOTAL ASSETS $ 1,860,405 $ !8,525,418

LIABILITIES: Current liabilities:

Accounts payable $ 16,868 $ I ,820,078 Unearned revenues 3,696 Due to other funds 73,114

Total current liabilities 93,678 1,820,078

Noncurrent liabilities:

Other postemployment benefits liability 199,325

Total liabilities 293,003 1,820,078

NET POSITION: Net investment in capital assets 618,709 Unrestricted 948,693 16,705,340

Total net position 1,567,402 16,705,340

TOTAL NET POSITION AND LIABILITIES $ 1,860,405 $ 18,525,418


Page 29


STATEMENT OF REVENUES, EXPENSES, AND CHANGE IN NET POSITION PROPRIETARY FUND TYPES

FOR THE YEAR ENDED JUNE 30, 2013 FOOD INTERNAL

SERVICE SERVICE OPERATING REVENUES:

Food service revenue $ 2,500,371 $ Charges for services 15,950,643

Total operating revenues 2,500,371 15,950,643

OPERATING EXPENSES:

Contract services 3,989,855 Salaries 123,693 Employee benefits 81,271 15,351,614 Food and supplies consumed 282,457 Depreciation 95,004 Other expenses 31,019

Total operating expenses 4,603,299 15,351,614

OPE!CAT!NG INCOME (LOSS) (2, 1 02,928) 599,029

NONOPERATING REVENUES: Federal subsidies 2,074,784 Value of donated commodities 221,042 State subsidies for food service 143,134 Interest earned 790 40,449 Miscellaneous 818,033 State subsidy for social security payments 4,878 State subsidy for retirement payments 7,881

Total nonoperating revenues 2,452,509 858,482

INCOME BEFORE TRANSFERS 349,581 1,457,511

TRANSFER IN 1,500,000

CHANGE IN NET POSITION 349,581 2,957,511

NET POSITION, Beginning of year 1,217,821 13,747,829

NET POSITION, End of year $ 1,567,402 $ 16,705,340


Page 30

CENTRAL DAUPHIN SCHOOL DIS1RICT

STATEMENT OF CASH FLOWS PROPRIETARY FUND TYPES

FOR 1HE YEAR ENDED JUNE 30,2013 FOOD INTERNAL

SERVICE SERVICE

CASH FLOWS FROM OPERATING ACTIVITlES: Cash received from users $ 2,546,260 $ 15,382,419 Cash payments to employees for services (218,135) Cash payments for insurance claims (16,310,536) Cash payments to suppliers for goods and seJVices ( 4,296,387)

Net cash used in operating activities (1,968,262) (928,1 17)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Federal subsidies 2,073,415 State subsidies 155,893 Miscellaneous 818,033 Transfer from general fund 1,500,000

Net cash provided by noncapital financing activities 2,229,308 2,318,033

CASH FLOWS USED IN CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets (69,405)

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES: Investment income 790 40,449

Net cash provided by investing activities 790 40,449

NET INCREASE IN CASH AND CASH EQUIVALENTS 192,431 1,430,365

CASH AND CASH EQUIVALENTS, BEGINNING 689,548 t 1,088,581

CASH AND CASH EQUIVALENTS, ENDING $ 881,979 $ 12,518,946

SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACITONS: Donated commodities $ 221,042

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH USED IN OPERATING ACTIVITIES

Operating (loss) income $ (2,102,928) $ 599,029 Adjustment to reconcile operating (loss) income to

net cash used in operating activities: Depreciation 95,004 Donated commodities expense 221,042 Increase or decrease in assets and liabilities

Receivables from users 45,257 Inventories . (24,131) Deposit with Third Party (325,941) Other current assets (651) Accounts payable (6,607) 164,089 Accmed salaries and benefits Due from other funds (242,283) Other postemployment benefits (9,347) Due to other funds (183,360) (1,123,011) Compensated absences (3,824) Deferred revenue 1,283

Total adjustments 134,666 (1,527,146)

NET CASH USED IN OPERATING ACITVITIES $ (1,968,262) $ (928,117)


Page 31


STATEMENT OF FIDUCIARY NET POSITION

JUNE 30, 2013

ASSETS

Cash and cash equivalents

Investments

PRIVATE

PURPOSE

TRUST FUND

$ 28,393 $

141,000

AGENCY

FUND

372,167

Total Assets $ 169,393 =$====37=2~,1=67==

LIABILITIES AND NET POSITION

LIABILITIES:

Due to student groups $ 372,167

NET POSITION:

Reserved for student scholarships $ 169,393


Page 32


STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30, 2013

ADDITIONS: Contributions Investment income

Total additions

DEDUCTIONS: Scholarships awarded

Service charges

Total deductions

INCREASE IN NET POSITION

NET POSITION, BEGINNING

NET POSITION, ENDING


Page 33

PRIVATE PURPOSE

TRUST FUND

$

$

144,299

132

144,431

4,035 120

4,155

140,276

29,117

169,393

NOTE 1:

CENTRAL DAUPHIN SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2013

NATURE OF ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Nature of Operations

The School District is located in Dauphin County, adjacent to the City of Harrisburg, Pennsylvania. The School District encompasses an area of 118.2 square miles in Dauphin County and is comprised of 3 boroughs and 4 townships: the Boroughs of Dauphin, Paxtang, and Penbrook; and the Townships of Lower Paxton, Middle Paxton, Swatara, and West Hanover. The School District is governed by a board of 9 school directors who are citizens of the School District and who are elected for 4-year terms on a staggered basis. The School District operates 13 elementary school buildings, 4 middle school buildings, 2 high school buildings, 1 administrative building, and I transportation facility.

B. Reporting Entity

Governmental Accounting Standards Board ("GASB") Statement No. 61, "The Financial Reporting Entity: Omnibus - an amendment of GASB Statements No. 14 and No. 34" established the criteria used by the School District to evaluate the possible inclusion of related entities within its reporting entity based upon financial accountability and the nature and significance of the relationship. Based on the foregoing criteria, the School District has no component units that are required to be included in the School District's financial statements .

. C. Joint Ventures

The School District is a participant in two joint ventures with other school districts as follows:

1. Dauphin County Technical School ("Vo-Tech")

The Vo-Tech School provides vocational-technical education to the constituents of all participating school districts. Central Dauphin School District appoints two members of the twelve member board, which oversees the operations of the Yo-Tech School. Member school districts are responsible for funding the majority of the Vo-Tech School's operating budget. For the year ending June 30, 2013, Central Dauphin School District paid $5,393,635 for its estimated share of the operating budget. As of June 30, 2013, the Yo-Tech School had total assets of $3!,912,716, total liabilities of $25,713,427, and total net position of$6,199,289, of which $1,915,045 was unrestricted.

Page 34

NOTE 1:

CENTRAL DAUPHIN SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

NATURE OF ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

C. Joint Ventures (Continued)

1. Dauphin County Technical School ("Vo-Tech") (Continued)

As of June 30, 2013 the Yo-Tech school had capital assets of $25,808,389 and bonds payable of$21,542,333.

2. Dauphin County Area Vocational Technical School Authority ("Authority)

This -Authority was created as a financing medium for the construction, improvement, and maintenance for public school purposes relating to the operation of the Dauphin County Technical School. The Authority operated under the direction of the Yo-Tech School Board and is a component unit of the Yo-Tech School. As of June 30, 2013, the Authority had total assets of $13,678 and total liabilities of $0, resulting in an assigned fund balance of $13,678. As of June 30, 2013, the Authority had no capital assets or long term debt.

The most recent audited financial statements of these joint ventures are available for inspection at the School District's business office.

D. Measurement Focus. Basis of Accounting

The basic financial statements of the District are composed of the following:

• Government-wide financial statements • Fund fmancial statements • Notes to the fmancial statements

1. Government-wide Financial Statements

Government-wide fmancial statements (i.e. the statement of net position and the statement of activities) report on all the nonfiduciary activities of the School District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities which are supported by taxes and intergovernmental revenues are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

Page 35

NOTE 1:


JUNE 30, 2013


D. Measurement Focus, Basis of Accounting (Continued)

I. Government-wide Financial Statements (Continued)

Government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and agency fund financial statements which incorporates noncurrent assets as well as long term debt and obligations. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues 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 statement of activities demonstrates the degree to which the direct expenses of a given function or segments are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include I) charges to customer 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 that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Amounts expended to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as liabilities in the government-wide financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness of the School District are reported as a reduction of the related liability, rather than an expenditure.

2. Fund Financial Statements

The operations of the School District are organized and are recorded in individual funds. Each fund is a separate accounting entity, with selfbalancing accounts that comprise its assets, liabilities, fund balance, revenues, and expenditures or expenses, as appropriate.

Page 36

NOTE 1:


JUNE 30, 2013


D. Measurement Focus and Basis of Accounting (Continued)

2. Fund Financial Statements (Continued)

Governmental Funds

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 collected within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the School District considers revenues to be available if they are collected within 180 days of the end of the current fiscal period with the exception of property taxes which must be received within 60 days of year end to be deemed available. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Operating and capital grants, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable only when cash is received by the School District.

Under the current fmancial resources measurement focus, only current assets and current liabilities are generally included on the balance sheet. The reported fund balance is considered to be a measure of "available spendable resources". Governmental funds operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current position. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period.

Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current position, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities.

Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as an other fmancing source rather than as a fund liability. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is made.

Page 37

NOTE 1:


JUNE 30,2013


D. Measurement Focus and Basis of Accounting (Continued)

2. Fund Financial Statements (Continued)

Proprietary Funds

The School District's Food Service and Internal Service Fund are proprietary funds. In the fund financial statements, the proprietary funds are presented using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, the proprietary funds are presented using the economic resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. The proprietary fund type operating statement presents increases (revenues) and decreases (expenses) in total net position.

The proprietary funds operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities.

Amounts paid to acquire capital assets are capitalized as assets in the fund financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a liability in the fund financial statements, rather than as an other financing source. Amounts paid to reduce longterm indebtedness are reported as a reduction of the related liabilities, rather than an expense.

Fiduciary Funds

The School District Fiduciary Funds are presented in the fund financial statements as a Private Purpose Trust Fund and an Agency Fund. Since, by definition, the assets of these funds are held for the benefit of a third party (individuals, private organizations, and/or other governments) and caunot be used to satisfy obligations of the School District, these funds are not incorporated into the government-wide financial statements. The School District's fiduciary funds are presented on the accrual basis of accounting.

Page 38

NOTE 1:


JUNE 30,2013


E. Basis of Presentation

The following are the District's major funds:

Governmental Fund Tvoes

• The General Fund is the operating fund of the School District and is used to account for all financial resources except those required to be accounted for in another fund.

• The Capital Projects Fund is used to account for financial resources to be used in acquisition, construction, or improvement of capital facilities other than those financed by proprietary funds.

Proprietary Fund Types

• The Food Service Fund is used to account for the operations of the School District's food senrice operations. Operating Revenue consist of charges for food served. Operating expenses consist mainly of food, food preparation costs, supplies, and other direct costs. All other revenues and expenses are reported as nonoperating.

• The Internal Service Fund is used to account for the School District's self-insurance program for health care benefits (Note 15). Operating revenues consist of payments made for health care benefits. Operating revenues consist of payments made for health care benefits and administrative costs. All other revenues and expenses are reported as non-operating.

Additionally the School District reports the following fiduciary funds:

• The Private Purpose Trust Funds are used to account for assets held by the School District under a trust agreement for individuals, private organizations, or other governments and therefore not available to support the School District's own programs.

Page 39

NOTE 1:


JUNE 30, 2013


E. Basis of Presentation (Continued)

• Agency Funds are custodial in nature and account for assets held by the School District as an agent for various student activities.

F. Assets, Liabilities, Net Position or Fund Balance

1. Cash and Cash Equivalents

For the purposes of the accompanying statement of cash flows, the School District considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

2. Interfund Receivables and Payable

Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as "due to/from other funds."

3. Investments

Investments for the School District are reported at fair value. Investments that do not have an established market value are reported at estimated values.

4. Capital Assets Capital assets, which include property, plant, and equipment are reported in the governmental or business-type activity colunm in the governmentwide and the proprietary fund financial statements. Property, plant, and equipment, with initial, individual costs that equal or exceed $500 and estimated usefuJ lives of greater than one year are recorded as capital assets. Capital assets are recorded at historical costs or estimated historical costs if purchased or constructed. Donated capital assets are recorded at estimated fair value at the date of donation. Intangible assets, such as computer software, are grouped with furniture and equipment in the fmancial statements and are being depreciated.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend its useful life are not capitalized.

Page 40

NOTE 1:


JUNE 30,2013


F. Assets, Liabilities, Net Position or Fund Balance (Continued)

4. Capital Assets (Continued)

Major outlays for capital assets and improvements are capitalized as projects are completed.

Capital assets of the School District are depreciated using the straight line method over the following intended useful lives:

Description

Site Improvements Leasehold Assets Buildings and Improvements Furniture and Equipment Vehicles

5. Restricted Assets

Estimated Useful Lives

20 years 5-15 years 20-50 years 5-15 years 8 years

Restricted Assets represent revenues set-aside for liquidation of specific obligations, as detailed in Note 4.

6. Compensated Absences

Sick leave benefits are accrued as a liability using the termination method. Earned sick leave is made to the extent that it is probable that the benefits will result in termination payments. The liability is an estimate based on the School District's past experience of making termination payments.

7. Long-Term Obligations

In the government-wide financial statements and proprietary fund types in the fund financial statements, the long-term debt and other long-term obligations are reported as liabilities in the Statement of Net Position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight line method. Bonds payable are reported net of applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.

Page 41

NOTE 1:


JUNE 30,2013



7. Long-Term Obligations (Continued)

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other fmancing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

8. Unearned/Deferred Revenues

Unearned revenues reported in government-wide financial statements represent revenues not yet earned and unearned swap proceeds. The unearned revenues will be recognized as revenue in the fiscal year they are earned in accordance with lhe accrual basis of accounting. Deferred revenues reported in governmental fund fmancial statements represent unearned revenues and revenues which are measurable but not available and, in accordance with the modified accrual basis of accounting, are reported as deferred revenues. The School District deems revenues received within 180 days of year end to be available with the exception of property taxes which must be received within 60 days of year end to be deemed available.

9. Fund Balance

The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent the School District is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows:

Nonspendable fund balance - This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact.

Page 42

NOTE 1:


JUNE 30, 2013



9. Fund Balance (Continued)

Restricted fund balance - This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation.

Committed fund balance - This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of School Directors. These amounts cannot be used for any other purpose unless the Board of School Directors removes or changes the specified use by taking the same type of action (ordinance or resolution) that was employed when the funds were initially committed.

Assigned fund balance - This classification includes amounts that are constrained by the School District's intent to be used for a specific purpose but are neither restricted nor committed. The Board of School Directors delegated this responsibility to the Director of Business Affairs.

Unassigned fund balance - This classification represents amounts that are available for any purpose.

In circumstances where an expenditure is to be made for a purpose for which amounts are available in multiple fund balance classifications, the order in which resources will be expended is as follows: restricted fund balance, followed by committed fund balance, assigned fund balance and lastly unassigned fund balance.

Page 43

NOTE 1:


JUNE 30,2013



I 0. Net Position The government -wide and proprietary fund financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted and unrestricted.

• Net Investment in Capital Assets- This category groups all capital assets into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category.

• Restricted Net Position - This category presents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.

• Unrestricted Net Position - This category represents net position of the School District, not restricted for any project or other purpose.

When an expense is incurred for purposes for which both restricted and unrestricted net position is available, the District's policy is to apply restricted net position first.

II. Accounting Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual amounts may differ from those estimates.

12. Interfund Transactions

Quasi-external transactions are accounted for as revenues or expenditures. Transactions that constitute reimbursements to a fund for expenditures initially made from it, which are properly applicable to another fund, are recorded as expenditures in the reimbursing fund, and as reductions of expenditures in the fund that is reimbursed. All other interfund transactions, except quasi-external transactions and reimbursements, are reported as transfers.

Page44

NOTE 1:


JUNE 30, 2013


F. Assets. Liabilities, Net Position or Fund Balance (Continued)

13. Inventory

Inventories are presented at the lower of cost or market" on a first-in, firstout basis and are expended when used.

G. Adoption of Governmental Accounting Standards Board Statements

The School District adopted the provisions of GASB statement No. 60, "Accounting and Financial Reporting for Service Concession Arrangements". The adoption of this statement had no effect on previously reported amounts.

The School District adopted the provisions of GASB statement No. 61, "The Financial Reporting Entity: Omnibus- and amendment of GASB Statements No. 14 and No. 34". The adoption of this statement had no effect on previously reported amounts.

The School District adopted the provisions of GASB statement No. 62, "Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements". The adoption of this statement had no effect on previously reported amounts.

The School District adopted the provisions of GASB statement No. 63, "Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position". The adoption of GASB 63 resulted in the renaming of the residual measure of all other elements presented in a statement of financial position as "net position", rather than "net asset".

H. Pending Changes in Accounting Principles

In March 2012, the GASB issued Statement No. 65, "Items Previously Reported as Assets and Liabilities". The School District is required to adopt statement No. 65 for its fiscal year 2014 financial statements.

In March 2012, the GASB issued Statement No. 66, "Technical Corrections -2012- An Amendment ofGASB Statements No. 10 and No.62". The School District is required to adopt statement No. 66 for its fiscal year 2014 financial statements.

Page 45

NOTE 1:

NOTE2:


JUNE 30, 2013


H. Pending Changes in Accounting Principles (Continued)

In June 2012, the GASB issued Statement No. 67, "Financial Reporting for Pension Plans - an amendment to GASB Statement No. 25". The School District is required to adopt statement No. 67 for its fiscal year 2014 financial statements.

In June 2012, the GASB issued Statement No. 68, "Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27". The School District is required to adopt statement No. 68 for its fiscal year 2015 financial statements.

In January 2013, the GASB issued Statement No. 69, "Government Combinations and Disposals of Government Operations". The School District is required to adopt statement No. 69 for its fiscal year 2015 financial statements.

In April 2013, the GASB issued Statement No. 70, "Accounting and Financial Reporting for lVonexchange Financial Guarantees". The School District is required to adopt statement No. 70 for its fiscal year 2014 financial statements.

