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Comprehensive Annual Financial ReportFor the Fiscal Year Ended June 30, 2015

Independent School District No. 834Stillwater, Minnesota

1875 South Greeley Street

Stillwater, MN 55082

www.stillwaterschools.org651.351.8321

Prepared by Finance Department

Kristen Hoheisel, Director of Finance

Lynne Ritzer, Supervisor of Financial Services

Kathy Tuenge, District Accountant

Sue Brochman, Accounts Processing Technician

Diana Olson, Accounts Processing Technician

StillwaterAREA PUBLIC SCHOOLS

StillwaterAREA PUBLIC SCHOOLS

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SECTION I – INTRODUCTORY SECTION

Letter of Transmittal i–ivOrganizational Chart vSchool Board and Administration viCertificate of Excellence viiMap of School District viii

SECTION II – FINANCIAL SECTION

INDEPENDENT AUDITOR’S REPORT 1–3

MANAGEMENT’S DISCUSSION AND ANALYSIS 4–15

BASIC FINANCIAL STATEMENTSGovernment-Wide Financial Statements

Statement of Net Position 16Statement of Activities 17

Fund Financial StatementsGovernmental Funds

Balance Sheet 18–19Reconciliation of the Balance Sheet to the Statement of Net Position 20Statement of Revenue, Expenditures, and Changes in Fund Balances 21–22Reconciliation of the Statement of Revenue, Expenditures, and Changes in Fund Balances to the Statement of Activities 23Statement of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual – General Fund 24

Internal Service FundsStatement of Net Position 25Statement of Revenue, Expenses, and Changes in Fund Net Position 26Statement of Cash Flows 27

Fiduciary FundsStatement of Fiduciary Net Position 28Statement of Changes in Fiduciary Net Position 28

Notes to Basic Financial Statements 29–57

REQUIRED SUPPLEMENTARY INFORMATIONDefined Benefit Pension Plans – GERF/TRA Retirement Funds

Schedule of District’s and Non-Employer Proportionate Share of Net Pension Liability 58Schedule of District Contributions 59

Other Post-Employment Benefits PlanSchedule of Funding Progress 60Schedule of Employer Contributions 60

INDEPENDENT SCHOOL DISTRICT NO. 834

Table of Contents

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SUPPLEMENTAL INFORMATIONNonmajor Governmental Funds

Combining Balance Sheet 61Combining Statement of Revenue, Expenditures, and Changes in Fund Balances 62

General FundComparative Balance Sheet 63Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual 64–66

Food Service Special Revenue FundComparative Balance Sheet 67Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual 68

Community Service Special Revenue FundComparative Balance Sheet 69Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual 70

Capital Projects – Building Construction FundComparative Balance Sheet 71Schedule of Revenue, Expenditures, and Changes in Fund Balances – Budget and Actual 72

Debt Service FundBalance Sheet by Account 73Schedule of Revenue, Expenditures, and Changes in Fund Balances by Account – Budget and Actual 74–75

Internal Service FundsCombining Statement of Net Position 76Combining Statement of Revenue, Expenses, and Changes in Fund Net Position 77Combining Statement of Cash Flows 78

SECTION III – STATISTICAL SECTION (UNAUDITED)

Net Position by Component 79–80Changes in Net Position 81–82Governmental Activities Tax Revenues by Source and Levy Type 83Fund Balances of Governmental Funds 84–85Changes in Fund Balances of Governmental Funds 86–87General Governmental Tax Revenues by Source and Levy Type 88Tax Capacities and Market Values 89–90Property Tax Rates – Direct and Overlapping Governments 91–92Principal Property Taxpayers 93Property Tax Levies, Collections, and Receivables 94–95Ratios of Outstanding Debt by Type 96Ratio of Net General Obligation Bonded Debt to Market Value and Net General Obligation Bonded Debt per Capita 97


Table of Contents (continued)

Page

SECTION III – STATISTICAL SECTION (UNAUDITED) (CONTINUED)

Direct and Overlapping Debt 98Legal Debt Margin Information 99–100Demographic and Economic Statistics 101Principal Employers 102Employees by Classification 103–104Teacher Data 105–106Student to Staff Ratios 107Operating Indicators by Function – Standardized Testing and Graduation Rates 108–109School Facilities 110Food Service – School Lunch Program Data 111–112Student Enrollment 113Expenditures per Student 114


Table of Contents (continued)

Section IIntroduction

Stillwate

r AREA PUBLIC SCHOOLS

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September 28, 2015

To the School Board, citizens, and employees of Independent School District No. 834:

State law requires that every public school district publish, within six months of the close of each fiscal year, a complete set of audited financial statements. This report is published to fulfill that requirement for the fiscal year ended June 30, 2015. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. Malloy, Montague, Karnowski, Radosevich & Co. P.A., Certified Public Accountants, have issued an unmodified (“clean”) opinion on Independent School District No. 834’s (the District) financial statements for the year ended June 30, 2015. The independent auditor’s report is located at the front of the financial section of this report. The Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. PROFILE OF THE ENTITY AND ITS SERVICES The District provides a full range of public education services appropriate to grade levels ranging from pre-kindergarten through Grade 12. These include regular and enriched academic programs, special education programs, and career/vocational education. Food service and transportation are provided as supporting programs. The community education program in the District includes early childhood and family education programs, an adult basic education program, and a variety of classes for lifelong learning experiences for children and adults. Minnesota’s first schoolhouse was built in Stillwater in 1848, a year before Minnesota became a territory. Located on Olive Street between Second and Third Streets, the schoolhouse was a one-room building with cracks in the walls. Stillwater became the state’s first school district just two years later, a full four years before the City of Stillwater was incorporated. This District, now known as Independent School District No. 834, Stillwater Area Public Schools, has a long tradition of high expectations, high standards, and outstanding achievement. It is also a system dedicated to continuous improvement.

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The District served more than 8,400 students for the 2014–2015 school year and is projecting a similar enrollment for the 2015–2016 school year. We have gone from a one-room schoolhouse to 10 elementary schools (K–6), two junior high schools (Grades 7–9), one high school (Grades 10–12), and an alternative learning center for secondary students. An early childhood family center (ECFC) serves families with young children, from birth to age five. The average age of the District’s buildings is approximately 39.47 years; with the original buildings being constructed first in 1919 to the latest construction of the ECFC in 2012. Building ages include 1920s (1), 1930s (1), 1950s (5), 1960s (2), 1970s (2), 1990s (2), and 2010s (1). The District stretches 30 miles along the scenic St. Croix River from Marine on St. Croix south to Afton, and covers approximately 150 square miles. The District encompasses 18 communities, including: Afton, Bayport, Baytown Township, Grant, a portion of Hugo, Lake Elmo, Lakeland, Lakeland Shores, Lake St. Croix Beach, Marine on St. Croix, May Township, Oak Park Heights, St. Mary’s Point, Stillwater, Stillwater Township, West Lakeland Township, Withrow, and a portion of Woodbury. The total district population is estimated at 63,225. The District is well known for providing a solid and rigorous curriculum that focuses on the expanded basics of reading, writing, math, logic, and speaking. Student achievement on state and national tests ranks above the state average. The District strives to develop learners who are innovative, creative, and prepared for a rapidly changing world. Expectations are high and students of all abilities are challenged, supported, and motivated at every level—from early childhood through high school. Students regularly earn top awards and recognitions in academics, and performing and visual arts programs. Student athletes also consistently appear in state competitions. LOCAL ECONOMY According to census information from the Washington County website, the county continued to experience growth, increasing 2.2 percent since 2010. The Washington County population in 2012 was 243,313, making it the fifth largest county in the state of Minnesota, housing approximately 4.4 percent of the state’s population and approximately 8 percent of the Twin Cities metropolitan area’s population. According to the Metropolitan Council, as reported on the county’s website, Washington County’s population is expected to continue to grow. By the year 2030, the county’s population is projected to increase to 362,090. The District’s population has grown from 41,958 in 1996 to 63,225 in 2015. This represents almost a 51 percent increase. Source data from the U.S. Census Bureau shows that the median household income in 2012 for Washington County was $80,246 as compared to $58,906 for the state of Minnesota. Source data from the U.S. Bureau of Economic Analysis shows that the per capita income in 2012 for Washington County was $52,081. The poverty rate of Washington County continues to be low. Source data from the 2012 American Community Survey, as reported on the county’s website, shows that 5.5 percent of Washington County’s population was below the poverty level and that 3.8 percent of the county’s families were below the poverty level in the same year. Due to its strong and healthy local economy, the District has maintained a credit rating of Aa2 from Moody’s Investor Service since 2012.

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LONG-TERM FINANCIAL PLANNING AND MAJOR INITIATIVES With the exception of the voter-approved operating referendum, the District is dependent on the state of Minnesota for its revenue authority. Recent experience demonstrates that legislated revenue increases are unpredictable and have not been sufficient to meet instructional program needs and increased costs due to inflation. The District will continue to monitor its operations to ensure that revenues are sufficient to meet expenditures and to maintain a reasonable amount in reserve to cover any unforeseen expenditures. A long-term facilities committee was established during the 2013–2014 school year to address the many facets of facility planning. School age population changes are projected to result in greater facility needs on the south end of the District and reduced need on the northern end of the District. A shared elementary school, under a joint powers agreement, will retire existing debt, eliminating long-term financial ties. During the 2014–2015 school year, it was decided that the joint powers agreement for the shared elementary school will be terminated. The elementary school is to be sold and the District’s portion of the proceeds will be returned during the 2015–2016 school year. A referendum was passed in May 2015 that will change the instructional delivery model. The District will become a pre-K–5, 6–8, and 9–12 grade configuration. Remodeling for this configuration will occur in our existing buildings. A new elementary school will be built in the south end of the District. Along with a transportation terminal, science rooms, gym space, field improvements, playground surface, and HVAC systems will be addressed with the bond proceeds. With the involvement of students, staff, and community members, the District developed a strategic plan known as the Bridge to Excellence. This plan was designed for action and transparency, while addressing the objectives of uncompromising commitment to achieve specific, measurable, observable, or demonstrable results that exceed our present capability. This plan will be the focus of work for the District in the next five years. Year one of the Bridge to Excellence plan was the 2013–2014 school year. The complete five-year implementation plan can be viewed at www.stillwaterschools.org/vision. RELEVANT FINANCIAL POLICIES The District has adopted several financial policies, which were not significantly changed in the current year. The District is required to adopt an annual budget prior to the start of the fiscal year. For the 2014–2015 fiscal year, the District adopted a General Fund original budget estimating revenues to be less than appropriations ($93,392,056 versus $96,697,523), with available fund balance used to close the gap. The amount necessary for this purpose in the original budget was $3,305,467, which decreased to $1,976,380 in the final amended budget thanks to measures taken during the year to control expenditures. AWARDS AND ACKNOWLEDGEMENTS The Association of School Business Officials (ASBO) International awarded the Certificate of Excellence in Financial Reporting to the District for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2014. This was the 11th consecutive year that the District has achieved this prestigious award. A Certificate of Excellence in Financial Reporting is valid for a period of one year only. However, we believe that our current CAFR continues to meet the Certificate of Excellence in Financial Reporting program’s requirements, and we are submitting it to the ASBO International to determine its eligibility for another certificate.

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The preparation of this report would not have been possible without the skill, effort, and dedication of the entire staff of the Business and Administrative Services Division. We wish to thank all departments for their assistance in providing the data necessary to prepare this report. Credit is also due to the Superintendent and the School Board for their unfailing support in maintaining the highest standards of professionalism in the management of the District’s finances. Respectfully submitted,

Kristen Hoheisel, SFO, CPA (inactive) Director of Finance

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Board Position

Mr. Tom Lehmann ChairpersonMs. Kathleen Buchholz Vice ChairpersonMs. Amy Burback TreasurerMr. George Hoeppner ClerkMs. Paula O’Loughlin DirectorMs. Shelley Pearson DirectorDr. Michael Ptacek Director

Mr. Tom Nelson SuperintendentMs. Malinda Lansfeldt Executive Director of Learning Services and Elementary EducationDr. Ryan Laager Executive Director of Curriculum and Secondary EducationMs. Kristen Hoheisel Director of FinanceMr. Dennis Bloom Director of OperationsMs. Cathy Moen Director of Administrative ServicesMr. Paul Lee Director of Student Support ServicesMs. Annette Sallman Director of Community Education and Community Relations


Year Ended June 30, 2015

SCHOOL BOARD

ADMINISTRATION

School Board and Administration

Association of School Business Officials International

The Certificate of Excellence in Financial Reporting Award

is presented to

Stillwater Area Public Schools – Independent School District No 834

For Its Comprehensive Annual Financial Report (CAFR)

For the Fiscal Year Ended June 30, 2014

The CAFR has been reviewed and met or exceeded ASBO International’s Certificate of Excellence standards

Terrie S. Simmons, RSBA, CSBO John D. Musso, CAE, RSBA President Executive Director

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-viii-

Section IIFinancial

Stillwate


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INDEPENDENT AUDITOR’S REPORT To the School Board and Management of Independent School District No. 834 Stillwater, Minnesota REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Independent School District No. 834 (the District) as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. AUDITOR’S RESPONSIBILITY Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District’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 District’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

(continued)

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OPINIONS In our opinion, the financial statements referred to on the previous page present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the District as of June 30, 2015, 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. EMPHASIS OF MATTER As described in Note 1 of the notes to basic financial statements, the District has implemented Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27, during the year ended June 30, 2015. Our opinion is not modified with respect to this matter. OTHER MATTERS Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and the required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the GASB, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements. The introductory section, supplemental information, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not required parts of the basic financial statements. The supplemental information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

(continued)

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Prior Year Comparative Information We have previously audited the District’s 2014 financial statements, and we expressed unmodified audit opinions on the respective financial statements of the governmental activities, each major fund, and the aggregate remaining fund information in our report dated September 24, 2014. In our opinion, the partial comparative information presented herein as of and for the year ended June 30, 2014 is consistent, in all material respects, with the audited financial statements from which it has been derived. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated September 28, 2015 on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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. Minneapolis, Minnesota September 28, 2015


Management’s Discussion and Analysis Year Ended June 30, 2015

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This section of Independent School District No. 834’s (the District) comprehensive annual financial report (CAFR) presents management’s narrative overview and analysis of the District’s financial performance during the fiscal year ended June 30, 2015. Please read it in conjunction with the other components of the District’s CAFR. FINANCIAL HIGHLIGHTS

The District’s assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources at June 30, 2015 by $17,237,674 (net position). The District’s total net position increased by $8,582,161 during the fiscal year ended June 30, 2015, exclusive of the change in accounting principle reported in the current year as discussed below.

The District recorded a change in accounting principle in the current year for reporting the

District’s participation in the Public Employees Retirement Association (PERA) and Teachers Retirement Association (TRA) pension plans. This change reduced beginning net position in the government-wide statements by $57,356,245.

Government-wide revenues totaled $115,564,282 and were $8,582,161 more than expenses of

$106,982,121.

The General Fund’s total fund balance (under the governmental fund presentation) increased $1,024,145 from the prior year, compared to a $1,976,380 decrease planned in the budget.

OVERVIEW OF THE FINANCIAL STATEMENTS The financial section of the CAFR consists of the following parts:

Independent Auditor’s Report; Management’s Discussion and Analysis;

Basic financial statements, including the government-wide financial statements, fund financial

statements, and the notes to basic financial statements;

Required supplementary information; and

Supplemental information consisting of combining and individual fund statements and schedules. The following explains the two types of statements included in the basic financial statements: GOVERNMENT-WIDE FINANCIAL STATEMENTS The government-wide financial statements (Statement of Net Position and Statement of Activities) 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 District’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, except for the fiduciary funds. 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.

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The two government-wide financial statements report the District’s net position and how it has changed. Net position—the difference between the District’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources—is one way to measure the District’s financial health or position.

Over time, increases or decreases in the District’s net position are indicators of whether its financial position is improving or deteriorating, respectively.

To assess the overall health of the District requires consideration of additional nonfinancial

factors such as changes in the District’s property tax base and the condition of school buildings and other facilities.

In the government-wide financial statements the District’s activities are all shown in one category titled “governmental activities.” These activities, including regular and special education instruction, transportation, administration, food services, and community education, are primarily financed with state aids and property taxes. FUND FINANCIAL STATEMENTS The fund financial statements provide more detailed information about the District’s funds, focusing on its most significant or major funds, rather than the District as a whole. Funds (Food Service Special Revenue and Community Service Special Revenue) that do not meet the threshold to be classified as major funds are called nonmajor funds. Detailed financial information for nonmajor funds can be found in the supplemental information section. Funds are accounting devices the District uses to keep track of specific sources of funding and spending on particular programs. For Minnesota schools, funds are established in accordance with Uniform Financial Accounting and Reporting Standards in accordance with statutory requirements and accounting principles generally accepted in the United States of America. The District maintains the following kinds of funds:

Governmental Funds – The District’s basic services are included in governmental funds which generally focus on: 1) how cash and other financial assets that can readily be converted to cash flow in and out, and 2) the balances left at year-end that are available for spending. Consequently, the governmental fund statements provide a detailed short-term view that helps to determine whether there are more or less financial resources that can be spent in the near future to finance the District’s programs. Because this information does not encompass the additional long-term focus of the government-wide financial statements, we provide additional information (reconciliation schedules) immediately following the governmental fund statements that explain the relationship (or differences) between these two types of financial statement presentations. Proprietary Funds – The District maintains one type of proprietary fund. The internal service funds are used as an accounting device to accumulate and allocate costs internally among the District’s various functions. The District uses its internal service funds to account for the self-insurance activities of the district employees’ medical and dental claims. These services have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. Fiduciary Funds – The District is the trustee, or fiduciary, for assets that belong to other organizations. 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. All of the District’s fiduciary activities are reported in a separate Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. We exclude these activities from the government-wide financial statements because the District cannot use these assets to finance its operations.

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FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE Table 1 is a summarized view of the District’s Statement of Net Position:

2015 2014

AssetsCurrent and other assets 80,153,556$ 83,925,568$ Capital assets, net of depreciation 82,239,477 79,893,816

Total assets 162,393,033$ 163,819,384$

Deferred outflows of resourcesPension plan deferments – PERA and TRA 8,294,510$ –$

LiabilitiesCurrent and other liabilities 12,049,441$ 13,179,784$ Long-term liabilities, including due within one year 91,290,424 51,416,933

Total liabilities 103,339,865$ 64,596,717$

Deferred inflows of resourcesProperty taxes levied for subsequent year 34,357,434$ 33,210,909$ Pension plan deferments – PERA and TRA 15,752,570 –

Total deferred inflows of resources 50,110,004$ 33,210,909$

Net positionNet investment in capital assets 56,387,161$ 48,412,468$ Restricted 5,665,080 6,604,074 Unrestricted (44,814,567) 10,995,216

Total net position 17,237,674$ 66,011,758$

Table 1Summary Statement of Net Position

as of June 30, 2015 and 2014

The District’s financial position is the product of many factors. For example, the determination of the District’s net investment in capital assets involves many assumptions and estimates, such as current and accumulated depreciation amounts. A conservative versus liberal approach to depreciation estimates, as well as capitalization policies, will produce a significant difference in the calculated amounts. The other major factor in determining net position as compared to fund balances is the liability for long-term severance, pension, and other post-employment benefits (OPEB), which impacts the unrestricted portion of net position. Total net position decreased by $48,774,084, which reflects an increase of $8,582,161 from current year operating results, while the change in accounting principle mentioned earlier reduced unrestricted net position by $57,356,245. This change in accounting principle for pensions significantly increased deferred outflows of resources, long-term liabilities, and deferred inflows of resources, as presented in the table above.

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The District’s increase in net investment in capital assets is due mostly to the District repaying debt at a faster rate than the assets being depreciated. The District’s use of the alternative facility levy to finance capital improvements also contributes to the overall increase in the net investment in capital assets, without an offsetting decrease for related debt. A decrease in net position restricted for capital asset acquisition reduced the restricted portion of net position. The decrease in unrestricted net position was primarily due to the change in accounting principle previously discussed. Table 2 presents a summarized version of the District’s Statement of Activities:

2015 2014

Revenues Program revenues

Charges for services 7,558,128$ 7,846,540$ Operating grants and contributions 13,909,704 13,766,818

General revenuesProperty taxes 35,014,752 21,897,296 General grants and aids 57,947,379 62,828,789 Other 1,134,319 1,372,972

Total revenues 115,564,282 107,712,415

ExpensesAdministration 3,469,001 3,361,947 District support services 2,879,688 3,298,447 Elementary and secondary regular instruction 45,526,927 44,867,231 Vocational education instruction 1,142,699 948,370 Special education instruction 16,441,733 16,207,958 Instructional support services 6,112,684 5,461,838 Pupil support services 9,807,046 9,780,943 Sites and buildings 11,582,408 10,583,746 Fiscal and other fixed cost programs 188,265 274,552 Food service 3,883,245 3,952,305 Community service 4,586,087 4,213,278 Interest and fiscal charges on debt 1,362,338 1,580,073

Total expenses 106,982,121 104,530,688

Change in net position 8,582,161 3,181,727

Net position – beginning, as previously reported 66,011,758 62,830,031 Change in accounting principle (57,356,245) – Net position – beginning, restated 8,655,513 62,830,031

Net position – ending 17,237,674$ 66,011,758$

Table 2Summary Statement of Activities

for the Years Ended June 30, 2015 and 2014

This table is presented on an accrual basis of accounting, and it includes all of the governmental activities of the District. This statement includes depreciation expense, but excludes capital asset purchase costs, debt proceeds, and the repayment of debt principal. Additional operating referendum levy authority along with changes in the property tax shift, as further discussed on the next page, contributed to the increase in property taxes in the table above.

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Figure A shows further analysis of these revenue sources.

Figure A – Sources of Revenues for Fiscal Years 2015 and 2014

The largest share of the District’s revenue is received from the state, including the general education aid formula and most of the operating grants. This significant reliance on the state for funding has placed pressure on local school districts as a result of limited funding increases in recent years. Property taxes are generally the next largest source of funding. The level of revenue property tax sources provide is not only dependent on district taxpayers by way of operating and building referenda, but also by decisions made by the Legislature in the mix of state aid and local effort in a variety of funding formulas. The proportionate share of district revenue from these two sources may change significantly between fiscal years, due to the “tax shift.” The tax shift is an accounting tool used on occasion to balance the state budget, whereby districts recognize cash collections for the subsequent year’s property tax levy as current year revenue, and the state adjusts aid payments to districts by an equal amount.

