official statement - fiscal advisors · 2017-08-01 · beatriz curcio christopher enders patricia...

PRELIMINARY OFFICIAL STATEMENT

NEW ISSUE BOND ANTICIPATION NOTES

In the opinion of Hodgson Russ LLP, of Buffalo, New York, Bond Counsel, subject to continuing compliance by the Belfast Central School

District, Allegany County, New York (the "School District" or the “District”) with its covenants relating to certain requirements contained in the

Internal Revenue Code of 1986, as amended (the "Code"), interest on the Notes is (A) excluded from gross income of the owners thereof for federal

income tax purposes under existing law, and (B) exempt from personal income taxes imposed by the State of New York or any political subdivision

thereof (including The City of New York). Moreover, interest on the Notes is not an "item of tax preference" for purposes of the individual and

corporate alternative minimum taxes imposed by the Code. (See the caption "TAX EXEMPTION" herein for a discussion of certain federal taxes

applicable to corporate owners of the Notes.)

The Notes will designated as "qualified tax-exempt obligations" pursuant to Section 265(b)(3) of the Code.

$1,700,000 BELFAST CENTRAL SCHOOL DISTRICT

ALLEGANY COUNTY, NEW YORK GENERAL OBLIGATIONS

CUSIP BASE #: 077680

$1,700,000 Bond Anticipation Notes, 2017A (the “Notes”)

Dated: August 17, 2017 Due: August 2, 2018

The Notes will constitute general obligations of the Belfast Central School District (the “School District” or the “District”) and

will contain a pledge of its faith and credit for the payment of the principal of and interest on the Notes. All the taxable real property

within the District will be subject to the levy of ad valorem taxes, without limitation as to rate or amount, subject to certain statutory

limitations imposed by Chapter 97 of the 2011 Laws of New York.

The Notes will NOT be subject to redemption, in whole or in part, prior to their maturity. Interest on the Notes will be calculated

on a 30-day month and a 360-day year basis, and will be payable at maturity.

The Notes will be issued as registered notes, and, at the option of the purchaser(s), may be registered in the name of the

purchaser(s) or may be registered to The Depository Trust Company (“DTC” or the “Securities Depository”).

If the Notes will be issued through DTC, the Notes will be registered in the name of Cede & Co., as nominee of DTC in New

York, New York, which will act as the Securities Depository for the Notes. Individual purchases of the Notes will be made only in

book-entry-form, in principal denominations of $5,000 or integral multiples thereof. Purchasers of the Notes will not receive

certificates representing their ownership interest in the Notes. Payments of the principal of and interest on the Notes will be made by

the District to DTC, which will in turn remit such principal and interest to its Participants, for subsequent distribution to the Beneficial

Owners of the Notes. If the Notes are registered in the name of the purchaser(s), principal and interest on the Notes will be payable in

Federal Funds at such bank or trust company located and authorized to do business in the State of New York as may be selected by the

successful bidder. Paying agent fees, if any, are to be paid by the purchaser(s). In such case, the Notes will be issued in registered

form in denominations of $5,000 or integral multiples thereof, as may be determined by such successful bidder. See “BOOK-ENTRY-

ONLY SYSTEM,” herein.

The Notes are offered when, as and if issued and received by the purchaser(s) and subject to the receipt of the unqualified legal

opinion as to the validity of the Notes of Hodgson Russ LLP, Bond Counsel, of Buffalo, New York. It is anticipated that the Notes

will be available for delivery through the facilities of DTC located in Jersey City, New Jersey, or as agreed upon with the purchaser(s),

on or about August 17, 2017.

ELECTRONIC BIDS for the Notes must be submitted on Grant Street Group's MuniAuction website ("MuniAuction") accessible via

www.GrantStreet.com, on August 9, 2017 no later than 11:15 A.M. EDT. Bids may also be submitted by facsimile at (315) 930-2354. No

other form of electronic bidding services will be accepted. No phone bids will be accepted. No bid will be received after the time for

receiving bids specified above. Once the bids are communicated electronically via MuniAuction or facsimile to the District, each bid will

constitute an irrevocable offer to purchase the Notes pursuant to the terms provided in the Notice of Sale.

August 1, 2017

THE DISTRICT DEEMS THIS OFFICIAL STATEMENT TO BE FINAL FOR PURPOSES OF SECURITIES AND EXCHANGE COMMISSION RULE 15c2-12 (THE

“RULE”), EXCEPT FOR CERTAIN INFORMATION THAT HAS BEEN OMITTED HEREFROM IN ACCORDANCE WITH THE RULE AND THAT WILL BE SUPPLIED

WHEN THIS OFFICIAL STATEMENT IS UPDATED FOLLOWING THE SALE OF THE NOTES. THIS OFFICIAL STATEMENT WILL BE SO UPDATED UPON

REQUEST OF THE SUCCESSFUL BIDDER(S), AS MORE FULLY DESCRIBED IN THE NOTICE OF SALE WITH RESPECT TO THE NOTES. UNLESS THE NOTES

ARE PURCHASED FOR THE SUCCESSFUL BIDDER’S OWN ACCOUNT, AS PRINCIPAL FOR INVESTMENT AND NOTE RESALE, THE DISTRICT WILL

COVENANT IN AN UNDERTAKING TO PROVIDE NOTICE OF CERTAIN DESIGNATED EVENTS AS REQUIRED BY THE RULE. SEE "APPENDIX C -

DISCLOSURE UNDERTAKING" HEREIN.

http://www.grantstreet.com/

BELFAST CENTRAL SCHOOL DISTRICT ALLEGANY COUNTY, NEW YORK

SCHOOL DISTRICT OFFICIALS

2017-2018 BOARD OF EDUCATION

JOSIE PRESTON RANDA HARRINGTON

President Vice President

DAPHNE “BECKY” BACKER

BEATRIZ CURCIO

CHRISTOPHER ENDERS

PATRICIA KROTZ

JANINE PRESTON

* * * * *

WENDY BUTLER

Superintendent of Schools

ROBERT J. LINGENFELTER

District Treasurer

GINA LARRABEE

District Clerk

FISCAL ADVISORS & MARKETING, INC.

School District Municipal Advisors

HODGSON RUSS LLP

Bond Counsel

No person has been authorized by the District to give any information or to make any representations not contained in this Official Statement, and, if given

or made, such information or representations must not be relied upon as having been authorized. This Official Statement does not constitute an offer to sell or

solicitation of an offer to buy any of the Notes in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. The

information, estimates and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made

hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District.

TABLE OF CONTENTS

Page

THE NOTES .............................................................................. 1

Description of the Notes .......................................................... 1

No Optional Redemption ......................................................... 1

Purpose of Issue ...................................................................... 1

BOOK-ENTRY-ONLY SYSTEM ............................................ 2

Certificated Notes .................................................................... 3

THE SCHOOL DISTRICT ...................................................... 4

General Information ................................................................ 4

Population ............................................................................... 4

Selected Wealth and Income Indicators................................... 4

Larger Employers .................................................................... 4

Unemployment Rate Statistics ................................................. 5

Form of School Government ................................................... 5

Budgetary Procedures .............................................................. 5

Investment Policy .................................................................... 6

State Aid .................................................................................. 6

State Aid Revenues.................................................................. 8

District Facilities ..................................................................... 9

Enrollment Trends ................................................................... 9

Employees ............................................................................... 9

Status and Financing of Employee Pension Benefits .............. 9

Other Post-Employment Benefits .......................................... 11

Other Information .................................................................. 13

Financial Statements .............................................................. 13

2017 Unaudited Results of Operations .................................. 13

New York State Comptroller Report of Examination ............ 14

The State Comptroller’s Fiscal Stress Monitoring System .... 14

TAX INFORMATION ............................................................ 15

Taxable Assessed Valuations ................................................ 15

Tax Rates Per $1,000 (Assessed)........................................... 15

Tax Collection Procedure ...................................................... 15

Tax Levy and Tax Collection Record .................................... 15

Real Property Tax Revenues ................................................. 16

Larger Taxpayers 2016 for the 2016-17 Tax Roll ................. 16

Additional Tax Information ................................................... 16

STAR – School Tax Exemption ............................................ 17

TAX LEVY LIMITATION LAW .......................................... 17

STATUS OF INDEBTEDNESS ............................................. 19

Constitutional Requirements ................................................. 19

Statutory Procedure ............................................................... 19

Debt Outstanding End of Fiscal Year .................................... 20

Details of Outstanding Indebtedness ..................................... 20

Debt Statement Summary ...................................................... 21

Bonded Debt Service ............................................................. 21

Capital Project Financing ..................................................... 21

Capital Lease ......................................................................... 21

Cash Flow Borrowings .......................................................... 22

Estimated Overlapping Indebtedness .................................... 22

Debt Ratios ............................................................................ 22

Page

STATUS OF INDEBTEDNESS (CONT.) ............................. 21

SPECIAL PROVISIONS AFFECTING

REMEDIES UPON DEFAULT ....................................... 23

MARKET AND RISK FACTORS .......................................... 23

TAX EXEMPTION ................................................................... 24

LEGAL MATTERS .................................................................. 25

LITIGATION ............................................................................ 26

DISCLOSURE UNDERTAKING ............................................ 26

Historical Compliance ............................................................ 26

MUNICIPAL ADVISOR .......................................................... 26

RATING ..................................................................................... 27

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

APPENDIX - A

GENERAL FUND - Balance Sheets

APPENDIX - A1

GENERAL FUND – Revenues, Expenditures and

Changes in Fund Balance

APPENDIX - A2

GENERAL FUND – Revenues, Expenditures and

Changes in Fund Balance - Budget and Actual

APPENDIX - B

BONDED DEBT SERVICE

APPENDIX – B1

CURRENT BONDS OUTSTANDING

APPENDIX - C

DISCLOSURE UNDERTAKING

APPENDIX - D

AUDITED FINANCIAL STATEMENTS AND

SUPPLEMENTAL INFORMATION - JUNE 30, 2016

PREPARED WITH THE ASSISTANCE OF

Fiscal Advisors & Marketing, Inc.

120 Walton Street, Suite 600

Syracuse, New York 13202

(315) 752-0051

http://www.fiscaladvisors.com

1

OFFICIAL STATEMENT

of the

BELFAST CENTRAL SCHOOL DISTRICT ALLEGANY COUNTY, NEW YORK

Relating to

$1,700,000 Bond Anticipation Notes, 2017A

This Official Statement, which includes the cover page, has been prepared by the Belfast Central School District, Allegany

County, New York (the "School District" or "District", "County", and "State", respectively) in connection with the sale by the

School District of $1,700,000 principal amount of its Bond Anticipation Notes, 2017A (the "Notes").