In November 2013, the GASB issued Statement No. 71, "Pension Transition for Contributions made Subsequent to the Measurement Date". The School District is required to adopt statement No. 71 for its fiscal year 2015 financial statements.

The School District has not yet completed the various analysis required to estimate the financial statement impact of these new pronouncements.

BUDGETS AND BUDGETARY ACCOUNTING

An operating budget is adopted prior to the beginning of each year for the General Fund on a modified accrual basis of accounting. The General Fund is the only fund for which a budget is legally required.

The Pennsylvania School Code dictates specific procedures related to adoption of the School District's budget and reporting of its fmancial statements, specifically:

The School District, before levying annual school taxes, is required to prepare an operating budget for the succeeding fiscal year.

Page46

NOTE2:

NOTE3:


JUNE 30, 2013

BUDGETS AND BUDGETARY ACCOUNTING (CONTINUED)

The School District is required to publish notice by advertisement, at least once in two newspapers of general circulation in the municipality in which it is located, and within fifteen days of final action, that the proposed budget has been prepared and is available for public inspection at the admiuistrative office of the School District.

Notice that public hearings will be held on the proposed operating budget must be included in the advertisement; such hearings are required to be scheduled at least ten days prior to when final action on adoption is taken by the Board.

Legal budgetary control is maintained at the fund level. The Board of School Directors may make transfers of funds appropriated to any particular item of expenditure by legislative action in accordance with the Pennsylvania School Code.

Management may amend the budget at the sub-function/sub-object level without Board approval. 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.

In order to preserve a portion of an appropriation for which expenditure has been committed by a purchase order, contract or other form of commitment, an encumbrance is recorded. Encumbrances outstanding at year end are reported in the fund financial statements as assigned fund balances.

Included in the General Fund budget are program budgets as prescribed by the federal and state agencies funding the program. These budgets are approved on a program by program basis by the federal and state funding agencies.

DEPOSIT AND INVESMENT RISK

The School District's investment policy is in accordance with the Public School Code of 1949, Section 440.1 which requires monies to be invested in the following types of investments: U.S. Treasury bills, short-term obligations of the U.S. government or its agencies or instrumentalities, savings or time accounts, or share accounts of institutions insured by the FDIC, FSLIC, or NCUSIF to the extent 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, obligations of the United States of America or any of its agencies or instrumentalities, obligations of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities, or obligations of any political subdivision of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities.

Page 47

NOTE3:


JUNE 30,2013

DEPOSIT AND INVESMENT RISK (CONTINUED)

Custodial Credit Risk- For deposits and investments, custodial credit risk is the risk that in the event of the failure of the counterparty, the School District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. As of June 30, 2013, the School District's cash balances for its governmental activities, business-type activities and agency funds were $35,259,941 and its bank balances were $36,575,938. Of these bank balances, $34,482,871 were exposed to custodial credit risk and they were collateralized with securities held by the pledging fmancial institutions and uninsured. At June 30,2013, $655,432 of the District's investments in certificates of deposits were exposed to custodial credit risk, as they were collateralized with securities held by the pledging financial institution and uninsured.

As of June 30, 2013, the District had the following investments and maturities:

Investment Maturities {in Years} Fair Less More

Investment !xl!e Value Than 1 1-5 6-10 Than 10

Govermnental Activities Certificates ofDeposit $ 1,014,432 $ 737,584 $ 276,848 $ $ Investment Derivative - Swap 301,277 301,277 Total $ 1,315,709 $ 737,584 $ 276,848 $ $ 301,277

Fiduciarv Certificate of Deposit $ 141,000 $ $ 141,000 $ $ Total $ 141,000 $ $ 141,000 $ $

Interest Rate Risk. Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The District does not 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. Information about the exposure of the District's debt type investments to this risk, using the segmented time distribution model is as displayed above.

The District is invested in a basis swap with a notional amount of $45,000,000. The District makes semiannual payments to the counterparty of the Securities Industry and Financial Markets Association Municipal Swap Index Rate ("SIFMA") and receives 70% of 3-month LIB OR plus .5%. At June 30, 2013, the basis swap has a fair value of$301,277.

Page 48

NOTE3:

NOTE4:

NOTES:


JUNE 30, 2013

DEPOSIT AND INVESMENT RISK (CONTINUED)

Credit risk. Credit risk is the risk that a counterparty will not fulfill its obligations according to the swap agreement. The School District mitigates credit risk associated with swap transactions by only entering into swaps with highly rated counterparties. As of June 30, 2013, the School District was exposed to credit risk in the amount of $301,277 and the counterparty was rated Aa3 by Moody's, AAby Standard and Poor's, and AA by Fitch.

RESTRICTED CASH AND INVESTMENTS

Assets whose use is limited to a specific purpose have been classified as "restricted" in the balance sheet. Restricted assets are composed of the following:

Governmental Funds

Restricted Cash

Capital Projects Fund Cash restricted for future capital projects $4.835.058

Restricted Investment

Capital Projects Fund Investments restricted for future capital projects $964.971

TAXES RECEIVABLE

Real estate taxes are assessed on July 1, of each year and become due and payable on that date. Taxpayers are given a two percent discount if they pay their taxes by August 31. All taxes levied on July 1, become delinquent on November 1, and are charged a ten percent penalty. On January 15, of the following year, all delinquent taxpayers are turned over for collection to the Dauphin County Tax Claim Bureau. Uncollected real estate taxes attach as an enforceable lien on property when recorded by the Dauphin County Tax Claim Bureau in January. Delinquent taxes receivable at June 30, 2013 were $3,017,550.

Page 49

NOTE6:


JUNE 30, 2013

DUE FROM OTHER GOVERNMENTS

The following table summarizes the amounts due from other governments at June 30, 2013 as related to the School District's governmental and business-type activities:

Governmental activities: Commonwealth of Pennsylvania

State source revenue Federal source revenues

Capital Area Intermediate Unit Federal source revenues

Total Business-type activities:

Commonwealth of Pennsylvania State source revenue Federal source revenues

Total

Page 50

$ 931,221 504,225

894 044

$2.329.490

$ 2,802 40 531

$ 43.333


JUNE 30, 2013

NOTE7: CAPITAL ASSETS

Capital asset activity for the year ended June 30, 2013, was as follows:

Balance Balance Jul~ 1, 2012 Additions Reclass Deductions June 30,2013

Governmental Activities:

Capital assets not being

depreciated:

Land $ 4,783,289 $ $ $ $ 4,783,289 Construction in progress 50,994 463,289 (50,994) 463,289

Total capital assets not

being depreciated 4,834,283 463, 289 (50,994) 5,246,578

Capital assets being depreciated:

Site improvements 6,962,501 61,521 7,024,022 Leasehold Assets 1,003,390 1,003,390 Buildings and building

improvements 327,820,944 345,037 50,994 328,216,975 Furniture and equipment 23,337,417 980,668 (952, 170) 23,365,915 Vehicles 861,212 132,072 993,284

Total assets being dspraciatsd. 'lt::n no~:: Al:!JJ ~ ~::<~n 'lno 50,994 (952, 170} 360,603,586 vvv,vuv,-.v .... 1 1V E<> 1Li:1l.l

Less accumulated depreciation:

Site improvements 3,219,296 293,570 3,512,866 Leasehold Assets 936,066 67,324 1,003,390 Buildings and building

improvements 104,926,114 9,385,341 114,311,455 Furniture and equipment 16,843,195 2,607,376 (898,191) 18,552,380 Vehicles 621,543 58,561 680,104

Total accumulated depreciation 126,546,214 12,412,172 (898,191) 138,060,195

Total capital assets, being

depreciated, net 233,439,250 (10,892,874) 50,994 (53,979) 222,543,391

Governmental activities, capital

assets, net $ 238,273,533 $ (10,429,585) $ $ (53,979) $ 227,789,969

Business~ Type Activity:

Capital assets being $ 2,416,752 $ 69,405 $ $ $ 2,486,157 depreciated:

Less accumulated depreciation 1,772,444 95,004 1,867,448

Total capital assets being depreciated,

net $ 644,308 $ (25,629) $ $ $ 618,709

Page 51

NOTE7:

NOTES:


JUNE 30, 2013

CAPITAL ASSETS (CONTINUED)

Depreciation expense was charged to governmental activities as follows:

Instruction Instructional student support Administrative and financial support services Operation and maintenance of plant services Pupil transportation Student activities Total depreciation expense

INVENTORIES

$ 7,870,416 1,025,519 1,498,210 1,239,333

725,804 52,890

$12,412,172

The following table summarizes inventories at June 30, 2013 as related to the School District's governmental activities:

Computer supplies Paper supplies Custodial, maintenance, and electrical supplies General supplies Art supplies Administration supplies

Total

Page 52

$ 38,156 76,413

31,088 23,750

5,456 348

$ 175.211

NOTE9:


JUNE 30, 2013

GENERAL OBLIGATION NOTES AND BONDS

As of June 30, 2013, the School District's long-term debt consisted of the following:

