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FAIRFIELD-SUISUN UNIFIED SCHOOL DISTRICTFairfield, California

FINANCIAL STATEMENTS June 30, 2015

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FAIRFIELD-SUISUN UNIFIED SCHOOL DISTRICT

FINANCIAL STATEMENTSWITH SUPPLEMENTARY INFORMATION

For the Year Ended June 30, 2015(Continued)

CONTENTS

INDEPENDENT AUDITOR'S REPORT..................................................................................................... 1

MANAGEMENT'S DISCUSSION AND ANALYSIS.................................................................................... 4

BASIC FINANCIAL STATEMENTS:

GOVERNMENT-WIDE FINANCIAL STATEMENTS:

STATEMENT OF NET POSITION................................................................................................... 10

STATEMENT OF ACTIVITIES......................................................................................................... 11

FUND FINANCIAL STATEMENTS:

BALANCE SHEET - GOVERNMENTAL FUNDS............................................................................. 12

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THESTATEMENT OF NET POSITION.............................................................................................. 13

STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUNDBALANCES - GOVERNMENTAL FUNDS.................................................................................. 14

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND

CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS - TO THESTATEMENT OF ACTIVITIES.................................................................................................... 15

STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES - AGENCY FUNDS............................. 16

NOTES TO FINANCIAL STATEMENTS............................................................................................... 17

REQUIRED SUPPLEMENTARY INFORMATION:

GENERAL FUND BUDGETARY COMPARISON SCHEDULE............................................................. 50

SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS (OPEB) FUNDING PROGRESS............ 51

SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OFTHE NET PENSION LIABILITY....................................................................................................... 52

SCHEDULE OF THE DISTRICT'S CONTRIBUTIONS......................................................................... 54

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION............................................................. 56

SUPPLEMENTARY INFORMATION:

COMBINING BALANCE SHEET - ALL NON-MAJOR FUNDS............................................................. 57

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGE INFUND BALANCES - ALL NON-MAJOR FUNDS............................................................................. 58

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FINANCIAL STATEMENTSWITH SUPPLEMENTARY INFORMATION

For the Year Ended June 30, 2015

CONTENTS

COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - ALL AGENCY FUNDS............................................................................................................................. 59

ORGANIZATION................................................................................................................................... 64

SCHEDULE OF AVERAGE DAILY ATTENDANCE.............................................................................. 65

SCHEDULE OF INSTRUCTIONAL TIME............................................................................................. 66

SCHEDULE OF EXPENDITURE OF FEDERAL AWARDS.................................................................. 67

RECONCILIATION OF UNAUDITED ACTUAL FINANCIAL REPORT WITH AUDITEDFINANCIAL STATEMENTS............................................................................................................. 69

SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS - UNAUDITED.............................................. 70

SCHEDULE OF CHARTER SCHOOLS................................................................................................ 71

NOTES TO SUPPLEMENTARY INFORMATION................................................................................. 72

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH STATE LAWS ANDREGULATIONS.................................................................................................................................... 74

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL

REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS...........................................................................................76

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJORFEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVERCOMPLIANCE..................................................................................................................................................... 78

FINDINGS AND RECOMMENDATIONS:

SCHEDULE OF AUDIT FINDINGS AND QUESTIONED COSTS........................................................ 80

STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS.................................................. 84

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INDEPENDENT AUDITOR'S REPORT

Board of EducationFairfield-Suisun Unified School District

Fairfield, California

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 Fairfield-Suisun Unified School District, as of and for the year ended June 30, 2015 and the related notes to the financial statements, which collectivelycomprise Fairfield-Suisun Unified School 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 includesthe 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. Weconducted 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 andperform the audit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectivenessof the entity’s internal control. Accordingly, we express no such opinion. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of significantaccounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the governmental activities, each major fund, and the aggregate remainingfund information of Fairfield-Suisun Unified School District, as of June 30, 2015, and the respectivechanges in financial position for the year then ended in accordance with accounting principles generallyaccepted in the United States of America.

(Continued)

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Emphasis of Matter

As discussed in Note 1 to the financial statements, in June 2012, the Governmental AccountingStandards Board (GASB) issued GASB Statement No. 68, “Accounting and Financial Reporting for Pensions.” Also, in November 2013 the GASB issued GASB Statement No. 71, "Pension Transition for Contributions Made Subsequent to the Measurement Date". As discussed in notes 7 and 8, GASBStatements No. 68 and No. 71 are effective for the District's fiscal year ending June 30, 2015. TheseStatements replace the requirements of GASB Statement No. 27, "Accounting for Pensions by State andLocal Governmental Employers" and GASB Statement No. 50, "Pension Disclosures". GASB StatementsNo. 68 and No. 71 establish standards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows of resources and expenses as well as identifies the methods andassumptions that should be used to project benefit payments, discount projected benefit payments totheir actuarial present value and attribute that present value to period of employee service. Notedisclosures and required supplementary information (RSI) requirements about pensions are alsoaddressed. 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’sDiscussion and Analysis on pages 4 to 9, the General Fund Budgetary Comparison Schedule, Scheduleof Other Postemployment Benefits (OPEB) Funding Progress, Schedule of the District's ProportionateShare of the Net Pension Liability, and Schedule of the District's Contributions on pages 50 to 55 be

presented to supplement the basic financial statements. Such information, although not a part of thebasic financial statements, is required by Governmental Accounting Standards Board who considers it tobe an essential part of financial reporting for placing the basic financial statements in an appropriateoperational, economic, or historical context. We have applied certain limited procedures to the requiredsupplementary information in accordance with auditing standards generally accepted in the United Statesof America, which consisted of inquiries of management about the methods of preparing the informationand comparing the information for consistency with management’s responses to our inquiries, the basicfinancial 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 limitedprocedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise Fairfield-Suisun Unified School District’s basic financial statements. The accompanyingschedule of expenditure of federal awards as required by U.S. Office of Management and Budget Circular

A-133, Audits of States, Local Governments, and Non-Profit Organizations and the other supplementaryinformation listed in the table of contents are presented for purposes of additional analysis and are not arequired part of the basic financial statements.

The schedule of expenditure of federal awards and other supplementary information as listed in the tableof contents are the responsibility of management and were derived from and relate directly to theunderlying accounting and other records used to prepare the basic financial statements. Suchinformation, except for the Schedule of Financial Trends and Analysis, has been subjected to the auditingprocedures 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 UnitedStates of America. In our opinion, the schedule of expenditure of federal awards and other supplementaryinformation as listed in the table of contents, except for the Schedule of Financial Trends and Analysis,are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The Schedule of Financial Trends and Analysis has not been subjected to the auditing proceduresapplied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

(Continued)

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Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 23,2015 on our consideration of Fairfield-Suisun Unified School District’s internal control over financialreporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, andgrant 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 providean 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 Fairfield-SuisunUnified School District’s internal control over financial reporting and compliance.

Crowe Horwath LLP

Sacramento, CaliforniaNovember 23, 2015

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Management’s Discussion and Analysis


An overview of the Fairfield-Suisun Unified School District’s (the “District”) financial activitiesfor the fiscal year ended June 30, 2015, is presented in this discussion and analysis of theDistrict’s financial position.

This Management Discussion and Analysis should be read in conjunction with the District’sfinancial statements, including the notes and supplementary information, which immediatelyfollow this section.

Financial Highlights

The District’s General Fund balance increased by $2,713,167 from the prior year balanceof $26,019,348 at June 30, 2014, to $28,732,515 at June 30, 2015.

The District’s enrollment and average daily attendance (ADA) reflected a slight decrease.The District’s second period (P-2) attendance, excluding Adult Education, increased from20,389 in 2012-13, to 20,505 in 2013-14, and reflected a decrease in 2014-15 to 20,343.Cumulatively, there is a slight decrease of 46 ADA, or .22%, over the past two years.