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Figure B shows further analysis of these expense functions.

Figure B – Expenses for Fiscal Years 2015 and 2014

The District’s expenses are predominately related to educating students. Programs (or functions) such as elementary and secondary regular instruction, vocational education instruction, special education instruction, and instructional support services are directly related to classroom instruction, while the rest of the programs support instruction and other necessary costs to operate the District.

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FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS The financial performance of the District as a whole is also reflected in its governmental funds. Table 3 shows the change in total fund balances of each of the District’s governmental funds:

Increase2015 2014 (Decrease)

Major fundsGeneral 14,001,714$ 12,977,569$ 1,024,145$ Capital Projects – Building Construction 481,204 5,260,155 (4,778,951) Debt Service 1,772,888 1,869,211 (96,323)

Nonmajor fundsFood Service Special Revenue 123,578 68,165 55,413 Community Service Special Revenue 665,947 515,810 150,137

Total governmental funds 17,045,331$ 20,690,910$ (3,645,579)$

Table 3Governmental Fund Balancesas of June 30, 2015 and 2014

The focus of the District’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the District itself, or a group or individual that has been delegated authority to assign resources for use for particular purposes by the District’s School Board. At June 30, 2015, the District’s governmental funds reported combined fund balances of $17,045,331, a decrease of $3,645,579 in comparison with the prior year. Approximately 50.2 percent of this amount ($8,550,319) constitutes unassigned fund balance, which is available for spending at the District’s discretion. The remainder of the fund balance is either nonspendable, restricted, or assigned to indicate that it is 1) not in spendable form ($341,392), 2) restricted for particular purposes ($6,027,674), or 3) assigned for particular purposes ($2,125,946).

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ANALYSIS OF THE GENERAL FUND Table 4 summarizes the amendments to the General Fund budget:

IncreaseOriginal Budget Final Budget (Decrease) Percent Change

Revenues and other financing sources 93,392,056$ 93,844,818$ 452,762$ 0.5%

Expenditures and other financing uses 96,697,523$ 95,821,198$ (876,325)$ (0.9%)

Table 4General Fund

Budget

The District is required to adopt an operating budget prior to the beginning of its fiscal year, referred to above as the original budget. During the year, the District amended the budget for known significant changes in circumstances such as: updated enrollment estimates, legislative changes, additional funding received from grants or other local sources, staffing changes, employee contract settlements, insurance premium changes, special education tuition changes, or for new debt issued. Table 5 summarizes the operating results of the General Fund:

2015 Actual Amount Percent Amount Percent

Revenue 94,127,729$ 288,911$ 0.3% 6,238,779$ 7.1%

Expenditures 92,657,049 (2,710,601) (2.8%) 1,062,074 1.2%

Excess (deficiency) of revenue over expenditures 1,470,680 2,999,512 5,176,705

Net other financing sources (uses) (446,535) 1,013 (457,041)

Net change in fund balances 1,024,145$ 3,000,525$ 4,719,664$

Final Budget Over (Under) Prior Year

Table 5General Fund

Operating Results

Over (Under)

The fund balance of the General Fund increased $1,024,145, compared to a planned spend-down of $1,976,380 approved in the final budget.

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General Fund revenues for 2015 increased $6,238,779, or 7.1 percent, compared to the prior year. This was within $288,911, or 0.3 percent, of budget. The largest revenue variances occurred in state sources, which were $1,117,273 more than projected in the budget, and other local sources, which were less than anticipated by $680,001. The increase from the prior year was mainly due to additional operating referendum revenue authority and improvements in the general education funding formula. Total General Fund expenditures for 2015 increased $1,062,074, or 1.2 percent, over the prior year. Current year expenditures of $92,657,049 were $2,710,601, or 2.8 percent, under budget. The expenditure variance was spread across several programs and object categories of the General Fund. Elementary and secondary regular instruction, along with district support services, experienced the largest program variances, with savings of $1,162,922 and $789,416, respectively. This was due mostly to capital carryovers, staff development carryovers, unfilled positions, and conservative management of allocated budgets. COMMENTS ON SIGNIFICANT ACTIVITIES IN OTHER FUNDS Capital Projects – Building Construction Fund The District’s use of the alternative facility program levy and prior year bonds, issued for district security projects, contributed to the overall decrease in fund balance. Debt Service Fund The Debt Service Fund expenditures exceeded revenues and other financing sources by $96,323 in the current year. The funding of debt service is controlled in accordance with each outstanding debt issue’s financing plan. The remaining fund balance of $1,772,888 at June 30, 2015 is available for meeting future debt service obligations.

Other Governmental Funds The Food Service Special Revenue Fund ended the year with revenues and other financing sources exceeding expenditures, increasing equity by $55,413, compared to a planned fund balance increase of $8,471. The Community Service Special Revenue Fund ended the year with revenues exceeding expenditures, increasing equity by $150,137, compared to a planned fund balance reduction of $41,286. Internal Service Funds Internal service funds are used to account for the financing of goods and services provided by one department or agency of a government to other departments or agencies on a cost reimbursement basis. The District currently maintains two internal service funds. These funds are used to account for the District’s self-insured health and dental insurance functions. Operating revenues for the internal service funds for fiscal 2015 totaled $15,747,052. This is an increase from the fiscal year 2014 operating revenue level of $15,498,018. Nonoperating revenues totaled $4,684, which is an increase from the fiscal year 2014 nonoperating revenue of $3,109. Operating expenses totaled $14,991,681, which represents an increase from fiscal year 2014 operating expenditures of $14,118,711, due to an increase in both health and dental benefit claims. The net position balance for all internal service funds as of June 30, 2015 was $2,346,513, which represents a $760,055 increase from the prior year.

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CAPITAL ASSETS AND LONG-TERM LIABILITIES Capital Assets Table 6 shows the District’s capital assets, together with changes from the previous year. The table also shows the total depreciation expense for fiscal years ending June 30, 2015 and 2014:

2015 2014 Change

Land 3,994,902$ 3,994,902$ –$ Construction in progress 1,107,632 1,170,156 (62,524) Land improvements 10,828,604 10,462,403 366,201 Buildings 122,016,768 116,618,772 5,397,996 Furniture and equipment 10,232,924 9,532,813 700,111 Less accumulated depreciation (65,941,353) (61,885,230) (4,056,123)

Total 82,239,477$ 79,893,816$ 2,345,661$

Depreciation expense 4,102,076$ 3,923,704$ 178,372$

Table 6Capital Assets

By the end of 2015, the District had invested in a broad range of capital assets, including school buildings, athletic facilities, and other equipment for various instructional programs (see Table 6). The changes presented in the table above reflect the ongoing activity and completion of projects at district sites during fiscal year 2015, consistent with the activity of the Capital Projects – Building Construction Fund discussed on the previous page. The District defines capital assets as those with an initial, individual cost of $3,000 or more, which benefit more than one fiscal year. Beginning in the fiscal year 2015–2016, the District will use a $5,000 capitalization threshold. Additional details about capital assets can be found in the notes to basic financial statements.

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Long-Term Liabilities Table 7 illustrates the components of the District’s long-term liabilities with changes from the prior year:

2015 2014 Change

General obligation bonds payable 31,605,000$ 39,690,000$ (8,085,000)$ Certificates of participation payable 8,570,000 9,055,000 (485,000) Unamortized premium/discount 847,879 1,187,586 (339,707) Net pension liability – PERA* 10,513,003 – 10,513,003 Net pension liability – TRA* 38,231,979 – 38,231,979 Severance benefits payable 1,259,750 1,254,391 5,359 Compensated absences payable 262,813 229,956 32,857

Total 91,290,424$ 51,416,933$ 39,873,491$

* Reflects current year change in accounting principle, prior year balances were not restated.

Table 7Outstanding Long-Term Liabilities

The decreases in bonds and certificates of participation debt obligations in the table above are primarily due to the planned repayment schedules reflecting principal payments during fiscal year 2015. As previously discussed, the District recorded a change in accounting principle in the current year for reporting the District’s participation in the PERA and TRA pension plans. Information needed to restate previous periods was not readily available; therefore, prior period amounts were not restated. The state limits the amount of general obligation debt the District can issue to 15 percent of the market value of all taxable property within the District’s corporate limits (see Table 8):

District’s market value 8,025,467,500$ Limit rate 15.0%

Legal debt limit 1,203,820,125$

Table 8Limitations on Debt

Additional details of the District’s long-term debt activity can be found in the notes to basic financial statements.

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FACTORS BEARING ON THE DISTRICT’S FUTURE With the exception of the voter-approved operating referendum, the District is dependent on the state of Minnesota for a majority of its revenue authority. Recent experience demonstrates that legislated revenue increases have not been sufficient to meet instructional program needs and increased costs due to inflation. The general education program is the method by which school districts receive the majority of their financial support. This source of funding is primarily state aid and, as such, school districts rely heavily on the state of Minnesota for educational resources. In the 2015 fiscal year, several funding and pupil weighting changes went into effect, which included an equivalent increase of $105, or 2.0 percent, for the basic general education formula funding. The Legislature has added $117, or 2.0 percent, per pupil to the formula for fiscal year 2016 and an additional $119, or 2.0 percent, per pupil to the formula for fiscal year 2017. The ongoing demands on limited resources continue to present challenges in funding education for Minnesota schools. In August 2015, the District issued $90,565,000 of General Obligation School Building Bonds, Series 2015A, which will be used to finance construction and improvements at several district facilities. Also in August 2015, the District issued $14,695,000 of General Obligation Taxable OPEB Refunding Bonds, Series 2015B, which will be used to refinance the General Obligation Taxable OPEB Bonds, Series 2009B. CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT This CAFR is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Finance Department, Independent School District No. 834, 1875 South Greeley Street, Stillwater, Minnesota 55082.

BASIC FINANCIAL STATEMENTS

2015 2014

AssetsCash and temporary investments 35,965,527$ 39,534,414$ Receivables

Current taxes 18,957,340 18,413,837 Delinquent taxes 618,720 681,892 Accounts and interest 143,101 122,083 Due from other governmental units 8,414,619 7,965,867 Due from post-employment benefit trust 1,200,000 1,500,000

Inventory 55,935 66,391 Prepaid items 285,457 398,666 Negative net other post-employment benefit obligations 14,512,857 15,242,418

Capital assetsNot depreciated 5,102,534 5,165,058 Depreciated, net of accumulated depreciation 77,136,943 74,728,758

Total capital assets, net of accumulated depreciation 82,239,477 79,893,816

Total assets 162,393,033 163,819,384

Deferred outflows of resourcesPension plan deferments – PERA and TRA 8,294,510 –

Total assets and deferred outflows of resources 170,687,543$ 163,819,384$

LiabilitiesSalaries payable 4,628,230$ 4,638,971$ Accounts and contracts payable 2,971,185 3,152,906 Accrued interest payable 571,858 688,522 Due to other governmental units 383,066 456,431 Unearned revenue 2,629,787 3,122,645 Claims incurred but not reported 865,315 1,120,309

Long-term liabilities Due within one year 9,446,489 9,124,920 Due in more than one year 81,843,935 42,292,013

Total long-term liabilities 91,290,424 51,416,933

Total liabilities 103,339,865 64,596,717

Deferred inflows of resourcesProperty taxes levied for subsequent year 34,357,434 33,210,909 Pension plan deferments – PERA and TRA 15,752,570 –

Total deferred inflows of resources 50,110,004 33,210,909

Net positionNet investment in capital assets 56,387,161 48,412,468 Restricted for

Capital asset acquisition 3,535,475 4,566,380 Debt service 1,328,536 1,411,068 Food service 123,578 68,165 Community service 677,491 558,461

Unrestricted (44,814,567) 10,995,216 Total net position 17,237,674 66,011,758

Total liabilities, deferred inflows of resources, and net position 170,687,543$ 163,819,384$

See notes to basic financial statements


Governmental Activities

(With Partial Comparative Information as of June 30, 2014)as of June 30, 2015

Statement of Net Position

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2014Net (Expense) Net (Expense)Revenue and Revenue andChanges in Changes inNet Position Net Position

Operating CapitalCharges for Grants and Grants and Governmental Governmental

Functions/Programs Expenses Services Contributions Contributions Activities Activities

Governmental activitiesAdministration 3,469,001$ –$ 4,427$ –$ (3,464,574)$ (3,361,947)$ District support services 2,879,688 1,594 166 – (2,877,928) (3,289,642) Elementary and secondary regular instruction 45,526,927 1,340,698 1,558,604 – (42,627,625) (40,981,069) Vocational education instruction 1,142,699 636 17,795 – (1,124,268) (916,975) Special education instruction 16,441,733 106,819 9,598,894 – (6,736,020) (6,983,487) Instructional support services 6,112,684 55,502 688,489 – (5,368,693) (4,815,338) Pupil support services 9,807,046 9,559 211,326 – (9,586,161) (9,349,087) Sites and buildings 11,582,408 362,283 8 – (11,220,117) (10,143,868) Fiscal and other fixed cost programs 188,265 – – – (188,265) (274,552) Food service 3,883,245 2,559,430 1,239,095 – (84,720) (264,504) Community service 4,586,087 3,121,607 590,900 – (873,580) (956,788) Interest and fiscal charges 1,362,338 – – – (1,362,338) (1,580,073)

Total governmental activities 106,982,121$ 7,558,128$ 13,909,704$ –$ (85,514,289) (82,917,330)

General revenuesTaxes

Property taxes, levied for general purposes 21,050,994 9,620,050 Property taxes, levied for community service 883,576 443,538 Property taxes, levied for building construction 3,556,087 2,214,866 Property taxes, levied for debt service 9,524,095 9,618,842

General grants and aids 57,947,379 62,828,789 Other general revenues 1,100,896 1,334,369 Investment earnings 33,423 38,603

Total general revenues 94,096,450 86,099,057

Change in net position 8,582,161 3,181,727

Net position – beginning, as previously reported 66,011,758 62,830,031 Change in accounting principle (57,356,245) – Net position – beginning, restated 8,655,513 62,830,031

Net position – ending 17,237,674$ 66,011,758$


Program Revenues


2015

(With Partial Comparative Information for the Year Ended June 30, 2014)Year Ended June 30, 2015

Statement of Activities

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Capital Projects – Building Debt

General Fund Construction Fund Service Fund

Assets Cash and temporary investments 21,372,720$ 1,489,240$ 6,725,883$ Receivables

Current taxes 13,083,512 – 5,416,544 Delinquent taxes 416,389 – 185,446 Accounts and interest 43,686 25,389 – Due from other governmental units 8,023,671 – 1,042 Due from other funds 1,276,724 – –

Inventory – – – Prepaid items 271,178 – –

Total assets 44,487,880$ 1,514,629$ 12,328,915$

Liabilities

Salaries payable 4,447,219$ –$ –$ Accounts and contracts payable 1,507,659 1,033,425 – Due to other governmental units 383,058 – – Due to other funds – – – Unearned revenue 824,943 – –

Total liabilities 7,162,879 1,033,425 –

Deferred inflows of resourcesProperty taxes levied for subsequent year 23,048,499 – 10,428,521 Unavailable revenue – delinquent taxes 274,788 – 127,506

Total deferred inflows of resources 23,323,287 – 10,556,027

Fund balances (deficits)Nonspendable 271,178 – – Restricted 2,467,558 1,067,917 1,772,888 Assigned 2,125,946 – – Unassigned 9,137,032 (586,713) –

Total fund balances 14,001,714 481,204 1,772,888

Total liabilities, deferred inflows of resources, and fund balances 44,487,880$ 1,514,629$ 12,328,915$



Balance SheetGovernmental Fundsas of June 30, 2015

(With Partial Comparative Information as of June 30, 2014)

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Nonmajor Funds 2015 2014

1,444,941$ 31,032,784$ 34,757,051$

457,284 18,957,340 18,413,837 16,885 618,720 681,892 36,845 105,920 84,044

389,906 8,414,619 7,965,867 – 1,276,724 1,506,266

55,935 55,935 66,391 14,279 285,457 398,666

2,416,075$ 60,747,499$ 63,874,014$

181,011$ 4,628,230$ 4,638,971$ 82,862 2,623,946 2,639,029

8 383,066 456,431 76,724 76,724 6,266

393,987 1,218,930 1,527,887 734,592 8,930,896 9,268,584

880,414 34,357,434 33,210,909 11,544 413,838 703,611

891,958 34,771,272 33,914,520

70,214 341,392 465,057 719,311 6,027,674 9,582,274

– 2,125,946 5,992,778 – 8,550,319 4,650,801

789,525 17,045,331 20,690,910

2,416,075$ 60,747,499$ 63,874,014$

Total Governmental Funds

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2015 2014

17,045,331$ 20,690,910$

Capital assets are included in net position, but are excluded from fund balancesbecause they do not represent financial resources.

Cost of capital assets 148,180,830 141,779,046 Accumulated depreciation (65,941,353) (61,885,230)

Long-term liabilities are included in net position, but are excluded from fundbalances until due and payable. Debt issuance premiums and discounts are excludedfrom net position until amortized, but are included in fund balances upon issuance asother financing sources and uses.

General obligation bonds payable (31,605,000) (39,690,000) Certificates of participation payable (8,570,000) (9,055,000) Unamortized premium/discount (847,879) (1,187,586) Net pension liability – PERA (10,513,003) – Net pension liability – TRA (38,231,979) – Severance benefits payable (1,259,750) (1,254,391) Compensated absences payable (262,813) (229,956)

Net other post-employment benefit obligations reported in the Statement of NetPosition do not require the use of current financial resources and are not reported asassets (liabilities) in governmental funds until actually due. 14,512,857 15,242,418

Accrued interest payable is included in net position, but is excluded from fundbalances until due and payable. (571,858) (688,522)

Internal service funds are used by management to charge the costs of certainactivities to individual funds. The assets and liabilities of the internal service fundsare included in the governmental activities in the Statement of Net Position. 2,346,513 1,586,458

Certain expenses (including pension plan deferments – PERA and TRA) are includedin net position, but are excluded from fund balances as they represent long-termfunding obligations. (7,458,060) –

Certain revenues (including delinquent property taxes) are included in net position,but are excluded from fund balances until they are available to liquidate liabilities ofthe current period. 413,838 703,611

17,237,674$ 66,011,758$


Reconciliation of the Balance Sheet to the


as of June 30, 2015

Total net position – governmental activities

Total fund balances – governmental funds

Amounts reported for governmental activities in the Statement of Net Position aredifferent because:

(With Partial Comparative Information as of June 30, 2014)

Governmental FundsStatement of Net Position

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Capital Projects –Building Debt

General Fund Construction Fund Service Fund

Revenue Local sources

Property taxes 21,228,874$ 3,556,087$ 9,626,968$ Investment earnings 19,205 1,503 6,404 Other 2,977,987 – –

State sources 67,033,607 – 10,402 Federal sources 2,868,056 – –

Total revenue 94,127,729 3,557,590 9,643,774

ExpendituresCurrent

Administration 3,315,207 – – District support services 2,799,843 – – Elementary and secondary regular instruction 44,369,591 – – Vocational education instruction 1,118,757 – – Special education instruction 16,053,961 – – Instructional support services 6,006,701 – – Pupil support services 9,466,764 – – Sites and buildings 8,515,322 – – Fiscal and other fixed cost programs 188,265 – – Food service – – – Community service – – –

Capital outlay – 8,336,541 627,574 Debt service

Principal 485,000 – 8,085,000 Interest and fiscal charges 337,638 – 1,481,071

Total expenditures 92,657,049 8,336,541 10,193,645

Excess (deficiency) of revenue over expenditures 1,470,680 (4,778,951) (549,871)

Other financing sources (uses)Debt issued – – – Premium on debt issued – – – Sale of capital assets 7,013 – – Transfers in – – 453,548 Transfers out (453,548) – –

Total other financing sources (uses) (446,535) – 453,548

Net change in fund balances 1,024,145 (4,778,951) (96,323)

Fund balancesBeginning of year 12,977,569 5,260,155 1,869,211

End of year 14,001,714$ 481,204$ 1,772,888$


Statement of Revenue, Expenditures, and Changes in Fund Balances


Year Ended June 30, 2015Governmental Funds

(With Partial Comparative Information for the Year Ended June 30, 2014)

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Nonmajor Funds 2015 2014

892,596$ 35,304,525$ 21,663,695$ 1,627 28,739 35,494

5,681,037 8,659,024 9,180,909 734,726 67,778,735 72,763,704

1,092,961 3,961,017 3,831,903 8,402,947 115,732,040 107,475,705

– 3,315,207 3,221,578 – 2,799,843 3,276,874 – 44,369,591 44,249,081 – 1,118,757 897,800 – 16,053,961 15,696,438 – 6,006,701 5,333,225 – 9,466,764 9,436,480 – 8,515,322 8,386,809 – 188,265 274,552

3,730,236 3,730,236 3,824,528 4,418,275 4,418,275 4,035,871

49,086 9,013,201 4,257,222

– 8,570,000 7,875,000 – 1,818,709 2,022,272

8,197,597 119,384,832 112,787,730

205,350 (3,652,792) (5,312,025)

– – 3,360,000 – – 96,586

200 7,213 10,506 – 453,548 – – (453,548) –

200 7,213 3,467,092

205,550 (3,645,579) (1,844,933)

583,975 20,690,910 22,535,843

789,525$ 17,045,331$ 20,690,910$

Total Governmental Funds

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2015 2014

Total net change in fund balances – governmental funds (3,645,579)$ (1,844,933)$

Capital outlays are recorded as net position and the cost is allocated over their estimated useful lives asdepreciation expense. However, fund balances are reduced for the full cost of capital outlays at the time ofpurchase.