The factors affecting the District’s financial condition and the Notes are described throughout this Official Statement.

Inasmuch as many of these factors, including economic and demographic factors, are complex and may influence the District tax

base, revenues, and expenditures, this Official Statement should be read in its entirety, and no one factor should be considered

more or less important than any other by reason of its relative position in this Official Statement.

All quotations from and summaries and explanations of provisions of the Constitution and laws of the State and acts and

proceedings of the District contained herein do not purport to be complete and are qualified in their entirety by reference to the

official compilations thereof, and all references to the Notes and the proceedings of the District relating thereto are qualified in

their entirety by reference to the definitive forms of the Notes and such proceedings.

THE NOTES

Description of the Notes

The Notes are general obligations of the District, and will contain a pledge of its faith and credit for the payment of the

principal of and interest on the Notes as required by the Constitution and laws of the State of New York (State Constitution, Art.

VIII, Section 2: Local Finance Law, Section 100.00). All the taxable real property within the District is subject to the levy of ad

valorem taxes to pay the Notes and interest thereon, without limitation as to rate or amount, subject to certain statutory limitations

imposed by Chapter 97 of the 2011 Laws of New York. See “TAX LEVY LIMITATION LAW,” herein.

The Notes will be dated August 17, 2017 and will mature on August 2, 2018, with interest payable at maturity at the annual

rate or rates specified by the purchaser(s). Interest on the Notes will be calculated on a 30-day month and a 360-day year basis, and

will be payable at maturity.

The Notes will be issued in registered form either (i) in the name of the purchaser(s), in which case principal of and interest on

the Notes will be payable in federal funds at such bank(s) or trust company(ies) located and authorized to do business in the State

as may be selected by such successful bidder(s); or (ii) in the name of Cede & Co. as nominee of DTC, which will act as the

securities depository for the Notes. See "BOOK-ENTRY-ONLY SYSTEM," herein. One fully-registered note certificate will be

issued for all Notes of a particular issue bearing the same rate of interest and CUSIP number. Purchasers will not receive

certificates representing their interest in the Notes. Principal and interest will be paid in lawful money of the United States of

America (federal funds) by the District directly to the registered owner or to DTC for its nominee, Cede & Co.

No Optional Redemption

The Notes will NOT be subject to redemption, in whole or in part, prior to their maturity.

Purpose of Issue

The Notes are being issued in accordance with the Constitution and statutes of the State of New York, including the Education

Law and the Local Finance Law, and pursuant to a bond resolution that was duly adopted by the Board of Education of the District

on July 11, 2017 following a positive vote of the qualified voters of the District at a special meeting held on August 2, 2016,

authorizing the issuance of up to $1,700,000 of serial bonds of the District to undertake a capital improvements project consisting

of the reconstruction, rehabilitation and renovation, in part, and the construction of improvements and upgrades to, various District

buildings and facilities (and the sites thereof).

The issuance of the Notes will provide $1,700,000 in new monies for the aforementioned purpose.

2

BOOK-ENTRY-ONLY SYSTEM

The following is relevant only if the Notes are issued in book-entry-form. The Depository Trust Company (“DTC”), New

York, New York, will act as securities depository for the Notes. The Notes will be issued as fully-registered securities registered in

the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of

DTC. One fully-registered note certificate will be issued for Notes bearing the same rate of interest and CUSIP number, in the

aggregate principal amount of such issue, and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the

meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of

the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the

Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity

issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants

(“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and

other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between

Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include

both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other

organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the

holding company for DTC National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are

registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available

to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear

through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC

has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and

Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

Purchases of Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the

Notes on DTC’s records. The ownership interest of each actual purchaser of each Note (“Beneficial Owner”) is in turn to be

recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of

their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as

well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered

into the transaction. Transfers of ownership interests in the Notes are to be accomplished by entries made on the books of Direct

and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their

ownership interests in Notes, except in the event that use of the book-entry system for the Notes is discontinued.

To facilitate subsequent transfers, all Notes deposited by Direct Participants with DTC are registered in the name of DTC’s

partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of

Notes with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in

beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Notes; DTC’s records reflect only the identity

of the Direct Participants to whose accounts such Notes are credited, which may or may not be the Beneficial Owners. The Direct

and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect

Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among

them, subject to any statutory or regulatory requirements as may be in effect from time to time.

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

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

Principal and interest payments on the Notes will be made to Cede & Co., or such other nominee as may be requested by an

authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts in accordance with their respective

holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and

customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,”

and will be the responsibility of such Participant and not of DTC or the District, subject to any statutory or regulatory requirements

as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the District, disbursement

of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial

Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the Notes at any time by giving reasonable notice to

the District. Under such circumstances, in the event that a successor depository is not obtained, note certificates are required to be

printed and delivered.

http://www.dtcc.com/

3

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

depository). In that event, note certificates will be printed and delivered.

The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the District

believes to be reliable, but the District takes no responsibility for the accuracy thereof.

Source: The Depository Trust Company.

THE DISTRICT CANNOT AND DOES NOT GIVE ANY ASSURANCES THAT DTC, DIRECT PARTICIPANTS OR

INDIRECT PARTICIPANTS OF DTC WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE NOTES (1)

PAYMENTS OF PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUM ON THE NOTES; (2) CONFIRMATIONS

OF THEIR OWNERSHIP INTERESTS IN THE NOTES; OR (3) OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS

PARTNERSHIP NOMINEE, AS THE REGISTERED OWNER OF THE NOTES, OR THAT THEY WILL DO SO ON A

TIMELY BASIS, OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN

THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT.

THE DISTRICT WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO DTC, THE DIRECT

PARTICIPANTS, THE INDIRECT PARTICIPANTS OF DTC OR THE BENEFICIAL OWNERS WITH RESPECT TO (1) THE

ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT

PARTICIPANTS OF DTC; (2) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT

PARTICIPANTS OF DTC OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL

AMOUNT OF OR INTEREST OR REDEMPTION PREMIUM ON THE NOTES; (3) THE DELIVERY BY DTC OR ANY

DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC OF ANY NOTICE TO ANY BENEFICIAL OWNER

THAT IS REQUIRED OR PERMITTED TO BE GIVEN TO OWNERS; OR (4) ANY CONSENT GIVEN OR OTHER ACTION

TAKEN BY DTC AS THE REGISTERED OWNER OF THE NOTES.

THE INFORMATION CONTAINED HEREIN CONCERNING DTC AND ITS BOOK-ENTRY SYSTEM HAS BEEN

OBTAINED FROM DTC, AND THE DISTRICT MAKES NO REPRESENTATION AS TO THE COMPLETENESS OR THE

ACCURACY OF SUCH INFORMATION OR AS TO THE ABSENCE OF MATERIAL ADVERSE CHANGES IN SUCH

INFORMATION SUBSEQUENT TO THE DATE HEREOF.

Certificated Notes

DTC may discontinue providing its services with respect to the Notes at any time by giving notice to the District and

discharging its responsibilities with respect thereto under applicable law, or the District may terminate its participation in the

system of book-entry-only system transfers through DTC at any time. In the event that such book-entry-only system is

discontinued, the following provisions will apply:

The Notes will be issued in registered form in denominations of $5,000 or integral multiples thereof. Principal of and interest

on the Notes will be payable at a principal corporate trust office of a bank or trust company located and authorized to do business

in the State to be named by the District as fiscal agent for the Notes. The Notes will remain not subject to redemption prior to

maturity.

THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK

4

THE SCHOOL DISTRICT

General Information

The District is located in Western New York State’s Genesee River Valley in Allegany County and has a land area of

approximately 100 square miles. The District includes the Towns of Allen, Angelica, Belfast, Caneadea, and New Hudson. The

School District is 1-1/2 hours south of both Buffalo and Rochester.

The area is noted for its outstanding recreational activities, including hunting, fishing, horseback riding and hiking. The area is

a center for many year-round recreational activities with many excellent golf courses, ski resorts, boating opportunities, and State

parks.

Educational and cultural opportunities are abundant including nearby Houghton College, St. Bonaventure University, Alfred

University, SUNY Alfred and SUNY Geneseo.

The major highway serving the School District is State Rt. 19, which connects the District with Interstate Highway 86

(formerly Route 17).

Source: District officials.

Population

The current estimated population of the School District is 2,277. (Source: 2015 U.S. Census Bureau.)

Selected Wealth and Income Indicators

Per capita income statistics are not available for the District as such. The smallest areas for which such statistics are available,

which includes the District, are the Towns and County listed below. The figures set below with respect to such Towns and County

are included for information only. It should not be inferred from the inclusion of such data herein that the Towns or the County are

necessarily representative of the District, or vice versa.

Per Capita Income Median Family Income

2000 2006-2010 2011-2015 2000 2006-2010 2011-2015

Towns of:

Allen $ 13,830 $ 21,645 $ 13,240 $ 29,688 $ 41,167 $ 47,500

Angelica 16,348 19,453 22,176 37,891 47,370 49,625

Belfast 15,803 19,825 18,406 40,000 51,563 47,850

Caneadea 10,010 13,493 14,842 39,667 54,881 53,971

New Hudson 12,319 37,266 21,229 34,702 57,917 52,292

County of:

Allegany 15,667 20,058 20,940 45,972 49,864 52,942

State of:

New York 23,389 30,948 33,236 51,691 67,405 71,913

Note: 2012-2016 American Community Survey estimates are not available as of the date of this Official Statement.

Source: U.S. Census Bureau, 2000 census, 2006-2010 and 2011-2015 American Community Survey data.

Larger Employers

The following are the five larger employers within or in close proximity to the School District.

Estimated Number

Name Type of Employees

Excel Business Partners Agency 300

Houghton College Higher Education 285

Saputo Manufacturing 250

Ellsessor Steel Erectors, Inc. Steel Contractor 100

Belfast Central School District Public Education 95


5

Unemployment Rate Statistics

Unemployment statistics are not available for the District as such. The smallest area for which such statistics are available

(which includes the District) is Allegany County. The information set forth below with respect to the County and the State is

included for informational purposes only. It should not be implied from the inclusion of such data in this Official Statement that

the County or State is necessarily representative of the District, or vice versa.