The District is required to have available reserves equal to 3% of General Fund budgetedexpenditures, transfers out, and other uses. The required amount is approximately $5.6million. As of June 30, 2015, the District had $5,798,664 in its Special Reserve for Otherthan Capital Outlay Fund and $10,783,138 in General Fund unassigned amountsavailable to meet this requirement.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the District’s basicfinancial statements. The District’s basic financial statements comprise three components: 1)government-wide financial statements, 2) fund financial statements, and 3) notes to the financialstatements. This report also contains other supplementary information in addition to the basicfinancial statements themselves.

Government-Wide Financial Statements. The government-wide financial statements aredesigned to provide readers with a broad overview of the District’s finances, in a manner similarto a private-sector business.

The statement of net position presents information on all of the assets, liabilities, deferredoutflows of resources and deferred inflow of resources of the District, with the difference between the two reported as net position. Over time, increases or decreases in net position mayserve as a useful indicator of whether the financial position of the District is improving ordeteriorating.

The statement of activities presents information showing how the net position of the Districtchanged during the most recent fiscal year. All changes in net position are reported as soon as theunderlying event giving rise to the change occurs, regardless of the timing of related cash flows.Thus, revenues and expenses are reported in this statement for some items that will only result incash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

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The government-wide financial statements can be found on pages 10-11 of this report.

Fund Financial Statements. A fund is a group of related accounts that is used to maintaincontrol over resources that have been segregated for specific activities or objectives. The District,like other state and local governments, uses fund accounting to ensure and demonstrate

compliance with finance-related legal requirements. All of the funds of the District can be dividedinto three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental Funds. Governmental funds are used to account for essentially the samefunctions reported as governmental activities in the government-wide financial statements.However, unlike the government-wide financial statements, governmental fund financialstatements focus on near-term inflows and outflows of expendable resources, as well as on balances of expendable resources available at the end of the fiscal year. Such information may beuseful in evaluating government’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financialstatements, it is useful to compare the information presented for governmental funds with similar

information presented for governmental activities in the government-wide financial statements.By doing so, readers may better understand the long-term impact of the government’s near-termfinancing decisions. Both the governmental fund balance sheet and the governmental fundstatement of revenues, expenditures, and changes in fund balances provide a reconciliation tofacilitate this comparison between governmental funds and governmental activities.

The District maintains thirteen individual governmental funds. Information is presentedseparately in the governmental fund balance sheet and in the governmental fund statement ofrevenues, expenditures, and changes in fund balances for the General Fund, combined with theSpecial Reserve Fund for Other than Capital Projects, which together are considered to be a majorfund. Other major funds are the Capital Facilities Fund, the Bond, Interest and Redemption Fundand the Debt Service Fund. Data from all other governmental funds are combined into a single,

aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report.

The District adopts an annual appropriated budget for its General Fund. A budgetary comparisonstatement has been provided for the General Fund to demonstrate compliance with this budget.

The basic governmental fund financial statements can be found on pages 12-15 of this report.

Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of partiesoutside the governmental entity. Fiduciary funds are not reflected in the government-widefinancial statement because the resources of those funds are not available to support the District’sown programs.

The District uses an agency fund to account for resources held for student activities and groups.The basic fiduciary fund financial statement can be found on page 16 of this report.

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Notes to the Financial Statements. The notes provide additional information that is essential fora full understanding of the data provided in the government-wide and fund financial statements.The notes to the financial statements can be found on pages 17-49 of this report.

Financial Analysis of the District’s Funds

Table 1 summarizes the District’s net position as of June 30, 2015, and 2014. As noted earlier,net position may serve over time as a useful indicator of a government’s financial position. In thecase of the District, assets plus deferred outflows of resources exceeded liabilities plus deferredoutflows of resources. by $23,688,478 at the close of the most recent fiscal year.

Table 1 Net Position

2015 2014

Current and Other Assets $ 84,068,091 $ 80,050,729

Capital Assets 253,503,128 260,588,749 Total Assets 337,571,219 340,639,478

Deferred Outflows 15,833,932 4,239,761

Long-Term Liabilities Outstanding 277,162,204 145,927,200Other Liabilities 16,708,469 19,590,966 Total Liabilities

Deferred Inflows

293,870,673

35,846,000

165,518,166

Net Position: Net Investment in Capital Assets 146,722,296 148,637,918Restricted 39,374,619 38,725,479Unrestricted (162,408,437) (8,002,324) Total Net Position $ 23,688,478 $ 179,361,073

The largest portion of the District’s net position (619.38%) reflects its investment in capital assets(e.g., land, buildings and improvements, and furniture and equipment), less any related debt(general obligation bonds payable and obligations under capital leases less unspent bond proceeds) used to acquire those assets that is still outstanding. The District uses these capitalassets to provide services to students; consequently, these assets are not available for future

spending. Although the District’s investment in its capital assets is reported net of related debt, itshould be noted that the resources needed to repay this debt must be provided from other sources,since the capital assets themselves cannot be used to liquidate these liabilities.

The second largest portion of the District’s net position (166.22%) represents resources that aresubject to external restrictions as to their use. This amount has decreased from prior years due tothe completion of major capital construction projects and expenditure of local bond funds andmatching state apportionments received for capital construction.

The remaining portion of the District’s net position (-685.60%) represents unrestricted resourcesthat may be used to meet the District’s obligations to students, employees, and creditors.

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At the end of the current fiscal year, the District is able to report positive balances in two of thethree categories of net position.

Table 2 shows the changes in net position for fiscal year 2015. The District’s net positiondecreased by $155.7 million, or 86.8%, from 2014. This large decrease is due to the cumulativeeffect of the implementation of Governmental Accounting Standards Board (GASB) Statements

Number 68 and Number 71 which resulted in a $156.4 million restatement of Beginning NetPosition. For further information regarding these statements, please see the note on page 22 ofthis report.

Table 2Changes in Net Position

2015 2014 Revenues

Program Revenues:Charges for Services $ 3,974,754 $ 4,306,024

Operating Grants and Contributions 30,252,216 29,750,881General Revenues

Property Taxes 54,277,096 44,295,349 Federal and State Aid 116,228,461 107,680,223 Other 2,494,711 1,923,490Total Revenues 207,227,238 187,955,967

Program Expenses Instruction 122,366,071 110,501,235Instruction Related Services 24,593,901 21,703,303Pupil Services 21,285,323 17,976,605Ancillary Services 757,713 585,581Community Services 61,992 54,495General Administration 11,717,272 9,604,663

Plant Services 19,180,030 20,081,397Interest 3,192,579 5,982,933Other 3,274,037 3,565,426 Total Expenses 206,428,918 190,055,638 Increase/(Decrease) in Net position 798,320 -2,099,671 Net Position – Beginning (as restated) 22,890,158 181,460,744 Net Position – Ending $ 23,688,478 $ 179,361,073

Governmental funds. The focus of the District’s governmental funds is to provide information onnear-term inflows, outflows, and balances of expendable resources. Such information is useful inassessing the District’s financing requirements. The unreserved fund balance is divided betweendesignated balances and undesignated balances. The District has designated portions of theunreserved fund balance to earmark resources for certain government-wide liabilities and post-employment obligations that are not recognized in the governmental funds. Undesignated balances in the general fund are required by state law to be appropriated in the following year’s budget. Fund balances of capital projects and other governmental funds are restricted by state lawto be spent for the purpose of the fund and are not available for spending at the District’sdiscretion.

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General Fund Budgetary Highlights

Revenues. The difference between the original budget and the final amended budget was$11,643,115 or 6.92% of total General Fund revenues and other sources.

Expenditures. The difference between the original budget and the final amended budget was

$14,244,451 or 8.28% of total General Fund expenditures and other uses.

Capital Asset and Debt Administration

Capital Assets. The Capital Projects Fund is used to account for the costs incurred in acquiringand improving sites, constructing and remodeling facilities, and procuring equipment necessaryfor providing educational programs for all students within the District.