Capital outlays 6,452,387 2,981,505 Depreciation expense (4,102,076) (3,923,704)

A gain or loss on the disposal of capital assets, including the difference between the carrying value and anyrelated sale proceeds, is included in the change in net position. However, only the sale proceeds are included inthe change in fund balances. (4,650) (102,656)

The amount of debt issued is reported in the governmental funds as a source of financing. Debt obligations arenot revenues in the Statement of Activities, but rather constitute long-term liabilities.

General obligation bonds payable – (3,360,000)

Repayment of long-term debt does not affect the change in net position. However, it reduces fund balances. General obligation bonds payable 8,085,000 7,400,000 Certificates of participation payable 485,000 475,000

Interest on long-term debt is included in the change in net position as it accrues, regardless of when payment isdue. However, it is included in the change in fund balances when due. 116,664 89,263

Debt issuance premiums and discounts are included in the change in net position as they are amortized over thelife of the debt. However, they are included in the change in fund balances upon issuance as other financingsources and uses. 339,707 256,350

Certain expenses are included in the change in net position, but do not require the use of current funds, and arenot included in the change in fund balances.

Net pension liability – PERA 1,670,835 – Net pension liability – TRA 10,443,276 – Severance benefits payable (5,359) 316,548 Compensated absences payable (32,857) 239 Net OPEB obligation (729,561) (721,902)

Internal service funds are used by management to charge the costs of certain activities to individual funds. Thechange in net position of the internal service funds is included in the governmental activities in the Statement ofActivities. 760,055 1,382,416

Certain expenses (including pension plan deferments – PERA and TRA) are included in the change in netposition, but are excluded from the change in fund balances as they represent long-term funding obligations. (10,960,908) –

Certain revenues (including delinquent property taxes) are included in the change in net position, but areexcluded from the change in fund balances until they are available to liquidate liabilities of the current period. (289,773) 233,601

Change in net position – governmental activities 8,582,161$ 3,181,727$


Revenue, Expenditures, and Changes in Fund BalancesReconciliation of the Statement of


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

(With Partial Comparative Information for the Year Ended June 30, 2014)Year Ended June 30, 2015

Governmental Fundsto the Statement of Activities

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Over (Under)Original Final Actual Final Budget

Revenue Local sources

Property taxes 21,397,050$ 21,245,606$ 21,228,874$ (16,732)$ Investment earnings 20,000 20,000 19,205 (795) Other 3,409,883 3,657,988 2,977,987 (680,001)

State sources 65,116,139 65,916,334 67,033,607 1,117,273 Federal sources 3,448,984 2,998,890 2,868,056 (130,834)

Total revenue 93,392,056 93,838,818 94,127,729 288,911

ExpendituresCurrent

Administration 3,426,753 3,328,158 3,315,207 (12,951) District support services 3,772,697 3,589,259 2,799,843 (789,416) Elementary and secondary regular instruction 45,786,845 45,532,513 44,369,591 (1,162,922) Vocational education instruction 901,989 1,113,001 1,118,757 5,756 Special education instruction 16,654,444 16,390,481 16,053,961 (336,520) Instructional support services 6,598,623 6,211,278 6,006,701 (204,577) Pupil support services 9,767,233 9,570,168 9,466,764 (103,404) Sites and buildings 8,677,736 8,555,154 8,515,322 (39,832) Fiscal and other fixed cost programs 288,565 255,000 188,265 (66,735)

Debt servicePrincipal 485,000 485,000 485,000 – Interest and fiscal charges 337,638 337,638 337,638 –

Total expenditures 96,697,523 95,367,650 92,657,049 (2,710,601)

Excess (deficiency) of revenue over expenditures (3,305,467) (1,528,832) 1,470,680 2,999,512

Other financing sources (uses)Sale of capital assets – 6,000 7,013 1,013 Transfers out – (453,548) (453,548) –

Total other financing sources (uses) – (447,548) (446,535) 1,013

Net change in fund balances (3,305,467)$ (1,976,380)$ 1,024,145 3,000,525$

Fund balancesBeginning of year 12,977,569

End of year 14,001,714$



Budgeted Amounts

Year Ended June 30, 2015General Fund

Statement of Revenue, Expenditures, and Changes in Fund BalancesBudget and Actual

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2015 2014Assets

Current assetsCash and temporary investments 4,932,743$ 4,777,363$ Receivables

Accounts and interest 37,181 38,039 Total assets 4,969,924 4,815,402

LiabilitiesCurrent liabilities

Accounts and contracts payable 347,239 513,877 Unearned revenue 1,410,857 1,594,758 Claims incurred, but not reported 865,315 1,120,309

Total current liabilities 2,623,411 3,228,944

Net positionUnrestricted 2,346,513$ 1,586,458$



Statement of Net PositionInternal Service Funds

as of June 30, 2015(With Partial Comparative Information as of June 30, 2014)

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2015 2014

Operating revenueCharges for services

Contributions from governmental funds 15,747,052$ 15,498,018$

Operating expensesHealth benefit claims 14,119,837 13,344,352 Dental benefit claims 871,844 774,359

Total operating expenses 14,991,681 14,118,711

Operating income 755,371 1,379,307

Nonoperating revenueInvestment earnings 4,684 3,109

Change in net position 760,055 1,382,416

Net positionBeginning of year 1,586,458 204,042

End of year 2,346,513$ 1,586,458$




Statement of Revenue, Expenses, and Changes in Fund Net PositionInternal Service Funds


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2015 2014

Cash flows from operating activitiesContributions from governmental funds 15,564,009$ 15,599,088$ Payment for health claims (14,543,600) (12,953,755) Payment for dental claims (869,713) (767,516)

Net cash flows from operating activities 150,696 1,877,817

Cash flows from investing activitiesInvestment income received 4,684 3,109

Net change in cash and cash equivalents 155,380 1,880,926

Cash and cash equivalentsBeginning of year 4,777,363 2,896,437

End of year 4,932,743$ 4,777,363$

Reconciliation of operating income to net cash flows from operating activities

Operating income 755,371$ 1,379,307$ Adjustments to reconcile operating income to net cash flows from operating activities

Changes in assets and liabilitiesAccounts receivable 858 41,100 Accounts and contracts payable (166,638) 467,747 Unearned revenue (183,901) 59,970 Claims incurred but not reported (254,994) (70,307)

Net cash flows from operating activities 150,696$ 1,877,817$




Statement of Cash FlowsInternal Service Funds


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Post-EmploymentBenefits Private-Purpose

Trust Fund Trust Fund

AssetsCash and temporary investments 2,551,299$ 179,507$ Receivables

Accounts and interest 88,433 – Investments, at fair value

Local government bonds 4,608,908 – Negotiable certificates of deposit 1,989,959 – Mutual funds 2,905,305 –

Total assets 12,143,904 179,507

LiabilitiesDue to governmental funds 1,200,000 –

Net positionHeld in trust for employee benefits and scholarships 10,943,904$ 179,507$

Post-EmploymentBenefits Private-Purpose

Trust Fund Trust Fund

AdditionsContributions

Private donations –$ 22,433$ Employer 1,035,371 – Employee 299,755 –

Investment earnings 182,468 – Total additions 1,517,594 22,433

DeductionsScholarships and other deductions – 31,580 Benefits 2,535,126 –

Total deductions 2,535,126 31,580

Change in net position (1,017,532) (9,147)

Net positionBeginning of year 11,961,436 188,654

End of year 10,943,904$ 179,507$




Statement of Fiduciary Net Positionas of June 30, 2015

Statement of Changes in Fiduciary Net Position

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Notes to Basic Financial Statements as of June 30, 2015

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Organization Independent School District No. 834 (the District) was formed and operates pursuant to applicable Minnesota laws and statutes. A School Board elected by the voters of the District governs the District. The District’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. B. Reporting Entity The accompanying financial statements include all funds, departments, agencies, boards, commissions, and other organizations that comprise the District, along with any component units. Component units are legally separate entities for which the District (primary government) is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit includes whether or not the primary government appoints the voting majority of the potential component unit’s governing body, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. Based on these criteria, there are no organizations considered to be component units of the District. Joint Venture – The District participates in a joint venture to govern the administration, financing, and operation of a joint elementary school known as Valley Crossing Elementary School (the Joint School). The Joint School was established through a joint powers agreement entered into on October 18, 1994, and amended in July 1995 with the District, Independent School District (ISD) No. 622, ISD No. 833 (the participating Independent Districts), and Northeast Metropolitan Intermediate School District No. 916 (the Intermediate District) pursuant to applicable Minnesota Statutes. The participating Independent Districts establish policies and take steps to ensure that a sufficient number of pupils from each of the three participating Independent Districts will be enrolled in the Joint School and will also provide advice and assistance to the Intermediate District (which is responsible for the operations of the Joint School). The participating Independent Districts pay tuition equal to aids paid by the state and all local tax levies received by the districts, based on their individual share of the pupils attending the Joint School. The District does not hold an explicit, measurable equity interest in the Joint School. If the Joint School or its contents were to be sold, the remaining net sale proceeds would be distributed among the participating Independent Districts based on the ratio of leasing levies, capital expenditures revenue-related tuition, and continuing capital costs paid by each. Following is selected summary information for the Joint School obtained from the Intermediate District. Additional detailed information may be obtained by contacting the Intermediate District.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) As part of the joint powers agreement covering the construction and operation of the Joint School, the District is committed to levy its proportionate share of lease costs necessary to repay $18,000,000 of bonds issued during fiscal 1995–1996 to fund construction of the Joint School, with scheduled payments through 2016. A calculation is performed to determine each participating member district’s proportionate share of the required lease levy based on each district’s number of pupils attending the school. The District’s share of the total debt service requirement on these bonds for fiscal 2014–2015 is $627,574, out of a total commitment of $1,437,425 for the three participating school districts. Total operating revenues and respective enrollments for the Joint School for fiscal 2014–2015 as reported by the Intermediate District were as follows:

ISD No. 834 ISD No. 833 ISD No. 622 Total

Total funding by district 2,541,318$ 2,004,635$ 591,438$ 5,137,391$

Enrollment Kindergarten 55 48 13 116 Grades 1–6 275 225 73 573

Total pupils or average daily membership 330 273 86 689

Total weighted average daily membership 330 273 86 689

The following information for the Joint School is from the audited financial statements of the Intermediate District for the year ended June 30, 2014, the most recent financial statements available:

Community Debt Long-TermGeneral Fund Service Fund Service Fund Capital Assets Debt

Assets 2,283,335$ –$ 181,424$ 17,490,874$ –$ Liabilities 1,053,103$ –$ 63,713$ –$ 2,695,000$ Fund balances 1,230,232$ 654$ 117,711$ –$ –$ Revenue 6,125,757$ 446$ 1,435,813$ –$ –$ Expenditures 6,229,405$ 311$ 1,435,813$ –$ –$

Extracurricular Student Activities – Extracurricular student activities are determined primarily by student participants under the guidance of an adult and are generally conducted outside of school hours. In accordance with Minnesota Statutes, district school boards can elect to either control or not control extracurricular student activities. The District’s School Board has elected not to control or be otherwise financially accountable with respect to the underlying extracurricular activities. Accordingly, the extracurricular student activity accounts are not included in the District’s basic financial statements. C. Government-Wide Financial Statement Presentation The government-wide financial statements (Statement of Net Position and Statement of Activities) display information about the reporting government as a whole. These statements include all the financial activities of the District, except for the fiduciary funds. Generally, the effect of material interfund activity has been removed from the government-wide financial statements.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other internally directed revenues are reported instead as general revenues. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are generally recognized as revenues in the fiscal year for which they are levied, except for amounts advance recognized in accordance with a statutory “tax shift” described later in these notes. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. Depreciation expense is included as a direct expense in the functional areas that utilize the related capital assets. Interest on debt is considered an indirect expense and is reported separately on the Statement of Activities. D. Fund Financial Statement Presentation Separate fund financial statements are provided for governmental, proprietary, and fiduciary funds. Major individual governmental funds are reported as separate columns in the fund financial statements. Aggregated information for the remaining nonmajor governmental funds is reported in a single column in the fund financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this basis of accounting transactions are recorded in the following manner:

1. Revenue Recognition – Revenue is recognized when it becomes measurable and available. “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the District generally considers revenues, including property taxes, to be available if they are collected within 60 days after year-end. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. State revenue is recognized in the year to which it applies according to funding formulas established by Minnesota Statutes. Proceeds of long-term debt and acquisitions under capital leases are reported as other financing sources.

2. Recording of Expenditures – Expenditures are generally recorded when a liability is incurred,

except for principal and interest on long-term debt and other long-term liabilities, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as capital outlay expenditures in the governmental funds. In the General Fund, capital outlay expenditures are included within the applicable functional areas.

Internal service funds are presented in the proprietary fund financial statements. Because the principal users of the internal services are the District’s governmental activities, the internal service funds are consolidated into the governmental activities column when presented in the government-wide financial statements. The cost of these services is reported in the appropriate functional activity.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenue of the District’s internal service funds are charges to customers (other district funds) for service. Operating expenses for the internal service funds include the cost of providing the services. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Fiduciary funds are presented in the fiduciary fund financial statements by type: pension (or other benefit) trust and private-purpose trust. Since, by definition, fiduciary fund assets are being held for the benefit of a third party and cannot be used for activities or obligations of the District, these funds are excluded from the government-wide financial statements. Proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting as described earlier in these notes. Description of Funds The existence of the various district funds has been established by the Minnesota Department of Education. Each fund is accounted for as an independent entity. Descriptions of the funds included in this report are as follows: Major Governmental Funds

General Fund – The General Fund is used to account for all financial resources except those required to be accounted for in another fund.

Capital Projects – Building Construction Fund – The Capital Projects – Building Construction Fund is used to account for financial resources used for the acquisition or construction of major capital facilities authorized by bond issue or under the alternative facilities program.

Debt Service Fund – The Debt Service Fund is used to account for the accumulation of resources for, and payment of general obligation debt principal, interest, and related costs. The regular debt service account is used for all general obligation debt service except for the financial activities of the other post-employment benefits (OPEB) debt service account. The OPEB debt service account is used for the 2009 taxable OPEB bond issue.

Nonmajor Governmental Funds

Food Service Special Revenue Fund – The Food Service Special Revenue Fund is primarily used to account for the District’s child nutrition program. Community Service Special Revenue Fund – The Community Service Special Revenue Fund is used to account for services provided to residents in the areas of recreation, civic activities, nonpublic pupils, adult or early childhood programs, or other similar services.

Proprietary Funds

Internal Service Funds – Internal service funds account for the financing of goods or services provided by one department to other departments or agencies of the District, or to other governments, on a cost-reimbursement basis. The District’s internal service funds are used to account for dental and health insurance benefits offered by the District to its employees as a self-insured plan.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fiduciary Funds

Post-Employment Benefits Trust Fund – The Post-Employment Benefits Trust Fund is used to administer resources received and held by the District as the trustee for others. The Post-Employment Benefits Trust Fund includes assets held in an irrevocable trust to fund post-employment insurance benefits of eligible employees.

Private-Purpose Trust Fund – The Private-Purpose Trust Fund is used to account for resources held in trust to award scholarships to former students.

E. Budgetary Information Each June, the School Board adopts an annual budget for the following fiscal year for all governmental funds. The budget for each fund is prepared on the same basis of accounting as the fund financial statements. Legal budgetary control is at the fund level. Budgeted appropriations lapse at year-end. F. Cash and Temporary Investments Cash and temporary investments include balances from all funds that are combined and invested to the extent available in various securities as authorized by state law. Earnings from the pooled investments are allocated to the respective funds on the basis of applicable cash balance participation by each fund. Bond proceeds recorded in the Capital Projects – Building Construction Fund are not pooled, and earnings on these proceeds are allocated directly to the fund. Cash and investments held by trustee include balances held in segregated accounts that are established for specific purposes. In the Post-Employment Benefits Trust Fund, this represents assets contributed to an irrevocable trust established to finance the District’s liability for post-employment insurance benefits. Interest earned on these investments is allocated directly to the escrow accounts. For purposes of the Statement of Cash Flows, the District considers all highly liquid debt instruments with an original maturity from the time of purchase by the District of three months or less to be cash equivalent. The proprietary fund’s equity in the government-wide cash and investment management pool is considered to be cash equivalent. Investments are generally stated at fair value, except for investments in 2a7-like external investment pools, which are stated at amortized cost. Short-term, highly liquid debt instruments (including commercial paper, bankers’ acceptance, and U.S. treasury and agency obligations) purchased with a remaining maturity of one year or less are also reported at amortized cost. Investment income is accrued at the Balance Sheet date. G. Receivables When necessary, the District utilizes an allowance for uncollectible accounts to value its receivables. However, the District considers all of its current receivables to be collectible. The only receivables not expected to be fully collected within one year are delinquent property taxes receivable.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) At June 30, 2015, the District reported the following receivables due from other governmental units:

Due from the Minnesota Department of Education 7,904,798$ Due from other Minnesota school districts 318,425 Due from Washington County 134,625 Due from Technology and Information Education Services (TIES) 56,771

Total due from other governmental units 8,414,619$

H. Inventories Inventories are recorded using the consumption method of accounting and consist of purchased food, supplies, and surplus commodities received from the federal government. Food and supply purchases are recorded at invoice cost, computed on a first-in, first-out method. Surplus commodities are stated at standardized costs, as determined by the U.S. Department of Agriculture. I. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. Prepaid items are recorded as expenditures/expenses at the time of consumption. J. Property Taxes The majority of the District’s revenue in the General Fund is determined annually by statutory funding formulas. The total revenue allowed by these formulas is allocated between property taxes and state aids by the Legislature based on education funding priorities. Generally, property taxes are recognized as revenue by the District in the fiscal year that begins midway through the calendar year in which the tax levy is collectible. To help balance the state budget, the Minnesota Legislature utilizes a tool referred to as the “tax shift,” which periodically changes the District’s recognition of property tax revenue. The tax shift advance recognizes cash collected for the subsequent year’s levy as current year revenue, allowing the state to reduce the amount of aid paid to the District. Currently, the mandated tax shift recognizes $2,085,869 of the property tax levy collectible in 2015 as revenue to the District in fiscal year 2014–2015. The remaining portion of the taxes collectible in 2015 is recorded as a deferred inflow of resources (property taxes levied for subsequent year). Property tax levies are certified to the County Auditor in December of each year for collection from taxpayers in May and October of the following calendar year. In Minnesota, counties act as collection agents for all property taxes. The county spreads all levies over taxable property. Such taxes become a lien on property on the following January 1. The county generally remits taxes to the District at periodic intervals as they are collected. Taxes that remain unpaid are classified as delinquent taxes receivable. Revenue from these delinquent property taxes that is not collected within 60 days of year-end is reported as a deferred inflow of resources (unavailable revenue) in the fund financial statements because it is not known to be available to finance the operations of the District.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K. Capital Assets Capital assets that are purchased or constructed by the District are recorded at historical cost or estimated historical cost. Donated capital assets are recorded at their estimated fair value at the date of donation. The District defines capital assets as those with an initial, individual cost of $3,000 or more, which benefit more than one fiscal year. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Beginning in fiscal year 2015–2016, the District will use a $5,000 capitalization amount. Capital assets are recorded in the government-wide financial statements, but are not reported in the governmental fund financial statements. Capital assets are depreciated using the straight-line method over their estimated useful lives. Since surplus assets are generally sold for an immaterial amount or scrapped when declared as no longer fit or needed for public school purpose by the District, no salvage value is taken into consideration for depreciation purposes. Useful lives vary from 20 to 50 years for land improvements and buildings and 5 to 20 years for furniture and equipment. Land and construction in progress are not depreciated. The District does not possess material amounts of infrastructure capital assets, such as sidewalks or parking lots. Such items are considered to be part of the cost of buildings or other improvable property. L. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. If material, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums or discounts on debt issuances are reported as other financing sources or uses, respectively. M. Compensated Absences Under the terms of collectively bargained contracts, eligible employees accrue vacation and sick leave at varying rates, portions of which may be carried over to future years. Employees are reimbursed for unused, accrued vacation to the limit specified in their labor contract or School Board policy upon termination. Unused sick leave enters into the calculation of severance benefits for some employees upon termination. Compensated absences are accrued in the governmental fund statements only to the extent they have been used or otherwise matured prior to year-end. Unused vacation is accrued as it is earned in the government-wide financial statements. N. Severance Benefits The District provides lump sum severance benefits to eligible employees in accordance with provisions in certain collectively bargained contracts. Eligibility for these benefits is based on years of service and/or minimum age requirements. Severance benefits are calculated by converting a portion of an eligible employee’s unused accumulated sick leave. No individual can receive severance benefits in excess of one year’s salary. Members of certain employee groups may elect to receive district matching contributions paid into tax deferred matching contribution plans. Retirement benefits for certain employee groups are paid into a post-employment tax sheltered annuity account.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Severance payable and the District’s share of related benefits are recorded as a liability in the government-wide financial statements as it is earned and it becomes probable that it will vest at some point in the future. Severance pay is accrued in the governmental fund financial statements when the liability matures due to employee termination. O. Pensions For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and Teachers Retirement Association (TRA) and additions to/deductions from the PERA’s and the TRA’s fiduciary net positions have been determined on the same basis as they are reported by the PERA and the TRA. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. The TRA has a special funding situation created by direct aid contributions made by the state of Minnesota, City of Minneapolis, and Special School District No. 1, Minneapolis Public Schools. The direct aid is a result of the merger of the Minneapolis Teachers Retirement Fund Association into the TRA in 2006. P. Risk Management and Self-Insurance

1. General Insurance – The District is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets; errors and omissions; natural disasters; and workers’ compensation for which the District carries commercial insurance. Settled claims have not exceeded this commercial coverage in any of the past three fiscal years. There were no significant reductions in the District’s insurance coverage in fiscal year 2015.