General Obligation Notes, Series

2004

General Obligation Notes, Series

2006

General Obligation Bonds, Series Aof2006

General Obligation Bonds, Series

2009


2010


2011


2012

Subtotal

Bond Premium

Total Long-Term Obligations

Beginning

Balance

July I. 2012

$ 15,655,000

75,530,000

39,010,000

4,070,000

11,010,000

9,915,000

12,100,0.00

167,290,000

3,167,205

Additions

$

$ 170,457,205 _;$::.__~~~

Page 53

Reductions

$ 5,000

325,000

920,000

320,000

805,000

2,195,000

3,730;000

8,300,000

461,561

$ 8,761,561

Ending

Balance

June 30. 2013

$ 15,650,000

75,205,000

38,090,000

3,750,000

10,205,000

7,720,000

8,370,000

158,990,000

2,705,644

$ 161,695,644

Amounts

Due Within

One Year

$ 5,000

340,000

955,000

330,000

825,000

2,265,000

4,120,000

8,840,000

$ 8,840,000

NOTE9:

Date of Issue

2004 $

2006 $

2006 $

2009 $

2010 $

2011 $


JUNE 30,2013

GENERAL OBLIGATION NOTES AND BONDS (CONTINUED)

Refunded Bond Issues

The District has advance-refunded various bond issues by creating separate irrevocable trust funds containing U.S. government securities or securities collateralized by U.S. government securities. The securities and earnings thereon are considered sufficient to fully service the bonds until they are called or mature. For financial reporting purposes, the bonds are considered defeased and the liability for those bonds has been removed from the statement of net position. At June 30, 2013, the amount of defeased bonds outstanding but removed from the statement of net position for Series 2006 bonds equaled $58,900,000.

Pertinent information regarding long-term debt obligations outstanding is presented below:

Amount

of Balance Original Outstanding at

Issue Purpose June 30. 2013

15,695,000 In 2004, the School District issued General Obligation Notes of 2004 to partially refund other debt issuances of the School District. The Notes mature serially thorough 12/l/20 at rates of2.25% to 5.0%. $ 15,650,000

81,180,000 In 2006, the School District issued General Obligation Notes of 2006 to refund the principal amount of the 2006 bonds. The note matures serially through 2/1/30 at rates of 4.0% to 5.0%. $ 75,205,000

39,415,000 In 2006, the School District issued General Obligation Bonds Series A of 2006 to refund the General Obligation Notes Series AA of 1998 and Series AA of2002. The bonds mature serially through 11115/24 at rates of3.5% to 5.0%. $ 38,090,000

4,745,000 In 2009 the School District issued General Obligation Bonds of 2009 to refund the General Obligation Notes Series of 2003. The bonds mature serially through 7/15/22 at rates of2.0% to 3. 75%. $ 3,750,000

11,800,000 In 2010 the School District issued General Obligation Bonds of 2010 to refund the General Obligation Notes Series of 2009. The bonds mature serially through 2/1/24 at rates of2.0% to 3.4%. $ 10,205,000

11,690,000 In 2011 the School District issued General Obligation Bonds of 2011 to refund the General Obligation Notes Series of 2003. The bonds mature serially through 12/1/16 at rates of2.0% to 4.0%. $ 7,720,000

Page 54

NOTE9:

2012 $


JUNE 30, 2013

GENERAL OBLIGATION NOTES AND BONDS (CONTINUED)

12,100,000 In 2012 the School District issued General Obligation Bonds of2012 to Refund the General Obligation Bonds Series of2005. The bonds mature serially through 2015 and have a fixed rate of 4%. $ 8,370,000

$ 158,990,000

The following summarized the District's estimated future debt service requirements on these bonds and notes as of June 30, 2013:

2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2030

Total

Principal

$ 8,840,000 9,125,000 9,655,000

10,065,000 10,510,000 46,885,000 43,980,000 19,930,000

Interest

$ 6,712,996 6,428,964 6,080,612 5,653,313 5,185,462

19,390,081 10,392,979

1,355,175

$15,552,996 15,553,964 15,735,612 15,718,313 15,695,462 66,275,081 54,372,979 21,285,175

$158,990,000 $ 61,199,582 $220,189,582

NOTE 10: DERIV ATNE INSTRUMENTS

Objective and terms of the swaption and the basis swap. On May 25, 2010, tbe School District entered into a fixed receiver swaption (the "2010 swaption") to manage interest costs on a portion of tbe District's General Obligation Notes, Series of 2006, in tbe notional amount of $45,000,000. The Counterparty has tbe option on April 1, 2014 to place the District into tbe swap. The School District will pay the Royal Bank of Canada ("tbe Counterparty") interest on tbe outstanding notional amounts of the bonds at a rate equal to SIFMA, not to exceed 20%, which will be netted against interest receipts from tbe Counterparty on the same notional amounts equal to a fixed rate of 4.0%. The Counterparty has agreed to pay the District an option premium of $2,058,800 in the form of eight semi-annual installments of $257,350 made on August 1 and February 1. The semi-annual instalhnents begin on August 1, 2010 with a final payment due on February 1, 2014. The 2010 swaption has a notional amount of $45,000,000 and is structured to match the principal on $6,820,000 of the 2026 maturity and all the principal on tbe 2027 through 2030 maturities of the 2006 notes. The final termination date of the 2010 swaption is February 1, 2030.

Page 55


JUNE 30, 2013

NOTE 10: DERIVATIVE INSTRUMENTS (CONTINUED)

On October 14, 2010, the School District entered into a basis swap (the "20 II basis swap") to manage interest costs on a portion of the District's General Obligation Notes, Series of 2006, in the notional amount of $45,000,000. The School District pays the Royal Bank of Canada ("the Counterparty") interest on the outstanding notional amounts of the bonds at a rate equal to SIFMA, not to exceed 20%, which will be netted against interest receipts from the Counterparty on the same notional amounts equal to 70% of 3-month LIBOR plus .50%. The final termination date of the 2011 basis swap is February 1, 2030.

At June 30, 2013, the District has the following derivative instruments outstanding:

Governmental Activities:

Fair Value

Notional Amount Classification Amount

Fair Value Hedge (2010 Swaption)

$45,000,000 Other Asset $0

Investment Derivative (2011 Basis Swap)

$45,000,000 Investment $301,277

Page 56

Changes in Fair Value

Classification Amount

Deferred Inflow $0

Investment Revenue $254,297


JUNE 30, 2013


2010

2011

Type

Objective and terms of hedging derivative instruments

The following table displays the objective and terms of the School District's hedging derivative instruments outstanding at June 30, 2013, along with the credit rating of the counterparty.

Objective Notional Amounts

Effective Date

Maturity Date Terms

Receive- To hedge $ 45,000,000 04/01/14 02/01/30 PaySIFMA (not to exceed 20%); receive

4.0%

PaySIFMA (not to exceed 20%); receive

70% of3-

Counterparty Credit Rating Aa3/ AA-/AA

fixed changes in interest cash flows of rate swap the 2006 GON

Basis Swap

To take a $ 45,000,000 position in the market

10/18/10 02/01/30

month LIBOR plus .5%

Aa3/ AA-/AA

The fair values of the swaps were estimated using the zero-coupon method. This method calculates the fu1ure net settlement payments required by the swap, assuming that current forward rates implied by the yield curve correctly anticipate future spot interest rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon bonds due on the date of each future net settlement on the swap.

Credit risk. Credit risk is the risk that a counterparty will not fulfill its obligations according to the swap agreement. The School District mitigates credit risk associated with swap transactions by only entering into swaps with highly rated counterparties. As of June 30, 2013, the School District was exposed to credit risk in the amount of $301,277 on the 2011 basis swap and $514,700 on the outstanding option premium receivable of the 2010 swaption. The counterparty wasrate~ ~a3 ~:y_Moody's, AA- by Standard & Poor's, and AA !Jy Fitch.

Interest Rate Risk. On its receive fixed rate swap, as SIFMA swap index decreases, the School District's net payments on the swap increases.

Termination Risk. The School District or its counterparties may terminate a derivative instrument if the other party fails to perform under the terms of the contract. If at the time of termination, a hedging derivative instrument is in a liability position, the School District would be liable to the counterparty for a payment equal to the liability.

Page 57


JUNE 30,2013


NOTE 11:

Basis Risk. The School District is exposed to basis risk under the 2011 basis swap to the extent that SIFMA trades at a greater than expected percentage of LIB OR for an extended period of time. As of June 30,2013, the SIFMA rate of .06% was less than the 70% of 3-month LIB OR rate plus .5% of .69%.

AUTHORITY LEASE OBLIGATION

A. Dauphin County Area Vocational- Technical School Lease Revenue Bonds

During 2007, the Dauphin County Area Vocational Technical School issued $24,750,000 of School Lease Revenue Bonds through the State Public School Building Authority for capital improvements to the facilities owned and operated by the Technical School and to repay the cost of issuing the bonds. The Bonds are secured by sublease rental payments and these payments are guaranteed by six participating school districts. The School District's portion of these bonds is scheduled to be paid through the year ending June 30, 2031. At June 30, 2013, the School District's obligation consisted of the following:

Description

Dauphin County Area Vocational Technical

Outstanding July I, 2012

Principal Payments

Outstanding June 30, 2013 Current

School $10,387,945 $379,890 $10,008,055 $388,248

Total interest paid in 2013 was $424,030.