Table 3Capital Assets

(net of depreciation)

2015 2014 Percent ChangeLand and Improvement of Sites $ 68,441,103 $ 68,806,117 -.53%Buildings 180,010,637 179,827,875 .10%Equipment 4,161,663 4,839,223 -14.00%Construction in Progress 889,725 7,115,534 -87.50%

Total $ 253,503,128 $ 260,588,749 -2.71%

By June 30, 2015, the District had invested $384 million in a broad range of capital assets,including school buildings, buses, computers and copiers, and administrative offices. This

amount represents a net increase of $2.1 million or .5% from last year.

Table 4Anticipated Projects

ProjectEstimated

RemainingProject Cost

Minimum Essential Facility Projects:

Armijo High School Quad Project and Other SiteImprovements $ 2,400,000 Total $ 2,400,000

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Additional information on the District’s capital assets can be found in Note 4 to the basicfinancial statements.

Debt Administration – At June 30, 2015, the District had $277 million in long-term debtoutstanding – a decrease of 89.93% from last year as shown below in Table 5. The large increasein net pension liability is due to the implementation of GASB 68, which requires the District to

recognize the long-term debt obligation for the State of California’s share of pensions asdetermined by an actuary. In past years the District has not been required to recognize this debt.

Table 5Long-term Debt

2015 2014 Percent ChangeMello-Roos Bonds Payable $ 31,122,093 $ 33,638,173 -7.48%General Obligation BondsUnamortized Premiums

74,915,0005,441,289

78,365,0005,769,275

-4.40%-5.69%

Certificates of Participation 1,385,612 1,480,810 -6.43%

Compensated Absences 1,314,484 1,210,458 8.59%Child Development Loan 30,000 60,000 -50.00%California Energy CommissionLoanPost Employment Benefits

1,142,11828,124,608

1,031,270

24,372,214

10.75%15.40%

Net Pension Liability 133,687,000 0 100.00% Total $ 145,927,200 $ 145,927,200 89.93%

Economic Factors Facing the District in the Coming Year

The Fairfield-Suisun Unified School District is faced with the same economic pressures asdistricts throughout the State. Approximately ninety percent of the District’s revenues come fromthe State of California or are controlled by formulas set by the State of California. Therefore, theeconomic fortunes or misfortunes of the State are critical to the District. With the passage ofProposition 30 in November 2012, which increases taxes for up to six years, and with theimplementation of a new funding formula for school districts based on specific student populations, the District can expect to see increased revenues over the next few years.

The District has made significant budget reductions over the last seven years. As the Districtlooks toward the future, while budget reductions will not likely not be needed, limited newresources will not meet all of the pent up need that has accumulated due to reductions. Therefore,it will be critical for the Governing Board to focus on a balanced approach to meeting all of its

goals.

Contacting the District’s Financial Management

This financial report is designed to provide our citizens, taxpayers, parents, investors, andcreditors with a general overview of the District’s finances and to show the District’saccountability for the money it receives. If you have any questions regarding this report or needadditional financial information, contact Mrs. Kelly Bartel, Assistant Superintendent BusinessServices, Fairfield-Suisun Unified School District, 2490 Hilborn Road, Fairfield, CA 94534 or e-mail at [email protected].

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BASIC FINANCIAL STATEMENTS

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FAIRFIELD-SUISUN UNIFIED SCHOOL DISTRICTSTATEMENT OF NET POSITION

June 30, 2015

Governmental Activities

ASSETS

Cash and investments (Note 2) $ 75,535,951Receivables 8,447,060Prepaid expenses 53,733Stores inventory 31,347Non-depreciable capital assets (Note 4) 44,509,242Depreciable capital assets, net of accumulated

depreciation (Note 4) 208,993,886

Total assets 337,571,219

DEFERRED OUTFLOWS OF RESOURCES

Deferred loss of resources - pensions (Note 7 and 8) 11,947,484Deferred outflow from advance refunding of debt 3,886,448

Total deferred outflows 15,833,932

LIABILITIES

Accounts payable 16,109,081Unearned revenue 599,388Long-term liabilities (Note 5):

Due within one year 6,542,500Due after one year 270,619,704

Total liabilities 293,870,673

DEFERRED INFLOWS OF RESOURCES

Deferred inflows of resources - pensions (Note 7 and 8) 35,846,000

NET POSITION

Net investment in capital assets 146,722,296Restricted (Note 6) 39,374,619Unrestricted (162,408,437)

Total net position $ 23,688,478

See accompanying notes to financial statements.

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FAIRFIELD-SUISUN UNIFIED SCHOOL DISTRICTSTATEMENT OF ACTIVITIES


Net (Expense)Revenues and

Changes in Program Revenues Net Position

Charges Operating Capitalfor Grants and Grants and Governmental

Expenses Services Contributions Contributions Activities

Governmental activities:Instruction $ 122,366,071 $ 863,758 $ 16,931,297 $ - $ (104,571,016)Instruction-related services:

Supervision of instruction 6,579,127 91,826 1,886,428 - (4,600,873)Instructional library, media and

technology 2,390,257 805 152,632 - (2,236,820)School site administration 15,624,517 15,469 673,475 - (14,935,573)

Pupil services:Home-to-school transportation 2,848,020 306,272 91,381 - (2,450,367)Food services 7,746,946 2,037,025 6,093,937 - 384,016 All other pupil services 10,690,357 144,200 1,766,465 - (8,779,692)

General administration:Data processing 3,048,125 - 117,773 - (2,930,352)

All other general administration 8,669,147 106,497 625,788 - (7,936,862)Plant services 19,180,030 35,482 155,384 - (18,989,164) Ancillary services 757,713 1,055 31,755 - (724,903)Community services 61,992 - - - (61,992)Interest on long-term liabilities 3,192,579 - - - (3,192,579)Other outgo 3,274,037 372,365 1,725,901 - (1,175,771)

Total governmental activities $ 206,428,918 $ 3,974,754 $ 30,252,216 $ - (172,201,948)

General revenues:Taxes and subventions:

Taxes levied for general purposes 40,673,565Taxes levied for debt service 7,111,288Taxes levied for other specific purposes 6,492,243

Federal and state aid not restricted to specific purposes 116,228,461

Interest and investment earnings 242,850Miscellaneous 2,251,861

Total general revenues 173,000,268

Change in net position 798,320

Net position July 1, 2014 179,361,073

Cumulative effect of GASB 68 implementation (156,470,915)

Net position, July 1, 2014, as restated 22,890,158

Net position, June 30, 2015 $ 23,688,478


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FAIRFIELD-SUISUN UNIFIED SCHOOL DISTRICTBALANCE SHEET

GOVERNMENTAL FUNDSJune 30, 2015

DebtService

for BlendedCapital Component All Total

General Facilities Unit Non-Major GovernmentalFund Fund Fund Funds Funds

ASSETS

Cash and investments:Cash in County Treasury $ 36,773,368 $ 9,363,457 $ 12,529,660 $ 7,353,136 $ 66,019,621Cash on hand and in banks - - - 36,236 36,236Cash in revolving fund 50,000 - - 6,315 56,315Cash with Fiscal Agent - - 307,065 9,116,714 9,423,779

Receivables 7,090,644 2,903 - 1,353,513 8,447,060Prepaid expenditures 53,733 - - - 53,733Due from other funds 425,880 1,235,132 - 7,344 1,668,356Stores inventory 28,350 - - 2,997 31,347

Total assets $ 44,421,975 $ 10,601,492 $ 12,836,725 $ 17,876,255 $ 85,736,447

LIABILITIES AND FUND BALANCES

Liabilities: Accounts payable $ 13,850,687 $ 81,499 $ - $ 370,969 $ 14,303,155Unearned revenue 596,297 - - 3,091 599,388Due to other funds 1,242,476 - - 425,880 1,668,356