Year Average

2008 2009 2010 2011 2012 2013 2014 2015 2016

Allegany County 6.4% 8.7% 9.2% 8.9% 8.4% 7.5% 6.2% 6.5% 6.2%

New York State 5.4 8.4 8.6 8.2 8.5 7.7 6.3 5.3 4.8

2017 Monthly Figures

Jan Feb Mar Apr May Jun Jul Aug

Allegany County 7.8% 7.5% 6.7% 6.6% 6.0% 6.7% N/A N/A

New York State 4.9 5.0 4.4 4.2 4.3 4.5 N/A N/A

Note: Unemployment rates for the months of July and August of 2017 are unavailable as of the date of this Official Statement.

Source: Department of Labor, State of New York. Figures not seasonally adjusted.

Form of School Government

The Board of Education (the "Board") which is the policy-making body of the School District, consists of seven members with

overlapping five-year terms so that as nearly as possible an equal number of members are elected to the Board each year. Each

Board member must be a qualified voter of the School District and no Board member may hold certain other School District offices

or positions while serving on the Board of Education. The President and the Vice President are selected by the Board members.

Budgetary Procedures

Pursuant to the Education Law, the Board of Education annually prepares or causes to be prepared, a budget for the ensuing

fiscal year. A public hearing on such budget is held not less than seven days and not more than fourteen days prior to the vote.

The Board of Education causes notice of such public hearing to be published four times beginning seven weeks prior to the vote.

After the public hearing, but not less than six days prior to the budget vote, the District must mail a school budget notice to all

qualified voters which contains the total budget amount, the dollar and percentage increase or decrease in the proposed budget (or

contingency budget) as compared to the current budget, the percentage increase or decrease in the consumer price index, the

estimated property tax levy, the basic STAR exemption impact and the date, time and place of the vote.

After the budget hearing and subsequent notice, a referendum upon the question of the adoption of the budget is held on the

third Tuesday in May each year. All qualified District residents are eligible to participate.

Pursuant to Chapter 97 of the Laws of 2011 (“Chapter 97”), beginning with the 2012 – 2013 fiscal year, if the proposed budget

requires a tax levy increase that does not exceed the lesser of 2% or the rate of inflation (the “School District Tax Cap”), then a

majority vote is required for approval. If the proposed budget requires a tax levy that exceeds the School District Tax Cap, the

budget proposition must include special language and a 60% vote is required for approval. Any separate proposition that would

cause the District to exceed the School District Tax Cap must receive at least 60% voter approval.

If the proposed budget is not approved by the required margin, the Board of Education may resubmit the original budget or a

revised budget to the voters on the 3rd Tuesday in June, or adopt a contingency budget (which would provide for ordinary

contingent expenses, including debt service) that levies a tax levy no greater than that of the prior fiscal year (i.e. a 0% increase in

the tax levy).

If the resubmitted and/or revised budget is not approved by the required margin, the Board of Education must adopt a budget

that requires a tax levy no greater than that of the prior fiscal year (i.e. a 0% increase in the tax levy). For a complete discussion of

Chapter 97, see “TAX LEVY LIMITATION LAW,” herein.

6

Recent Budget Vote Results

The budget for the 2016-17 fiscal year was adopted by the qualified voters on May 17, 2016 with a vote of 126 to 33. The

District’s adopted budget for 2016-17 fiscal year remained within the Tax Cap imposed by Chapter 97 of the Laws of 2011.

The budget for the 2017-18 fiscal year was adopted by the qualified voters on May 16, 2017 with a vote of 145 to 51. The

District’s adopted budget for 2017-18 fiscal year remains within the Tax Cap imposed by Chapter 97 of the Laws of 2011.

Investment Policy

Pursuant to the statutes of the State of, the School District is permitted to invest only in the following investments: (1) special

time deposits or certificates of deposits in a bank or trust company located and authorized to do business in the State (2) obligations

of the United States of America; (3) obligations guaranteed by agencies of the United States of America where the payment of

principal and interest is guaranteed by the United States of America; (4) obligations of the State of New York; (5) with the

approval of the State Comptroller, tax anticipation notes and revenue anticipation notes issued by any municipality or district

corporation of the State, other than the District; (6) obligations of a New York public corporation which are made lawful

investments by the District pursuant to another provision of law; (7) certain certificates of participation issued on behalf of political

subdivisions of the State; and, (8) in the case of School District moneys held in certain reserve funds established pursuant to law,

obligations issued by the School District. These statutes further require that all bank deposits, in excess of the amount insured

under the Federal Deposit Insurance Act, be secured by either a pledge of eligible securities, an eligible surety bond or an eligible

letter of credit, as those terms are defined in the law.

Consistent with the above statutory limitations, it is the School District's current policy to invest in: (1) certificates of deposit

or time deposit accounts that are fully secured as required by statute, (2) obligations of the United States of America or (3)

obligations guaranteed by agencies of the United States of America where the payment of principal and interest is guaranteed by

the United States of America. In the case of obligations of the United States government, the School District may purchase such

obligations pursuant to a written repurchase agreement that requires the purchased securities to be delivered to a third party

custodian.

State Aid

The District receives substantial financial assistance from the State. In its budget for the 2017-2018 fiscal year, approximately

79.9% of the revenues of the District are estimated to be received in the form of State aid. If the State should not adopt its budget

in a timely manner in any year, municipalities and school districts in the State, including the District, may be affected by a delay in

the payment of State aid.

The State is not constitutionally obligated to maintain or continue State aid to the District. No assurance can be given that

present State aid levels will be maintained in the future. In view of the State’s continuing budget problems, future State aid

reductions are likely. State budgetary restrictions which eliminate or substantially reduce State aid could have a material adverse

effect upon the District requiring either a counterbalancing increase in revenues from other sources to the extent available, or a

curtailment of expenditures.

Building Aid

A portion of the District’s State aid consists of building aid which is related to outstanding indebtedness for capital project

purposes. In order to receive building aid, the District must have building plans and specifications approved by the Facilities

Planning Unit of the State Education Department. A maximum construction and incidental cost allowance is computed for each

building project that takes into account a pupil construction cost allowance and assigned pupil capacity. For each project financed

with debt obligations, a bond percentage is computed. The bond percentage is derived from the ratio of total approved cost

allowances to the total principal borrowed. Approved cost allowances are estimated until a project final cost report is completed.

Aid on debt service is generally paid in the current fiscal year provided such debt service is reported to the Commissioner of

Education by November 15 of that year. Any debt service in excess of amounts reported by November 15 will not be aided until

the following fiscal year. The building aid received is equal to the approved building expense, or bond percent, times the building

aid ratio that is assigned to the District. The building aid ratio is calculated based on a formula that involves the full valuation per

pupil in the District compared to a State-wide average.

7

Pursuant to the provisions of Chapter 760 of the Laws of 1963, the District is eligible to receive a Building Aid Estimate from

the New York State Department of Education. Since the gross indebtedness of the District is within the debt limit, the District is

not required to apply for a Building Aid Estimate. Based on 2017-2018 preliminary building aid ratios, the District expects to

receive State building aid of approximately 94.3% of debt service on State Education Department approved expenditures from July

1, 2004 to the present.

The State building aid ratio is calculated each year based upon a formula which reflects Resident Weighted Average Daily

Attendance (RWADA) and the full value per pupil compared with the State average. Consequently, the estimated aid will vary

over the life of each issue. State building aid is further dependent upon the continued apportionment of funds by the State

Legislature.

State Aid History

State aid to school districts within the State has declined in some recent years before increasing again in more recent years.

School district fiscal year (2012-2013): The State Legislature adopted the State budget on March 30, 2012. The budget

included an increase of $751 million in State aid for school districts.

The 2012-2013 State budget linked additional school aid to compliance with a new teacher evaluation process. A school

district would not be eligible for an aid increase in 2012-2013 unless it had its teacher evaluation process reviewed and approved

by the New York State Education Department by January 17, 2013. The New York State Education Department approved the

District’s initial Annual Professional Performance Review Plan (APPR) on December 11, 2012. The most current APPR was

approved on October 30, 2015.

School district fiscal year (2013-2014): The State Legislature adopted the State budget on March 29, 2013. The budget

included an increase of $1.0 billion in State aid for school districts.

School district fiscal year (2014-2015): The 2014-2015 State budget included a $1.1 billion or 5.3% increase in State aid to

school districts for the 2014-2015 school year. High-need school districts received 70% of the school aid increase. The 2014-15

State budget restored $602 million of Gap Elimination Adjustment (“GEA”) reductions that had been imposed on school districts

from 2010-2011 to 2012-2013. The 2014-2015 State budget invested $1.5 billion over five years to support the phase-in of a

statewide universal full-day pre-kindergarten program.

The Smart Schools Bond Act was proposed as part of the 2014-2015 State budget and was subsequently approved by the

voters of the State. The Smart Schools Bond Act authorizes the issuance of $2 billion of general obligation bonds to financed

improved educational technology and infrastructure to improve learning and opportunity for students throughout the State. The

District’s estimated allocation of funds thereunder is $559,939.

School district fiscal year (2015-2016): The 2015-2016 State budget included a partial reduction in the Gap Elimination

Adjustment with $603 million in GEA cuts being restored, and provided an additional $428 million in foundation aid and $268

million in expense base aids which reimbursed school districts for prior year expenses in school construction, transportation,

BOCES and special education services.

School district fiscal year (2016-2017): The 2016-17 State budget included a school aid increase of $991 million over 2015-

16, $863 million of which consists of traditional operating aid. In addition to full-funding of expense based aids ($408 million), the

budget also includes a $266 million increase in Foundation Aid and an $189 million restoration to the Gap Elimination Adjustment.

The bulk of the remaining increase included $100 million in Community Schools Aid, an aid category, to support school districts

that wish to create community schools. The funds may only be used for certain purposes such as providing health, mental health

and nutritional services to students and their families. The District received $44,520 in State aid (in the form of Foundation aid) to

be used on community schools activities. The District is not a part of the Community Schools Grant Initiative (CSGI).

School district fiscal year (2017-18): The State 2017-18 Enacted Budget increases State aid to education by $1.1 billion,

including a $700 million increase in Foundation Aid, bringing the total amount of State aid to education to $25.8 billion or an

increase of 4.4%. Expense-based aids to support school construction, pupil transportation, BOCES and special education were

continued in full, as is the State’s usual practice. Transportation aid increased by 5.5% and building aid increased by 4.8%. The

State 2017-18 Enacted Budget continues to link school aid increases for 2017-18 and 2018-19 to teacher and principal evaluation

plans approved by September 1 of the current year in compliance with Education Law Section 3012-d.