2. Self-Insurance – The District has established two internal service funds to account for and finance its self-insured risk of loss for respective employee dental and health insurance plans. Under these plans, the internal service funds provide coverage to participating employees and their dependents for various dental and healthcare costs as described in the plans. The District makes premium payments that include both employer and employee contributions to the internal service funds on behalf of program participants based on rates determined by insurance company estimates of monthly claims paid for each coverage class, plus the stop-loss health insurance premium costs and administrative service charges. District claim 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 actual claim liabilities depend on complex factors such as inflation, changes in legal doctrines, and damage awards, the process used in computing a claim liability does not necessarily result in an exact amount. Claim liabilities are evaluated periodically to take into consideration recently settled claims, the frequency of claims, and other economic and social factors.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Changes in the balance of dental claim liabilities for the last two years were as follows:

Balance Charges andBeginning Changes Claim Balance

of Year in Estimates Payments End of Year

2014 15,236$ 774,359$ 774,872$ 14,723$ 2015 14,723$ 871,844$ 870,341$ 16,226$

Changes in the balance of health insurance claim liabilities for the last two years were as follows:

Balance Charges andBeginning Changes Claim Balance

of Year in Estimates Payments End of Year

2014 1,175,380$ 13,344,352$ 13,414,146$ 1,105,586$ 2015 1,105,586$ 14,119,837$ 14,376,334$ 849,089$

Q. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until then. The District only has one item that qualifies for reporting in this category. It is the deferred outflows of resources related to pensions reported in the government-wide Statement of Net Position. This deferred outflow results from differences between expected and actual experience, changes of assumptions, difference between projected and actual earnings on pension plan investments, and from contributions to the plan subsequent to the measurement date and before the end of the reporting period. These amounts are deferred and amortized as required under pension standards. In addition to liabilities, statements of financial position or balance sheets will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The District has three items which qualify for reporting in this category. The first item is property taxes levied for subsequent years, which represent property taxes received or reported as a receivable before the period for which the taxes are levied, and is reported as a deferred inflow of resources in both the government-wide Statement of Net Position and the governmental funds Balance Sheet. Property taxes levied for subsequent years are deferred and recognized as an inflow of resources in the government-wide financial statements in the year for which they are levied and in the governmental fund financial statements during the year for which they are levied, if available. The second item, unavailable revenue from property taxes, arises under a modified accrual basis of accounting and is reported only in the governmental funds Balance Sheet. Delinquent property taxes not collected within 60 days of year-end are deferred and recognized as an inflow of resources in the governmental funds in the period the amounts become available.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The third item, deferred inflows of resources related to pensions, is reported in the government-wide Statement of Net Position. This deferred inflow results from differences between expected and actual experience, changes of assumptions, and difference between projected and actual earnings on pension plan investments. These amounts are deferred and amortized as required under pension standards. R. Net Position In the government-wide and internal service fund financial statements, net position represents the difference between assets, deferred outflows of resources, liabilities, and deferred inflows of resources. Net position is displayed in three components:

Net Investment in Capital Assets – Consists of capital assets, net of accumulated depreciation, reduced by any outstanding debt attributable to acquire capital assets.

Restricted Net Position – Consists of net position restricted when there are limitations imposed

on their use through external restrictions imposed by creditors, grantors, or laws or regulations of other governments.

Unrestricted Net Position – All other net position that does not meet the definition of

“restricted” or “net investment in capital assets.” The District applies restricted resources first when an expense is incurred for which both restricted and unrestricted resources are available. S. Fund Balance Classifications In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows:

Nonspendable – Consists of amounts that are not in spendable form, such as prepaid items, inventory, and other long-term assets.

Restricted – Consists of amounts related to externally imposed constraints established by creditors, grantors, or contributors; or constraints imposed by state statutory provisions.

Committed – Consists of internally imposed constraints that are established by resolution of the School Board. Those committed amounts cannot be used for any other purpose unless the School Board removes or changes the specified use by taking the same type of action it employed to previously commit those amounts.

Assigned – Consists of internally imposed constraints. These constraints consist of amounts intended to be used by the District for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds, assigned amounts represent intended uses established by the governing body itself or by an official to which the governing body delegates the authority. Pursuant to School Board resolution, the District’s Superintendent and Director of Finance are authorized to establish assignments of fund balance.

Unassigned – The residual classification for the General Fund which also reflects negative

residual amounts in other funds.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) When both restricted and unrestricted resources are available for use, it is the District’s policy to first use restricted resources, then use unrestricted resources as they are needed. When committed, assigned, or unassigned resources are available for use, it is the District’s policy to use resources in the following order: 1) committed, 2) assigned, and 3) unassigned. T. Use of Estimates The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenditures/expenses during the reporting period. Actual results could differ from those estimates. U. Prior Period Comparative Financial Information/Reclassification The basic financial statements include certain prior year partial comparative information in total but not at the level of detail required for a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the District’s financial statements for the year ended June 30, 2014, from which the summarized information was derived. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year’s presentation. V. Change in Accounting Principles During the year ended June 30, 2015, the District implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27. GASB Statement No. 68 included major changes in how employers account for pension benefit expenses and liabilities. In financial statements prepared using the economic resources measurement focus and accrual basis of accounting (government-wide and proprietary funds), an employer is required to recognize a liability for its share of the net pension liability provided through the pension plan. An employer is required to recognize pension expense and report deferred outflows of resources and deferred inflows of resources for its share related to pensions. This standard required retroactive implementation, which resulted in the restatement of net position as of June 30 2014. The net position of governmental activities in the government-wide statements as of June 30, 2014 was decreased by $57,356,245. This change reflects the District’s proportionate share of the net pension liabilities ($60,859,093 decrease in net position) and related deferred outflows of resources ($3,502,848 increase in net position) for the PERA and TRA pension plans, which are now reported by employers under current guidance. Certain amounts necessary to fully restate fiscal year 2014 financial information are not determinable; therefore, prior year comparative amounts have not been restated.

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NOTE 2 – DEPOSITS AND INVESTMENTS A. Components of Cash and Investments Cash and investments at year-end consist of the following:

Deposits 15,481,380$ Investments 32,719,125

Total 48,200,505$

Cash and investments are presented in the financial statements as follows:

Statement of Net PositionCash and temporary investments 35,965,527$

Statement of Fiduciary Net PositionCash and temporary investments

Post-Employment Benefits Trust Fund 2,551,299 Private-Purpose Trust Fund 179,507

InvestmentsPost-Employment Benefits Trust Fund 9,504,172

Total 48,200,505$

B. Deposits In accordance with applicable Minnesota Statutes, the District maintains deposits at depository banks authorized by the School Board, including checking accounts, savings accounts, and non-negotiable certificates of deposit.

The following is considered the most significant risk associated with deposits:

Custodial Credit Risk – In the case of deposits, this is the risk that in the event of a bank failure, the District’s deposits may be lost. Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury bills, notes, and bonds; issues of U.S. government agencies; general obligations rated “A” or better; revenue obligations rated “AA” or better; irrevocable standard letters of credit issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. The District’s deposit policies do not further limit depository choices.

At year-end, the carrying amount of the District’s deposits was $15,481,380 while the balance on the bank records was $16,175,782. At June 30, 2015, all deposits were fully covered by federal depository insurance, surety bonds, or by collateral held by the District’s agent in the District’s name.

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NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED) C. Investments The District has the following investments at year-end:

Investment Type Rating Agency Less Than 1 1 to 5 Total

Local government bonds AAA S&P 1,474,853$ –$ 1,474,853$ Local government bonds AA S&P –$ 575,461$ 575,461 Local government bonds AA Moody’s 271,556$ 2,287,038$ 2,558,594 Negotiable certificates of deposit N/A N/A 1,241,763$ 1,245,184$ 2,486,947 Investment pools/mutual funds

Minnesota Trust Investment Shares Portfolio AAA S&P 20,422,143 Minnesota Trust Term Series AAA S&P 4,000,000 Goldman Sachs Financial Square Prime Obligations AAA S&P 18,449 Vanguard Total Stock Market ETF N/R N/A 1,182,678

Total investments 32,719,125$

N/A – Not Applicable

Interest Risk – Maturity Duration in YearsCredit Risk

N/R – Not Rated The Minnesota Trust Investment Shares Portfolio is regulated by Minnesota Statutes and is an external investment pool which is not registered with the Securities Exchange Commission (SEC) that follows the same regulatory rules of the SEC under rule 2a7. The District’s investment in this trust is measured at the net asset value per share provided by the pool, which is based on an amortized cost method that approximates fair value. Investments are subject to various risks, the following of which are considered the most significant:

Custodial Credit Risk – For investments, this is the risk that in the event of a failure of the counterparty to an investment transaction (typically a broker-dealer) the District would not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Although the District’s investment policies do not directly address custodial credit risk, it typically limits its exposure by purchasing insured or registered investments, or by the control of who holds the securities. Credit Risk – This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limit the District’s investments to direct obligations or obligations guaranteed by the United States or its agencies; shares of investment companies registered under the Federal Investment Company Act of 1940 that receive the highest credit rating, are rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a final maturity of 13 months or less; general obligations rated “A” or better; revenue obligations rated “AA” or better; general obligations of the Minnesota Housing Finance Agency rated “A” or better; bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System; commercial paper issued by United States corporations or their Canadian subsidiaries, rated of the highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank, domestic branch of a foreign bank, or a United States insurance company, and with a credit quality in one of the top two highest categories; repurchase or reverse purchase agreements and securities lending agreements with financial institutions qualified as a “depository” by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; that are a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; or certain Minnesota securities broker-dealers. For assets held in the Post-Employment Benefits Trust Fund, the investment options available to the District are expanded to include the investment types specified in Minnesota Statute § 356A.06, Subd. 7. The District’s investment policies do not further restrict investing in specific financial instruments.

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NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED)

Concentration Risk – This is the risk associated with investing a significant portion of the District’s investments (considered 5 percent or more) in the securities of a single issuer, excluding U.S. guaranteed investments (such as treasuries), investment pools, and mutual funds. The District’s investment policies do not address concentration risk. Interest Rate Risk – This is the risk of potential variability in the fair value of fixed rate investments resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). The District’s investment policies do not limit the maturities of investments; however, when purchasing investments the District considers such things as interest rates and cash flow needs.

NOTE 3 – CAPITAL ASSETS Capital assets activity for the year ended June 30, 2015 is as follows:

Balance –Beginning Completed Balance –

of Year Additions Deletions Construction End of Year

Capital assets, not depreciatedLand 3,994,902$ –$ –$ –$ 3,994,902$ Construction in progress 1,170,156 5,964,006 – (6,026,530) 1,107,632

Total capital assets, not depreciated 5,165,058 5,964,006 – (6,026,530) 5,102,534

Capital assets, depreciatedLand improvements 10,462,403 76,234 – 289,967 10,828,604 Buildings 116,618,772 34,184 – 5,363,812 122,016,768 Furniture and equipment 9,532,813 377,963 (50,603) 372,751 10,232,924

Total capital assets, depreciated 136,613,988 488,381 (50,603) 6,026,530 143,078,296

Less accumulated depreciation forLand improvements (5,987,269) (355,501) – – (6,342,770) Buildings (48,899,679) (3,221,116) – – (52,120,795) Furniture and equipment (6,998,282) (525,459) 45,953 – (7,477,788)

Total accumulated depreciation (61,885,230) (4,102,076) 45,953 – (65,941,353)

Net capital assets, depreciated 74,728,758 (3,613,695) (4,650) 6,026,530 77,136,943

Total capital assets, net 79,893,816$ 2,350,311$ (4,650)$ –$ 82,239,477$

Depreciation expense for the year was charged to the following governmental functions:

Administration 160,801$ District support services 114,448 Elementary and secondary regular instruction 1,787,275 Vocational education instruction 45,533 Special education instruction 654,691 Instructional support services 243,663 Pupil support services 385,185 Sites and buildings 379,032 Food service 150,546 Community service 180,902

Total depreciation expense 4,102,076$

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NOTE 4 – LONG-TERM LIABILITIES A. General Obligation Bonds Payable The District currently has the following general obligation bonds payable outstanding:

Interest Final PrincipalIssue Issue Date Rate Face/Par Value Maturity Outstanding

General obligation bonds payableSchool building refunding bonds 02/17/2009 1.50–3.50% 18,805,000$ 02/01/2017 5,555,000$ Taxable OPEB bonds 02/17/2009 2.05–4.90% 19,155,000 03/01/2019 15,240,000 School building refunding bonds 09/30/2010 2.65–4.00% 4,630,000 02/01/2022 3,420,000 Alternate facilities refunding bonds 03/27/2012 3.00% 11,815,000 02/01/2016 4,455,000 Capital facilities bond 03/01/2014 2.00% 3,360,000 02/01/2022 2,935,000

Total general obligation bonds payable 31,605,000$

These bonds were issued to finance acquisition, construction, and/or improvements of capital facilities, to finance the retirement (refunding) of prior bond issues, or to finance OPEB obligations. Assets of the Debt Service Fund, together with scheduled future ad valorem tax levies, are dedicated for the retirement of these bonds. The annual future debt service levies authorized equal 105 percent of the principal and interest due each year. These levies are subject to reduction if fund balance amounts exceed limitations imposed by Minnesota law.

B. Certificates of Participation Payable

Interest Final PrincipalIssue Issue Date Rate Face/Par Value Maturity Outstanding

2011A Certificates of Participation 06/16/2011 2.00–5.00% 10,000,000$ 02/01/2029 8,570,000$ In June 2011, the District sold $10,000,000 of certificates of participation under Minnesota Statute § 123B.51 to finance the construction of the District’s Early Childhood Center. Scheduled future ad valorem lease obligation tax levies will be made to finance the retirement of principal and interest payments on the certificates. These certificates of participation are being paid by the General Fund. C. Other Long-Term Liabilities The District offers a number of benefits to its employees, including: compensated absences, severance benefits, pensions, and OPEB. The details of these various benefit liabilities are discussed elsewhere in these notes. Such benefits are financed primarily from the General Fund. The District has also established a Post-Employment Benefits Trust Fund to finance OPEB obligations.

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NOTE 4 – LONG-TERM LIABILITIES (CONTINUED) D. Minimum Debt Payments Minimum annual principal and interest payments to maturity for general obligation bonds and certificates of participation are as follows:

Year EndingJune 30, Principal Interest Principal Interest

2016 8,330,000$ 1,225,285$ 495,000$ 327,938$ 2017 8,865,000 955,370 505,000 318,038 2018 5,685,000 601,620 520,000 305,413 2019 5,920,000 346,933 530,000 292,413 2020 910,000 73,832 550,000 275,187

2021–2025 1,895,000 68,420 3,040,000 1,076,724 2026–2029 – – 2,930,000 367,500

31,605,000$ 3,271,460$ 8,570,000$ 2,963,213$

General Obligation Bonds Certificates of Participation

E. Changes in Long-Term Liabilities

Balance – Change inBeginning Accounting Balance – Due Within

of Year Principle* Additions Retirements End of Year One Year

General obligation bonds payable 39,690,000$ –$ –$ 8,085,000$ 31,605,000$ 8,330,000$ Certificates of participation payable 9,055,000 – – 485,000 8,570,000 495,000 Unamortized premium/discount 1,187,586 – – 339,707 847,879 –

Total bonds and certificates payable 49,932,586 – – 8,909,707 41,022,879 8,825,000

Net pension liability – PERA – 12,183,838 776,586 2,447,421 10,513,003 – Net pension liability – TRA – 48,675,255 1,975,017 12,418,293 38,231,979 – Severance benefits payable 1,254,391 – 416,656 411,297 1,259,750 358,676 Compensated absences payable 229,956 – 211,461 178,604 262,813 262,813

51,416,933$ 60,859,093$ 3,379,720$ 24,365,322$ 91,290,424$ 9,446,489$

*Adjustment is part of the change in accounting principle described earlier in these notes.

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NOTE 5 – FUND BALANCES The following is a breakdown of equity components of governmental funds which are defined earlier in the report. When applicable, certain restrictions which have an accumulated deficit balance at June 30 are included in unassigned fund balance in the District’s financial statements in accordance with accounting principles generally accepted in the United States of America. A description of these deficit balance restrictions is included herein since the District has specific authority to future resources for such deficits. A. Classifications At June 30, 2015, a summary of the District’s governmental fund balance classifications are as follows:

CapitalProjects –Building

Construction Debt Service NonmajorGeneral Fund Fund Fund Funds Total

NonspendableInventory –$ –$ –$ 55,935$ 55,935$ Prepaid items 271,178 – – 14,279 285,457

Total nonspendable 271,178 – – 70,214 341,392

RestrictedHealth and safety 388,467 – – – 388,467 Operating capital 2,079,091 – – – 2,079,091 Alternative facilities program – 1,067,917 – – 1,067,917 Debt service – – 1,772,888 – 1,772,888 Food service – – – 60,678 60,678 Community education programs – – – 570,897 570,897 Early childhood family education programs – – – 63,952 63,952 School readiness – – – 21,385 21,385 Adult basic education – – – 140 140 Community service – – – 2,259 2,259

Total restricted 2,467,558 1,067,917 1,772,888 719,311 6,027,674

AssignedSeverance benefits 1,100,000 – – – 1,100,000 Facility use improvements 95,946 – – – 95,946 Technology equipment 410,000 – – – 410,000 Technology infrastructure 520,000 – – – 520,000

Total assigned 2,125,946 – – – 2,125,946

Unassigned 9,137,032 (586,713) – – 8,550,319

Total 14,001,714$ 481,204$ 1,772,888$ 789,525$ 17,045,331$

B. Minimum Unassigned Fund Balance Policy The School Board has formally adopted a fund balance policy regarding the minimum unassigned fund balance for the General Fund. The policy establishes the District will maintain a minimum unassigned General Fund balance of 5 percent of the annual projected expenditures. If the unassigned fund balance for the General Fund is projected to fall below 5 percent, the Superintendent shall recommend to the School Board a list of actions to be taken to ensure the required fund balance is maintained. At June 30, 2015, the unassigned fund balance of the General Fund was 9.7 percent of fiscal 2016 projected expenditures.

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NOTE 6 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE A. Plan Descriptions The District participates in the following cost-sharing, multiple-employer defined benefit pension plans administered by the PERA and the TRA. The PERA’s and the TRA’s defined benefit pension plans are established and administered in accordance with Minnesota Statutes. The PERA’s and the TRA’s defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code.

1. General Employees Retirement Fund (GERF) The PERA’s defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. All full-time and certain part-time employees of the District other than teachers are covered by the General Employees Retirement Fund (GERF). GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. The Basic Plan was closed to new members in 1967. All new members must participate in the Coordinated Plan.

2. Teachers Retirement Association (TRA) The TRA administers a Basic Plan (without Social Security coverage) and a Coordinated Plan (with Social Security coverage) in accordance with Minnesota Statutes, Chapters 354 and 356. The TRA is a separate statutory entity and administered by a Board of Trustees. The Board consists of four active members, one retired member, and three statutory officials. Teachers employed in Minnesota’s public elementary and secondary schools, charter schools, and certain educational institutions maintained by the state (except those teachers employed by the cities of Duluth and St. Paul, and by the University of Minnesota system) are required to be TRA members. State university, community college, and technical college teachers first employed by the Minnesota State Colleges and Universities (MnSCU) may elect TRA coverage within one year of eligible employment. Alternatively, these teachers may elect coverage through the Defined Contribution Retirement Plan (DCR) administered by MnSCU.

B. Benefits Provided

The PERA and the TRA provide retirement, disability, and death benefits. Benefit provisions are established by state statutes and can only be modified by the State Legislature.

PERA – Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. Members in plans that are at least 90 percent funded for two consecutive years are given 2.5 percent increases. Members in plans that have not exceeded 90 percent funded, or have fallen below 80 percent, are given 1 percent increases.

TRA – Post-retirement benefit increases are provided to eligible benefit recipients each January.

The TRA increase is 2.0 percent. After the TRA funded ratio exceeds 90 percent for two consecutive years, the annual post-retirement benefit will increase to 2.5 percent.

The benefit provisions stated in the following paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service.

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NOTE 6 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)

1. GERF Benefits Benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for the PERA’s Coordinated and Basic Plan members. The retiring member receives the higher of a step-rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. Disability benefits are available for vested members, and are based upon years of service and average high-five salary.

2. TRA Benefits The TRA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by Minnesota Statutes and vest after three years of service credit. The defined retirement benefits are based on a member’s highest average salary for any five consecutive years of allowable service, age, and a formula multiplier based on years of credit at termination of service: Two methods are used to compute benefits for the TRA’s Coordinated and Basic Plan members. Members first employed before July 1, 1989, receive the greater of the Tier I or Tier II benefits as described. Tier I Benefits

Step Rate Formula

Percentage per Year

Basic Plan First 10 years of serviceAll years after

2.2% 2.7%

Coordinated First 10 years if service years are up to July 1, 2006First 10 years if service years are July 1, 2006 or after All other years of service if service years are up to July 1, 2006 All other years of service if service years are July 1, 2006 or after

1.2%1.4% 1.7% 1.9%

With these provisions:

(a) Normal retirement age is 65 with less than 30 years of allowable service and age 62 with 30 or more years of allowable service.

(b) Three percent per year early retirement reduction factor for all years under normal

retirement age. (c) Unreduced benefits for early retirement under a Rule-of-90 (age plus allowable service equals

90 or more).

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NOTE 6 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) Tier II Benefits

For years of service prior to July 1, 2006, a level formula of 1.7 percent per year for Coordinated Plan members and 2.7 percent per year for Basic Plan members. For years of service July 1, 2006 and after, a level formula of 1.9 percent per year for Coordinated Plan members and 2.7 percent for Basic Plan members applies. Beginning July 1, 2015, the early retirement reduction factors are based on rates established under Minnesota Statutes. Smaller reductions, more favorable to the member, will be applied to individuals who reach age 62 and have 30 years or more of service credit. Members first employed after June 30, 1989, receive only the Tier II calculation with a normal retirement age that is their retirement age for full Social Security retirement benefits, but not to exceed age 66. Six different types of annuities are available to members upon retirement. The No Refund Life Plan is a lifetime annuity that ceases upon the death of the retiree—no survivor annuity is payable. A retiring member may also choose to provide survivor benefits to a designated beneficiary(ies) by selecting one of the five plans that have survivorship features. Vested members may also leave their contributions in the TRA Fund upon termination of service in order to qualify for a deferred annuity at retirement age. Any member terminating service is eligible for a refund of their employee contributions plus interest.

C. Contributions

Minnesota Statutes set the rates for employer and employee contributions. Contribution rates can only be modified by the State Legislature.