Total liabilities 15,689,460 81,499 - 799,940 16,570,899

Fund balances:Nonspendable 132,083 - - 9,312 141,395Restricted 2,398,436 10,519,993 12,836,725 17,067,003 42,822,157 Assigned 9,620,194 - - - 9,620,194Unassigned 16,581,802 - - - 16,581,802

Total fund balances 28,732,515 10,519,993 12,836,725 17,076,315 69,165,548

Total liabilities and

fund balances $ 44,421,975 $ 10,601,492 $ 12,836,725 $ 17,876,255 $ 85,736,447


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FAIRFIELD-SUISUN UNIFIED SCHOOL DISTRICTRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITIONJune 30, 2015

Total fund balances - Governmental Funds $ 69,165,548

Amounts reported for governmental activities in the statement of

net position are different because:

Capital assets used for governmental activities are not financialresources and, therefore, are not reported as assets ingovernmental funds. The cost of the assets is $384,290,129and the accumulated depreciation is $130,787,001 (Note 4). 253,503,128

Long-term liabilities are not due and payable in the currentperiod and, therefore, are not reported as liabilities in thefunds. Long-term liabilities at June 30, 2015 consisted of (Note 5):

General Obligation Bonds $ (74,915,000)Unamortized premiums (5,441,289)Mello-Roos Bonds (31,122,093)Certificates of Participation (1,385,612)Child development loan (30,000)California Energy Commission loan (1,142,118)Post-retirement healthcare benefits (28,124,608)Net pension liability (133,687,000)Compensated absences (1,314,484)

(277,162,204)

Losses on the refunding of debt are categorized as deferredoutflows and are amortized over the shortened life of therefunded or refunding of the related debt. 3,886,448

In government funds, deferred outflows and inflows of

resources relating to pensions are not reported because theyare applicable to future periods. In the statement of netposition, deferred outflows and inflows of resources relatingto pensions are reported (Note 7 and 8).

Deferred outflows of resources relating to pensions $ 11,947,484Deferred inflows of resources relating to pensions (35,846,000)

(23,898,516)

Unmatured interest is not recognized until it is due and,therefore, is not accrued as a payable in governmental funds. (1,805,926)

Total net position - governmental activities $ 23,688,478


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FAIRFIELD-SUISUN UNIFIED SCHOOL DISTRICTSTATEMENT OF REVENUES, EXPENDITURES

AND CHANGE IN FUND BALANCESGOVERNMENTAL FUNDS


DebtService

for BlendedCapital Component All Total

General Facilities Unit Non-Major Governmental

Fund Fund Fund Funds Funds

Revenues:Local Control Funding Formula (LCFF):

State apportionment $ 110,789,789 $ - $ - $ - $ 110,789,789Local sources 40,673,665 - - - 40,673,665

Total LCFF 151,463,454 - - - 151,463,454

Federal sources 9,131,201 - - 6,298,115 15,429,316Other state sources 11,991,842 - - 1,175,190 13,167,032Other local sources 7,970,498 2,805,740 5,309,481 9,593,720 25,679,439

Total revenues 180,556,995 2,805,740 5,309,481 17,067,025 205,739,241

Expenditures:Current:

Certificated salaries 81,800,639 - - 944,338 82,744,977Classified salaries 29,990,280 - - 3,285,519 33,275,799Employee benefits 37,461,244 - - 1,333,085 38,794,329Books and supplies 9,463,581 2,747 - 4,336,500 13,802,828Contract services and operating

expenditures 14,764,677 251,216 - 1,379,060 16,394,953Other outgo 3,274,037 - - - 3,274,037

Capital outlay 129,094 517,537 - 758,146 1,404,777Debt service:

Principal retirement 95,198 - 2,516,080 3,480,000 6,091,278Interest and other charges 66,306 - 1,387,213 2,848,504 4,302,023

Total expenditures 177,045,056 771,500 3,903,293 18,365,152 200,085,001

Excess (deficiency) ofrevenues over (under)

expenditures 3,511,939 2,034,240 1,406,188 (1,298,127) 5,654,240

Other financing sources (uses):Interfund transfers in 425,880 - - 1,599,441 2,025,321Interfund transfers out (1,335,500) - (263,941) (425,880) (2,025,321)Proceeds from issuance of debt 110,848 - - - 110,848

Total other financingsources (uses) (798,772) - (263,941) 1,173,561 110,848

Net change in fund balances 2,713,167 2,034,240 1,142,247 (124,566) 5,765,088

Fund balances, July 1, 2014 26,019,348 8,485,753 11,694,478 17,200,881 63,400,460

Fund balances, June 30, 2015 $ 28,732,515 $ 10,519,993 $ 12,836,725 $ 17,076,315 $ 69,165,548


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FAIRFIELD-SUISUN UNIFIED SCHOOL DISTRICTSTATEMENT OF FIDUCIARY ASSETS AND LIABILITIES

AGENCY FUNDSJune 30, 2015

ASSETS

Cash on hand and in banks (Note 2) $ 505,922

LIABILITIES

Due to student groups $ 505,922


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FAIRFIELD-SUISUN UNIFIED SCHOOL DISTRICTNOTES TO FINANCIAL STATEMENTS

June 30, 2015

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fairfield-Suisun Unified School District (the "District") accounts for its financial transactions in accordancewith the policies and procedures of the California Department of Education's California School Accounting

Manual . The accounting policies of the District conform to accounting principles generally accepted in theUnited States of America as prescribed by the Governmental Accounting Standards Board. The followingis a summary of the more significant policies:

Reporting Entity: The Board of Education is the level of government which has governanceresponsibilities over all activities related to public school education in the Fairfield-Suisun Unified SchoolDistrict. The Board is not included in any other governmental "reporting entity" as defined by theGovernmental Accounting Standards Board since Board members have decision-making authority, thepower to designate management, the responsibility to significantly influence operations and primaryaccountability for fiscal matters.

The District receives funding from local, state and federal government sources and must comply with allthe requirements of these funding source entities.

Mello-Roos Community Facilities Districts: The District and Community Facilities Districts Nos. 1, 2, 4, 5and 6 (the "CFDs") have a financial and operational relationship that meet the reporting entity definitioncriteria of Codification of Governmental Accounting and Financial Reporting Standards, Section 2100 , for inclusion of the CFDs as a component unit of the District. Accordingly, the financial activities of the CFDshave been included in the financial statements of the District.

The following are those aspects of the relationship between the District and the CFDs that satisfyCodification of Governmental Accounting and Financial Reporting Standards, Section 2100 , as amendedby criteria:

A - Accountability

1. The CFDs' Board of Directors are the same as the District's Board of Education.

2. The District is able to impose its will upon the CFD, based on the following:

a. All major financing arrangements, contracts, and other transactions of the CFDs must have theconsent of the District.

b. The District exercises significant influence over operations of the CFDs.

3. The CFDs provide specific financial benefits or impose specific financial burdens on the District basedupon the following:

a. Proceeds from the issuance of bonds from the CFDs are used for capital outlay projects of the District.

b. The District is responsible for assuring the taxes collected are used to fund the debt service.

c. The District has assumed a "moral obligation", and potentially a legal obligation, for any debt incurredby the CFDs.

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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

B - Scope of Service

The CFDs are nonprofit, public benefit corporations incorporated under the laws of the State of Californiaand recorded by the Secretary of State on March 30, 1989. The CFDs were formed for the sole purposeof providing financial assistance to the District for construction and acquisition of major capital facilitiesprojects. Upon completion, the District intends to occupy and/or use all CFD facilities, improvements andequipment under lease-purchase agreements. At the end of each lease term, title of all CFD propertyand equipment will pass to the District for no additional consideration.

C - Financial Presentation

For financial presentation purposes, the CFDs' financial activity is blended with the financial data of theDistrict. Bonds issued by the CFDs are included in the long-term liabilities of the District.

Basis of Presentation - Financial Statements: The basic financial statements include a Management

Discussion and Analysis (MD & A) section providing an analysis of the District's overall financial positionand results of operations; financial statements prepared using full accrual accounting for all of theDistrict's activities, including infrastructure; and a focus on the major funds.