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The State 2017-18 Enacted Budget allows the Governor to reduce expenditures (including aid to school districts) mid-year if

revenues (including, but not limited to, funding from the federal government) are less than what was expected. If federal support is

reduced by $850 million or more, the Governor will develop a plan to make uniform spending reductions. Such plan would take

effect automatically unless the Legislature passes their own plan within 90 days.

There can be no assurance that the State appropriation for building aid and other State aid to school districts will be continued

in future years, either pursuant to existing formulas or in any form whatsoever. State aid, including building aid appropriated and

apportioned to the District, can be paid only if the State has such monies available therefor. The availability of such monies and

the timeliness of such payment could be affected by a delay in the adoption of the State budget or their elimination therefrom.

State Aid Litigation

In January 2001, the State Supreme Court issued a decision in Campaign for Fiscal Equity v. New York mandating that the

system of apportionment of State aid to school districts within the State be restructured by the Governor and the State Legislature.

On June 25, 2002, the Appellate Division of the State Supreme Court reversed that decision. On June 26, 2003, the State Court of

Appeals, the highest court in the State, reversed the Appellate Division, holding that the State must, by July 30, 2004, ascertain the

actual cost of providing a sound basic education, enact reforms to the system of school funding and ensure a system of

accountability for such reforms. The Court of Appeals further modified the decision of the Appellate Division by deciding against a

Statewide remedy and instead limited its ruling solely to the New York City school system.

After further litigation, on appeal in 2006, the Court of Appeals held that $1.93 billion of additional funds for the New York

City schools – as initially proposed by the Governor and presented to the Legislature as an amount sufficient to provide a sound

basic education – was reasonably determined. State legislative reforms in the wake of the Campaign for Fiscal Equity decision

included increased accountability for expenditure of State funds and collapsing over 30 categories of school aid for school districts

in the State into one classroom operating formula referred to as foundation aid. The stated purpose of foundation aid is to prioritize

funding distribution based upon student need. As a result of the Court of Appeals ruling schools were to receive $5.5 billion

increase in foundation aid over a four fiscal year phase-in covering 2007 to 2011.

Litigation is continuing however as a statewide lawsuit entitled NYSER vs. State of New York was heard on appeal on May 30,

2017. The plaintiffs assert that the State has failed to comply with the original decision of the New York State Court of Appeals in

CFE v. State of New York to ensure that all students throughout the State have the opportunity for a sound basic education. The

complaint asks the court for an order requiring the state to immediately discontinue the use of the gap elimination adjustment

(GEA), the cap on state aid increases and the supermajority requirements regarding increases in local property tax levies. The

complaint also asks the court to order the State to develop a new methodology for determining the actual costs of providing all

students the opportunity for a sound basic education, revise the State funding formulas to ensure that all schools receive sufficient

resources, and ensure a system of accountability that measures whether every school has sufficient resources and that all students

are, in fact, receiving the opportunity for a sound basic education. It is not possible to predict the outcome of this litigation.

State Aid Revenues

The following table illustrates the percentage of total revenues of the District for each of the last five completed fiscal years,

the unaudited figures for the 2016-17 fiscal year, as well as budgeted figures for the current 2017-18 fiscal year comprised of State

aid.

Fiscal Year

Total

State Aid

Total

Revenues

Percentage of

Total Revenues

Consisting of

State Aid

2011-2012 $ 6,290,141 $ 7,889,715 79.73%

2012-2013 6,381,981 8,133,779 78.46

2013-2014 6,527,525 8,480,493 76.97

2014-2015 6,764,150 8,733,883 77.45

2015-2016 7,142,194 9,130,973 78.22

2016-2017 (Budgeted) 7,349,150 9,288,258 79.12

2016-2017 (Unaudited) 7,148,952 9,228,138 77.47

2017-2018 (Budgeted) 7,480,635 9,361,286 79.91

Source: Audited financial statements for 2011-12 through and including 2015-16 fiscal years and the budgets for the 2016-17 and

2017-18 fiscal years of the District. The 2016-17 unaudited figures are estimates and may vary. This table is not audited.

9

District Facilities

The District currently operates the following facilities:

Name Grades Capacity Year(s) Built

Belfast Central School K-12 596 1912, ‘46, ‘98, ‘10

Belfast Central School Garage/Storage --- --- 2003, ‘10


Enrollment Trends

Actual Projected

School Year Enrollment School Year Enrollment

2013-14 373 2018-19 360

2014-15 366 2019-20 360

2015-16 360 2020-21 360

2016-17 355 2021-22 360

2017-18 366 2022-23 360


Employees

The District employs a total of 72 full-time and 15 part-time employees with representation by the various bargaining units

listed below:

Contract

Employees Union Representation Expiration Date

44 Belfast Central School Faculty Association June 30, 2020

37 Belfast Central School Service Unit June 30, 2020


Status and Financing of Employee Pension Benefits

Substantially all employees of the District are members of either the New York State and Local Employees' Retirement System

("ERS") (for non-teaching and non-certified administrative employees) or the New York State Teachers' Retirement System

("TRS") (for teachers and certified administrators). (Both Systems are referred to together hereinafter as the "Retirement Systems"

where appropriate.) These Retirement Systems are cost-sharing multiple public employer retirement systems. The obligation of

employers and employees to contribute and the benefits to employees are governed by the New York State Retirement and Social

Security Law (the "Retirement System Law"). The Retirement Systems offer a wide range of plans and benefits which are related

to years of service and final average salary, vesting of retirement benefits, death and disability benefits and optional methods of

benefit payments. All benefits generally vest after ten years of credited service. The Retirement System Law generally provides

that all participating employers in each retirement system are jointly and severally liable for any unfunded amounts. Such amounts

are collected through annual billings to all participating employers. Generally, all employees, except certain part-time employees,

participate in the Retirement Systems. The Retirement Systems are non-contributory with respect to members hired prior to July

27, 1976. All members working less than ten years must contribute 3% (ERS) or 3.5% (TRS) of gross annual salary towards the

cost of retirement programs.

On December 12, 2009, a new Tier V was signed into law. The legislation created a new Tier V pension level, the most

significant reform of the State’s pension system in more than a quarter-century. Key components of Tier V include:

Raising the minimum age at which most civilians can retire without penalty from 55 to 62 and imposing a penalty

of up to 38% for any civilian who retires prior to age 62.

Requiring ERS employees to continue contributing 3% of their salaries and TRS employees to continue

contributing 3.5% toward pension costs so long as they accumulate additional pension credits.

Increasing the minimum years of service required to draw a pension from 5 years to 10 years.

Capping the amount of overtime that can be considered in the calculation of pension benefits for civilians at

$15,000 per year, and for police and firefighters at 15% of non-overtime wages.

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On March 16, 2012, the Governor signed into law the new Tier VI pension program, effective for new ERS and TRS

employees hired after April 1, 2012. The Tier VI legislation provides for increased employee contribution rates of between 3%

and 6% and contributions at such rates continue so long as such employee continues to accumulate pension credits, an increase in

the retirement age from 62 years to 63 years, a readjustment of the pension multiplier, and a change in the time period for the final

average salary calculation from 3 years to 5 years. Tier VI employees will vest in the system after ten years of employment and

will continue to make employee contribution throughout employment.

The District is required to contribute at an actuarially determined rate. The actual contributions for the last five years and

budgeted figures for the 2017-2018 fiscal years are as follows:

Fiscal Year ERS TRS

2012-2013 $ 167,003 $ 292,102

2013-2014 195,797 400,916

2014-2015 132,229 448,906

2015-2016 115,230 306,100

2016-2017 101,364 276,574

2017-2018 (Budgeted) 128,076 284,482

Source: District records.

Pursuant to various laws enacted between 1991 and 2002, the State Legislature authorized local governments to make

available certain early retirement incentive programs to its employees. The District currently does not have early retirement

incentive programs for its employees.

Historical Trends and Contribution Rates. Historically there has been a State mandate requiring full (100%) funding of the

annual actuarially required local governmental contribution out of current budgetary appropriations. With the strong performance

of the Retirement System in the 1990s, the locally required annual contribution declined to zero. However, with the subsequent

decline in the equity markets, the pension system became underfunded. As a result, required contributions increased substantially

to 15% to 20% of payroll for the employees' and the police and fire retirement systems, respectively. Wide swings in the

contribution rate resulted in budgetary planning problems for many participating local governments.

A chart of average ERS and TRS rates as a percent of payroll (2013 to 2018) is shown below:

Year ERS TRS

2012-13 18.9% 11.84%

2013-14 20.9 16.25

2014-15 20.1 17.53

2015-16 18.2 13.26

2016-17 15.5 11.72

2017-18 15.3 9.80*

* The estimated TRS rate for 2017-18 fiscal year was released in February 2017 in an effort to assist with budget preparations.

In 2003, Chapter 49 of the Laws of 2003 amended the Retirement and Social Security Law and the Local Finance Law. The

amendments empowered the State Comptroller to implement a comprehensive structural reform program for ERS. The reform

program established a minimum contribution for any local governmental employer equal to 4.5% of pensionable salaries for bills

which were due December 15, 2003 and for all fiscal years thereafter, as a minimum annual contribution where the actual rate

would otherwise be 4.5% or less due to the investment performance of the fund. In addition, the reform program instituted a billing

system to match the budget cycle of municipalities and school districts that will advise such employers over one year in advance

concerning actual pension contribution rates for the next annual billing cycle. Under the previous method, the requisite ERS

contributions for a fiscal year could not be determined until after the local budget adoption process was complete. Under the new

system, a contribution for a given fiscal year is based on the valuation of the pension fund on the prior April 1 of the calendar year

preceding the contribution due date instead of the following April 1 in the year of contribution so that the exact amount may now

be included in a budget.