The aggregate maturities of the lease payable are as follows:

Year 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2031 Total lease payments Less amount representing interest

Total lease payable

Page 58

Amount $ 793,672

793,114 794,109 794,297 793,315

3,969,503 3,971,552 2,375,877

14,285,439 (4,277,384)

$ I 0,008,055

NOTE 12:

NOTE 13:


JUNE 30, 2013

CAPITALIZED LEASES

During 2013 the School District leased copiers though several capital lease arrangements in the General Fund. The assets acquired through the capital leases are reported in capital assets and there were no future minimum lease obligations as of June 30, 2013.

Balance July l, 2012 Additions

Capital leases $ 59,828 $

Reductions

$ 59,828 $

Balance June 30,

2013

Amortization expense for these assets is included in depreciation expense in the accompanying financial statements.

COMPENSATED ABSENCES

The changes in the School District's compensated absences m 2013 are summarized as follows:

Governmental Business-Type Activities Activity

Balance, July 1, 2012 $ 3,272,561 $ 3,824 Reductions 291,329 3,824

Balance June 30, 2013 $ 2,981,232 $

Compensated absences are paid from the General Fund and Food Service Fund.

Page 59

NOTE 14:

NOTE 15:


JUNE 30, 2013

PENSION BENEFITS

All full-time and certain part-time employees of the School District participate in the Commonwealth of Pennsylvania Public School Employees' Retirement System ("PSERS"), a governmental cost-sharing multiple-employer defined benefit pension plan.

PSERS provides retirement and disability, legislatively mandated ad hoc cost-ofliving adjustments and healthcare premium assistance benefits to qualifying annuitants. The School District's and its employees' obligation to contribute to PSERS are established by authority of Act 96 of the Public School Employees' Retirement Code. Benefit provisions are established and amended by the PSERS board of trustees. PSERS issues a comprehensive annual financial report that includes financial statements and required supplementary information for the plan. A copy of the report may be obtained by writing to Public School Employees' Retirement System, P.O. Box 125, Harrisburg, Pennsylvania 1710-0125.

The School District's contribution rate was 12.02% in 2013, 8.72% in 2012, 5.80% in 2011of covered payroll. The School District's contributions to PSERS for the years ended June 30, 2013, 2012, and 2011 were approxi_mately $8,009,693 $5,880,623, and $3,904,293, respectively, equal to the required contractual contribution. The employees' contribution rates range from 5.25% to 7.50%, depending upon when the active member was hired and what benefits class is selected.

POSTEMPLOYMENT BENEFITS PLAN

A. Plan Description

The School District provides postretirement healthcare benefits for teachers and administrative employees who retire with at least 3 5 years of public school service in Pennsylvania or 3 0 years of public school service in Pennsylvania and have attained the age of 60 for teachers and 55 for administrators or later, up to age 65. The employee also shall have completed 20 years of service with the School District. The cost of such medical, vision, and dental coverage for retirees and spouses is determined by the contract provisions at the time of retirement. The plan provides post -retirement medical, prescription drug, and dental benefits. The plan is unfunded and no financial report is prepared. These benefits are accounted for in accordance with GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. Retired teachers who are ineligible under the above requirements and choose to participate in the medical plan must pay 100% of the composite rate cost of such coverage.

Page 60

NOTE 15:


JUNE 30, 2013

POSTEMPLOYMENT BENEFITS (CONTINUED)

B. Funding Policy

The contribution requirements of plan members and the School District are established and may be amended by the School Board. The plan is funded on a pay-as-you-go basis, i.e., premiums are paid annually to fund the health care benefits provided to current retirees. Retiree contribution rates and amount vary depending on classification and years of services with the School District. The School District paid premiums of approximately $1,811,417 for the fiscal year ended June 30, 2013. Total retiree contributions made by plan members were $763,733 for fiscal year ended June 30, 2013.

C. Annual OPEB Cost and Net OPEB Obligation

The School 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 No. 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 30 years. The following show the components of the School District's annual OPEB cost for the year, the estimated amount contributed to the plan, and changes in the School District's net OPEB obligation:

Governmental Food Total Primary Activities Service Fund Government

Annual required contribution (ARC) $ 3,459,951 $ 104,791 $ 3,564,742

Interest on net OPEB obligation 536,782 9,390 546,172

Adjustment to ARC {1,808,470) (31,637) (1,840,107)

Annual OPEB costs (expense) 2,188,263 82,544 2,270,807

Estimated contributions made {1,571,515) (91,891) (1,663,406)

Increase/(Decrease) in net OPEB obligation 616,748 (9,347) 607,401

Net OPEB obligation- beginning of year 11,928,488 208,672 12,137,160

Net OPEB obligation- end of year $ 12,545,236 $ 199,325 $ 12,744,561

Page 61

NOTE 15:

CENTRAL DAUPHiN SCHOOL DISTRICT NOTES TO FiNANCIAL STATEMENTS (CONTiNUED)

JUNE 30, 2013

POSTEMPLOYMENT BENEFITS (CONTiNUED)

C. Annual OPEB Cost and Net OPEB Obligation (Continued)

The School District's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for June 30, 2011, 2012, and 2013 were as follows:

Percentage of AnnualOPEB

Fiscal Year Annual Cost Net Ended OPEB Cost Contributed Obligation

June 30, 2013 $2,270,807 73% $12,744,561 June 30, 2012 $2,341,504 72% $12,137,160 June 30, 2011 $3,888,865 47% $11,474,020

D. Funded Status and Funding Progress

As of July I, 2011, the most recent actuarial valuation date, the plan was not funded. The actuarial accrued liability for benefits was $16.8 million, and there were no assets, resulting is an unfunded actuarial accrued liability (UAAL) of $16.8 million. The actuarial value of assets as a percentage of the actuarial accrued liability was 0%. The covered payroll was $62.7 million, and the ratio of the UAAL to the covered payroll was 26.8%.

Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability 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 ARC are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The schedule of funding progress, presented as RSI following the notes to the fmancial statements presents multiyear trend information about whether the actuarial value of plan assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits.

Page 62

NOTE 15:

NOTE 16:


JUNE 30, 2013

POSTEMPLOYMENT BENEFITS PLAN (CONTINUED)

E. Actuarial Methods and Assumptions

The calculations are based on the types of benefits provided under the terms of the School District's Retirement Benefits plan at the time of the valuation. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations in the future. The actuarial methods and assumptions used incfude techniques that are designed to reduce the efforts of shortterm volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the July I, 2011, actuarial valuation, the Early Age Normal Method was used. Under the Entry Age Normal Cost Method, the Normal Cost is the present value of benefits allocated to the year following the valuation date. Benefits are allocated on a level basis over the earnings of an individual between the date of hire and the assumed retirement age. The Accrued Liability as of the valuation date is the excess of the present value of future benefits over the present value of future Normal Cost. The Unfunded Accrued Liability is the excess of the Accrued Liability over the Actuarial Value of Assets. Actuarial gains and losses serve to reduce or increase the Unfunded Accrued Liability.

The actuarial assumptions included a 4.5% investment rate of return, which is the expected rate to be earned on the School District's deposits and investments, and an annual healthcare cost trend rate of 8.0% initially, reduced by .5% annually to a rate of 5.5% in 2016. The rates decrease from 5.3% in 2017 to 4.2% in 2089 and later based on the Society of Actuaries Long-Run Medical Cost Trend Model. The UAAL is being amortized as a level percentage of payroll over an eight year period on an open basis.

RISK MANAGEMENT

Since July I, 1997, it has been the policy of the School District not to purchase commercial health, dental, and vision insurance for the risks of losses to which it is exposed. Instead, the School District's management believes it is more economical to manage its risk internally. The School District pays all claims for risk of loss which the School District is exposed, including health, dental, and vision claims, which are administered by third parties. The School District has purchased stop loss insurance from commercial insurers that will reimburse the School District 100% of all medical claims over $110,000 per year per participant with exceptions.

Page 63

NOTE 16:


JUNE 30,2013

RISK MANAGEMENT (CONTINUED)

The School District will also receive a stop loss reimbursement of 100% for all medical claims which exceed $16,442,182 in the aggregate for the year. During the year ended June 30, 2013, the School District did not receive any stop loss reimbursements.

The District accounts for its self-insurance activity in its Internal Service Fund.

Liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported. Because of delays between the time a claim is incurred and it is reported to the School District for payment, the estimated liability does not necessarily result in an exact amount. Changes in the School District's claims liability amount for the years ended June 30, 2013 and 2012 were:

2012 2013 Liability at beginnjng of year $ 712,171 $ 1,655,989 Current year c lairns 16,648,567 15,351,614 Less - c Ja_jm payments (15,704,7491 (15,187,525)

Liability - end of year ~$ 1,655,989 $ 1,820,078

NOTE 17:

The School District continues to carry commercial insurance for all other risks of loss including workers compensation, liability and property, and casualty insurance. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. The selfinsurance liability is recorded as Accounts Payable in the Proprietary Fund Statement of Net Position and the Government - Wide Statement of Net Position.

CONTINGENT LIABILITIES

The School District is subject to real estate tax assessment appeals on an ongoing basis. If tax appeals are successful, the result is a loss of tax revenue to the School District. It is anticipated that any material loss of tax revenue on individual tax appeals will be offset with additional revenues from other properties or other sources of revenue and would not create a financial hardship to the School District.