Basis of Presentation - Government-Wide Financial Statements: The Statement of Net Position and theStatement of Activities displays information about the reporting government as a whole. Fiduciary fundsare not included in the government-wide financial statements. Fiduciary funds are reported only in theStatement of Fiduciary Assets and Liabilities.

The Statement of Net Position and the Statement of Activities are prepared using the economic resourcesmeasurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses, assets andliabilities resulting from exchange and exchange-like transactions are recognized when the exchangetakes place. Revenues, expenses, gains, losses, assets and liabilities resulting from nonexchangetransactions are recognized in accordance with the requirements of Governmental Accounting StandardsBoard Codification Section N50.118-.121.

Program revenues: Program revenues included in the Statement of Activities derive directly from theprogram itself or from parties outside the District's taxpayers or citizenry, as a whole; program revenuesreduce the cost of the function to be financed from the District's general revenues.

Allocation of indirect expenses: The District reports all direct expenses by function in the Statement of Activities. Direct expenses are those that are clearly identifiable with a function. Depreciation expense isspecifically identified by function and is included in the direct expense of each function. Interest on long-term liabilities is considered an indirect expense and is reported separately on the Statement of Activities.

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Basis of Presentation - Fund Accounting: The accounts of the District are organized on the basis of funds,each of which is considered to be a separate accounting entity. The operations of each fund are

accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fundequity, revenues, and expenditures or expenses, as appropriate. District resources are allocated to andaccounted for in individual funds based upon the purpose for which they are to be spent and the meansby which spending activities are controlled.

A - Major Funds

1 - General Fund:

The General Fund is the general operating fund of the District and accounts for all revenues andexpenditures of the District not encompassed within other funds. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for inthis fund. General operating expenditures and the capital improvement costs that are not paid throughother funds are paid from the General Fund. For financial reporting purposes, the current year activity

and year-end balances of the Special Reserve for Other Than Capital Projects Fund is combined with theGeneral Fund.

2 - Capital Facilities Fund:

The Capital Facilities Fund is used to account for the accumulation and expenditure of resources used for the acquisition or construction of major capital facilities by the District.

3 - Debt Service for Blended Component Unit Fund:

The Debt Service for Blended Component Unit Fund is used to account for the accumulation of resourcesfor, and the payment of, general long-term debt principal, interest and related costs.

B - Other Funds

1 - Special Revenue Funds:

Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legallyrestricted to expenditures for specified purposes. This includes the Adult Education, Child Development,Cafeteria and Deferred Maintenance Funds.

2 - Capital Projects Funds:

Capital Projects Funds are used to account for resources used for the acquisition or construction of major capital facilities by the District. This includes the Building, County School Facilities, Special Reserve for Capital Projects and Community Facilities District Bond Funds.

3 - Debt Service Funds:

Debt Service Funds are used to account for resources used to account for the accumulation of resourcesfor, and the payment of, long-term liabilities principal, interest and related costs. This includes the BondInterest and Redemption Fund.

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4 - Student Body Fund:

The Student Body Fund is a Fiduciary Fund for which the District acts as an agent. All cash activity andassets of the various student bodies of the District are accounted for in the Student Body Fund.

Basis of Accounting: Basis of accounting refers to when revenues and expenditures or expenses arerecognized in the accounts and reported in the financial statements. Basis of accounting relates to thetiming of the measurement made, regardless of the measurement focus applied.

Accrual: Governmental activities in the government-wide financial statements and the fiduciary fundfinancial statements are presented on the accrual basis of accounting. Revenues are recognized whenearned and expenses are recognized when incurred.

Modified Accrual: The governmental funds financial statements are presented on the modified accrualbasis of accounting. Under the modified accrual basis of accounting, revenues are recorded whensusceptible to accrual; i.e., both measurable and available. "Available" means collectible within the

current period or within 60 days after year end. Expenditures are generally recognized under themodified accrual basis of accounting when the related liability is incurred. The exception to this generalrule is that principal and interest on general obligation long-term liabilities, if any, is recognized when due.

Budgets and Budgetary Accounting: By state law, the Board of Education must adopt a final budget byJuly 1. A public hearing is conducted to receive comments prior to adoption. The Board of Educationcomplied with these requirements.

Receivables: Receivables are made up principally of amounts due from the State of California for LocalControl Funding Formula funding and Categorical programs. The District has determined that noallowance for doubtful accounts was required as of June 30, 2015.

Stores Inventory: Inventory in the General and Cafeteria Funds consists mainly of consumable suppliesheld for future use and are valued at average cost. Inventories are recorded as expenditures at the timeindividual inventory items are transferred from the warehouse to schools and offices.

Capital Assets: Capital assets purchased or acquired, with an original cost of $15,000 or more, arerecorded at historical cost or estimated historical cost. Contributed assets are reported at fair marketvalue as of the date received. Additions, improvements and other capital outlay that significantly extendthe useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensedas incurred. Capital assets are depreciated using the straight-line method over 5 - 50 years dependingon asset types.

Interfund Activity: Interfund activity is reported as either loans, services provided, reimbursements or transfers. Loans are reported as interfund receivables and payables as appropriate and are subject toelimination upon consolidation. Services provided, deemed to be at market or near market rates, aretreated as revenues and expenditures/expenses. Reimbursements occur when one fund incurs a cost,

charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental funds are netted as partof the reconciliation to the government-wide financial statements.

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Deferred Outflows/Inflows of Resources: In addition to assets, the statement of net position includes aseparate section for deferred outflows of resources. This separate financial statement element, deferred

outflows of resources, represents a consumption of net position that applies to a future period(s), and assuch will not be recognized as an outflow of resources (expense/expenditures) until then. The Districthas recognized a deferred loss on refunding reported, which is in the statement of net position. Adeferred loss on refunding results from the difference in the carrying value of refunded debt and itsreacquisition price. This amount is deferred and amortized over the shortened life of the refunded or refunding debt. Amortization for the year ended June 30, 2015 totaled $353,313. Additionally, theDistrict has recognized a deferred outflow of resources related to the payments made subsequent to themeasurement date for the pensions and changes in proportionate share.

In addition to liabilities, the statement of net position reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents anacquisition of net position that applies to a future period(s) and as such, will not be recognized as aninflow of resources (revenue) until that time. The District has recognized a deferred inflow of resourcesrelated to the recognition of the pension liability reported which is in the statement of net position.

Pensions: For purposes of measuring the net pension liability, deferred outflows of resources anddeferred inflows of resources related to pensions, and pension expense, information about the fiduciarynet position of the State Teachers’ Retirement Plan (STRP) and Public Employers Retirement Fund B(PERF B) and additions to/deductions from STRP’s and PERF B’s fiduciary net position have beendetermined on the same basis as they are reported by STRP and PERF B. For this purpose, benefitpayments (including refunds of employee contributions) are recognized when due and payable inaccordance with the benefit terms. Investments are reported at fair value. The following is a summary of pension amounts in the aggregate:

STRP PERF B Total

Deferred outflows of resources $ 7,293,422 $ 4,654,062 $ 11,947,484

Deferred inflows of resources $ 25,521,000 $ 10,325,000 $ 35,846,000Net pension liability $103,639,000 $ 30,048,000 $133,687,000

Pension expense $ 10,467,925 $ 3,020,162 $ 13,488,087

Compensated Absences: Compensated absences benefits totaling $1,314,484 are recorded as a long-term liability of the District. The liability is for the earned but unused benefits.

Accumulated Sick Leave: Sick leave benefits are accumulated for each employee. The employees donot gain a vested right to accumulated sick leave. Accumulated employee sick leave benefits are notrecognized as liabilities of the District since cash payment of such benefits is not probable. Therefore,sick leave benefits are recorded as expenditures in the period that sick leave is taken.