Chapter 57 of the Laws of 2010 (Part TT) amended the Retirement and Social Security Law to authorize participating

employers, if they so elect, to amortize an eligible portion of their annual required contributions to ERS when employer

contribution rates rise above certain levels. The option to amortize the eligible portion began with the annual contribution due

February 1, 2011. The amortizable portion of an annual required contribution is based on a “graded” rate by the State Comptroller

in accordance with formulas provided in Chapter 57. Amortized contributions are to be paid in equal annual installments over a

ten-year period, but may be prepaid at any time. Interest is to be charged on the unpaid amortized portion at a rate to be

11

determined by the State Comptroller, which approximates a market rate of return on taxable fixed rate securities of a comparable

duration issued by comparable issuers. The interest rate is established annually for that year’s amortized amount and then applies

to the entire ten years of the amortization cycle of that amount. When in any fiscal year, the participating employer’s graded

payment eliminates all balances owed on prior amortized amounts, any remaining graded payments are to be paid into an employer

contribution reserve fund established by the State Comptroller for the employer, to the extent that amortizing employer has no

currently unpaid prior amortized amounts, for future such use.

The District is not amortizing any pension payments nor does it intend to do so in the foreseeable future.

Stable Rate Pension Contribution Option: The 2013-14 State Budget included a provision that provides local governments

and school districts, including the District, with the option to “lock-in” long-term, stable rate pension contributions for a period of

years determined by the State Comptroller and ERS and TRS. The stable rates would be 12% for ERS and 14% for TRS. The

pension contribution rates under this program would reduce near-term payments for employers, but will require higher than normal

contributions in later years. The District did not participate in the Stable Rate Pension Contribution Option nor does it intend to do

so in the foreseeable future.

The investment of monies, and assumptions underlying same, of the Retirement Systems covering the District’s employees is

not subject to the direction of the District. Thus, it is not possible to predict, control or prepare for future unfunded accrued

actuarial liabilities of the Retirement Systems (“UAALs”). The UAAL is the difference between total actuarially accrued liabilities

and actuarially calculated assets available for the payment of such benefits. The UAAL is based on assumptions as to retirement

age, mortality, projected salary increases attributed to inflation, across-the-board raises and merit raises, increases in retirement

benefits, cost-of-living adjustments, valuation of current assets, investment return and other matters. Such UAALs could be

substantial in the future, requiring significantly increased contributions from the District which could affect other budgetary

matters. Concerned investors should contact the Retirement Systems administrative staff for further information on the latest

actuarial valuations of the Retirement Systems.

Other Post-Employment Benefits

Healthcare Benefits. It should also be noted that the District provides employment healthcare benefits to various categories of

former employees. These costs may be expected to rise substantially in the future. There is now an accounting rule that requires

governmental entities, such as the District, to account for employment healthcare benefits as it accounts for vested pension benefits.

GASB Statement No. 45 ("GASB 45") of the Governmental Accounting Standards Board ("GASB"), described below, requires

such accounting.

School districts and Boards of Cooperative Educational Services, unlike other municipal units of government in the State, have

been prohibited from reducing health benefits received by or increasing health care contributions paid by retirees below the level of

benefits or contributions afforded to or required from active employees since the implementation of Chapter 729 of the Laws of

1994. Legislative attempts to provide similar protection to retirees of other local units of government in the State have not

succeeded as of this date. Nevertheless, many such retirees of all varieties of municipal units in the State do presently receive such

benefits.

GASB 45 and OPEB. OPEB refers to "other post-employment benefits," meaning other than pension benefits OPEB consists

primarily of health care benefits, and may include other benefits such as disability benefits and life insurance. Until now, these

benefits have generally been administered on a pay-as-you-go basis and have not been reported as a liability on governmental

financial statements.

GASB 45 requires municipalities and school districts to account for OPEB liabilities much like they already account for

pension liabilities, generally adopting the actuarial methodologies used for pensions, with adjustments for the different

characteristics of OPEB and the fact that most municipalities and school districts have not set aside any funds against this liability.

Unlike GASB 27, which covers accounting for pensions, GASB 45 does not require municipalities or school districts to report a net

OPEB obligation at the start.

Under GASB 45, based on actuarial valuation, an annual required contribution ("ARC") is determined for each municipality or

school district. The ARC is the sum of (a) the normal cost for the year (the present value of future benefits being earned by current

employees) plus (b) amortization of the unfunded accrued liability (benefits already earned by current and former employees but

not yet provided for), using an amortization period of not more than 30 years. If a municipality or school district contributes an

amount less than the ARC, a net OPEB obligation will result, which is required to be recorded as a liability on its financial

statements.

GASB 45 does not require that the unfunded liability actually be amortized nor that it be advance funded, only that the

municipality or school district account for its unfunded accrued liability and compliance in meeting its ARC.

12

The District contracted with NYHART, an actuarial firm, to calculate its OPEB in accordance with GASB 45. Based on the

most recent actuarial valuation and financial data as of June 30, 2016, the following tables show the components of the District's

annual OPEB cost, the amount actuarially contributed to the plan, changes in the District's net OPEB obligation and funding status

for the fiscal years ending June 30, 2015 and 2016:

Annual OPEB Cost and Net OPEB Obligation: 2015 2016

Annual required contribution (ARC) $ 44,639 $ 44,883

Interest on net OPEB obligation 11,413 12,203

Adjustment to ARC (10,811) (11,559)

Annual OPEB cost (expense) 45,241 45,527

Contributions made (27,684) (27,126)

Increase in net OPEB obligation 17,557 18,401

Net OPEB obligation - beginning of year 253,620 271,177

Net OPEB obligation - end of year $ 271,177 $ 289,578

Percentage of annual OPEB cost contributed 61.2% 59.6%

Funding Status:

Actuarial Accrued Liability (AAL) $ 454,718 $ 456,529

Actuarial Value of Assets 0 0

Unfunded Actuarial Accrued Liability (UAAL) $ 454,718 $ 456,529

Funded Ratio (Assets as a Percentage of AAL) 0.0% 0.0%

Percentage of

Fiscal Annual Annual OPEB Net OPEB

Year Ended OPEB Cost Cost Contributed Obligation

2016 $ 45,527 59.6% $ 289,578

2015 45,241 61.2 271,177

2014 101,401 23.5 253,620

2013 102,349 44.6 176,005

The aforementioned liability and ARC are recognized and have been disclosed in accordance with GASB 45 standards in the

District’s audited financial statements.

There is no authority in current State law to establish a trust account or reserve fund for this liability. The District has not

reserved any funds towards its OPEB liability. The District funds this liability on a pay-as-you-go basis.

The District’s unfunded actuarial accrued OPEB liability could have a material adverse impact upon the District’s finances and

could force the District to reduce services, raise taxes or both.

Actuarial valuation will be required every 2 years for OPEB plans with more than 200 members, every 3 years if there are

fewer than 200 members.

In April 2015, the State Comptroller proposed legislation to create an optional investment pool to help the State and local

governments fund retiree health insurance and other post-employment benefits. The proposed legislation would allow the

following:

Authorize the creation of irrevocable OPEB trusts, not part of the New York State Common Retirement Fund, so that

New York state and its local governments can, at their option, help fund their OPEB liabilities;

Establish an OPEB investment fund in the sole custody of the State Comptroller for the investment of OPEB assets of

the state and participating eligible local governments;

Designate the president of the Civil Service Commission as the trustee of the state’s OPEB trust and the governing

boards as trustee for local governments; and

Allow school districts to transfer certain excess reserve balances to an OPEB trust once it is established.

Under the State Comptroller’s proposal, there are no restrictions on the amount a government can deposit into the trust. The

proposed legislation was not enacted into law in the last two legislative sessions. It is not possible to predict whether the

Comptroller’s proposed legislation will be reintroduced or enacted if introduced.

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Other Information

The statutory authority for the power to spend money for the object or purpose, or to accomplish the object or purpose, for

which the Notes are to be issued is the Education Law and the Local Finance Law.

The District is currently in the process of complying with the procedure for the publication of the estoppel notice with respect

to the Notes as provided in Title 6 of Article 2 of the Local Finance Law.

No principal or interest upon any obligation of the School District is past due.

The fiscal year of the District is July 1 to June 30.

Except for as shown under “STATUS OF INDEBTEDNESS – Estimated Overlapping Indebtedness”, this Official Statement

does not include the financial data of any political subdivision having power to levy taxes within the District.

Financial Statements

The District retains independent Certified Public Accountants. The audit report covering the period ending June 30, 2017 is

unavailable as of the date of this Official Statement. The last audit report covers the period ending June 30, 2016 and is attached

hereto as “APPENDIX – D”. Certain financial information of the District can be found attached as Appendices to the Official

Statement.

The District complies with the Uniform System of Accounts as prescribed for school districts in New York State by the State.

This system differs from generally accepted accounting principles as prescribed by the American Institute of Certified Public

Accountants' Industry Audit Guide, "Audits of State and Local Governmental Units", and codified in Government Accounting,

Auditing and Financial Reporting (GAAFR), published by the Governmental Accounting Standards Board (GASB).

Beginning with the fiscal year ending June 30, 2003, the District issues its financial statements in accordance with GASB

Statement No. 34. This statement includes reporting of all assets including infrastructure and depreciation in the Government Wide

Statement of Activities, as well as the Management’s Discussion and Analysis.

2017 Unaudited Results of Operations

The District expects to end the fiscal year ending June 30, 2017 with an unappropriated unreserved fund balance of $478,968.

Summary unaudited information for the General Fund for the period ending June 30, 2017 is as follows:

Beginning of Year Total Unassigned Fund Balance: $ 965,499

Revenues: $ 9,228,138

Expenditures: 9,105,344

Appropriated Fund Balance: 301,325

Transfer to Reserves: 308,000

Excess (Deficit) Revenues over Expenditures: $ (185,206)

End of Year Total Unassigned Fund Balance: $ 478,968

Note: These projections are based upon certain current assumptions and estimates and the audited results may vary therefrom.



14

New York State Comptroller Report of Examination

The State Comptroller's office, i.e., the Department of Audit and Control, periodically performs a compliance review to

ascertain whether the District has complied with the requirements of various State and Federal statutes. These audits can be found

on the Office of the State Comptroller website.

The State Comptroller’s office released an audit report of the District on December 16, 2016. The purpose of the audit was to

examine the District’s procurement procedures for the period from July 1, 2014 through August 16, 2016.

Key Findings:

Although the Board has adopted a procurement policy that requires competition for purchases not subject to bidding

requirements, the policy does not clearly establish procedures for procuring professional services.

The purchasing agent and claims auditor did not always ensure that purchases were made in compliance with the policy or

require District officials to properly document compliance when they sought competition.

District officials could not demonstrate that they sought competition when procuring professional services from five

vendors who were paid approximately $164,000 or obtained quotes for purchases from one vendor totaling $3,000.