Page 64

NOTE 17:

NOTE 18:


JUNE 30,2013

CONTINGENT LIABILITIES (CONTINUED)

The School District is involved in various lawsuits in the normal course of operations. Management cannot predict the outcome of all lawsuits or estimate the amount of any additional loss that may result. Accordingly, other than the $400,000 mentioned below, no provision has been made in the financial statements for any contingent liabilities that may result. Management believes that losses resulting from these matters, if any, would be covered by the accrual and the District's professional liability insurance policy and would not have a material effect on the financial position of the School District.

The School District participates in numerous state and federal grant programs, which are governed by various rules and regulations of the. grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the School District has not complied with the rules and regulation governing the grants, refunds of any money received may be required and the collectability of any related receivables at June 30, 2013 may be impaired. In the opinion of the School District, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.

The School District is involved in one lawsuit under which it may be responsible to pay future education costs of a student. An estimated liability of $400,000 has been accrued in the Government - Wide Statement of Net Position as an other liability.

INTERFUND RECEIVABLES AND PAY ABLES AND TRANSFERS

Interfund balances at June 30, 2013 are as follows:

Interfund receivables and payables:

General Fund Capital Projects Fund Food Service Fund Internal Service Fund

Total interfund receivables and payables

Receivables

$1,052,472 4,000,000

680,189 $5,732,661

Payables

$5,659,547

73,114

$5,732,661

The outstanding balances between funds result mainly from the time lag between the dates that (1) interfund goods and services are provided, (2) reimbursable expenditures occur and (3) payments between funds are made.

Page 65

CENTRAL DAUPHIN SCHOOL DISTRlCT NOTES TO FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 2013

NOTE 18: INTERFUND RECEIVABLES AND PAY ABLES AND TRANSFERS (CONTINUED)

Interfund transfers:

T

General Fund Capital Projects Fund Internal Service Fund

Total interfund transfers

Transfer to other fund

$5,500,000

$5,500,000

Transfer from other funds

$ 4,000,000 1,500,000

$5,500,000

Transfers from the general fund are used to move assigned revenues for capital projects to the Capital Projects Fund and to move revenues designated for the future payment of health care expenses to the Internal Service Fund.

Page 66

REQUIRED SUPPLEMENTAL INFORMATION

CENTRAL DAUPHIN SCHOOL DISTRICT SCHEDULE OF FUNDING PROGRESS FOR POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS

Schedule of Funding Progress

Actuarial Accrued UAALas a

Actuarial Liability Unfunded Percentage of Actuarial Value of (AAL)- Entry AAL Covered Covered Valuation Assets Age (UAAL) Funded Ratio Payroll Payroll

Date (a) (b) (b-a) (alb) (c) ((b-a)/c)

7/1/2007 $ $ 20,497,389 $ 20,497,389 0.0% $ 64,764,838 31.6% 7/112009 $ $ 22,340,290 $ 22,340,290 0.0% $ 67,284,748 33.2% 7/1/2011 $ $ I6,841,771 $ I6,841,771 0.0% $ 62,738,241 26.8%

Page68

OTHER SUPPLEMENTAL INFORMATION

Central Dauphin School District

Combining Balance Sheet Private Purpose TrustFunCis

For the Year Ended June 30,2013

J.R Phillips Gail Wagner Andrea Bibb Swatter Lenker Mary Benney Katelin Bustin 'Paul Lavelle Jr Gerald Fetrow Memorial Pat Kreider Memorial Memorial "'" Colin Nasworthy Memorial Memorial Scholarship Elizabeth Schultze Memorial Trust

Fund Memorial Fund Fund A~d Scholarship fund Fund Fund Fund Scholarship Fund F~d Scholarship Total

ASSETS

Cash and cash equivalents ' 1,995 ' '"' ' 330 ' 2,793 ' 839 ' 3,09:2 ' 4,188 ' 12,093 ' 391 ' 1,001 ' 1,229 ' ' 28,393

Investments ---- 141,000 __ !.~.!POO

Total Assets ' 1,995 ' '"' ' 330 ' 2,793 ~ ' 3,09:~ ' 4,188 ' 12,093 ' 391 ' 1,001 ' 1,229 ' 141,000 ' 169,393

NETPOSmON

Reserved for student scholwhips ' 1,995 $ •143 ' 330 ----- ' 2,793 ~ ' 3,09~ ' 4,188 ' 12,093 ' 391 ' 1,001 ' 1,229 ' 141,000 ' 169,393

Pase 70

Central Dauphin School District Combining Statement of Revenues, Expenses, and

Changes in Net Position Private Purpose Trust Funds

Ga1\ Wagner For the Year Ended June 3012013

AndreaBLbb ·-~ Lenker Mil)! Benney KateiLnBustm Elliibeih Paul Lavelle Jr Geraltl fetrow J.RPhillips Pat Kreider Memorial Memorial Math Colin Noswc,rthy Memorial Memorial Scholarship Schultze Memorial T=o

Memorial Fund Memorial Fund Fund Fund AMcd Scholarship Fund Fund ·~d Fund Scholarship Fund Scholarship Tow REVENUES

Local sources: Contributions ' ' $ $ $ $ 3,199 $ $ ' ' 100 ' ' 141,000 ' 144,299 Investment income I l ___ 4_ 2 13 10$ ' I 131

Total Revenues l l 4 3,200 13 108 102 l 141,000 144,430

EXPENSES Scholarships awan:led 1,050 2,000 "' 185 250 101 200 4,035 Service Charges '" ---- "'

Total Eltpenses 1,050 119 2,000 249 185 250 101 200 4,154

Net increase (decrease) (1,049) (118) 4 1,200 (236) (17) (250) l (199) 141,000 140,276

NET POSITION, Beginning ofyeat 3,044 443 330 2,911 ---'-"- 1,891 4.424 12,170 641 1,000 1,428 29,117

NET POSITION, End of year $ 1,995 ' 443 _,_ ----330 ' 2,793 ~ ' 3,092 ' 4,188 $ 12,093 ' 391 -·--1,001 $ 1,229 -~. 141,000 $ 169,393

Page '11


SCHEDULE OF REVENUES AND OTHER FINANCING SOURCES - GENERAL FUND FOR THE YEARS ENDED JUNE 30,2013 AND JUNE 30,2012

2013 2012

REVENUES FROM LOCAL SOURCES: Real estate taxes $ 73,640,523 $ 70,423,138 Public utility realty tax 146,289 145,833 Earned income taxes 38,053,945 36,471,937 Real estate transfer taxes 1,930,276 1,343,926 Delinquent taxes - all levies 3,452,171 3,857,583 Payments in lieu of taxes 46,265 44,610 Interest earned 82,657 205,952 Benefits co-pay 843,022 882,101 Federal revenue received from other schools 82,368 1,865,958 Tuition revenue 1,117,755 1,020,220 Rent from school and other facilities 8,400 6,900 Refund of prior year expenditures 45,420 72,901 Donations 41,000 100,000 Miscellaneous revenue 283,461 466,633

Total revenues from local sources 119,773,552 116,907,692

REVENUES FROM STATE SOURCES: Basic instructional subsidy 15,558,347 15,565,467 Charter schools Section 1305 and 1306 264,877 246,568 Athletic program 96,525 01 'JJ:_,

0 I,JJ£.

Special education 5,129,786 5,177,527 Transportation 3,088,243 3,038,352 Rentals and sinking fund payments 1,905,735 1,833,251 Medical and dental services 190,283 202,109 State property tax reduction 2,625,294 2,613,831 Revenue for social security payments 2,403,827 2,423,963 Revenue for retirement payments 3,804,884 2,214,399 PA Accountability grant 364,588 Other state revenue 2,809 393

Total revenues from state sources 35,435,198 33,397,212

REVENUES FROM FEDERAL SOURCES: Title I 1,850,591 2,288,867 School Improvement Grant 612,468 Title II 291,074 290,151 Title Ill !07,057 73,604 IDEA- Section B 1,659,405 10,000 Other federal revenue - Access Grant 368,788 395,115

Total revenues fi·om federal sources 4,889,383 3,057,737

OTHER FINANCING SOURCES Proceeds from sale of fixed assets 3,000 Swap proceeds 804,795 764,215 Transfer from health care stabilization fund

Total other financing sources 804,795 767,215

TOTAL $ 160,902,928 $ 154,129,856

Page72

CENTRAL DAUPHIN SCHOOL DISTRICT SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES

GENERAL FUND FOR THE YEARS ENDED JUNE 30,2013 AND 2012

2013

INSIRI!CTION

REGULAR PROGRAMS: Salaries - teachers Salaries - substitutes Salaries - clerical and teachers aides Medical, dental and vision benefits Social security Retirement Tuition reimbursement Unemployment compensation Workmen's compensation Contracted services Repairs and maintenance Tuition- other schools in state Travel Teaching supplies Textbooks Instructional equipment Printing and binding Other expenses