Unearned Revenue: Revenue from federal, state, and local special projects and programs is recognizedwhen qualified expenditures have been incurred. Funds received but not earned are recorded asunearned revenue until earned.

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Net Position: Net position is displayed in three components:

1. Net Investment in Capital Assets – Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances (excluding unspent bondproceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition,

construction, or improvement of those assets.

2. Restricted Net Position - Restrictions of the ending net position indicate the portions of net position notappropriable for expenditure or amounts legally segregated for a specific future use. The restrictionfor unspent categorical program revenues represents the portion of net position restricted to specificprogram expenditures. The restriction for special revenues represents the portion of net positionrestricted for special purposes. The restriction for debt service represents the portion of net positionavailable for the retirement of debt. The restriction for capital projects represents the portion of netposition restricted for capital projects. It is the District's policy to use restricted net position first whenallowable expenditures are incurred.

3. Unrestricted Net Position – All other net position that do not meet the definitions of "restricted" or "netinvestment in capital assets".

Fund Balance Classifications: Governmental Accounting Standards Board Codification Sections 1300and 1800, Fund Balance Reporting and Governmental Fund Type Definitions (GASB Cod. Sec. 1300 and1800) implements a five-tier fund balance classification hierarchy that depicts the extent to which agovernment is bound by spending constraints imposed on the use of its resources. The fiveclassifications, discussed in more detail below, are nonspendable, restricted, committed, assigned andunassigned.

A - Nonspendable Fund Balance:

The nonspendable fund balance classification reflects amounts that are not in spendable form, such as

revolving fund cash, prepaid expenditures and stores inventory.

B - Restricted Fund Balance:

The restricted fund balance classification reflects amounts subject to externally imposed and legallyenforceable constraints. Such constraints may be imposed by creditors, grantors, contributors, or laws or regulations of other governments, or may be imposed by law through constitutional provisions or enablinglegislation. These are the same restrictions used to determine restricted net position as reported in thegovernment-wide statements.

C - Committed Fund Balance:

The committed fund balance classification reflects amounts subject to internal constraints self-imposed by

formal action of the Board of Education. Constraints giving rise to committed fund balance must beimposed no later than the end of the reporting period. The actual amounts may be determinedsubsequent to that date but prior to the issuance of the financial statements. Formal action by the Boardof Education is required to remove any commitment from fund balance. At June 30, 2015, the Districthad no committed fund balances.

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D - Assigned Fund Balance:

The assigned fund balance classification reflects amounts that the District's Board of Education hasapproved to be used for specific purposes, based on the District's intent related to those specificpurposes. The Board of Education can designate personnel with the authority to assign fund balances,however at June 30, 2015, no such designation has occurred.

E - Unassigned Fund Balance:

In the General Fund only, the unassigned fund balance classification reflects the residual balance thathas not been assigned to other funds and that is not restricted, committed, or assigned to specificpurposes.

In any fund other than the General Fund, a positive unassigned fund balance is never reported becauseamounts in any other fund are assumed to have been assigned, at least, to the purpose of that fund.However, deficits in any fund, including the General Fund that cannot be eliminated by reducing or eliminating amounts assigned to other purposes are reported as negative unassigned fund balance.

Fund Balance Policy: The District has an expenditure policy relating to fund balances. For purposes of fund balance classifications, expenditures are to be spent from restricted fund balances first, followed inorder by committed fund balances (if any), assigned fund balances and lastly unassigned fund balances.

While GASB Cod. Sec. 1300 and 1800 do not require districts to establish a minimum fund balance policyor a stabilization arrangement, GASB Cod. Sec. 1300 and 1800 do require the disclosure of a minimumfund balance policy and stabilization arrangements, if they have been adopted by the Board of Education.

At June 30, 2015, the District has not established a minimum fund balance policy nor has it established astabilization arrangement.

Custodial Relationships: The Statement of Fiduciary Assets and Liabilities represents the assets and

liabilities of various student organizations within the District. As the funds are custodial in nature, nomeasurement of operating results is presented.

Property Taxes: Secured property taxes are attached as an enforceable lien on property as of March 1.Taxes are due in two installments on or before December 10 and April 10. Unsecured property taxes aredue in one installment on or before August 31. The County of Solano bills and collects taxes for theDistrict. Tax revenues are recognized by the District when received.

Encumbrances: Encumbrance accounting is used in all budgeted funds to reserve portions of applicableappropriations for which commitments have been made. Encumbrances are recorded for purchaseorders, contracts, and other commitments when they are written. Encumbrances are liquidated when thecommitments are paid. All encumbrances are liquidated at June 30.

Eliminations and Reclassifications: In the process of aggregating data for the Statement of Net Positionand the Statement of Activities, some amounts reported as interfund activity and balances in the fundswere eliminated or reclassified. Interfund receivables and payables were eliminated to minimize the"grossing up" effect on assets and liabilities within the governmental activities column.

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Estimates: The preparation of financial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimates and assumptions.

These estimates and assumptions 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 revenues and expenditures or expenses during the reporting period. Accordingly, actual results maydiffer from those estimates.

New Accounting Pronouncements: In June 2012 GASB issued GASB Statement No. 68, Accounting andFinancial Reporting for Pensions. This Statement replaces the requirements of GASB Statement No. 27,

Accounting for Pensions by State and Local Governmental Employers and GASB Statement No. 50,Pension Disclosures, as they relate to governments that provide pensions through pension plansadministered as trusts or similar arrangements that meet certain criteria. GASB Statement No. 68requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measurethe annual costs of pension benefits. The Statement also enhances accountability and transparency

through revised and new note disclosures and required supplementary information (RSI). This Statementis effective for the District’s fiscal year ending June 30, 2015. Based on the implementation of GASBStatement No. 68, the District’s July 1, 2014 net position was restated by $156,470,915, because of therecognition of the net pension liability and deferred outflows of resources .

In November 2013 GASB issued Statement No. 71, Pension Transition for Contributions MadeSubsequent to the Measurement Date. The objective of this Statement is to address an issue regardingapplication of the transition provisions of GASB Statement No. 68. The issue relates to amountsassociated with contributions, if any, made by a state or local government employer or nonemployer contributing entity to a defined benefit pension plan after the measurement date of the government’sbeginning net pension liability. This Statement amends paragraph 137 of GASB Statement No. 68 torequire that, at transition, a government recognize a beginning deferred outflow of resources for itspension contributions, if any, made subsequent to the measurement date of the beginning net pensionliability. GASB Statement No. 68, as amended, continues to require that beginning balances for other deferred outflows of resources and deferred inflows of resources related to pensions be reported attransition only if it is practical to determine all such amounts. The provisions of this Statement arerequired to be applied simultaneously with the provisions of GASB Statement No. 68 and are effective for the District’s fiscal year ending June 30, 2015. Based on the implementation of GASB Statement No. 71,the District established a deferred outflow category to report the payments made subsequent to themeasurement date of the pensions.

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In February 2015, the GASB has issued its final standard on accounting and financial reporting issuesrelated to fair value measurements, applicable primarily to investments made by state and local

governments. GASB Statement No. 72, Fair Value Measurement and Application, defines fair value anddescribes how fair value should be measured, what assets and liabilities should be measured at fair value, and what information about fair value should be disclosed in the notes to the financial statements.Under GASB Statement No. 72, fair value is defined as the price that would be received to sell an assetor paid to transfer a liability in an orderly transaction between market participants at the measurementdate. Investments, which generally are measured at fair value, are defined as a security or other assetthat governments hold primarily for the purpose of income or profit and the present service capacity of which are based solely on their ability to generate cash or to be sold to generate cash. Before theissuance of GASB Statement No. 72, state and local governments have been required to disclose howthey arrived at their measures of fair value if not based on quoted market prices. Under the newguidance, those disclosures have been expanded to categorize fair values according to their relativereliability and to describe positions held in many alternative investments. This statement is effective for the District’s fiscal year ending June 30, 2016. Management has not determined what impact this GASB

statement will have on its financial statements.