Key Recommendations:

Review and revise its procurement policy to clearly require the procurement of professional services through RFPs or

written or verbal quotes.

Require the purchasing agent and claims auditor to regularly monitor compliance with the procurement policy and

periodically report to the Board.

Solicit competition for professional services through the use of RFPs or quotes and obtain the appropriate number of

quotes for purchases as required by the procurement policy.

The District provided a complete response to the State Comptroller’s office on December 5, 2016. A copy of the complete

report and response can be found via the website of the Office of the New York State Comptroller.

There are no other State Comptrollers audits of the District that are currently in progress or pending release.

Note: Reference to website implies no warranty of accuracy of information therein.

The State Comptroller’s Fiscal Stress Monitoring System

The New York State Comptroller has reported that New York State’s school districts and municipalities are facing significant

fiscal challenges. As a result, the Office of the State Comptroller has developed a Fiscal Stress Monitoring System (“FSMS”) to

provide independent, objectively measured and quantifiable information to school district and municipal officials, taxpayers and

policy makers regarding the various levels of fiscal stress under which the State’s school districts and municipalities are operating.

The fiscal stress scores are based on financial information submitted as part of each school district’s ST-3 report filed with the

State Education Department annually, and each municipality’s annual report filed with the State Comptroller. Using financial

indicators that include year-end fund balance, cash position and patterns of operating deficits, the system creates an overall fiscal

stress score which classifies whether a school district or municipality is in “significant fiscal stress”, in “moderate fiscal stress,” as

“susceptible to fiscal stress” or “no designation”. Entities that do not accumulate the number of points that would place them in a

stress category will receive a financial score but will be classified in a category of “no designation.” This classification should not

be interpreted to imply that the entity is completely free of fiscal stress conditions. Rather, the entity’s financial information, when

objectively scored according to the FSMS criteria, did not generate sufficient points to place them in one of the three established

stress categories.

The reports of the State Comptroller for the past three years for the District are as follows:

Fiscal Year Ending In Stress Designation Fiscal Score

2016 No Designation 6.7%



Source: Website of the Office of the New York State Comptroller.

Note: Reference to website implies no warranty of accuracy of information therein.

15

TAX INFORMATION

Taxable Assessed Valuations

Fiscal Year Ending June 30: 2013 2014 2015 2016 2017

Towns of:

Allen 7,286,531$ 7,305,818$ 7,395,999$ 7,491,770$ 8,282,074$

Angelica 2,382,954 2,362,947 2,362,947 2,327,560 2,421,235

Belfast 45,342,744 46,124,580 46,813,468 47,751,114 47,525,178

Caneadea 28,261,127 28,426,597 33,703,989 (1) 33,886,415 34,062,789

New Hudson 3,125,716 3,142,733 3,149,264 3,447,391 3,531,191

Total Assessed Values 86,399,072$ 87,362,675$ 93,425,667$ 94,904,250$ 95,822,467$

State Equalization Rates

Towns of:

Allen 100.00% 100.00% 100.00% 93.00% 100.00%

Angelica 100.00% 100.00% 100.00% 100.00% 99.00%

Belfast 94.00% 92.00% 88.00% 83.00% 80.00%

Caneadea 100.00% 95.00% 100.00%(1)

96.00% 96.00%

New Hudson 100.00% 100.00% 98.00% 100.00% 99.00%

Total Taxable Full Valuation 89,293,290$ 92,869,645$ 99,873,592$ 106,660,429$ 109,183,170$

(1) Significant change due to revaluation.

Tax Rates Per $1,000 (Assessed)


Towns of:

Allen $ 18.13 $ 18.11 $ 17.17 $ 17.71 $ 16.49

Angelica 18.13 18.11 17.17 16.47 16.65

Belfast 19.29 19.69 19.51 19.85 20.61

Caneadea 18.13 19.06 17.17 17.16 17.17

New Hudson 18.13 18.11 17.52 16.47 16.65 (1)

Significant change due to revaluation.

Tax Collection Procedure

Tax payments are due September 1st. There is no penalty charge for the first thirty days after taxes are due, but a 2% penalty is

charged from October 1st to October 31

st. On or about November 5

th, uncollected taxes are returnable to the County for collection.

The School District receives this amount from the County prior to the end of the School District's fiscal year, thereby assuring

100% tax collection annually. Tax sales are held annually by the County.

Tax Levy and Tax Collection Record


Total Tax Levy $ 1,618,748 $ 1,681,913 $ 1,714,610 $ 1,757,132 $ 1,799,991

Amount Uncollected (1) 231,082 211,187 153,514 220,823 150,407

% Uncollected 14.28% 12.56% 8.95% 12.57% 8.36% (1)

The District receives 100% of its tax levy each year. See "Tax Collection Procedure," herein. This is the amount that was

returned to the County.

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Real Property Tax Revenues

The following table illustrates the percentage of total revenues of the District for each of the last five completed fiscal years,

the unaudited figures for the 2016-17 fiscal year, as well as budgeted figures for the current 2017-18 fiscal year comprised of State

aid.

Fiscal Year

Total

Property Tax

Total

Revenues

Percentage of

Total Revenues

Consisting of

Real Property Tax

2011-12 $ 1,181,531 $ 7,889,715 14.98%

2012-13 1,231,740 8,133,779 15.14

2013-14 1,281,440 8,480,493 15.11

2014-15 1,714,610 8,480,494 20.22

2015-16 1,762,029 9,130,973 19.30

2016-17 (Budgeted) 1,799,991 9,288,258 19.38

2016-17 (Unaudited) 1,799,991 9,228,138 19.51

2017-18 (Budgeted) 1,835,801 9,361,286 19.61

Source: Audited financial statements for 2011-12 through and including 2015-16 fiscal years and the budgets for the 2016-17 and

2017-18 fiscal years of the District. The 2016-17 unaudited figures are estimates and may vary. This table is not audited.

Larger Taxpayers 2016 for the 2016-17 Tax Roll

Name Type Assessed Valuation

State of New York Government $ 3,116,560

Rochester Gas & Electric Utility 3,012,637

Dominion Resources Commercial 1,300,350

Douglas Behen Individual/Commercial 935,200

National Fuel Gas Utility 855,018

Peter Fuller Residential/Commercial 513,200

Verizon Utility 482,432

Hughes Association Commercial 440,000

Enders, Christopher Residential/Rental 428,600

Marshacres, LLC Commercial 410,100

The larger taxpayers listed above have a total assessed valuation of $11,494,097 which represents 12.00% of the total assessed

valuation of the District.

As of the date of this Official Statement, the District does not currently have any pending or outstanding tax certioraris that are

known to have a material impact on the District.

Source: School District Tax Rolls.

Additional Tax Information

Real property located in the School District is assessed by the Towns.

Senior citizens' exemptions are offered to those who qualify.

The total valuation of the School District is estimated to be categorized as follows: Residential - 90%, Commercial - 5%, State

Land – 4%, and Agricultural - 1%.

The estimated total annual property tax bill of a $100,000 market value residential property located in the School District is

approximately $1,164 for School District taxes after deducting basic STAR deductions.

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STAR – School Tax Exemption

The STAR (School Tax Relief) program provides State-funded exemptions from school property taxes to homeowners for

their primary residences. School districts are reimbursed by the State for real property taxes exempted pursuant to the STAR

Program.

Homeowners over 65 years of age with household adjusted gross incomes, less the taxable amount of total distributions from

individual retirement accounts and undisclosed retirement annuities (“STAR Adjusted Gross Income”) of $86,000 or less,

increased annually according to a Cost-of-Living adjustment, are eligible for an “enhanced” exemption. Other homeowners with

household STAR Adjusted Gross Income not in excess of $500,000 are eligible for a “basic” exemption on their primary residence.

The below table lists the basic and enhanced exemption amounts for the municipalities applicable to the District:

Town of: Enhanced Exemption Basic Exemption Date Certified

Allen $ 65,500 $ 30,000 4/7/2017

Angelica 64,850 29,700 4/7/2017

Belfast 65,500 30,000 4/7/2017

Caneada 62,880 28,800 4/7/2017

New Hudson 64,850 29,700 4/7/2017

$421,685 of the District’s $1,757,132 school tax levy for the 2015-2016 fiscal year was exempted by the STAR Program. The

District received full reimbursement from such exempt taxes in January 2016.

$407,674 of the District’s $1,799,991 school tax levy for the 2016-2017 fiscal year was exempted by the STAR Program. The

District received full reimbursement from such exempt taxes in January 2017.

Approximately $410,000 of the District’s $1,835,801 school tax levy for the 2017-2018 fiscal year is expected to be exempted

by the STAR Program. The District anticipates full reimbursement from such exempt taxes in January 2018.

TAX LEVY LIMITATION LAW

On June 24, 2011, Chapter 97 of the 2011 Laws of New York was signed into law by the Governor (“Chapter 97” or the “Tax

Levy Limitation Law”). The Tax Levy Limitation Law applies to all local governments, including school districts (with the

exception of New York City, and the counties comprising New York City and school districts in New York City, Buffalo,

Rochester, Syracuse, and Yonkers.)

On June 25, 2015, Chapter 20 of the 2015 Laws of New York (“Chapter 20”) amended the Tax Levy Limitation Law to extend

its expiration from June 15, 2016 to June 15, 2020. Chapter 20 also affects the calculation of the tax base growth factor, as

outlined below.

Prior to the enactment of the Tax Levy Limitation Law, there was no statutory limitation on the amount of real property taxes

that a school district could levy as part of its budget if its budget had been approved by a simple majority of its voters. In the event

the budget had been defeated by the voters, the school district was required to adopt a contingency budget. Under a contingency

budget, school budget increases were limited to the lesser of four percent (4%) of the prior year’s budget or one hundred twenty

percent (120%) of the consumer price index (“CPI”).

Chapter 97 requires that a school district submit its proposed tax levy to the voters each year beginning with the 2012-2013

fiscal year.