Total regular programs

SPECIAL PROGRAMS: Salaries - administrative & substitutes Salaries - teachers, life skills support Salaries - teachers, deaf and hearing support Salaries - vision support Salaries - teachers, speech and language support Salaries -teachers, emotional support Salaries - teachers, autistic support Salaries - teachers, learning support Salaries - teachers, gifted support Salaries - teachers, multi-handicapped support Medical, dental and vision benefits Social security Retirement Tuition reimbursement Workers' compensation Contracted services

$

Page 73

37,845,21 I 815,367 621,742

8,363,090 2,951,532 4,906,124

434,543 151,983 338,33 I 104,747

19,879 3,774,244

36,840 1 1 C:A "')0'7 l,lJ<-t,.JO/

401,875 317,190

1,352 726

62,239,163

116,923 853,744 44,768

153,646 784,756 998,758 927,000

5,011,971 505,451 574,255

2,836,401 737,626

1,235,124 140,056 86,532

477,169

$

2012

39,159,717 873,473 599,914

8,874,237 3,120,345 3,702,977

668,161 403,035 331,053

99,089 18,751

4,496,844 39,526

1 f\0 c ('\'"7f\ l,V:tJ,::t/V

179,720 730,454

1,000 1,803

64,396,069

I I 6,782 791,008

79,163 150,064 761,722 949,121 809,062

4,882,062 487,626 573,309

2,892,798 715,704 858,879 153,043 73,019

439,413

CENTRAL DAUPHIN SCHOOL DISTRICT SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES (CONTINUED)

GENERAL FUND FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

Facility rental

Intermediate unit services Tuition - other schools in state Travel Teaching supplies Textbooks Instructional equipment Other expenses

Total special programs

Vocational Education Programs, Tuition to area vo-tech school

Other Instructional Programs Salaries - teachers, summer school Salaries - teachers, homebound instruction Salaries - teachers, detention center Salaries - teachers, alternative education Salaries -teachers, outside school Medical, dental and vision benefits Social security Retirement Workers' compensation Contracted services Tuition - other schools in state Rental Travel Teaching supplies Instructional equipment

Total other instructional programs

Community College Programs, Tuition

TOTAL INSTRUCTION

Page 74

2013

69,339 1,300,385 3,257,113

22,872 94,912

313 537

1,392

20,231,043

5,393,635

35,187 71,890

583,662 25,835 26,572

136,930 56,410 93,597

6,233 53,188

457,993

11,239 38,846

2,667

1,600,249

2,018,523

$ 91,482,613

2012

67,320 1,008,989 1,983,445

23,382 254,459

6,966

2,422

18,079,758

5,923,382

31,227 91,236

599,530 34,944 35,604

163,939 60,183

71,897 6,053

204,039 357,866

498 10,675 38,121

1,705,812

1,979,885

$ 92,084,906



SUPPORT SERVICES

PUPIL PERSONNEL: Salaries - supervision Salaries - guidance Salaries - attendance Salaries - psychological Salaries - social work Salaries - student accounting Salaries - other Medical, dental and vision benefits Social security Retirement Workers' compensation Contracted services Travel Materials and supplies Books and periodicals Equipment Other expenses

Total pupil personnel

INSTRUCTIONAL STAFF: Salaries - librarians Salaries - curriculum Salaries - instructional staff Medical, dental and vision benefits Social security Retirement Workers' compensation Contracted services Repairs and maintenance Travel Professional meetings Materials and supplies Books and periodicals Equipment Other expenses

Total instructional staff

$

Page 75

2013

617,675 1,749,702

150,185 587,009 132,132 247,473 327,540 784,561 284,447 474,709

33,046 10,640 9,332

20,395

4,189

5,433,035

1,035,016 158,622 67,215

435,675 94,477

160,452 10,754 18,773 45,734

6,842 602,461

66,159 58,541 68,694

955

2,830,370

$

2012

622,069 1,664,821

142,852 586,047 127,394 207,825 266,381 807,261 270,480 323,371

28,868 107,321

10,673 25,577

475 925 331

5,192,671

1,131,353 150,034 79,030

393,298 101,213 123,035

10,032 15,170 60,150 2,369

10,654 64,200 83,563 83,984

625

2,308,710



ADMINISTRATION: Salaries - board services Salaries- tax collection Salaries - office of superintendent Salaries - principals and assistants Medical, dental and vision benefits Social security Retirement Tuition reimbursement Workers' compensation Auditing and accounting services Legal services Tax collection expenses Other contracted services Board of directors expenses and supplies Superintendent expenses and supplies Administration expenses and supplies Books and periodicals Equipment

Total administration

PUPIL HEALTH: Salaries - nurses Medical, dental and vision benefits Social security Retirement Workers' compensation Contracted services Repairs and maintenance Travel Materials and supplies Equipment

Total pupil health

Page 76

2013

84,778 402,626

3,768,672 1,280,898

317,307 514,565

97,641 36,558 39,580

524,665 646,795

850 105,167 25,339

109,420 10,760 6 357

7,971 978

1,241,973 297,329

93,178 154,607

10,856 116,233

1,965 1,302

18,991 553

1,936,987

2012

12,495 92,416

391,954 3,791,772 1,279,297

316,567 364,295

40,284 38,736 34,316

494,826 494,460

8,126 143,469

13,651 133,960

6,103 11,812

7,668,539

1,164,468 288,180

87,516 105,467

8,845 61,512

610 4,516

14,488

1,735,602



BUSINESS: Salaries Medical, dental and vision benefits Social security Retirement Workers' compensation Contracted services Communications Advertising Travel Materials and supplies Repairs and maintenance Equipment Other expenses

Total business

OPERATION AND MAINTENANCE OF PLANT SERVICES: Salaries Medical, dental and vision benefits Social security Retirement Workers' compensation Contracted services Cleaning, disposal and lawn care services Utilities Repairs and maintenance Other property services Insurance Communications Travel Operational supplies Electricity and heating fuel Equipment Other expenses

Total operation and maintenance of plant services

Page 77

2013

438,727 106,489 31,981 54,227 3,749

26,373 72,000

7,611 4,491 5,375 1,274

19,965 2,273

774,535

3,977,592 1,397,609

301,552 472,880

34,294 624,133

1,203,018 224,647 307,699 931,971 235,652 264,405

4,393 850,740

2,067,408 84,707

3,661

12,986,361

2012

424,514 109,563 31,377 36,721

3,923 20,324

103,000 2,515 2,276 4,455 5,678

3,352

747,698

4,082,069 1,373,515

309,224 359,735

44,706 477,520

1,063,597 255,014 352,012 987,152 224,984 249,851

3,853 973,173

1,837,841 83,252

1,011

12,678,509

• •



STUDENT TRANSPORTATION SERVICES: Salaries Medical, dental and vision benefits Social security Retirement Workers' compensation Other professional services Repairs and maintenance Contracted services Liability insurance Travel Operational supplies Gasoline and diesel fuel Equipment Rental of equipment Othci expenses

Total student transportation services

CENTRAL: Salaries Medical, dental and vision benefits Other employee benefits Social security Retirement Workers' compensation Contracted services Repairs and maintenance Advertising Travel General supplies Equipment Other expenses

Total central

Page 78

2013

149,765 60,423 11,375 17,765

1,269

6,370,388 37,610

550 29,329

824,846 96,772

3,655 1,598

7,605,345

940,773 1,413,910

127,829 69,325

114,243 8,048

960,327 2,475 6,406 4,499

31,618 213,275

1,291

3,894,019

2012

270,117 56,058 20,517 21,876

2,411 295

2,300 6,493,158

31,045 271

40,031 967,776

33,305 5,375 1 1 11..., 1,1 1 I

7,945,652

1,039,383 1,282,059

117,041 75,758 87,252

9,603 803,188

4,442 3,990 5,484

67,491 277,707

910

3,774,308



2013 OTHER SUPPORT SERVICES:

Salaries 61,591 Medical, dental and vision benefits 113 Social security 4,712 Retirement 5,117 Workers' compensation 528 Intermediate unit 146,689

Total other support services 218,750

2012

60,943 970

4,660 3,325

560 146,206

216,664

TOTAL SUPPORT SERVICES $ 43,651,380 $ 42,268,353

OPERATION OF NONINSTRUCTIONAL SERVICES

STUDENT ACTIVITIES: Salaries Medical, dental, vision benefits Social securit'j Retirement Workers'compensation Athletic program Liability insurance General supplies Other expenses

Total student activities

SCHOOL RESOURCE OFFICERS and CROSSING GUARDS: Salaries Medical, dental, vision benefits Social security Retirement Workers' compensation Contracted services General supplies Travel Crossing guards Other expenses

Total community services

TOTAL OPERATION OF NONINSTRUCTIONAL SERVICES

Page 79

$

$

390,341 21,534 '")() ,:::'")'} k7,JL.J

45,637 3,374

1,695,686 44,902 16,819 2,080

2,249,896

133,105 16,637 10,117 13,334

1,187 18,460 12,586

271 157,836

344

363,877

2,613,773

$

$

352,292 55,444 27,907 30,202

3,101 1,792,600

22,351 19,366

2,303,263

100,649 9,355 7,661 7,512

930 1,627

15,836 340

159,213

303,123

2,606,386



2013

DEBT SERVICE

Debt Service: Principal $ 8,739,718 $ Interest 7,397,824

2012

8,427,287 7,267,683

TOTAL DEBT SERVICE $ 16,137,542 $ 15,694,970

Other $ 373,022 $ 46,051

OTHER FINANCING USES

Interfund Transfers Out: Capital Projects Fund $ 4,000,000 $ Food Service Fund 625,901 Internal Service Fund 1,500,000