In June 2015, the GASB issued GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement No. 68, and

Amendments to Certain Provisions of Statements No. 67 and 68, completes the suite of pensionstandards. GASB Statement No. 73 establishes requirements for those pensions and pension plans thatare not administered through a trust meeting specified criteria (in other words, those not covered byGASB Statements No. 67 and No. 68). The requirements in GASB Statement No. 73 for reportingpensions generally are the same as in GASB Statement No. 68. However, the lack of a pension plan thatis administered through a trust that meets specified criteria is reflected in the measurements. Theprovisions in GASB Statement No. 73 are effective for fiscal years beginning after June 15, 2015, exceptthose provisions that address employers and governmental nonemployer contributing entities for pensions that are not within the scope of GASB Statement No. 68, which are effective for fiscal yearsbeginning after June 15, 2016. Management has not determined what impact this statement will have onits financial statements.

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In June 2015, the GASB issued GASB Statement No. 74, Financial Reporting for PostemploymentBenefit Plans Other Than Pension Plans, which replaces GASB Statement No. 43, Financial Reporting

for Postemployment Benefit Plans Other Than Pension Plans. GASB Statement No. 74 addresses thefinancial reports of defined benefit OPEB plans that are administered through trusts that meet specifiedcriteria. The GASB Statement follows the framework for financial reporting of defined benefit OPEB plansin GASB Statement No. 45 by requiring a statement of fiduciary net position and a statement of changesin fiduciary net position. The Statement requires more extensive note disclosures and RSI related to themeasurement of the OPEB liabilities for which assets have been accumulated, including informationabout the annual money-weighted rates of return on plan investments. GASB Statement No. 74 also setsforth note disclosure requirements for defined contribution OPEB plans. This statement is effective for theDistrict’s fiscal year ending June 30, 2017. Management has not determined what impact this statementwill have on its financial statements.

In June 2015, the GASB issued GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, which replaces the requirements of GASB StatementNo. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other ThanPensions. GASB Statement No. 75 requires governments to report a liability on the face of the financialstatements for the OPEB that they provide. Governments that are responsible only for OPEB liabilitiesrelated to their own employees and that provide OPEB through a defined benefit OPEB plan administeredthrough a trust that meets specified criteria will report a net OPEB liability, which is the differencebetween the total OPEB liability and assets accumulated in the trust and restricted to making benefitpayments. Governments that participate in a cost-sharing OPEB plan that is administered through a trustthat meets the specified criteria will report a liability equal to their proportionate share of the collectiveOPEB liability for all entities participating in the cost-sharing plan. Governments that do not provideOPEB through a trust that meets specified criteria will report the total OPEB liability related to their employees. GASB Statement No. 75 carries forward from GASB Statement No. 45 the option to use aspecified alternative measurement method in place of an actuarial valuation for purposes of determiningthe total OPEB liability for benefits provided through OPEB plans in which there are fewer than 100 planmembers (active and inactive). This option was retained in order to reduce costs for smaller

governments. GASB Statement No. 75 requires governments in all types of OPEB plans to present moreextensive note disclosures and required supplementary information (RSI) about their OPEB liabilities.

Among the new note disclosures is a description of the effect on the reported OPEB liability of using adiscount rate and a healthcare cost trend rate that are one percentage point higher and one percentagepoint lower than assumed by the government. The new RSI includes a schedule showing the causes of increases and decreases in the OPEB liability and a schedule comparing a government’s actual OPEBcontributions to its contribution requirements. Some governments are legally responsible to makecontributions directly to an OPEB plan or make benefit payments directly as OPEB comes due for employees of other governments. In certain circumstances (called special funding situations) GASBStatement No. 75 requires these governments to recognize in their financial statements a share of theother government’s net OPEB liability. This statement is effective for the District’s fiscal year endingJune 30, 2018. Earlier application is encouraged. Management has not determined what impact thisstatement will have on its financial statements.

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In June 2015, the GASB issued GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, which reduces the GAAP hierarchy to two

categories of authoritative GAAP from the four categories under GASB Statement No. 55, The Hierarchyof Generally Accepted Accounting Principles for State and Local Governments. The first category of authoritative GAAP consists of Statements of Governmental Accounting Standards. The second categorycomprises GASB Technical Bulletins and Implementation Guides, as well as guidance from the AICPAthat is cleared by the GASB. The Statement also addresses the use of authoritative and nonauthoritativeliterature in the event that the accounting treatment for a transaction or other event is not specified withina source of authoritative GAAP. These changes are intended to improve financial reporting for governments by establishing a framework for the evaluation of accounting guidance that will result ingovernments applying that guidance with less variation. That will improve the usefulness of financialstatement information for making decisions and assessing accountability and enhance the comparabilityof financial statement information among governments. The Statement also is intended to improveimplementation guidance by elevating its authoritative status to a level that requires it be exposed for aperiod of broad public comment prior to issuance, as is done for other GASB pronouncements. In

connection with GASB Statement No. 76, the GASB also recently cleared Implementation Guide No.2015-1, which incorporates changes resulting from feedback received during the public exposure of all of implementation guidance previously issued. This statement is effective for the District’s fiscal year endingJune 30, 2016. The implementation of this standard is not expected to have a significant impact on theDistrict's financial statements.

NOTE 2 - CASH AND INVESTMENTS

Cash at June 30, 2015, consisted of the following:

Governmental Activities

Pooled Funds:Cash in County Treasury $ 66,019,621

Deposits:Cash on hand and in banks 36,236Cash in revolving fund 56,315

Cash with Fiscal Agent 9,423,779

$ 75,535,951

Fiduciary Activities

Deposits:Cash on hand and in banks $ 505,922

Pooled Funds: In accordance with Education Code Section 41001, the District maintains substantially allof its cash in the Solano County Treasury. The County pools and invests the cash. These pooled fundsare carried at cost which approximates fair value. Interest earned is deposited annually into participatingfunds. Any investment losses are proportionately shared by all funds in the pool.

(Continued)

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June 30, 2015

NOTE 2 - CASH AND INVESTMENTS (Continued)

Because the District's deposits are maintained in a recognized pooled investment fund under the care of a third party and the District's share of the Treasurer's Pooled Investment Fund does not consist of

specific, identifiable investment securities owned by the District, no disclosure of the individual depositsand investments or related custodial credit risk classifications is required.

In accordance with applicable state laws, the Solano County Treasurer may invest in derivative securitieswith the State of California. However, at June 30, 2015, the Solano County Treasurer has representedthat the Pooled Investment Fund contained no derivatives or other investments with similar risk profiles.

Custodial Credit Risk: The District limits custodial credit risk by ensuring uninsured balances arecollateralized by the respective financial institution. Cash balances held in banks are insured up to$250,000 by the Federal Deposit Insurance Corporation (FDIC) and are collateralized by the respectivefinancial institution. At June 30, 2015, the carrying amount of the District's accounts was $598,473 andthe bank balance was $603,171, all of which was insured.

Cash with Fiscal Agent: Cash with Fiscal Agent totaling $9,423,779, represents cash held by a bank astrustee for the repayment of General Obligation Bonds, Mello-Roos Bonds and Certificates of Participation. This amount is fully collateralized.

Interest Rate Risk: The District's investment policy does not limit cash and investment maturities as ameans of managing its exposure to fair value losses arising from increasing interest rates. AtJune 30, 2015, the District had no significant interest rate risk related to cash and investment held.

Credit Risk: The District's investment policy does not limit its investment choices other than the limitationsof state law.

Concentration of Credit Risk: The District does not place limits on the amount it may invest in any oneissuer. At June 30, 2015, the District had no concentration of credit risk.

Interfund Activity: Transactions between funds of the District are recorded as interfund transfers. Theunpaid balances at year end, as a result of such transactions, are shown as due to and due from other funds.