Chapter 97 restricts, among other things, the amount of real property taxes that may be levied by or on behalf of a school

district in a particular year. Pursuant to the Tax Levy Limitation Law, the tax levy of a school district cannot increase by more than

the lesser of (i) two percent (2%) or (ii) the annual increase in the CPI, over the amount of the prior year’s tax levy. Certain

adjustments are permitted for taxable real property full valuation increases or changes in physical or quantity growth in the real

property base as defined in Section 1220 of the Real Property Tax Law. Chapter 20 additionally allows the State Commissioner of

Taxation and Finance to adjust for changes in the real property base to reflect development on tax exempt real property. A school

district can exceed the tax levy limitation for the coming fiscal year only if the voters of such school district first approve a tax levy

by at least 60% affirmative vote of those voting to override such limitation for such coming fiscal year only. Tax levies that do not

exceed the limitation will only require approval by at least 50% of those voting. In the event that the voters reject a tax levy and

the district does not go out for a second vote, or if a second vote is likewise defeated, Chapter 97 provides that the tax levy for the

new fiscal year may not exceed the tax levy for the prior fiscal year.

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A school district’s calculation of each fiscal year’s tax levy limit is subject to review by the Commissioner of Education and

the Commissioner of Taxation and Finance prior to adoption of each fiscal year budget.

There are exceptions for school districts to the tax levy limitation provided in Chapter 97, including expenditures made on

account of certain tort settlements and certain increases in the average actuarial contribution rates of the New York State and Local

Employees’ Retirement System and the Teachers’ Retirement System. School districts are also permitted to carry forward a certain

portion of their unused levy limitation from a prior year.

There is also an exception for school districts for “Capital Local Expenditures” subject to voter approval where required by

law. This term is defined in a manner that does not include certain items for which a school district may issue debt, including the

payment of judgments or settled claims, including tax certiorari payments, and cashflow borrowings, including tax anticipation

notes, revenue anticipation notes, budget notes and deficiency notes. “Capital Local Expenditures”, are defined as “the taxes

associated with budgeted expenditures resulting from the financing, refinancing, acquisition, design, construction, reconstruction,

rehabilitation, improvement, furnishing and equipping of or otherwise providing for school district capital facilities or school

district capital equipment, including debt service and lease expenditures, and transportation capital debt service, subject to the

approval of the qualified voters where required by law”. The portion of the tax levy necessary to support “Capital Local

Expenditures” is defined as the “Capital Tax Levy”, and is an exclusion from the tax levy limitation, applicable to the Notes.

Real Property Tax Rebate (Chapter 59). Chapter 59 of the 2014 Laws of the State (“Chapter 59”), included provisions which

provide a refundable personal income tax credit to real property taxpayers in school districts and certain municipal units of

government. Real property owners in school districts are eligible for this credit in the 2014 and 2015 taxable years of those

property owners. Real property taxpayers in certain other municipal units of government are eligible for this credit in the 2015 and

2016 taxable years of those real property taxpayers. The eligibility of real property taxpayers for the tax credit in each year

depends on such jurisdiction’s compliance with the provisions of the Tax Levy Limitation Law. School districts budgets must

comply in their 2014-2015 and 2015-2016 fiscal years. Other municipal units of government must have their budgets in

compliance for their 2015 and 2016 fiscal years. Such budgets must be within the tax cap limits set by the Tax Levy Limitation

Law for the real property taxpayers to be eligible for this personal income tax credit. The affected jurisdictions include counties,

cities (other than any city with a population of one million or more and its counties), towns, villages, school districts (other than the

dependent school districts of New York City, Buffalo, Rochester, Syracuse and Yonkers, the latter four of which are indirectly

affected by applicability to their respective city) and independent special districts.

Certain additional restrictions on the amount of the personal income tax credit are set forth in Chapter 59 in order for the tax

cap to qualify as one which will provide the tax credit benefit to such real property taxpayers. The refundable personal income tax

credit amount is increased in the second year if compliance occurs in both taxable years.

For the second taxable year of the program, the refundable personal income tax credit for real property taxpayers is

additionally contingent upon adoption by the school district or municipal unit of a state approved “government efficiency plan”

which demonstrates “three year savings and efficiencies of at least one per cent per year from shared services, cooperation

agreements and/or mergers or efficiencies”.

Municipalities, school districts and independent special districts must provide certification of compliance with the

requirements of the new provisions to certain state officials in order to render their real property taxpayers eligible for the personal

income tax credit.

Real Property Tax Rebate (Chapter 20). Chapter 20 introduced a new real property tax rebate program that will provide state-

financed tax rebate checks and credits to taxpayers who are eligible for the STAR exemption (see “STAR - School Tax

Exemption,” herein) in the years 2016-2019. Residents of New York City are not eligible for the Chapter 20 Real Property Tax

Rebate. For 2016, eligible taxpayers who reside outside New York City but within the Metropolitan Commuter Transportation

District (“MCTD”) will receive $130, and eligible taxpayers who reside outside the MCTD will receive $185. Credits in 2017-

2019 vary based on a taxpayer’s personal income level and STAR tax savings.

Similarly to the Chapter 59 Real Property Tax Rebate, under Chapter 20 the eligibility of real property taxpayers for the tax

credit in each year depends on such jurisdiction’s compliance with the provisions of the Tax Levy Limitation Law. Unlike Chapter

59, however, for many taxpayers only the compliance of the school district in which the taxpayer resides is relevant. Municipal

compliance with the Tax Levy Limitation Law is only required in the case of the “Big 4” cities that have fiscally dependent school

districts. In such cases, the joint school/city levy must remain in compliance with the Tax Levy Limitation Law. In either scenario,

the relevant jurisdiction (independent school district or joint city/school district) must certify its compliance with the provisions of

the Tax Levy Limitation Law.

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While the provisions of Chapter 59 and Chapter 20 do not directly further restrict the taxing power of the affected

municipalities, school districts and special districts, they do provide an incentive for such tax levies to remain within the tax cap

limits established by the Tax Levy Limitation Law. The implications of this for future tax levies and for operations and services of

the District are uncertain at this time.

See “THE SCHOOL DISTRICT – Budgetary Procedures” herein for additional information regarding the District’s Tax Levy.

STATUS OF INDEBTEDNESS

Constitutional Requirements

The New York State Constitution limits the power of the District (and other municipalities and certain school districts of the

State) to issue obligations and to contract indebtedness. Such constitutional limitations in summary form and as generally

applicable to the District include the following:

Purpose and Pledge. The District shall not give or loan any money or property to or in aid of any individual or private

undertaking or give or loan its credit to or in aid of any of the foregoing or any public corporation.

The District may contract indebtedness only for a District purpose and shall pledge its faith and credit for the payment of

principal of and interest thereon.

Payment and Maturity. Except for certain short-term indebtedness contracted in anticipation of taxes or to be paid within

three fiscal year periods, indebtedness shall be paid in annual installments commencing no later than two years after the date such

indebtedness shall have been contracted and ending no later than the expiration of the period of probable usefulness of the object or

purpose as determined by statute; unless substantially level or declining debt service is utilized, no installment may be more than

fifty percent in excess of the smallest prior installment. The District is required to provide an annual appropriation for the payment

of interest due during the year on its indebtedness and for the amounts required in such year for amortization and redemption of its

serial bonds and such required annual installments on its notes.

Statutory Procedure

In general, the State Legislature has, by the enactment of the Local Finance Law, authorized the powers and procedure for the

District to borrow and incur indebtedness subject, of course, to the constitutional provisions set forth above. The power to spend

money, however, generally derives from other law, including the Education Law.

The District is generally required by such laws to submit propositions for the expenditure of money for capital purposes to the

qualified electors of the District. Upon approval thereby, the Board may adopt a bond resolution authorizing the issuance of bonds,

and notes in anticipation of the bonds. No down payment is required in connection with the issuance of District obligations.

The Local Finance Law also authorizes the District to issue revenue anticipation notes, in anticipation of the collection of a

specific type of revenue, such as State aid.

Debt Limit. The District has the power to contract indebtedness for any District purpose authorized by the Legislature of the

State provided the aggregate principal amount thereof shall not exceed ten per centum of the full valuation of the taxable real estate

of the District and subject to certain enumerated deductions such as State aid for building purposes. The statutory method for

determining full valuation is by taking assessed valuation of taxable real estate for the last completed assessment roll and applying

thereto the ratio (equalization rate) which such assessed valuation bears to the full valuation; such ratio is determined by the State

Office of Real Property Services. The Legislature prescribes the manner by which such ratio shall be determined.

The Local Finance Law also provides that where a resolution authorizing the issuance of bonds or notes is published with a

statutory form of notice, the validity of the bonds or notes authorized thereby, including revenue anticipation notes may be

contested only if:

(1) (a) such obligations were authorized for an object or purpose for which the District is not authorized to expend money, or

(b) the provisions of the law which should be complied with as of the date of publication of this notice were not

substantially complied with,

and an action, suit or proceeding contesting such validity is commenced within 20 days after the date of such publication of

this notice; or

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(2) Such obligations were authorized in violation of the provisions of the Constitution of New York.

The District is in the process of complying with this estoppel procedure in connection with the bond resolution under which the

Notes are being issued.

The Board, as the finance board of the District, has the power to enact bond resolutions and revenue anticipation note

resolutions. In addition, the Board has the power to authorize the sale and issuance of obligations. However, the Board may

delegate the power to sell the obligations to the President of the Board, the chief fiscal officer of the District, pursuant to the Local

Finance Law.

The District is further subject to constitutional limitation by the general constitutionally imposed duty on the State Legislature

to restrict the power of taxation and contracting indebtedness; however, the State Legislature is prohibited by a specific

constitutional provision from restricting the power of the District to levy taxes on real estate for the payment of interest on or

principal of indebtedness theretofore contracted.

Debt Outstanding End of Fiscal Year

Fiscal Years Ending June 30th

: 2013 2014 2015 2016 2017

Bonds $ 12,211,000 $ 11,270,000 $ 10,350,000 $ 9,395,000 $ 8,395,000

Bond Anticipation Notes 0 0 0 220,372 624,528

Other Debt (1)

0 0 0 0 475,000

Total Debt Outstanding $ 12,211,000 $ 11,270,000 $ 10,350,000 $ 9,615,372 $ 9,494,528

(1)

Represents an Energy Performance Contract. See “Capital Leases” herein.

Details of Outstanding Indebtedness

The following table sets forth the indebtedness of the District evidenced by bonds and notes as of August 1, 2017.

Type of Indebtedness Maturity Amount

Bonds 2017-2039 $ 8,395,000

Bond Anticipation Notes

Capital Project August 3, 2017 624,528 (1)

Total Indebtedness $ 9,019,528

(1)

To be renewed at maturity the proceeds of the District’s $599,144 Bond Anticipation Note, 2017 scheduled to close on August

2, 2017 along with $25,384 in available funds.