TOTAL OTHER FINANCING USES $ 5,500,000 $ 625,901

Page 80

CENTRAL DAUPHIN SCHO,OL DISTRICT

SCHEDULE OF REVENUES AND EXPENDI11JRES GENERAL FUND • LAST TEN YEARS

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 REVENUES:

Local sources $ 119,773,552 $ 116,907,692 $ 115,607,349 ' II 0,208,306 $ 108,866,327 $ lll,948,949 ' 105,230,723 ' 95,373,416 $ 92,379,608 $ 82,669,348 State sources 35,435,198 33,397,212 35,970,805 33,854,355 35,434,546 32,175,880 31,322,577 31,394,595 26,533,769 24,635,043 Federal sources 4 889,383 3.057.737 6,379,285 5 807 427 3,232!320 1,356,638 2482272 I 749,925 2108,529 1.709.169

Total revenues 160,098,133 153,362,641 157,957,439 149,870,088 147,533,193 145,481,467 139,035,572 128,517,936 121,021,906 109,013,560

EXPENDITURES: Instruction 91,482,613 92,084,906 92,102,421 1!7,695,795 86,503,321 84,304,929 78,381,744 73,698,744 70,292,239 64,249,379 Support services 43,651,380 42,268,353 44,325,829 41,131,233 4l,Hi9,092 40,578,014 38,476,448 34,056,231 32,752,272 29,177,809 Operation of noninslructional services 2,613,773 2,606,386 2,534,273 779,304 956,461 797,097 679,800 683,894 587,004 630,321 Facilities acquisition 153,451 Debt service 16,137,542 15,694,970 15,371,593 15,704,864 18,565,230 17,283,907 14,898,309 ll,891,210 11,926,S09 3,934,686 Refund of prior years' receipts 373.022 46,051 315 916 JIB 617 229798 18 037 9953 17 738 . 60.361 185.088

Total expenditures 154,258 330 152,700.666 154,650 032 145.429.813 147,423 902 142,981,984 132446,2.54 !20 347,817 115.771.836 98.177.283

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 5,839,803 661,975 3,307,407 4,440275 109,291 2499483 6 589,318 8 170 119 5.250.070 10,836.277

OTHER FINANCING SOURCES (USES): Proceeds from extlll!ded term financing, net 27,412 599,731 1,207,222 SWAP Proceeds 804,795 764,215 699,474 3,062,750 Proceeds from sale of capital assets 3,000 2,260,000 1,100 14,458

lnterfund transfers in 851,656 lnrerti.md tiW1Sfefs out (5,500 000) (625,901} ~2,850,470) p.506.345l (1.526 776) (6.460.099~ ~5,932,510) (5,297,916) p,303,640~ (8,026.449~

Total o!her financing sources (uses) (4.695.205) 141314 (2,150,996) 3,816.405 (646,608) (5,845,910) (4.725.288) (5,297.916) {1,303 640) (8 026 449)

CHANGE IN FUND BALANCE $ 1,144.598 $ 803.289 $ 1.156.4\1 J,__ 8 256.680 $ (537,317) _,_Q,H§.~:m ' 1,864,030 $ 2.872.203 $ 3 946430 ! 2,809,828

Page 81

YEAR

2014 $ 2015 2016 2017 2018

Subtotal

2019 2020 2021 2022 2023

Subtotal

2024 2025 2026 2027 2028

Subtotal

2029 2030

Subtotal

CENTRAL DAUPHIN SCIHOOL DISTRICT

SCHEDULE OF DEBT SERVICE REQUIREMENTS- PRINCIPAL PAYMENTS JUNE 30, 21l13

2004 2006 Notes 2006A 2009

5,000 $ 340,000 $ 955,000 $ 330,000 5,000 355,000 1,000,000 335,000 5,000 360,000 5,650,000 350,000

1,020,000 370,000 6,765,000 355,000 1,755,000 385,000 7,110,000 365,000 2,790,000 1 ,810,000 21 ,480,000 1 '735,000

1,830,000 8,150,000 2,880,000

12,860,000

400,000 7,475,000 375,000 420,000 1,370,000 390,000

2,195,000 1 ,425,000 405,000 5,300,000 1,485,000 415,000 5,540,000 1 ,550,000 430,000

13,855,000 13,305,000 2,015,000

6,270,000 6,550,000 8,540,000 8,925,000 9,325,000

39,610,000

9,745,000 10,185,000

19,930,000

1,615,000 1,690,000

3,305,000

2010 2011 2012 TOTAL

$ 825,000 $ 2,265,000 $ 4,120,000 $ 8,840,000 840,000 2,340,000 4,250,000 9,125,000 855,000 2,435,000 9,655,000 875,000 680,000 - 10,065,000 895,000 10,510,000

4,290,000 7,720,000 8,370,000 48,195,000

915,000 10,995,000 940,000 11,270,000 970,000 - 7,875,000 995,000 8,195,000

1 ,030,000 - u8,550,000 4,850,000 46,885,000

1,065,000

1,065,000

8,950,000 8,240,000 8,540,000 8,925,000 9,325,000

43,980,000

9,745,000 10,185,000

19,930,000

Total $15,650,000 $75,205,000 $38,090,000 $ 3,750,000 $10,205,000 $ 7,720,000 $ 8,370,000 $158,990,000

- 82 -

YEAR

2014 2015 2016 2017 2018

Subtotal

2019 2020 2021 2022 2023

Subtotal

2024 2025 2026 2027 2028

Subtotal

2029 2030

Subtotal


SCHEDULE OF DEBT SERVICE REQUIREMENTS- INTEREST PAYMENTS JUNE 30, 2013

2004 2006 Notes 2006A 2009 2010 2011 2012

$ 755,399 $ 3,360,100 $ 1,791,103 $ 112,178 $ 277,091 $ 227,825 $ 189,300 755,205 3,346,500 1,752,003 103,865 260,591 147,050 63,750 755,003 3,332,300 1,590,753 95,040 243,791 63,725 729,400 3,317,900 1,280,378 85,344 226,691 13,600 667,045 3,303,100 933,503 74,810 207.004

3,662,052 16,659,900 7,347,740 471,237 1,215,168 452,200 253,050

TOTAL TOTAL TOTAL DEBT

INTEREST PRINCIPAL SERVICE

$ 6,712,996 $ 8,840,000 $ 15,552,996 6,428,964 9,125,000 15,553,964 6,080,612 9,655,000 15,735,612 5,653,313 10,065,000 15,718,313 5 185 462 10 510 000 15 695 462

30,061,347 48,195,000 78,256,347

590,845 347,750

72,000

3,287,700 568,878 63,429 184,629 4,695,481 10,995,000 15,690,481 3,271,700 354,603 51,283 160,610 4,185,946 11.270,000 15,455,946 3,254,900 297,990 38,158 132,410 3,795,458 7,875,000 11,670,458 3,167,100 237,593 23,699 103,310 3,531,702 8,195,000 11,726,702 2 928 600 173 858 8 063 70 973 3181 494 8 550 000 11 731 494

1,010,595 15,910,000 1,632,922 184,632 651 ,932 19,390,081 46,885,000 66,275,081

2,679,300 2,397,150 2,102,400 1,718,100

896,850 458,325

1,355,175

107,009 36,335

36,210

896,850 458,325

1,355,175

9,745,000 10,185,000

19,930,000

10,641,850 10,643,325

21,285,175

Total $ 4,672,647 $44,138,500 $ 9,124,006 $ 655,869 $ 1,903,310 $ 452,200 $ 253,050 $ 61,199,582 $158,990,000 $220,189,582

- 83 -


SCHEDULE OF STATISTICAL INFORMATION GENERAL FUND- TEN YEARS (UNAUDITED)

JUNE 30,2013

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

Assessed real estate valuation- net 5,431,255,650 5,382,210,120 5,396,969,119 5,322,526,929 5,248,975,682 5,339,651,178 5,191,332,402 5,029, 753,350 4,855,144,964 4,733,334,738

Real estate w: rate (in mills) 14.32 13.86 13.86 13.86 13.55 13~55 12.97 11.97 11.89 11.42

Real estate w:es levied 77,760,917 74,597,432 74,802,009 73,770,223 71,113,123 72,341,594 67,321,199 60,291,653 57,717,963 54,064,149

Real estate taxes collected - current 73,378,030 70,269,048 70,939,102 69,570,899 66,920,222 68,156,596 63,805,330 56,668,211 54,660,789 51,114,785

Ratio of net general long term debt to assesed value 3.16% 3.36% 3.51% 3.73% 3.93% 3.71% 3.91% 3.92% 2.48% 2.64%

Ratio of debt service for general long term debt to total general fund expenditures 10.46% 10.28% 9.94% 10.80% 12.59% 12.09% 11.25% 9.88% 10.30% 4.01%

Ratio of fund balance for general fund to general fund expenditures 14.18% 13.04% 14.36% 14.49% 8.69% 9.34% 12.61% 12.33% 10.33% 7.35%

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