1. GERF Contributions

Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. Basic Plan members and Coordinated Plan members were required to contribute 9.1 percent and 6.5 percent, respectively, of their annual covered salary in calendar year 2014. Coordinated Plan members contributed 6.5 percent of pay in 2015. In calendar year 2014, the District was required to contribute 11.78 percent of pay for Basic Plan members and 7.25 percent for Coordinated Plan members. In 2015, employer rates increased to 7.5 percent in the Coordinated Plan, The District’s contributions to the GERF for the plan’s fiscal year ended June 30, 2015, were $946,168. The District’s contributions were equal to the required contributions for each year as set by state statutes.

2. TRA Contributions Per Minnesota Statutes, Chapter 354 sets the contribution rates for employees and employers. Rates for each fiscal year were:

Year Ended June 30, 2014 2015 Employee Employer Employee Employer Basic Plan 10.5% 11.0% 11.0% 11.5%

Coordinated Plan 7.0% 7.0% 7.5% 7.5%

The District’s contributions to the TRA for the plan’s fiscal year ended June 30, 2015, were $2,841,307. The District’s contributions were equal to the required contributions for each year as set by state statutes.

•

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D. Pension Costs

1. GERF Pension Costs At June 30, 2015, the District reported a liability of $10,513,003 for its proportionate share of the GERF’s net pension liability. The net pension liability was measured as of June 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The District’s proportion of the net pension liability was based on the District’s contributions received by the PERA during the measurement period for employer payroll paid dates from July 1, 2013, through June 30, 2014, relative to the total employer contributions received from all of the PERA’s participating employers. At June 30, 2014, the District’s proportion was 0.2238 percent.

For the year ended June 30, 2015, the District recognized pension expense of $776,586 for its proportionate share of the GERF’s pension expense. At June 30, 2015, the District reported its proportionate share of the GERF’s deferred outflows of resources and deferred inflows of resources, and its contributions subsequent to the measurement date, from the following sources:

Deferred DeferredOutflows Inflows

of Resources of Resources

Differences between expected and actual economic experience 161,342$ –$ Changes in actuarial assumptions 1,083,470 – Differences between projected and actual investment earnings – 2,840,604 The District’s contributions to the GERF subsequent to the measurement date 946,168 –

Total 2,190,980$ 2,840,604$

A total of $946,168 reported as deferred outflows of resources related to pensions resulting from district contributions to the GERF subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows and inflows of resources related to the GERF pensions will be recognized in pension expense as follows:

Pension

Year Ended ExpenseJune 30, Amount

2016 (295,214)$ 2017 (295,214)$ 2018 (295,214)$ 2019 (710,150)$

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2. TRA Pension Costs

At June 30, 2015, the District reported a liability of $38,231,979 for its proportionate share of the TRA’s net pension liability. The net pension liability was measured as of June 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The District’s proportion of the net pension liability was based on the District’s contributions to the TRA in relation to total system contributions including direct aid from the state of Minnesota, City of Minneapolis, and Special School District No. 1, Minneapolis Public Schools. The District’s proportionate share was 0.8297 percent at the end of the measurement period and 0.8485 percent for the beginning of the period.

The pension liability amount reflected a reduction due to direct aid provided to the TRA. The amount recognized by the District as its proportionate share of the net pension liability, the direct aid, and total portion of the net pension liability that was associated with the District were as follows:

District’s proportionate share of net pension liability 38,231,979$ State’s proportionate share of the net pension liability associated with the District 2,689,665$

A change in benefit provisions that affected the measurement of the total pension liability since the prior measurement date was an increase of the contribution rates for both the member and employer.

For the year ended June 30, 2015, the District recognized pension expense of $1,857,686. It also recognized $117,331 as pension expense for the support provided by direct aid. At June 30, 2015, the District reported its proportionate share of the TRA’s deferred outflows of resources and deferred inflows of resources, and its contributions subsequent to the measurement date, related to pensions from the following sources:

Deferred DeferredOutflows Inflows

of Resources of Resources

Differences between expected and actual economic experience 3,262,223$ –$ Difference between projected and actual investment earnings – 12,019,748 Changes in proportion and differences between contributions made and the District’s proportionate share of contributions – 892,218 The District’s contributions to the TRA subsequent to the measurement date 2,841,307 –

Total 6,103,530$ 12,911,966$

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A total of $2,841,307 reported as deferred outflows of resources related to pensions resulting from district contributions to the TRA subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows and inflows of resources related to the TRA will be recognized in pension expense as follows:

Pension

Year Ended ExpenseJune 30, Amount

2016 $ (2,510,155)2017 $ (2,510,155)2018 $ (2,510,155)2019 $ (2,510,155)2020 $ 390,877

E. Actuarial Assumptions

The total pension liability in the June 30, 2014, actuarial valuation was determined using the entry age normal actuarial cost method and the following actuarial assumptions:

Assumptions GERF TRA

Inflation 2.75% per year 3.0% Active member payroll growth 3.50% per year 3.75% based on years of service Investment rate of return 7.90% 8.25%

Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors, and disabilitants were based on RP-2000 tables for males or females, as appropriate, with slight adjustments. Actuarial assumptions used in the June 30, 2014, valuation were based on the results of actuarial experience studies. The actuarial assumptions used in the June 30, 2014, valuation were based on the results of an actuarial experience study for the period July 1, 2004, to June 30, 2008, and a limited scope experience study dated August 29, 2014. The limited scope experience study addressed only inflation and long-term rate of return for the GASB Statement No. 67 valuation. The following changes in actuarial assumptions for the GERF occurred in 2014: as of July 1, 2013, the post-retirement benefit increase rate was assumed to increase from 1.0 percent to 2.5 percent on January 1, 2046. As of July 1, 2014, the post-retirement benefit increase rate was assumed to increase from 1.0 percent to 2.5 percent on January 1, 2031. There was a change in actuarial assumptions that affected the measurement of the total liability for the TRA since the prior measurement date. Post-retirement benefit adjustments are now assumed to increase from 2.0 percent annually to 2.5 percent annually once the legally specified criteria are met. This is estimated to occur July 1, 2034. The long-term expected rate of return on pension plan investments is 7.9 percent for the GERF and 8.25 percent for the TRA. The Minnesota State Board of Investment, which manages the investments of the PERA and the TRA, prepares an analysis of the reasonableness of the long-term expected rate of return on a regular basis using a building-block method in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages.

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NOTE 6 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Target Long-Term ExpectedAsset Class Allocation Rate of Return

Domestic stocks 45% 5.50%International stocks 15% 6.00%Bonds 18% 1.45%Alternative assets 20% 6.40%Cash 2% 0.50%

Total 100%

F. Discount Rate The discount rate used to measure the total pension liability was 7.9 percent for the GERF and 8.25 percent for the TRA. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rates specified in the statute. Based on those assumptions, each of the pension plan’s fiduciary net positions were projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. Pension Liability Sensitivity The following table presents the District’s proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the District’s proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate:

DiscountRate

GERF discount rate 7.90%

District’s proportionate share of the GERF net pension liability 10,513,003$

TRA discount rate 7.25% 8.25%

District’s proportionate share of the TRA net pension liability $ 38,231,979

6.90% 8.90%

1% Decrease in 1% Increase in

Discount Rate Discount Rate

$ 16,947,385 $ 5,219,020

9.25%

$ 63,184,368 $ 17,430,313 H. Pension Plan Fiduciary Net Position Detailed information about the GERF’s fiduciary net position is available in a separately-issued PERA financial report. That report may be obtained on the PERA website at www.mnpera.org; by writing to the PERA at 60 Empire Drive, Suite 200, St. Paul, Minnesota 55103-2088; or by calling (651) 296-7460 or (800) 652-9026. Detailed information about the TRA’s fiduciary net position is available in a separately-issued TRA financial report. That report can be obtained at the TRA website at www.MinnesotaTRA.org; by writing to the TRA at 60 Empire Drive, Suite 400, St. Paul, Minnesota 55103-2088; or by calling (651) 296-2409 or (800) 657-3669.

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NOTE 7 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN A. Plan Description The District provides post-employment benefits to certain eligible employees through the OPEB Plan, a single-employer defined benefit plan administered by the District. All post-employment benefits are based on contractual agreements with employee groups. Eligibility for these benefits is based on years of service and/or minimum age requirements. These contractual agreements do not include any specific contribution or funding requirements. The plan does not issue a publicly available financial report. These benefits are summarized as follows:

Post-Employment Insurance Benefits – All retirees of the District upon retirement have the option under state law to continue their medical insurance coverage through the District. For members of certain employee groups, the District pays for all or part of the eligible retiree’s premiums for medical and/or dental insurance from the time of retirement until the employee reaches the age of eligibility for Medicare. Benefits paid by the District differ by bargaining unit and date of hire, with some contracts specifying a certain dollar amount per month, and some covering premium costs as defined within each collective bargaining agreement. Retirees not eligible for these District-paid premium benefits must pay the full district premium rate for their coverage.

The District is legally required to include any retirees for whom it provides health insurance coverage in the same insurance pool as its active employees until the retiree reaches Medicare eligibility, whether the premiums are paid by the District or the retiree. Consequently, participating retirees are considered to receive a secondary benefit known as an “implicit rate subsidy.” This benefit relates to the assumption that the retiree is receiving a more favorable premium rate than they would otherwise be able to obtain if purchasing insurance on their own, due to being included in the same pool with the District’s younger and statistically healthier active employees.

B. Funding Policy The required contribution is based on projected pay-as-you-go financing requirements, with additional amounts to pre-fund benefits as determined periodically by the District. The District has established the Post-Employment Benefits Trust Fund to finance these obligations. C. Annual OPEB Cost and Net OPEB Obligation The District’s annual OPEB cost (expense) is calculated based on annual required contributions (ARC) of the District, an amount determined on an actuarially determined basis in accordance with the parameters of GASB Statement No. 45. The ARC represents a level funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the District’s annual OPEB cost for the year, the amount actually contributed to the plan, and the changes in the District’s net OPEB obligation to the plan:

ARC 1,413,688$ Interest on net OPEB obligation (609,697) Adjustment to ARC 960,941

Annual OPEB cost 1,764,932 Contributions made 1,035,371

Increase in net OPEB obligation 729,561 Negative net OPEB obligation – beginning of year (15,242,418)

Negative net OPEB obligation – end of year (14,512,857)$

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NOTE 7 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the past three years are as follows:

NegativePercentage of Net OPEB

Fiscal Annual Employer Annual OPEB ObligationYear Ended OPEB Cost Contribution Cost Contributed (Asset)

June 30, 2013 1,560,198$ 879,583$ 56.4% (15,964,320)$ June 30, 2014 1,642,570$ 920,668$ 56.1% (15,242,418)$ June 30, 2015 1,764,932$ 1,035,371$ 58.7% (14,512,857)$

D. Funded Status and Funding Progress As of July 1, 2014, the most recent actuarial valuation date, the plan was 57.1 percent funded. The actuarial accrued liability for benefits was $20,931,583, and the actuarial value of assets was $11,961,436, resulting in an unfunded actuarial accrued liability (UAAL) of $8,970,147. The covered payroll (annual payroll of active employees covered by the plan) was $46,712,917, and the ratio of the UAAL to the covered payroll was 19.2 percent. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the ARC of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Schedule of Funding Progress following the notes to basic financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the July 1, 2014 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included: a 4.0 percent investment rate of return (net of investment expenses) based on the District’s own investments; a 3.0 percent rate of projected salary increases; an annual dental trend rate of zero percent; and an annual medical trend rate of 7.5 percent initially, reduced by decrements to an ultimate rate of 5.0 percent after 10 years. All rates include a 2.5 percent inflation assumption. The UAAL is being amortized on a level dollar basis over a closed period. The remaining amortization period at July 1, 2014 for the various amortization layers ranged from 24 to 30 years. F. Post-Employment Benefits Trust Fund The District administers a defined benefit Post-Employment Benefits Trust Fund. The assets of the plan are reported in the District’s financial report in the Post-Employment Benefits Trust Fund. The plan assets may be used only for the payment of benefits of the plan, in accordance with the terms of the plan.

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NOTE 7 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED) The Post-Employment Benefits Trust Fund is reported using the accrual basis of accounting. Employer contributions to the plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits are recognized when due and payable in accordance with the terms of the plan. G. Membership Membership in the plan consisted of the following as of the latest actuarial valuation:

Retirees and beneficiaries receiving benefits 231 Active plan members 995

Total members 1,226

NOTE 8 – FLEXIBLE BENEFIT PLAN The District has a flexible benefit plan which is classified as a cafeteria plan (the Plan) under § 125 of the Internal Revenue Code. All employee groups of the District are eligible if and when the collective bargaining agreement or contract with their group allows eligibility. Eligible employees can elect to participate by contributing pre-tax dollars withheld from payroll checks to the Plan for healthcare and dependant care benefits. Payments are made from the Plan to participating employees upon submitting a request for reimbursement of eligible expenses actually incurred by the participant. Before the beginning of the Plan year, which is from July 1 to June 30, each participant designates a total amount of pre-tax dollars to be contributed to the Plan during the year. At June 30, the District is contingently liable for total contributions to the medical reimbursement portion of the Plan, whether or not such contributions have been made. All assets of the Plan are held in a separate bank account and are administered by an employee of the District. Payments of insurance premiums (health, dental, life, and disability) are made by the District directly to the designated service providers. These payments are made on a timely basis and are accounted for primarily in the District’s self-insurance funds. The medical reimbursement and dependant care activity in the financial statements is accounted for in the General Fund. All property of the Plan and income attributable to that property is solely the property of the District, subject to the claims of the District’s general creditors. Participants’ rights under the Plan are equal to those of general creditors of the District in an amount equal to the eligible healthcare and dependant care expenses incurred by the participants. The District believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in the future.

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NOTE 9 – INTERFUND BALANCES AND TRANSACTIONS A. Interfund Receivables and Payables The District had the following interfund receivables and payables at June 30, 2015:

Due From Due ToOther Funds Other Funds

General Fund 1,276,724$ –$ Nonmajor Fund – Food Service Special Revenue Fund – 76,724 Post-Employment Benefits Trust Fund – 1,200,000

1,276,724$ 1,276,724$

These balances represent interfund amounts due to the General Fund relating to post-employment benefit costs to be reimbursed and to eliminate a temporary cash deficit in the Food Service Special Revenue Fund as of June 30, 2015. Such interfund balances are reported in the fund financial statements, but are eliminated as necessary in the government-wide financial statements. B. Transfers

During fiscal 2015, the General Fund transferred $453,548 to the Debt Service Fund to finance debt service for bonds issued in the prior year. Such interfund transfers are reported in the fund financial statements, but are eliminated in the government-wide financial statements. NOTE 10 – COMMITMENTS AND CONTINGENCIES A. Operating Leases Alternative Learning Center The District is currently utilizing space under operating lease agreements for the Alternative Learning Center program. Monthly required lease payments are adjusted annually for a consumer price index factor through its expiration date of November 2017. Monthly base lease payment requirements were $14,421 for the year ended June 30, 2015. The District is also required to pay taxes, utilities, insurance, and common area maintenance costs under these agreements. At June 30, 2015, annual minimum base lease payments, excluding a consumer price index factor, are as follows:

Year EndingJune 30, Amount

2016 173,052$ 2017 173,052 2018 72,105

418,209$

The District’s costs under these lease agreements for the Alternative Learning Center for the year ended June 30, 2015 totaled $224,020.

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NOTE 10 – COMMITMENTS AND CONTINGENCIES (CONTINUED) Transportation Terminal The District entered into a lease agreement for a transportation terminal on June 27, 2008 effective July 1, 2008 through June 30, 2018. Monthly base lease payment requirements were $14,724 for the year ended June 30, 2015, adjusted annually for a consumer price index factor. The District is also required to pay taxes, utilities, insurance, operation, and maintenance costs. At June 30, 2015, annual minimum base lease payments are as follows:

Year EndingJune 30, Amount

2016 176,689$ 2017 176,689 2018 176,689

530,067$

The District’s cost under this lease was $226,762 for the year ended June 30, 2015. B. Legal Claims The District has the usual and customary types of miscellaneous legal claims pending at year-end, mostly of a minor nature and usually covered by insurance carried for that purpose. Although the outcomes of these claims are not presently determinable, the District believes that the resolution of these matters will not have a material adverse effect on its financial position. C. Federal and State Revenues Amounts received or receivable from federal and state agencies are subject to agency audit and adjustment. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of funds which may be disallowed by the agency cannot be determined at this time although the District expects such amounts, if any, to be immaterial. D. Construction Contracts At June 30, 2015, the District had commitments totaling $797,243 under various construction contracts for which the work was not yet completed. NOTE 11 – SUBSEQUENT EVENTS In August 2015, the District issued $90,565,000 of General Obligation School Building Bonds, Series 2015A. The bonds bear an interest rate between 3.00–5.00 percent and mature in 2037. The proceeds of this debt issue will be used to finance construction and improvements at several District facilities. Also in August 2015, the District issued $14,695,000 of General Obligation Taxable OPEB Refunding Bonds, Series 2015B. The bonds bear an interest rate between 0.70–1.55 percent and mature in 2019. The proceeds of this debt issue will be used to refinance the General Obligation Taxable OPEB Bonds, Series 2009B of the District.

REQUIRED SUPPLEMENTARY INFORMATION

2014

District’s proportion of the net pension liability (asset) 0.2238%

District’s proportionate share of the net pension liability (asset) 10,513,003$

District’s covered-employee payroll 11,750,557$

Proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 89.47%

Plan fiduciary net position as a percentage of the total pension liability 78.70%

District’s proportion of the net pension liability (asset) 0.8297%

District’s proportionate share of the net pension liability (asset) (a) 38,231,979$

District’s proportionate share of the state of Minnesota’s proportionate share of the net pension liability (b) 2,689,665

Proportionate share of the net pension liability and the District’s share of the state of Minnesota’s share of the net pension liability (a + b) 40,921,644$


Proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 100.94%

Plan fiduciary net position as a percentage of the total pension liability 81.50%

Note: The District implemented GASB Statement No. 68 in fiscal 2015 (using a June 30, 2014measurement date). This information is not available for previous fiscal years.

Teachers Retirement Association


Defined Benefit Pensions PlansSchedule of District’s and Non-Employer Proportionate Share of Net Pension Liability

GERF/TRA Retirement FundsJune 30, 2015

Public Employees Retirement Association

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2015

Statutorily required contribution 946,168$

Contributions in relation to the statutorily required contributions 946,168

Contribution deficiency (excess) –$


Contributions as a percentage of covered-employee payroll 7.39%

Statutorily required contribution 2,841,307$

Contributions in relation to the statutorily required contributions 2,841,307

Contribution deficiency (excess) –$


Contributions as a percentage of covered-employee payroll 7.50%

Note: The District implemented GASB Statement No. 68 in fiscal 2015. This information is not availablefor previous fiscal years.