(Continued)

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June 30, 2015

NOTE 3 - INTERFUND TRANSACTIONS

Interfund Receivables/Payables: Individual fund interfund receivable and payable balances atJune 30, 2015, were as follows:

Interfund InterfundFund Receivables Payables

Major Funds:General $ 425,880 $ 1,242,476Capital Facilities 1,235,132 -

Non-Major Funds: Adult Education - 77,122Child Development 1,332 20,040Cafeteria 2,134 328,718Special Reserve for Capital Projects 3,878 -

Totals $ 1,668,356 $ 1,668,356

Interfund Transfers: Interfund transfers consists of operating transfers from funds receiving revenue tofunds through which the resources are to be expended.

Interfund transfers for the 2014-15 fiscal year were as follows:

Transfer from the General Fund to the Adult Education Fundfor apportionment. $ 905,000

Transfer from the General Fund to the Deferred MaintenanceFund for maintenance projects. 400,000

Transfer from the Cafeteria Fund to the General Fund for indirect costs. 328,718

Transfer from the Debt Service for Blended Component UnitFund to the Community Facilities District Bond Fund for

the transfer of administration costs. 263,941Transfer from the Adult Education Fund to the General Fund

for indirect costs. 77,122Transfer from the General Fund to the Cafeteria Fund for

allocation of lottery revenue. 25,500Transfer from the Child Development Fund to the General

Fund for loan repayment. 20,040Transfer from the General Fund to the Child Development

Fund for allocation of lottery revenue. 5,000

$ 2,025,321

(Continued)

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June 30, 2015

NOTE 4 - CAPITAL ASSETS

A schedule of changes in capital assets for the year ended June 30, 2015, is shown below:

Balance BalanceJuly 1, June 30,2014 Additions Deductions Transfers 2015

Non-depreciable:Land $ 43,352,546 $ - $ - $ 266,971 $ 43,619,517Work-in-progress 7,115,534 670,271 (179,342) (6,716,738) 889,725

Depreciable:Buildings 270,007,287 1,316,265 (66,643) 5,428,712 276,685,621Improvement of sites 46,680,063 449,174 - 1,021,055 48,150,292Equipment 15,080,051 141,700 (276,777) - 14,944,974

Totals, at cost 382,235,481 2,577,410 (522,762) - 384,290,129

Less accumulated depreciation:Buildings (90,179,412) (6,528,227) 32,655 - (96,674,984)Improvement of sites (21,226,492) (2,102,214) - - (23,328,706)

Equipment (10,240,828) (816,656) 274,173 - (10,783,311)

Total accumulated depreciation (121,646,732) (9,447,097) 306,828 - (130,787,001)

Governmental activitiescapital assets, net $ 260,588,749 $ (6,869,687) $ (215,934) $ - $ 253,503,128

Depreciation expense was charged to governmental activities as follows:

Instruction $ 8,627,377Home-to-school transportation 310,743Food services 8,881General administration 442,967

Central data processing 21,825Plant services 35,304

Total depreciation expense $ 9,447,097

(Continued)

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June 30, 2015

NOTE 5 - LONG-TERM LIABILITIES

General Obligation Bonds: On October 26, 2011, the District issued the 2011 General ObligationRefunding Bonds totally $30,995,000 for the purpose of refunding the General Obligation Bonds (Series

2002) maturing on August 1, 2013 through August 1, 2027, inclusive, and to pay for the cost of issuanceof the Bonds. The General Obligation Refunding Bonds mature in varying amounts during thesucceeding year through August 2027 with interest rates ranging from 2.00% to 5.00%.

The annual payments required to amortize the 2011 General Obligation Refunding Bonds outstanding asof June 30, 2015, are as follows:

Year EndingJune 30, Principal Interest Total

2016 $ 1,690,000 $ 1,039,769 $ 2,729,7692017 1,720,000 1,001,369 2,721,3692018 1,765,000 953,394 2,718,3942019 1,820,000 899,619 2,719,6192020 1,870,000 834,919 2,704,919

2021-2025 10,595,000 2,882,072 13,477,0722026-2028 7,590,000 473,075 8,063,075

$ 27,050,000 $ 8,084,217 $ 35,134,217

On November 14, 2012, the District issued the 2012 General Obligation Refunding Bonds totaling$49,615,000 for the purpose of refunding $48,635,000 of the General Obligation Bonds (Series 2004)maturing on August 1, 2015 through August 1, 2028, inclusive, and to pay the costs of issuance of theBonds. The 2012 General Obligation Refunding Bonds mature in varying amounts during the succeedingyear through August 2028 with interest rates ranging from 2.50% to 4.00%.

The annual payments required to amortize the Series 2012 General Obligation Refunding Bondsoutstanding as of June 30, 2015, are as follows:

Year EndingJune 30, Principal Interest Total

2016 $ 1,795,000 $ 1,702,225 $ 3,497,2252017 1,995,000 1,626,425 3,621,4252018 2,190,000 1,542,725 3,732,7252019 2,405,000 1,450,825 3,855,8252020 2,620,000 1,350,325 3,970,325

2021-2025 16,620,000 4,954,713 21,574,7132026-2029 20,240,000 1,451,950 21,691,950

$ 47,865,000 $ 14,079,188 $ 61,944,188

(Continued)

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June 30, 2015

NOTE 5 - LONG-TERM LIABILITIES (Continued)

Child Development Loan: The District has been awarded two Child Care Facilities Revolving Fund loansin the amount of $150,000, for purchase, transportation and installation of facilities for replacement and/or

expansion of capacity for provision of child care and development services for a total loan amount of $300,000. The loan is repayable in equal payments of $30,000 over a 10-year period beginning on thedate of the first repayment. The loans do not bear interest. Future minimum payments are as follows:

Year EndingJune 30, Payments

2016 $ 15,0002017 15,000

Total $ 30,000

California Energy Commission Loan: On June 4, 2013, the District received a loan from the State of

California Energy Commission (CEC) in the amount of $1,031,270 with an interest rate of 1.0%. OnJuly 3, 2014, the District received another disbursement from the CEC in the amount of $110,848. Asummary of future payments is as follows:

Year EndingJune 30, Payments

2016 $ 85,5922017 85,5922018 85,5922019 85,5922020 85,592

2021-2025 427,9612026 385,165

1,241,086

Less: interest portion (98,968)

$ 1,142,118

(Continued)

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June 30, 2015

NOTE 5 - LONG-TERM LIABILITIES (Continued)

Post-Retirement Healthcare Benefits: In addition to the pension benefits described in Note 7 and 8, theDistrict provides post-retirement health care benefits to all employees who retire from the District after

attaining age 55 with at least 15 years of service, in accordance with contracts between the District andemployee groups. Benefits are provided for management and confidential retirees for five years after thedate of retirement, for classified retirees to age 65 or for 36 months, and for certificated retirees to age 65or for 120 months, whichever is shorter. The District pays 100% of the cost of health, dental and visionbenefits for management and confidential retirees, and pays half the cost of medical and dental benefitsfor certificated and classified retirees, recognized as expenditures on a pay-as-you-go basis.

The District's annual other postemployment benefit (OPEB) cost (expense) is calculated based on theannual required contribution of the employer (ARC), an amount actuarially determined in accordance withthe parameters of GASB Cod. Sec. P50.108-.109. The ARC represents a level of funding that, if paid onan ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarialliabilities (or funding excess) over a period not to exceed thirty years. The following table shows thecomponents of the District's annual OPEB cost for the year, the amount actually contributed to the plan,and changes in the District's net OPEB obligation:

Annual required contribution $ 5,338,725

Interest on net OPEB obligation 974,889

Adjustment to annual required contribution (968,575)

Annual OPEB cost (expense) 5,345,039

Contributions made (1,592,645)

Increase in net OPEB obligation 3,752,394

Net OPEB obligation - beginning of year 24,372,214

Net OPEB obligation - end of year $ 28,124,608

The District's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the netOPEB obligation for the year ended June 30, 2015

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