Teachers Retirement Association


Defined Benefit Pensions PlansSchedule of District Contributions

GERF/TRA Retirement FundsJune 30, 2015

Public Employees Retirement Association

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UnfundedActuarial Actuarial ActuarialValuation Accrued Accrued Covered

Date Liability Liability Payroll

July 1, 2010 19,471,651$ 2,824,354$ 85.5 % 44,591,184$ 6.3 %July 1, 2012 21,891,931$ 6,777,783$ 69.0 % 45,891,310$ 14.8 %July 1, 2014 20,931,583$ 8,970,147$ 57.1 % 46,712,917$ 19.2 %

NegativeAnnual Net OPEB

Year Ended Required ObligationJune 30, Contribution (Asset)

2010 824,345$ 107.8 % (17,280,603)$ 2011 970,369$ 111.4 % (17,114,193)$ 2012 975,647$ 81.9 % (16,644,935)$ 2013 1,255,319$ 70.1 % (15,964,320)$ 2014 1,328,219$ 69.3 % (15,242,418)$ 2015 1,413,688$ 73.2 % (14,512,857)$

Percentage

16,647,297$

11,961,436$ 15,114,148$

Contributed


Schedule of Funding Progress and Schedule of Employer ContributionsJune 30, 2015

Schedule of Funding Progress

UnfundedLiability as aActuarial

Other Post-Employment Benefits Plan

Plan AssetsFunded Percentage ofRatio Payroll

Schedule of Employer Contributions

Value of

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SUPPLEMENTAL INFORMATION

Community Food Service Service Total

AssetsCash and temporary investments –$ 1,444,941$ 1,444,941$ Receivables

Current taxes – 457,284 457,284 Delinquent taxes – 16,885 16,885 Accounts and interest 651 36,194 36,845 Due from other governmental units 297,667 92,239 389,906

Inventory 55,935 – 55,935 Prepaid items 6,965 7,314 14,279

Total assets 361,218$ 2,054,857$ 2,416,075$

LiabilitiesSalaries payable 6,138$ 174,873$ 181,011$ Accounts and contracts payable 10,550 72,312 82,862 Due to other governmental units – 8 8 Due to other funds 76,724 – 76,724 Unearned revenue 144,228 249,759 393,987

Total liabilities 237,640 496,952 734,592

Deferred inflows of resourcesProperty taxes levied for subsequent year – 880,414 880,414 Unavailable revenue – 11,544 11,544

Total deferred inflows of resources – 891,958 891,958

Fund balances Nonspendable for inventory 55,935 – 55,935 Nonspendable for prepaid items 6,965 7,314 14,279 Restricted 60,678 658,633 719,311

Total fund balances 123,578 665,947 789,525

Total liabilities, deferred inflows of resources, and fund balances 361,218$ 2,054,857$ 2,416,075$

as of June 30, 2015

Special Revenue Funds


Nonmajor Governmental FundsCombining Balance Sheet

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CommunityFood Service Service Total

RevenueLocal sources

Property taxes –$ 892,596$ 892,596$ Investment earnings 153 1,474 1,627 Other 2,559,430 3,121,607 5,681,037

State sources 147,433 587,293 734,726 Federal sources 1,091,662 1,299 1,092,961

Total revenue 3,798,678 4,604,269 8,402,947

ExpendituresCurrent

Food service 3,730,236 – 3,730,236 Community service – 4,418,275 4,418,275

Capital outlay 13,229 35,857 49,086 Total expenditures 3,743,465 4,454,132 8,197,597

Excess (deficiency) of revenue over expenditures 55,213 150,137 205,350

Other financing sourcesSale of capital assets 200 – 200

Net change in fund balances 55,413 150,137 205,550

Fund balances Beginning of year 68,165 515,810 583,975

End of year 123,578$ 665,947$ 789,525$

Nonmajor Governmental Funds


Special Revenue Funds

Year Ended June 30, 2015Combining Statement of Revenue, Expenditures, and Changes in Fund Balances

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2015 2014


Current taxes 13,083,512 12,850,007 Delinquent taxes 416,389 439,090 Accounts and interest 43,686 44,940 Due from other governmental units 8,023,671 7,751,018 Due from other funds 1,276,724 1,506,266

Prepaid items 271,178 380,847

Total assets 44,487,880$ 43,767,661$

LiabilitiesSalaries payable 4,447,219$ 4,480,733$ Accounts and contracts payable 1,507,659 1,666,420 Due to other governmental units 383,058 452,412 Unearned revenue 824,943 1,136,310

Total liabilities 7,162,879 7,735,875

Deferred inflows of resourcesProperty taxes levied for subsequent year 23,048,499 22,601,549 Unavailable revenue – delinquent taxes 274,788 452,668

Total deferred inflows of resources 23,323,287 23,054,217

Fund balancesNonspendable for prepaid items 271,178 380,847 Restricted for health and safety 388,467 659,200 Restricted for operating capital 2,079,091 1,271,856Assigned for subsequent year budget – 3,305,467Assigned for severance benefits 1,100,000 1,100,000Assigned for facility use improvements 95,946 57,806Assigned for supply and material carryover – 1,058,568Assigned for donations carryover – 329,197 Assigned for Bridge to Excellence – 141,740 Assigned for technology equipment 410,000 – Assigned for technology infrastructure 520,000 – Unassigned 9,137,032 4,672,888

Total fund balances 14,001,714 12,977,569

Total liabilities, deferred inflows of resources, and fund balances 44,487,880$ 43,767,661$

as of June 30, 2015 and 2014Comparative Balance Sheet

General Fund


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2014Over (Under)

Budget Actual Budget Actual


Property taxes 21,245,606$ 21,228,874$ (16,732)$ 9,471,422$ Investment earnings 20,000 19,205 (795) 25,150 Other 3,657,988 2,977,987 (680,001) 3,859,780

State sources 65,916,334 67,033,607 1,117,273 71,725,446 Federal sources 2,998,890 2,868,056 (130,834) 2,807,152

Total revenue 93,838,818 94,127,729 288,911 87,888,950

ExpendituresCurrent

AdministrationSalaries 2,247,117 2,251,922 4,805 2,166,385 Employee benefits 908,698 933,453 24,755 885,692 Purchased services 111,066 79,673 (31,393) 113,777 Supplies and materials 16,600 7,652 (8,948) 14,540 Capital expenditures 500 – (500) 398 Other expenditures 44,177 42,507 (1,670) 40,786

Total administration 3,328,158 3,315,207 (12,951) 3,221,578

District support servicesSalaries 1,575,668 1,551,951 (23,717) 1,470,470 Employee benefits 894,219 828,906 (65,313) 814,493 Purchased services 214,461 120,455 (94,006) 79,609 Supplies and materials 453,805 249,669 (204,136) 452,409 Capital expenditures 452,176 59,571 (392,605) 463,029Other expenditures (1,070) (10,709) (9,639) (3,136)

Total district support services 3,589,259 2,799,843 (789,416) 3,276,874

Elementary and secondary regular instruction

Salaries 26,627,713 26,106,411 (521,302) 26,438,879 Employee benefits 12,241,856 11,996,717 (245,139) 11,842,421 Purchased services 4,206,382 3,814,556 (391,826) 3,543,866 Supplies and materials 1,361,032 1,464,985 103,953 1,237,355 Capital expenditures 1,033,665 940,085 (93,580) 1,113,178 Other expenditures 61,865 46,837 (15,028) 73,382

Total elementary and secondary regular instruction 45,532,513 44,369,591 (1,162,922) 44,249,081

(continued)

2015


General FundSchedule of Revenue, Expenditures, and Changes in Fund Balances

Budget and ActualYear Ended June 30, 2015

(With Comparative Actual Amounts for the Year Ended June 30, 2014)

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2014Over (Under)


Expenditures (continued)Current (continued)

Vocational education instructionSalaries 605,596 624,203 18,607 468,245 Employee benefits 232,851 238,384 5,533 182,588 Purchased services 241,909 239,100 (2,809) 214,266 Supplies and materials 25,851 16,028 (9,823) 23,624 Capital expenditures 6,794 1,042 (5,752) 9,077

Total vocational education instruction 1,113,001 1,118,757 5,756 897,800

Special education instructionSalaries 10,249,360 10,143,914 (105,446) 9,884,275 Employee benefits 4,829,120 4,765,951 (63,169) 4,567,329 Purchased services 1,085,207 1,014,456 (70,751) 1,079,859 Supplies and materials 158,266 87,447 (70,819) 108,790 Capital expenditures 65,328 39,534 (25,794) 52,404 Other expenditures 3,200 2,659 (541) 3,781

Total special education instruction 16,390,481 16,053,961 (336,520) 15,696,438

Instructional support servicesSalaries 3,501,966 3,317,742 (184,224) 2,978,214 Employee benefits 1,246,448 1,319,253 72,805 1,199,646 Purchased services 603,275 596,852 (6,423) 660,852 Supplies and materials 528,254 479,298 (48,956) 244,603 Capital expenditures 315,385 281,263 (34,122) 232,125 Other expenditures 15,950 12,293 (3,657) 17,785

Total instructional support services 6,211,278 6,006,701 (204,577) 5,333,225

Pupil support servicesSalaries 1,921,769 1,805,538 (116,231) 1,801,081 Employee benefits 881,880 869,482 (12,398) 835,209 Purchased services 6,723,719 6,741,252 17,533 6,738,377 Supplies and materials 42,800 40,225 (2,575) 26,837 Capital expenditures – 10,207 10,207 34,976 Other expenditures – 60 60 –

Total pupil support services 9,570,168 9,466,764 (103,404) 9,436,480

(continued)

(With Comparative Actual Amounts for the Year Ended June 30, 2014)Year Ended June 30, 2015

Budget and Actual (continued)Schedule of Revenue, Expenditures, and Changes in Fund Balances

General Fund


2015

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2014Over (Under)


Expenditures (continued)Current (continued)

Sites and buildingsSalaries 2,371,644 2,365,442 (6,202) 2,375,607 Employee benefits 1,413,586 1,404,663 (8,923) 1,214,820 Purchased services 3,233,950 3,550,444 316,494 3,273,409 Supplies and materials 602,872 603,359 487 600,393 Capital expenditures 915,952 585,710 (330,242) 905,592 Other expenditures 17,150 5,704 (11,446) 16,988

Total sites and buildings 8,555,154 8,515,322 (39,832) 8,386,809

Fiscal and other fixed cost programs Purchased services 255,000 188,265 (66,735) 274,552

Debt servicePrincipal 485,000 485,000 – 475,000 Interest and fiscal charges 337,638 337,638 – 347,138

Total debt service 822,638 822,638 – 822,138

Total expenditures 95,367,650 92,657,049 (2,710,601) 91,594,975

Excess (deficiency) of revenue over expenditures (1,528,832) 1,470,680 2,999,512 (3,706,025)

Other financing sources (uses)Sale of capital assets 6,000 7,013 1,013 10,506 Transfers out (453,548) (453,548) – –

Total other financing sources (uses) (447,548) (446,535) 1,013 10,506

Net change in fund balances (1,976,380)$ 1,024,145 3,000,525$ (3,695,519)

Fund balancesBeginning of year 12,977,569 16,673,088

End of year 14,001,714$ 12,977,569$

2015



Budget and Actual (continued)Schedule of Revenue, Expenditures, and Changes in Fund Balances

General Fund

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2015 2014

AssetsReceivables

Accounts and interest 651$ 426$ Due from other governmental units 297,667 192,267

Inventory 55,935 66,391 Prepaid items 6,965 1,460

Total assets 361,218$ 260,544$

LiabilitiesSalaries payable 6,138$ 8,092$ Accounts and contracts payable 10,550 11,330 Due to other funds 76,724 6,266Unearned revenue 144,228 166,691

Total liabilities 237,640 192,379

Fund balancesNonspendable for inventory 55,935 66,391 Nonspendable for prepaid items 6,965 1,460 Restricted for food service 60,678 314

Total fund balances 123,578 68,165

Total liabilities and fund balances 361,218$ 260,544$


Food Service Special Revenue FundComparative Balance Sheet

as of June 30, 2015 and 2014

-67-

2014Over (Under)



Investment earnings –$ 153$ 153$ 404$ Other – primarily meal sales 2,618,790 2,559,430 (59,360) 2,550,935

State sources 143,875 147,433 3,558 114,255 Federal sources 1,017,645 1,091,662 74,017 1,022,611

Total revenue 3,780,310 3,798,678 18,368 3,688,205

ExpendituresCurrent

Salaries 1,284,531 1,253,936 (30,595) 1,242,239 Employee benefits 657,428 657,505 77 660,306 Purchased services 335,280 347,958 12,678 394,853 Supplies and materials 1,473,765 1,470,308 (3,457) 1,514,543 Other expenditures 6,535 529 (6,006) 12,587

Capital outlay 14,300 13,229 (1,071) 14,162 Total expenditures 3,771,839 3,743,465 (28,374) 3,838,690

Excess (deficiency) of revenue over expenditures 8,471 55,213 46,742 (150,485)

Other financing sourcesSale of capital assets – 200 200 –

Net change in fund balances 8,471$ 55,413 46,942$ (150,485)

Fund balancesBeginning of year 68,165 218,650

End of year 123,578$ 68,165$

2015


Food Service Special Revenue FundSchedule of Revenue, Expenditures, and Changes in Fund Balances



-68-

2015 2014


Current taxes 457,284 472,066 Delinquent taxes 16,885 19,966 Accounts and interest 36,194 38,309 Due from other governmental units 92,239 21,502

Prepaid items 7,314 16,359

Total assets 2,054,857$ 1,871,715$

LiabilitiesSalaries payable 174,873$ 148,135$ Accounts and contracts payable 72,312 58,144 Due to other governmental units 8 4,019 Unearned revenue 249,759 224,886

Total liabilities 496,952 435,184

Deferred inflows of resourcesProperty taxes levied for subsequent year 880,414 900,157 Unavailable revenue – delinquent taxes 11,544 20,564

Total deferred inflows of resources 891,958 920,721

Fund balances (deficits)Nonspendable for prepaid items 7,314 16,359 Restricted for community education programs 570,897 483,912 Restricted for early childhood family education programs 63,952 – Restricted for school readiness 21,385 19,707 Restricted for adult basic education 140 – Restricted for community service 2,259 17,919 Unassigned – early childhood family education programs

restricted account deficit – (22,087) Total fund balances 665,947 515,810

Total liabilities, deferred inflows of resources, and fund balances 2,054,857$ 1,871,715$

as of June 30, 2015 and 2014Comparative Balance Sheet

Community Service Special Revenue Fund


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2014Over (Under)



Property taxes 899,763$ 892,596$ (7,167)$ 436,589$ Investment earnings 1,000 1,474 474 1,068 Other – primarily tuition and fees 3,037,843 3,121,607 83,764 2,767,116

State sources 574,519 587,293 12,774 913,189 Federal sources 2,201 1,299 (902) 2,140

Total revenue 4,515,326 4,604,269 88,943 4,120,102

ExpendituresCurrent

Salaries 2,553,744 2,518,303 (35,441) 2,338,531 Employee benefits 870,849 859,648 (11,201) 767,625 Purchased services 796,548 781,906 (14,642) 664,846 Supplies and materials 243,256 225,726 (17,530) 204,959 Other expenditures 28,439 32,692 4,253 59,910

Capital outlay 63,776 35,857 (27,919) 27,022 Total expenditures 4,556,612 4,454,132 (102,480) 4,062,893

Net change in fund balances (41,286)$ 150,137 191,423$ 57,209

Fund balances Beginning of year 515,810 458,601

End of year 665,947$ 515,810$



2015

Year Ended June 30, 2015Budget and Actual

Schedule of Revenue, Expenditures, and Changes in Fund BalancesCommunity Service Special Revenue Fund

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2015 2014


Accounts and interest 25,389 369

Total assets 1,514,629$ 6,165,301$

LiabilitiesSalaries payable –$ 2,011$ Accounts and contracts payable 1,033,425 903,135

Total liabilities 1,033,425 905,146

Fund balances (deficits)Restricted for alternative facilities program 1,067,917 2,635,324 Restricted for building projects funded by certificates of participation – 137,915 Restricted for capital projects – 2,486,916 Unassigned (586,713) –

Total fund balances 481,204 5,260,155

Total liabilities and fund balances 1,514,629$ 6,165,301$


Capital Projects – Building Construction FundComparative Balance Sheet

as of June 30, 2015 and 2014

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2014Over (Under)



Property taxes 3,556,087$ 3,556,087$ –$ 2,214,866$ Investment earnings 2,000 1,503 (497) 1,936 Other – – – 3,078

Total revenue 3,558,087 3,557,590 (497) 2,219,880

ExpendituresCapital outlay

Salaries 84,220 82,004 (2,216) 79,989 Employee benefits 40,961 39,779 (1,182) 39,435 Purchased services 998,640 1,426,243 427,603 780,776 Supplies and materials 5,000 41,525 36,525 14,416 Capital expenditures 8,004,100 6,746,990 (1,257,110) 2,655,811 Other expenditures – – – 5,682

Total expenditures 9,132,921 8,336,541 (796,380) 3,576,109

Excess (deficiency) of revenue over expenditures (5,574,834) (4,778,951) 795,883 (1,356,229)

Other financing sourcesDebt issued – – – 3,330,494 Premium on debt issued – – – 96,586

Total other financing sources – – – 3,427,080

Net change in fund balances (5,574,834)$ (4,778,951) 795,883$ 2,070,851

Fund balances Beginning of year 5,260,155 3,189,304

End of year 481,204$ 5,260,155$

2015


Capital Projects – Building Construction FundSchedule of Revenue, Expenditures, and Changes in Fund Balances

Budget and Actual


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Regular OPEBDebt Service Debt Service

Account Account 2015 2014

AssetsCash and temporary investments 5,777,928$ 947,955$ 6,725,883$ 6,493,113$ Receivables

Current taxes 4,670,829 745,715 5,416,544 5,091,764 Delinquent taxes 157,826 27,620 185,446 222,836 Due from other governmental units 889 153 1,042 1,080

Total assets 10,607,472$ 1,721,443$ 12,328,915$ 11,808,793$

Deferred inflows of resourcesProperty taxes levied for subsequent year 8,992,789$ 1,435,732$ 10,428,521$ 9,709,203$ Unavailable revenue – delinquent taxes 108,370 19,136 127,506 230,379

Total deferred inflows of resources 9,101,159 1,454,868 10,556,027 9,939,582

Fund balancesRestricted for debt service 1,506,313 266,575 1,772,888 1,869,211

Total deferred inflows of resources and fund balances 10,607,472$ 1,721,443$ 12,328,915$ 11,808,793$

Totals


Debt Service FundBalance Sheet by Account

as of June 30, 2015(With Comparative Totals as of June 30, 2014)

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Regular OPEBDebt Service Debt Service

Budget Account Account


Property taxes 9,705,035$ 8,213,060$ 1,413,908$ Investment earnings 20,000 6,077 327

State sources 1,500 8,873 1,529 Total revenue 9,726,535 8,228,010 1,415,764

ExpendituresCapital outlay – joint elementary school 656,681 627,574 – Debt service

Principal 8,085,000 7,410,000 675,000 Interest 1,478,611 736,608 742,003 Fiscal charges and other 3,000 2,460 –

Total expenditures 10,223,292 8,776,642 1,417,003

Excess (deficiency) of revenue over expenditures (496,757) (548,632) (1,239)

Other financing sourcesDebt issued – – – Transfers in 453,548 453,548 –

Total other financing sources 453,548 453,548 –

Net change in fund balances (43,209)$ (95,084) (1,239)

Fund balancesBeginning of year 1,601,397 267,814

End of year 1,506,313$ 266,575$

Actual2015


Debt Service FundSchedule of Revenue, Expenditures, and Changes in Fund Balances by Account



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2014

Over (Under)Total Budget Actual

9,626,968$ (78,067)$ 9,540,818$ 6,404 (13,596) 6,936

10,402 8,902 10,814 9,643,774 (82,761) 9,558,568

627,574 (29,107) 639,929

8,085,000 – 7,400,000 1,478,611 – 1,672,259

2,460 (540) 2,875 10,193,645 (29,647) 9,715,063

(549,871) (53,114) (156,495)

– – 29,506 453,548 – – 453,548 – 29,506

(96,323) (53,114)$ (126,989)

1,869,211 1,996,200

1,772,888$ 1,869,211$

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Health Benefits DentalSelf-Insurance Self-Insurance 2015 2014

AssetsCurrent assets

Cash and temporary investments 4,736,957$ 195,786$ 4,932,743$ 4,777,363$ Receivables

Accounts and interest 26,677 10,504 37,181 38,039 Total assets 4,763,634 206,290 4,969,924 4,815,402

LiabilitiesCurrent liabilities

Accounts and contracts payable 318,762 28,477 347,239 513,877 Unearned revenue 1,409,038 1,819 1,410,857 1,594,758 Claims incurred, but not reported 849,089 16,226 865,315 1,120,309

Total current liabilities 2,576,889 46,522 2,623,411 3,228,944

Net positionUnrestricted 2,186,745$ 159,768$ 2,346,513$ 1,586,458$

(With Comparative Totals as of June 30, 2014)

Totals


Internal Service FundsCombining Statement of Net Position

as of June 30, 2015

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Operating revenueCharges for services

Contributions from governmental funds 14,950,322$ 796,730$ 15,747,052$ 15,498,018$

Operating expensesHealth benefit claims 14,119,837 – 14,119,837 13,344,352 Dental benefit claims – 871,844 871,844 774,359

Total operating expenses 14,119,837 871,844 14,991,681 14,118,711

Operating income (loss) 830,485 (75,114) 755,371 1,379,307

Nonoperating revenueInvestment earnings 4,348 336 4,684 3,109

Change in net position 834,833 (74,778) 760,055 1,382,416

Net positionBeginning of year 1,351,912 234,546 1,586,458 204,042

End of year 2,186,745$ 159,768$ 2,346,513$ 1,586,458$

(With Comparative Totals for the Year Ended June 30, 2014)

Totals


Internal Service FundsCombining Statement of Revenue, Expenses, and Changes in Fund Net Position


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Cash flows from operating activitiesContributions from governmental funds 14,847,817$ 716,192$ 15,564,009$ 15,599,088$ Payment for health claims (14,543,600) – (14,543,600) (12,953,755) Payment for dental claims – (869,713) (869,713) (767,516)

Net cash flows from operating activities 304,217 (153,521) 150,696 1,877,817

Cash flows from investing activitiesInvestment income received 4,348 336 4,684 3,109

Net change in cash and cash equivalents 308,565 (153,185) 155,380 1,880,926

Cash and cash equivalentsBeginning of year 4,428,392 348,971 4,777,363 2,896,437

End of year 4,736,957$ 195,786$ 4,932,743$ 4,777,363$

Reconciliation of operating income (loss) to net cash flows from operating activities

Operating income (loss) 830,485$ (75,114)$ 755,371$ 1,379,307$ Adjustments to reconcile operating income (loss) to net cash flows from operating activities

Changes in assets and liabilitiesAccounts receivable 770 88 858 41,100 Accounts and contracts payable (167,266) 628 (166,638) 467,747 Unearned revenue (103,275) (80,626) (183,901) 59,970 Claims incurred but not reported (256,497) 1,503 (254,994) (70,307)

Net cash flows from operating activities 304,217$ (153,521)$ 150,696$ 1,877,817$

(With Comparative Totals for the Year Ended June 30, 2014)

Totals


Internal Service FundsCombining Statement of Cash Flows


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Section IIIStatistical

Stillwate


Contents

Financial Trends

Revenue Capacity

Debt Capacity

Demographic and Economic Information

Operating Indicators

Sources:

These schedules contain service and infrastructure data to help the reader understand how the information in theDistrict’s CAFR relates to the services the District provides, and the activities it performs.

Unless otherwise noted, the information in these schedules is derived from the District’s CAFR for the relevantyear.

STATISTICAL SECTION (UNAUDITED)

This section of Independent School District No. 834’s (the District) comprehensive annual financial report (CAFR)presents detailed information as a context for understanding what the information in the financial statements, notedisclosures, and required supplementary information says about the District’s overall financial health.

These schedules contain trend information to help the reader understand how the District’s financial performance andwell-being have changed over time.

These schedules contain information to help the reader assess the District’s most significant local revenue source,property taxes.

These schedules present information to help the reader assess the affordability of the District’s current levels ofoutstanding debt and the District’s ability to issue additional debt in the future.

These schedules offer demographic and economic indicators to help the reader understand the environment withinwhich the District’s financial activities take place.

2006 2007 2008 2009

Governmental activitiesNet investment in capital assets 10,924,190$ 14,756,992$ 14,881,633$ 21,089,341$ Restricted 4,759,061 5,946,352 10,392,587 7,703,046 Unrestricted (14,649,617) (14,137,585) (7,509,256) 12,406,435

Total governmental activities net position 1,033,634$ 6,565,759$ 17,764,964$ 41,198,822$

Note 1:

Note 2:

(Accrual Basis of Accounting)

The District implemented GASB Statement No. 68 in fiscal 2015. The District reported a change in accountingprinciple as a result of implementing this standard that decreased unrestricted net position by approximately$57.4 million.

Fiscal Year


Net Position by ComponentLast Ten Fiscal Years

The District implemented GASB Statement No. 45 in fiscal 2009. The District reported a change in accountingprinciple as a result of implementing this standard that increased unrestricted net position by approximately$16.3 million.

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2010 2011 2012 2013 2014 2015

26,912,181$ 32,496,605$ 37,806,325$ 42,915,472$ 48,412,468$ 56,387,161$ 5,836,072 5,741,270 6,583,887 6,729,217 6,604,074 5,665,080

16,061,541 14,300,543 13,994,929 13,185,342 10,995,216 (44,814,567)

48,809,794$ 52,538,418$ 58,385,141$ 62,830,031$ 66,011,758$ 17,237,674$

-80-

2006 2007 2008 2009

Governmental activitiesExpenses

Administration 2,534,955$ 2,992,735$ 2,865,280$ 2,865,116$ District support services 2,521,529 2,310,618 2,154,748 3,038,488 Elementary and secondary regular instruction 40,451,076 43,428,075 39,725,125 41,493,803 Vocational education instruction 722,509 692,393 654,272 745,556 Special education instruction 12,194,026 12,144,868 12,099,216 13,206,499 Instructional support services 4,722,705 4,815,785 4,548,287 4,890,063 Pupil support services 6,988,750 7,153,644 7,568,484 7,872,315 Sites and buildings 9,768,147 9,051,494 9,583,240 8,733,192 Fiscal and other fixed cost programs 340,866 254,468 223,936 226,975 Food service 3,439,193 3,645,992 3,774,872 4,118,584 Community service 3,797,040 3,812,371 3,869,376 3,910,085 Interest and fiscal charges 2,658,109 3,402,874 3,073,076 2,819,105

Total governmental activities expenses 90,138,905 93,705,317 90,139,912 93,919,781

Program revenuesCharges for services

District support services – – – – Elementary and secondary regular instruction 539,588 958,096 1,658,560 1,522,339 Vocational education instruction – – 1,637 1,840 Special education instruction 624,760 387,092 – 236,083 Instructional support services 4,187 902 4,675 7,603 Pupil support services 76,274 52,937 43,026 75,713 Sites and buildings 35,000 35,000 38,050 35,000 Food service 2,557,654 2,697,742 2,794,304 2,910,136 Community service 2,384,354 2,282,961 2,374,120 2,144,984

Operating grants and contributions 10,601,156 9,868,159 10,572,728 10,954,652 Capital grants and contributions 305,144 – – –

Total governmental activities program revenues 17,128,117 16,282,889 17,487,100 17,888,350

Net (expense) revenue (73,010,788) (77,422,428) (72,652,812) (76,031,431)

General revenues and other changes in net positionTaxes

Property taxes, levied for general purposes 7,775,808 13,887,581 14,598,532 14,824,812 Property taxes, levied for community service 421,036 825,007 847,325 767,959 Property taxes, levied for building construction 1,500,000 1,500,000 2,500,000 2,325,124 Property taxes, levied for debt service 7,432,543 8,158,898 8,093,169 8,506,949

General grants and aids 57,583,915 53,693,705 54,913,196 54,764,777 Other general revenues 3,472,771 2,792,303 1,520,230 1,518,888 Investment earnings 911,634 2,097,059 1,379,565 486,284

Total general revenues and other changes in net position 79,097,707 82,954,553 83,852,017 83,194,793

Change in net position 6,086,919$ 5,532,125$ 11,199,205$ 7,163,362$

Fiscal Year


Changes in Net PositionLast Ten Fiscal Years


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2010 2011 2012 2013 2014 2015

3,041,640$ 3,126,960$ 3,235,785$ 3,445,881$ 3,361,947$ 3,469,001$ 2,782,680 3,579,239 2,932,763 2,980,841 3,298,447 2,879,688

41,922,830 44,039,863 45,399,734 46,704,006 44,867,231 45,526,927 766,080 717,896 764,276 762,936 948,370 1,142,699

13,505,129 14,350,898 15,518,727 15,619,428 16,207,958 16,441,733 4,792,991 4,751,164 5,040,679 4,820,342 5,461,838 6,112,684 8,386,277 8,835,330 9,975,054 9,667,145 9,780,943 9,807,046 9,039,507 9,678,797 9,266,384 9,201,362 10,583,746 11,582,408

189,764 190,063 217,758 252,417 274,552 188,265 3,866,922 4,012,862 3,945,136 4,039,562 3,952,305 3,883,245 3,780,587 3,908,861 3,960,982 4,204,796 4,213,278 4,586,087 2,713,060 2,722,908 2,728,948 2,164,229 1,580,073 1,362,338

94,787,467 99,914,841 102,986,226 103,862,945 104,530,688 106,982,121

17,655 17,538 17,895 15,740 8,805 1,594 1,446,214 1,441,187 1,424,263 1,856,271 1,645,165 1,340,698

480 691 1,814 216 – 636 368,106 162,129 71,507 107,767 192,412 106,819 34,899 47,521 61,216 110,769 196,225 55,502 50,240 51,999 53,037 49,321 46,004 9,559 59,997 236,885 414,364 450,136 439,878 362,283

2,878,510 2,766,860 2,735,673 2,660,858 2,550,935 2,559,430 2,145,350 2,385,426 2,339,041 2,708,941 2,767,116 3,121,607

11,394,973 13,079,813 14,762,025 12,402,761 13,766,818 13,909,704 – – 1,006,442 260,000 – –

18,396,424 20,190,049 22,887,277 20,622,780 21,613,358 21,467,832

(76,391,043) (79,724,792) (80,098,949) (83,240,165) (82,917,330) (85,514,289)

15,447,040 22,515,640 17,490,729 17,123,931 9,620,050 21,050,994 875,488 1,292,504 862,659 876,061 443,538 883,576

2,399,459 2,984,614 2,957,788 2,996,024 2,214,866 3,556,087 9,799,390 9,665,222 9,753,374 9,983,309 9,618,842 9,524,095

54,202,772 45,798,915 53,389,125 55,057,375 62,828,789 57,947,379 1,189,290 1,149,074 1,440,494 1,607,275 1,334,369 1,100,896

88,576 47,447 51,503 41,080 38,603 33,423

84,002,015 83,453,416 85,945,672 87,685,055 86,099,057 94,096,450

7,610,972$ 3,728,624$ 5,846,723$ 4,444,890$ 3,181,727$ 8,582,161$

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Capital Projects –General Community Building DebtPurposes Service Construction Service Total

7,775,808$ 421,036$ 1,500,000$ 7,432,543$ 17,129,387$

13,887,581 825,007 1,500,000 8,158,898 24,371,486

14,598,532 847,325 2,500,000 8,093,169 26,039,026

14,824,812 767,959 2,325,124 8,506,949 26,424,844

15,447,040 875,488 2,399,459 9,799,390 28,521,377

22,515,640 1,292,504 2,984,614 9,665,222 36,457,980

17,490,729 862,659 2,957,788 9,753,374 31,064,550

17,123,931 876,061 2,996,024 9,983,309 30,979,325

9,620,050 443,538 2,214,866 9,618,842 21,897,296

21,050,994 883,576 3,556,087 9,524,095 35,014,752

Note: The change in “tax shift” as approved in legislation impacted the amount of tax revenue recognized in fiscal years2006, 2011, and 2014. Changes in the amount of revenue recognized due to the tax shift are offset by an adjustmentto state aid payments by an equal amount.

Fiscal Year

Property Tax

2010

2007

2011

2012

2014

2015

2008

2013

2009

2006


Governmental Activities Tax Revenues by Source and Levy TypeLast Ten Fiscal Years


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Fiscal Year2006 2007 2008 2009

General FundReserved 5,095,674$ 6,559,427$ 6,972,794$ 4,006,498$ Unreserved 3,779,837 5,583,084 10,684,442 17,757,679 Nonspendable – – – – Restricted – – – – Assigned – – – – Unassigned – – – –

Total General Fund 8,875,511$ 12,142,511$ 17,657,236$ 21,764,177$

All other governmental fundsReserved 27,742,108$ 17,151,453$ 4,280,876$ 2,104,223$ Unreserved, reported in

Special revenue funds 314,536 212,429 215,273 306,438 Debt service funds 1,960,846 2,389,018 2,521,865 2,341,801

Nonspendable – – – – Restricted – – – – Unassigned – – – –

Total all other governmental funds 30,017,490$ 19,752,900$ 7,018,014$ 4,752,462$

Total all governmental funds 38,893,001$ 31,895,411$ 24,675,250$ 26,516,639$


Fund Balances of Governmental FundsLast Ten Fiscal Years

(Modified Accrual Basis of Accounting)

The District implemented GASB Statement No. 54 in fiscal 2011. The new fund balance classifications under GASBStatement No. 54 are not available for previous fiscal years.

Note:

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2010 2011 2012 2013 2014 2015

2,416,646$ –$ –$ –$ –$ –$ 20,149,643 – – – – –

– 481,158 492,250 341,429 380,847 271,178 – 2,985,708 3,200,215 1,696,761 1,931,056 2,467,558 – 10,313,846 7,498,781 9,434,577 5,992,778 2,125,946 – 6,736,831 8,381,132 5,200,321 4,672,888 9,137,032

22,566,289$ 20,517,543$ 19,572,378$ 16,673,088$ 12,977,569$ 14,001,714$

1,702,530$ –$ –$ –$ –$ –$

597,744 – – – – – 1,938,911 – – – – –

– 74,943 83,198 94,083 84,210 70,214 – 18,100,245 17,696,287 5,768,672 7,651,218 3,560,116 – – – – (22,087) (586,713)

4,239,185$ 18,175,188$ 17,779,485$ 5,862,755$ 7,713,341$ 3,043,617$

26,805,474$ 38,692,731$ 37,351,863$ 22,535,843$ 20,690,910$ 17,045,331$

-85-

2006 2007 2008 2009

RevenuesLocal sources

Taxes 17,123,071$ 24,266,449$ 25,952,333$ 26,291,089$ Investment earnings 911,634 2,097,059 1,379,565 486,284 Other 9,519,588 9,207,033 8,434,602 8,452,586

State sources 65,669,102 60,653,946 62,371,846 62,692,999 Federal sources 2,821,113 2,907,918 3,114,078 3,026,430

Total revenues 96,044,508 99,132,405 101,252,424 100,949,388

ExpendituresCurrent

Administration 2,636,354 2,921,259 2,777,585 3,626,450 District support services 2,346,334 2,399,421 2,490,086 3,639,254 Elementary and secondary regular instruction 39,047,858 40,343,122 39,145,244 50,701,768 Vocational education instruction 694,089 664,725 620,325 861,269 Special education instruction 11,927,646 11,936,615 11,560,959 16,162,412 Instructional support services 4,633,748 4,722,263 4,459,325 5,611,563 Pupil support services 6,787,445 6,956,508 7,970,717 8,281,049 Sites and buildings 7,170,459 6,639,559 7,022,603 8,140,132 Fiscal and other fixed cost programs 340,866 254,468 223,936 226,975 Food service 3,353,800 3,567,834 3,685,740 3,637,043 Community service 3,667,256 3,679,937 3,735,258 3,748,303

Capital outlay 7,805,154 13,600,945 9,192,094 4,959,922 Debt service

Principal 4,655,075 5,198,646 5,286,004 5,693,750 Interest and fiscal charges 2,732,052 3,244,693 3,402,709 2,873,186

Total expenditures 97,798,136 106,129,995 101,572,585 118,163,076

Excess of revenues over (under) expenditures (1,753,628) (6,997,590) (320,161) (17,213,688)

Other financing sources (uses)Debt issued (bonds, COPs, and leases) 20,497,000 – – 19,155,000 Refunding debt issued 6,883,000 – – 18,805,000 Premium (discount) on debt issued 515,837 – – 500,077 Payments to refunded bond escrow agent – – (6,900,000) (19,405,000) Sale of capital assets – – – – Transfers in – – – – Transfers out – – – –

Total other financing sources (uses) 27,895,837 – (6,900,000) 19,055,077

Net change in fund balances 26,142,209$ (6,997,590)$ (7,220,161)$ 1,841,389$

Debt service as a percentage of noncapital expenditures 8.2% 9.1% 9.4% 7.6%

Last Ten Fiscal Years(Modified Accrual Basis of Accounting)


Fiscal Year

Changes in Fund Balances of Governmental Funds

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2010 2011 2012 2013 2014 2015

28,348,430$ 36,599,588$ 31,112,428$ 31,003,085$ 21,663,695$ 35,304,525$ 88,576 47,447 51,503 36,529 35,494 28,739

8,190,741 8,259,310 9,565,746 9,567,294 9,180,909 8,659,024 56,813,540 53,970,507 63,275,666 64,012,306 72,763,704 67,778,735

8,784,205 4,908,221 4,875,484 3,447,830 3,831,903 3,961,017 102,225,492 103,785,073 108,880,827 108,067,044 107,475,705 115,732,040

2,955,484 3,050,424 3,122,053 3,265,990 3,221,578 3,315,207 3,475,331 3,559,455 2,962,763 2,898,262 3,276,874 2,799,843

40,640,979 42,882,425 43,734,096 45,045,025 44,249,081 44,369,591 728,145 681,283 725,446 714,976 897,800 1,118,757

13,182,892 14,098,745 15,078,470 15,163,821 15,696,438 16,053,961 4,699,181 4,727,331 4,872,233 4,760,457 5,333,225 6,006,701 8,103,691 8,554,839 9,664,270 9,316,324 9,436,480 9,466,764 7,395,211 8,001,032 7,402,105 7,606,240 8,386,809 8,515,322

189,764 190,063 217,758 252,417 274,552 188,265 3,758,718 3,897,203 3,834,043 3,906,007 3,824,528 3,730,236 3,635,911 3,733,145 3,757,693 4,002,997 4,035,871 4,418,275 3,375,914 4,831,964 12,561,991 3,090,147 4,257,222 9,013,201

6,750,000 6,851,862 7,097,360 7,864,472 7,875,000 8,570,000 3,045,436 2,817,000 3,097,454 2,808,570 2,022,272 1,818,709

101,936,657 107,876,771 118,127,735 110,695,705 112,787,730 119,384,832

288,835 (4,091,698) (9,246,908) (2,628,661) (5,312,025) (3,652,792)

– 10,568,694 – – 3,360,000 – – 4,630,000 11,815,000 – – – – 780,261 826,040 – 96,586 – – – (4,735,000) (12,210,000) – – – – – 22,641 10,506 7,213 – – – – – 453,548 – – – – – (453,548) – 15,978,955 7,906,040 (12,187,359) 3,467,092 7,213

288,835$ 11,887,257$ (1,340,868)$ (14,816,020)$ (1,844,933)$ (3,645,579)$

9.9% 9.4% 9.5% 9.9% 9.0% 9.2%

-87-

Capital Projects –Building Community

Construction Debt Service SpecialGeneral Fund Fund Service Fund Revenue Fund Total

7,775,172$ 1,500,000$ 7,427,224$ 420,675$ 17,123,071$

13,822,132 1,500,000 8,122,623 821,694 24,266,449

14,542,170 2,500,000 8,065,830 844,333 25,952,333

14,732,405 2,325,124 8,468,090 765,470 26,291,089

15,350,371 2,399,459 9,729,165 869,435 28,348,430

22,605,469 2,984,614 9,712,279 1,297,226 36,599,588

17,514,085 2,957,788 9,775,753 864,802 31,112,428

17,134,315 2,996,024 9,995,503 877,243 31,003,085

9,471,422 2,214,866 9,540,818 436,589 21,663,695

21,228,874 3,556,087 9,626,968 892,596 35,304,525

Note:

2011

2012

2013

2014

The change in “tax shift” as approved in legislation impacted the amount of tax revenue recognized in fiscal years2006, 2011, and 2014. Changes in the amount of revenue recognized due to the tax shift are offset by an adjustmentto state aid payments by an equal amount.

2015

Fiscal Year

2006

2007

2008

2009

2010

Property Tax


General Governmental Tax Revenues by Source and Levy TypeLast Ten Fiscal Years

(Modified Accrual Basis of Accounting)

-88-

Agricultural Non-Agricultural Contribution Distribution

2,825,460$ 75,290,397$ (4,468,236)$ 4,317,581$

2,950,664 86,115,249 (4,811,721) 4,806,471

3,141,858 92,927,086 (6,204,294) 5,663,595

3,203,160 95,201,054 (7,342,426) 6,607,347

2,182,525 93,477,345 (7,901,616) 6,797,234

2,549,868 88,348,989 (7,309,552) 6,824,429

2,244,531 82,304,899 (7,491,704) 6,203,175

2,247,330 78,962,711 (7,455,679) 5,635,681

2,274,352 80,305,216 (7,438,018) 5,569,812

2,601,918 90,112,548 (7,063,639) 5,859,176

Note:

Source: State of Minnesota School Tax Report

2011

2012

2010

2008

2009

2006

2007

Tax Capacity Valuation


Tax Capacities and Market ValuesLast Ten Fiscal Years

2015

2014

The District has presented taxable market value, which is the best information available to represent estimatedactual value of property.

2013

CollectibleFiscal DisparitiesFor Taxes

-89-

TaxableTax Increment Total Taxable Market Value

(2,331,954)$ 75,633,248$ 19.41 % 6,838,847,950$ 1.11 %

(3,186,422) 85,874,241 19.00 7,715,239,550 1.11

(3,429,244) 92,099,001 17.40 8,211,679,350 1.12

(3,446,962) 94,222,173 17.71 8,352,967,100 1.13

(3,344,406) 91,211,082 19.73 8,085,484,800 1.13

(3,226,292) 87,187,442 20.30 7,641,521,000 1.14

(2,196,517) 81,064,384 22.33 7,299,137,400 1.11

(2,299,050) 77,090,993 22.02 6,988,425,700 1.10

(1,515,947) 79,195,415 23.15 7,122,885,600 1.11

(1,615,626) 89,894,377 21.12 8,025,467,500 1.12

TotalDirect Tax Rate

Tax Capacity

of Market Valueas a Percentage

-90-

TaxCollectionCalendar Oak Park

Year ISD No. 834 Stillwater Heights Bayport Marine Afton

2006 19.405% 49.246% 36.136% 34.524% 35.005% 26.571% 2006 0.13216% – – – – –

2007 19.004% 46.498% 35.733% 31.014% 32.147% 22.349% 2007 0.11527% – – – – –

2008 17.404% 48.186% 36.343% 30.206% 35.519% 22.510% 2008 0.12544% – – – – –

2009 17.714% 47.930% 38.732% 30.488% 34.407% 24.037% 2009 0.12623% – – – – –

2010 19.734% 49.493% 43.845% 32.359% 35.478% 25.357% 2010 0.12033% – – – – –

2011 20.300% 52.539% 45.028% 35.650% 38.842% 27.044% 2011 0.15894% – – – – –

2012 22.333% 54.674% 51.710% 40.571% 45.202% 30.078% 2012 0.17625% – – – – –

2013 22.018% 61.503% 54.898% 43.923% 53.537% 30.059% 2013 0.16569% – – – – –

2014 23.150% 58.359% 59.641% 41.699% 57.734% 30.092% 2014 0.22687% – – – – –

2015 21.124% 54.916% 56.804% 40.468% 55.427% 27.737% 2015 0.19995% – – – – –

(1) Municipalities listed include those with district learning sites.

(2)

Source: Washington County

Market value rate

The miscellaneous other levy includes the Washington County HRA, Metropolitan Council, MetropolitanMosquito, Transit District, Valley Branch Watershed, Rice Creek Watershed, Carnelian-Marine Watershed, SouthWashington Watershed, Browns Creek Watershed, Woodbury HRA, and Regional Rail Authority.

Overlapping RatesMunicipalities (1)

Rate

Tax capacity rate

Tax capacity rateMarket value rate



Property Tax Rates – Direct and Overlapping GovernmentsLast Ten Fiscal Years

Tax capacity rate



Tax capacity rate



Market value rate


Market value rate

-91-

TotalWashington Miscellaneous Stillwater

Lake Elmo Lakeland Woodbury County Other (2) Resident

19.351% 34.410% 29.018% 25.869% 16.052% 110.572% – – 0.01943% – – 0.13216%

19.274% 34.312% 28.122% 24.604% 15.309% 105.415% – – 0.02450% – – 0.11527%

20.553% 32.522% 28.169% 24.822% 15.283% 105.695% – – 0.02318% – – 0.12544%

19.878% 35.125% 28.474% 25.242% 14.399% 105.285% – – 0.02249% – – 0.12623%

20.479% 38.420% 31.033% 26.670% 14.769% 110.666% – – 0.02361% – – 0.12033%

21.832% 40.375% 34.921% 28.511% 15.237% 116.587% – – 0.02572% – – 0.15894%

27.272% 44.462% 35.921% 30.265% 17.478% 124.750% – – 0.02565% – – 0.17625%

27.818% 48.194% 39.440% 32.328% 18.948% 134.797% – – 0.02699% – – 0.16569%

27.761% 47.028% 38.076% 31.051% 18.145% 130.705% – – 0.02594% – – 0.22687%

23.798% 43.489% 34.657% 28.441% 16.640% 121.122% – – 0.01308% – – 0.19995%

-92-

Net Tax Net TaxCapacity Rank Capacity Rank

8,013,302$ 1 8.91 % 2,975,890$ 1 3.93 %950,331 2 1.06 386,544 4 0.51 712,670 3 0.79 – – – 612,190 4 0.68 654,240 2 0.87 528,290 5 0.59 – – – 510,690 6 0.57 – – – 482,905 7 0.54 374,154 5 0.49 481,886 8 0.54 – – – 458,577 9 0.51 – – – 457,121 10 0.51 – – –

SC Mall, LLC – – – 561,030 3 0.74 Prudential Insurance Company of America – – – 326,598 6 0.43

– – – 309,277 7 0.41 – – – 309,271 8 0.41

Menards, Inc. – – – 288,350 9 0.38 VSSA Housing and Community Services, LLC – – – 282,123 10 0.37

Total 13,207,962$ 14.69 % 6,467,477$ 8.55 %


Rivertown Trading CompanyTarget Corporation

Stillwater Health System

VSSA Boutwells Landing, LLC


2015 2006

Current Year and Nine Years Ago

Percentage

Principal Property Taxpayers

of Taxof Tax

Wal-Mart RE Business – TRS

Capacity Value

Percentage

Xcel Energy

Sam’s Real Estate Business – TRSOPH PAT, LLC & OPH VAL, LLC

Capacity ValueTaxpayer

Inland Woodbury Commons, LLC

Andersen Corporation

Crossroads Commerce Center, LLC

Uptown Citywalk, LLLP

-93-

PropertyLocal Spread Fiscal Disparities Tax Credits Total Spread Amount

22,443,970$ 1,446,347$ 467,468$ 24,357,785$ 23,981,922$ 98.5 %

23,898,040 1,544,990 426,488 25,869,518 25,362,791 98.0

24,983,142 1,697,782 378,620 27,059,544 26,477,924 97.9

25,686,833 1,937,342 389,065 28,013,240 27,250,014 97.3

25,962,783 2,022,039 446,618 28,431,440 27,882,503 98.1

27,998,728 2,133,322 485,327 30,617,377 30,165,859 98.5

29,596,378 2,196,745 – 31,793,123 31,387,467 98.7

27,325,101 2,227,189 – 29,552,290 29,194,108 98.8

33,219,281 2,128,942 – 35,348,223 35,019,746 99.1

33,800,881 2,642,422 – 36,443,303 17,485,963 48.0

Note 1:

Note 2:



Collections

Last Ten Fiscal YearsProperty Tax Levies, Collections, and Receivables

2013

2010

of Levy

2008

2009

For Taxes PercentageCollectible

2011

Original Levy

2012

First Year Levy Recognized

2014

A portion of the total spread levy is paid through various property tax credits which are paid through state aidsand have been included in collections. Legislative changes beginning with taxes collectible in 2012 significantlyreduced or eliminated the amount of tax credits paid through state aids.

Delinquent taxes receivable are written off after seven years. The amount of collections has been adjusted toreflect the write off of delinquent taxes receivable.

2006

2007

2015

-94-

Received inSubsequent

Years Amount Amount Amount

375,863$ 24,357,785$ 100.0 % –$ – % –$ – %

506,727 25,869,518 100.0 – – – –

581,620 27,059,544 100.0 – – – –

725,376 27,975,390 99.9 37,850 0.1 – –

523,164 28,405,667 99.9 25,773 0.1 – –

409,028 30,574,887 99.9 42,490 0.1 – –

344,841 31,732,308 99.8 60,815 0.2 – –

234,867 29,428,975 99.6 123,315 0.4 – –

– 35,019,746 99.1 328,477 0.9 – –

– 17,485,963 48.0 – – 18,957,340 52.0

618,720$ 18,957,340$

Total to DatePercentage

Percent

Uncollected Taxes Receivable as of June 30, 2015Delinquent Current

Percentof Levy

-95-

General PremiumObligation (Discount) Certificates of Total Primary Per

Bonds on Bonds Participation Capital Leases Government Capita (1)

74,990,000$ 661,032$ –$ 1,288,400$ 76,939,432$ 9.53 % 1,349$

70,365,000 532,351 – 714,754 71,612,105 8.34 1,221

58,785,000 466,438 – 108,750 59,360,188 6.87 987

71,755,000 819,452 – – 72,574,452 8.61 1,202

65,005,000 646,953 – – 65,651,953 7.63 1,076

62,980,000 1,283,018 10,000,000 371,832 74,634,850 8.21 1,255

63,145,000 1,921,745 10,000,000 189,472 75,256,217 7.76 1,265

43,730,000 1,443,936 9,530,000 – 54,703,936 5.54 891

39,690,000 1,187,586 9,055,000 – 49,932,586 N/A 810

31,605,000 847,879 8,570,000 – 41,022,879 N/A 649

N/A – Not Available

(1)

Note:

Source:

2015

2010

2008

Fiscal Year

Last Ten Fiscal Years

2006

Ratios of Outstanding Debt by Type

2014

2013

2011

2012

2009


2007

Income (1)of PersonalPercentage

The District and the City of Stillwater’s comprehensive annual financial reports for the year ended December 31, 2014.

See the Schedule of Demographic and Economic Statistics for personal income and total ISD No. 834 population data.

Governmental Activities

Details regarding the District’s outstanding debt can be found in the notes to basic financial statements.

-96-

Less Debt Net BondedGross Service Funds Net Estimated Debt

Bonded Debt on Hand Bonded Debt Market Value Population per Capita

75,651,032$ 8,930,496$ 66,720,536$ 6,838,847,950$ 0.98 % 57,049 1,170$

70,897,351 9,426,536 61,470,815 7,715,239,550 0.80 58,657 1,048

59,251,438 2,521,865 56,729,573 8,211,679,350 0.69 60,161 943

72,574,452 2,341,801 70,232,651 8,352,967,100 0.84 60,365 1,163

65,651,953 1,938,911 63,713,042 8,085,484,800 0.79 61,033 1,044

64,263,018 6,819,183 57,443,835 7,641,521,000 0.75 59,454 966

65,066,745 14,445,949 50,620,796 7,299,137,400 0.69 59,484 851

45,173,936 1,996,200 43,177,736 6,988,425,700 0.62 61,379 703

40,877,586 1,869,211 39,008,375 7,122,885,600 0.55 61,609 633

32,452,879 1,772,888 30,679,991 8,025,467,500 0.38 63,225 485

Source: Annual school district census and U.S. Census

2013

2010

2014

2012

YearFiscal


Net Debt to

2011

2007

Percent of

2015

Market Value

2006

2009

2008


Ratio of Net General Obligation Bonded Debtto Market Value and Net General Obligation Bonded Debt

per Capita

-97-

2014–2015Taxable Net Portion AllocableTax Capacity Bonded Debt to ISD No. 834

Independent School District No. 834 89,894,377$ 32,452,879$ 100.00 % 32,452,879$

Overlapping debtCity of Afton 6,131,202 6,240,000 83.43 5,206,032 City of Bayport 2,907,623 290,000 100.00 290,000 City of Hugo 16,054,724 9,300,000 5.14 478,020 City of Lake Elmo 13,072,105 20,000,000 61.13 12,226,000 City of Lakeland 2,253,756 1,485,000 100.00 1,485,000 City of Lake St. Croix Beach 987,113 153,682 100.00 153,682 City of Marine 1,347,526 94,000 100.00 94,000 City of Oak Park Heights 8,821,455 14,885,000 100.00 14,885,000 City of Scandia 5,351,906 1,030,000 0.04 412 City of Stillwater 20,551,164 31,515,000 100.00 31,515,000 City of Woodbury 83,772,549 57,827,070 13.11 7,581,129 Northeast Metropolitan Intermediate School District No. 916 265,486,865 2,695,000 33.86 912,527 South Washington Watershed 111,066,463 5,106,520 8.73 445,799 Washington County 261,367,034 172,765,000 31.03 53,608,980

Total overlapping debt 128,881,581

Total direct and overlapping debt 161,334,460$

Note 1:

Note 2:


The Washington County HRA, Metropolitan Council, and Metropolitan Airports Commission are governmentalunits with overlapping debt applicable to the District. Overlapping debt information for these units of governmentapplicable to the District was not readily available.


The percentage of overlapping debt applicable is estimated using taxable net tax capacity values. Applicablepercentages were estimated by determining the portion of the overlapping entity’s taxable net tax capacity valuethat is within the District’s boundaries and dividing it by the overlapping government’s total taxable net taxcapacity value.

Governmental Unit ISD No. 834 Allocable to

Percent

as of June 30, 2015Direct and Overlapping Debt

-98-

2006 2007 2008 2009

1,025,827,193$ 1,157,285,933$ 1,231,751,903$ 1,252,945,065$

66,059,504 60,938,464 56,263,135 69,413,199

959,767,689$ 1,096,347,469$ 1,175,488,768$ 1,183,531,866$

Total net debt applicable to the limit6.44% 5.27% 4.57% 5.54%

Note:


Total net debt applicable to limit

as a percentage of debt limit

Legal debt margin


Legal Debt Margin InformationLast Ten Fiscal Years

Under state finance law, the District’s outstanding general obligation debt should not exceed 15 percent of totalmarket property value. By law, the general obligation debt subject to the limitation may be offset by amounts setaside for repaying general obligation bonds.

Debt limit

Fiscal Year

-99-

2010 2011 2012 2013 2014 2015

1,212,822,720$ 1,146,228,150$ 1,094,870,610$ 1,048,263,855$ 1,068,432,840$ 1,203,820,125$

63,066,089 56,160,817 48,699,051 41,733,800 37,820,789 29,832,112

1,149,756,631$ 1,090,067,333$ 1,046,171,559$ 1,006,530,055$ 1,030,612,051$ 1,173,988,013$

5.20% 4.90% 4.45% 3.98% 3.54% 2.48%

Market value 8,025,467,500$

Debt limit (15% of market value) 1,203,820,125

Debt applicable to limitGeneral obligation bonds 31,605,000 Less amount set aside for repayment of general obligation debt (1,772,888)

Total net debt applicable to limit 29,832,112

Legal debt margin 1,173,988,013$

Legal Debt Margin Calculation for Fiscal Year 2015

-100-

TotalPersonal Per Capita ISD No. 834 School

Population (1) Income (1) Personal Income Population (2) Enrollment (3)

17,959 807,113,000$ 44,942 57,049 8,997 3.6 %

18,112 858,943,000 47,424 58,657 8,966 4.1

17,953 863,862,000 48,118 60,161 8,915 5.0

18,235 842,603,000 46,208 60,365 8,719 7.5

18,225 860,220,000 47,200 61,033 8,746 6.9

18,299 908,619,000 49,654 59,454 8,697 6.2

18,638 970,257,000 52,058 59,484 8,556 5.3

18,970 987,578,000 52,060 61,379 8,489 4.6

18,970 N/A N/A 61,609 8,497 3.6

N/A N/A N/A 63,225 8,448 3.5


Note 1: Student enrollment numbers are estimated for the most recent fiscal year.

Note 2: Unemployment rate for 2015 is an average through July 2015.

Sources:(1) City of Stillwater’s comprehensive annual financial report for the year ended December 31, 2014(2) Annual school district census and U.S. Census(3) The District(4) Minnesota Department of Employment and Economic Development



Fiscal Year

WashingtonCity of Stillwater

2015

2014

2010

2006

2007

2008

Demographic and Economic Statistics

2013

2009

2012

2011

UnemploymentCounty

Rate (4)

-101-

Employees Rank Employees Rank

Andersen Corporation 2,622 1 2,766 1 Washington County 1,127 2 970 3 Independent School District No. 834 1,030 3 1,048 2 Lakeview Memorial Hospital 759 4 500 5 Minnesota Correctional Facility – OPH 517 5 280 7 Stillwater Medical Group and Clinic 382 6 220 9 Wal-Mart 300 7 236 8 Cub Foods, Inc. 295 8 550 4 DiaSorin, Inc. 250 9 – – W. Zintl Corporation 180 10 – – Design Fabricated Parts, Inc. – – 330 6 Water Medical Group – – 200 10

Total 7,462 7,100

63,225 61,033

11.8% 11.6%

Note 1: Information prior to June 30, 2010 is not readily available.

Note 2:

Source: Telephone survey by district finance staff.

Percent of principal employers to total ISD No. 834 population

Current Year and Five Years Ago

Total ISD No. 834 population (see the Schedule of

Employer

Total number of employees working for employers within the District’s boundaries is not readily available. TheDistrict has provided total population to provide a comparison base to reference between current year and fiveyears ago.


Fiscal Year2015 2010

Principal Employers

Demographic and Economic Statistics)

-102-

2006 2007 2008 2009

8 7 7 9 18 18 17 18

514 517 522 516 89 95 93 102

170 178 200 198 79 78 78 78 65 61 55 62 60 50 62 35

Total 1,003 1,004 1,034 1,018

(1)

Source: The District’s Human Resources Department

This schedule is a headcount based on contract group; if an employee has multiple contract groups, they arereflected multiple times. Full-time and part-time employees count the same.

Food serviceParaprofessionals

Teachers

Employees (1)

Custodians

District directors/superintendent

Fiscal Year

Principals


Employees by ClassificationLast Ten Fiscal Years

Community education leads and assistants

Coordinators, supervisors, specialists, and technical support

-103-

2010 2011 2012 2013 2014 2015

9 10 10 10 10 11 18 18 18 17 17 17

510 542 554 542 548 523 103 105 98 104 105 105 197 200 183 180 197 191 89 77 76 75 74 72 60 57 56 52 52 52 62 65 51 52 56 59

1,048 1,074 1,046 1,032 1,059 1,030

-104-

BA BA + 15 BA + 30 BA + 45 BA + 60

37,041$ 38,262$ 39,499$ 40,751$ 42,015$ 59,783$ 62,262$ 67,284$ 70,167$ 76,716$

41 10 10 11 49

68,842$ MA +15

499

N/A – Not Applicable

Source: The District’s Human Resources Department



Salary Schedule

Low rangeHigh rangeNumber of teachers

Number of full-time equivalents

Teacher Data

Average educationAverage salary

-105-

MA MA + 15 MA + 30 MA + 45 MA + 60 Total

42,015$ 42,670$ 43,325$ 43,986$ 44,649$ N/A76,716$ 78,449$ 79,834$ 81,242$ 82,656$ N/A

139 48 49 31 125 513

-106-

ISD No. 834Student to Teacher Washington

Ratios (1) ISD No. 834 County Average State Average

20.02 17.09 15.49 13.53

19.52 16.73 15.02 13.40

19.83 16.96 14.79 13.02

19.36 16.89 15.26 13.73

19.69 17.26 14.66 12.98

19.36 16.40 14.57 13.04

18.09 15.20 14.48 13.04

18.16 15.32 14.17 12.93

17.86 15.01 13.85 12.82

18.99 15.75 14.21 12.56

(1) This data is computed using only full-time equivalent licensed classroom teaching staff.

(2)

Source: Minnesota Department of Education

2011


Student to Staff RatiosLast Ten Fiscal Years

Minnesota Department of Education Student to Staff Ratio (2)

Fiscal Year

2012

2006

This data is computed by dividing total students (Minnesota Department of Education enrollment numberspre-kindergarten through Grade 12) by total certified staff. Certified staff includes classroom teachers,administrators, special education teachers, and all other licensed professionals measured in full-time equivalents.

2013

2014

2015

2007

2008

2009

2010

-107-

Standardized tests

89 % 87 % 91 % 89 % 87 %83 85 85 78 85

Grade 7 83 82 79 81 80 Grade 10 74 74 83 90 88

MCA Math (1)87 87 89 89 91 68 66 72 68 76

Grade 7 72 75 78 79 77 Grade 11 43 48 51 56 62

23.2 23.4 23.6 23.3 23.9

Graduation data (2)ISD No. 834’s graduation rate 98 97 97 96 98 State graduation rate 91 91 92 92 92

Post-graduation student surveyFour-year college/university 71 67 60 55 63 Two-year college 17 23 20 19 12 Vocational/technical college 2 1 3 2 1 Employment 7 4 2 2 – Military 2 2 – 1 – No response/undecided 1 3 15 21 24

100 % 100 % 100 % 100 % 100 %


(1)

(2)

Note:

Source:


Operating Indicators by FunctionStandardized Testing and Graduation Rates


2006

MCA Reading (1)

2008Fiscal Year

Average composite score

2007 2010

ACT

Grade 5

Minnesota Department of Education, the District’s Testing Department, and the District’s Registrar andACT Corporation.

Percent of students scoring at or above proficiency on the Minnesota Comprehensive Assessment Test (II).

Grade 3

Grade 5Grade 3

2009

Starting in 2012, Minnesota began using the federally-required adjusted cohort graduation rate model.This model follows students in a cohort throughout high school and determines if they graduate withinfour, five, or six years. The four-year graduation rate shows the number of students graduating from highschool within four years after entering Grade 9.

In fiscal year 2005–2006, the Minnesota Comprehensive Assessment Test switched to the MinnesotaComprehensive Assessment Test II.

-108-

90 % 88 % 75 % 68 % 73 %87 86 76 78 76 76 86 67 68 70 89 88 74 68 72

90 90 82 81 83 69 74 71 67 65 67 74 70 67 68 65 53 70 65 60

24.1 24.0 24.1 24.5 24.7

96 86 88 89 N/A93 78 80 81 N/A

65 72 79 80 73 15 15 11 10 16 – – – – – – 3 3 3 4 – 3 1 2 3

20 6 6 5 5

100 % 100 % 100 % 100 % 100 %

201320122011 20152014

-109-

Square EnrollmentUse Constructed Acres Classrooms Footage Capacity (1)

Afton Lakeland Elementary School 1951/1954/1965 17.00 24 63,368 525 501 1968/1980/2001

School 1919/1937/1946 1.13 16 49,830 375 357 1980/1997/2014

Office/ 1975 6.50 N/A 16,139 N/A N/Awarehouse

Early Childhood Family Center School 2012 2.00 17 46,000 255 N/A

School 1920/1952/1954 8.70 36 82,570 725 723 1959/1963/19691976/1987/1988

1996/2010

School 1963/1966/1969 12.00 31 74,048 650 492 1990/1993

School 1954/1965/1975 9.90 7 18,555 175 153 1997/2005

School 1956/1963/1975 12.70 26 65,781 500 487 1996/2001/2014

School 1967/1969 40.00 50 133,451 1,050 830

School 1998 16.00 29 106,998 725 595

School 1993/2001 131.88 110 356,000 2,375 2,069

School 1959/1965/1969 40.00 59 212,924 1,250 1,142 1979/1993/2014

School 1971/1997 12.00 28 65,089 650 478

Washington School School 1939/2008 1.80 15 33,407 375 94

School 1954/1965/1975 9.00 13 33,034 250 181 1997


(1) Enrollment data from October 1, 2014

Source: The District’s Operations and Maintenance Department and Enrollment Department, and MDE school ADM servedreport.

Lake Elmo Elementary


School Facilitiesas of June 30, 2015

Andersen Elementary

Facility

Withrow Elementary

Oak Park Elementary

Rutherford Elementary

Lily Lake Elementary

Marine Elementary

Oak-Land Junior High

Central Services

Stillwater Junior High

Stillwater Area High

Stonebridge Elementary

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Average Daily Total Average DailyAttendance (1) Lunches Served Days Participation

8,057 924,186 174 5,311 65.92 %

8,181 953,575 173 5,512 67.38

8,147 960,944 175 5,491 67.40

7,935 921,516 173 5,327 67.13

7,972 929,732 175 5,313 66.64

7,907 923,824 175 5,279 66.76

7,745 873,497 174 5,020 64.82

7,737 811,103 172 4,716 60.95

7,765 769,864 167 4,610 59.37

7,786 762,295 173 4,406 56.59

(1)

Source: The District’s Food Service Department

Based on State Food and Nutrition Department guidelines.

2006

2007

Fiscal Year

2008

2012

2013

2014

2015


Food ServiceSchool Lunch Program Data


2011

2010

2009

AttendanceAverage Daily

as a Percentage ofParticipation

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Number Served Number Served

89,264 9.66 % 32,795 3.55 %

95,287 9.99 35,816 3.76

98,481 10.25 39,578 4.12

105,169 11.41 37,328 4.05

122,991 13.23 45,011 4.84

134,898 14.60 44,748 4.84

136,847 15.67 42,542 4.87

131,341 16.19 43,232 5.33

130,637 16.97 41,084 5.34

134,115 17.59 46,416 6.09

Percent of TotalPercent of TotalReduced LunchFree Lunch

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Pre-Kindergartenand Handicapped Total

Kindergarten Kindergarten Elementary Secondary Total Pupil Units

90.56 508.92 3,921.49 4,476.47 8,997.44 10,474.64

98.35 466.14 3,947.76 4,453.98 8,966.23 10,458.12

94.45 511.05 3,935.72 4,373.82 8,915.04 10,391.15

119.99 494.26 3,800.75 4,304.18 8,719.18 10,168.44

123.02 486.43 3,823.73 4,312.98 8,746.16 10,206.81

141.39 480.43 3,869.63 4,205.46 8,696.91 10,132.59

147.06 506.98 3,775.38 4,126.54 8,555.96 9,949.02

139.37 456.27 3,801.29 4,091.82 8,488.75 9,892.79

145.28 465.49 3,808.19 4,078.24 8,497.20 9,890.12

140.23 547.31 3,695.86 4,064.77 8,448.17 9,261.12

Note 1: Student enrollment numbers are estimated for the most recent fiscal year.

Note 2: Beginning in fiscal 2015, changes in ADM weightings as noted below reduced the calculated pupil units.

Note 3: ADM is weighted as follows in computing pupil units:

Handicapped Half-Day Full-Day Elementary ElementaryPre-Kindergarten Kindergarten Kindergarten Kindergarten 1–3 4–6 Secondary

Fiscal 2006 through 2007 1.250 1.000 0.557 0.557 1.115 1.060 1.300Fiscal 2008 through 2014 1.250 1.000 0.612 0.612 1.115 1.060 1.300Fiscal 2015 1.000 1.000 0.550 1.000 1.000 1.000 1.200

Source: Minnesota Department of Education student reporting system

2010

Average Daily Membership (ADM) (for Students Served or Tuition Paid)

Year Ended

2006

2009



Student Enrollment

2015

2014

June 30,

2008

2007

2013

2012

2011

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Seven-CountyState Average Metro Average

2014 2014 2014 2015

Expenditures per student (ADM) (1)General Fund

District level administration 501$ 522$ 428$ 424$ School level administration 425 432 348 354 Regular instruction 4,778 5,116 4,827 4,881 Career and technical instruction 133 121 104 131 Special education 1,976 2,108 1,831 1,883 Student activities/athletics 282 222 221 225 Instructional support services 524 606 527 607 Pupil support services 306 356 385 373 Operations, maintenance, and other 868 825 802 812 Student transportation 640 657 715 739 Equipment 401 337 329 225 Land and buildings 177 210 202 239

Total General Fund expenditures 11,011$ 11,512$ 10,718$ 10,893$

ADM used per profile model format 8,546 8,506

(1) Average daily membership (ADM) is a measure of student attendance.

Source: Minnesota Department of Education School District Profiles Report

ISD No. 834


Expenditures per StudentYear Ended June 30, 2015

(With Comparative Amounts for the Year Ended June 30, 2014)

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