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Debt Statement Summary

Summary of Indebtedness, Debt Limit and Net Debt-Contracting Margin as of August 1, 2017:

Full Valuation of Taxable Real Property ................................................................................................$ 109,183,170

Debt Limit 10% thereof .......................................................................................................................... 10,918,317

Inclusions:

Bonds ..................................................... $ 8,395,000

Bond Anticipation Notes ....................... 624,528

Principal of this Issue ............................. 1,700,000

Total Inclusions ....................... $ 10,719,528

Exclusions:

Building Aid (1)

...................................... $ 0

Total Exclusions ...................... $ 0

Total Net Indebtedness ...........................................................................................................................$ 10,719,528

Net Debt-Contracting Margin .................................................................................................................$ 198,789

The percent of debt contracting power exhausted is ............................................................................... 98.18%

(1)

Based on preliminary 2017-2018 building aid estimates, the District anticipates State Building aid of 94.3% for debt service on

State Education Department approved expenditures from July 1, 2004 to the present. The District has no reason to believe that

it will not ultimately receive all of the building aid it anticipates, however, no assurance can be given as to when and how much

building aid the District will receive in relation to the outstanding bonds.

Note: The State Constitution does not provide for the inclusion of tax anticipation or revenue anticipation notes in the

computation of the net indebtedness of the School District.

Bonded Debt Service

A schedule of Bonded Debt Service may be found in “APPENDIX - B” to this Official Statement.

Capital Project Financing Plans

In 2016, the District’s voters approved a capital improvements project consisting of the reconstruction, rehabilitation and

renovation, in part, and the construction of improvements and upgrades to, various District buildings and facilities (and the sites

thereof). Work on this project has begun and is anticipated to be completed by the end of 2018. The issuance of the Notes will

provide $1,700,000 in new money for the aforementioned purpose. After the issuance of the Notes, the District will not have any

remaining authorized and unissued indebtedness relating to this project.

Additionally, the District requested permission from New York State to use the unused portion of its previous building project

authorization and has received final approval. Only necessary projects are being considered (i.e. sewer lines, phone system, etc.).

Phase one was completed during the summer of 2015. The rest of the project will be finished during the spring and summer of

2017.

The District has entered into an energy performance contract. The work pursuant to such contract is expected to be completed

in 2017. See “Capital Leases,” herein.

There are presently no other capital projects authorized and unissued by the District, nor are any contemplated.

Cash Flow Borrowings

The District has not usually found it necessary to issue revenue anticipation notes in the past and does not intend to in the

foreseeable future.

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Capital Leases

On September 16, 2016, the District entered into an Energy Performance Contract (EPC) with Siemens in the amount of

$502,167. The interest rate is 3.0012% and the payments are due annually through 2031.

Estimated Overlapping Indebtedness

In addition to the District, the following political subdivisions have the power to issue bonds and to levy taxes or cause taxes to

be levied on taxable real property in the District. Estimated bonds and bond anticipation notes are listed as of the close of the last

fiscal year of the respective municipalities.

Status of Gross Net District Applicable

Municipality Debt as of Indebtedness (1)

Exclusions (2)

Indebtedness Share Indebtedness

County of:

Allegany 12/31/2015 27,385,000$ -$ 27,385,000$ 4.87% 1,333,650$

Town of:

Allen 12/31/2015 191,943 171,263 20,680 22.58% 4,670

Angelica 12/31/2015 - - - 3.44% -

Belfast 12/31/2015 1,460,143 1,278,000 182,143 92.41% 168,318

Caneadea 12/31/2015 8,236,870 8,204,870 32,000 36.91% 11,811

New Hudson 12/31/2015 - - - 9.53% -

Total: 1,518,449$ (1)

Bonds and bond anticipation notes as of close of the fiscal year. Not adjusted to include subsequent bond sales, if any. (2)

Water and sewer debt and appropriations. Pursuant to the Local Finance Law, this indebtedness is excluded from the

constitutional debt limit.

Note: The 2016 Comptroller’s Special Report is currently unavailable as of the date of this Official Statement.

Source: Comptroller’s Special Report on Municipal Affairs for Local Finance Years Ended in 2015.

Debt Ratios

The following table sets forth certain ratios relating to the School District's indebtedness as of July 18, 2017

Per Percentage of

Amount Capita (a)

Full Value (b)

Net Indebtedness (c)

..................................................................... $ 10,719,528 $ 4,707.74 9.82%

Net Indebtedness Plus Net Overlapping Indebtedness (d)

............ 12,237,977 5,374.61 11.21 (a)

The current estimated population of the District 2,277. See “THE SCHOOL DISTRICT - Population” herein. (b)

The District's full value of taxable real estate for the 2016-17 fiscal year is $109,183,170. See “TAX INFORMATION –

Taxable Assessed Valuations,” herein. (c)

See calculation of "Debt Statement Summary," herein. (d)

Estimated net overlapping indebtedness is $1,518,449. See “Estimated Overlapping Indebtedness,” herein.

Note: The above ratios do not take into account State building aid the District will receive for outstanding capital projects.


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SPECIAL PROVISIONS AFFECTING REMEDIES UPON DEFAULT

In the event of a default in the payment of the principal of and/or interest on the Notes, the State Comptroller is required to

withhold, under certain conditions prescribed by Section 99-b of the State Finance Law, State aid and assistance to the District and

to apply the amount thereof so withheld to the payment of such defaulted principal and/or interest, which requirement constitutes a

covenant by the State with the holders from time to time of the Notes.

Section 3-a of the General Municipal Law provides, subject to exceptions not pertinent, that the rate of interest to be paid by

the District upon any judgment or accrued claim against it shall not exceed nine per centum per annum. This provision might be

construed to have application to the holders of the Notes in the event of a default in the payment of the principal of or interest on

the Notes.

In accordance with the general rule with respect to municipalities, judgments against the District may not be enforced by levy

and execution against property owned by the District.

The Federal Bankruptcy Code allows public bodies recourse to the protection of a federal court for the purpose of adjusting

outstanding indebtedness. Section 85.80 of the Local Finance Law contains specific authorization for any municipality in the State

to file a petition under any provision of federal bankruptcy law for the composition or adjustment of municipal indebtedness.

While these provisions do not apply to school districts, there can be no assurance that they will not be made so applicable in the

future.

At the Extraordinary Session of the State Legislature held in November, 1975, legislation was enacted which purported to

suspend the right to commence or continue an action in any court to collect or enforce certain short-term obligations of The City of

New York. The effect of such act was to create a three-year moratorium on actions to enforce the payment of such obligations. On

November 19, 1976, the Court of Appeals, the State's highest court, declared such act to be invalid on the ground that it violates the

provisions of the State Constitution requiring a pledge by such City of its faith and credit for the payment of such obligations.

As a result of the Court of Appeals decision, the constitutionality of that portion of Title 6-A of Article 2 of the Local Finance

Law enacted at the 1975 Extraordinary Session of the State legislature authorizing any county, city, town or village with respect to

which the State has declared a financial emergency to petition the State Supreme Court to stay the enforcement against such

municipality of any claim for payment relating to any contract, debt or obligation of the municipality during the emergency period,

is subject to doubt. In any event, no such emergency has been declared with respect to the District.

The Constitutional provision providing for first revenue set asides does not apply to tax anticipation notes, revenue

anticipation notes or bond anticipation notes.

MARKET AND RISK FACTORS

The financial and economic condition of the District as well as the market for the Notes could be affected by a variety of

factors, some of which are beyond the District's control. There can be no assurance that adverse events in the State and in other

jurisdictions in the County, including, for example, the seeking by a municipality or large taxable property owner of remedies

pursuant to the Federal Bankruptcy Code or otherwise, will not occur which might affect the market price of and the market for the

Notes. If a significant default or other financial crisis should occur in the affairs of the State or any other jurisdiction or any of its

agencies or political subdivisions thereby further impairing the acceptability of obligations issued by borrowers within the State,

both the ability of the District to arrange for additional borrowings, and the market for and market value of outstanding debt

obligations, including the Notes, could be adversely affected.

The District is dependent in part on financial assistance from the State. However, if the State should experience difficulty in

borrowing funds in anticipation of the receipt of State taxes in order to pay State aid to municipalities and school districts in the

State, including the District, in any year, the District may be affected by a delay, until sufficient taxes have been received by the

State to make State aid payments to the District. In several recent years, the District has received delayed payments of State aid

which resulted from the State's delay in adopting its budget and appropriating State aid to municipalities and school districts, and

consequent delay in State borrowing to finance such appropriations. (See also "THE SCHOOL DISTRICT - State Aid").

The enactment of the Tax Levy Limitation Law, which imposes a tax levy limitation upon municipalities, school districts and

fire districts in the State, including the District could have an impact upon the market price of the Notes. See “TAX LEVY

LIMITATION LAW,” herein.

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Amendments to the United States Internal Revenue Code of 1986, as amended (the “Code”) could reduce or eliminate the

favorable tax treatment granted to municipal debt, including the Notes and other debt issued by the District. President Trump and

the leaders of the Republican majorities in both houses of Congress have stated that some sort of significant tax reform legislation

will be a priority for them in 2017, and a broad outline of the President’s tax proposal has been released. While it is impossible to

predict at this time what, if any tax reform legislation will be proposed or enacted, any such future legislation could have an adverse

effect on the market value of the Notes. See “TAX EXEMPTION,” herein.

TAX EXEMPTION

Hodgson Russ LLP of Buffalo, New York, Bond Counsel, will deliver an opinion that, under existing law, the interest on the

Notes is excluded from gross income of the owners thereof for federal income tax purposes, and is not an "item of tax preference"

for purposes of the individual and corporate alternative minimum taxes imposed by the Code. However, this opinion will note that

(1) the District, by failing to comply with certain restrictions contained in the Code, may cause interest on the Notes to become

subject to federal income taxation from the date of issuance of the Notes, (2) Section 56 of the Code provides that for purposes of

computing the alternative minimum tax on corporations (as defined for federal income tax purposes) interest on the Notes is taken

into account in determining adjusted current earnings, and (3) interest on the Notes earned by foreign corporations doing business

in the United States could be subject to the branch profits tax imposed by Section 884 of the Code. The opinion will also state that

interest on the Notes is exempt from personal income taxes imposed by the State of New York or any political subdivision thereof

(including The City of New York).

In rendering the foregoing opinions, Hodgson Russ LLP will note that the exclusion of the interest on the Notes from gross

income for federal income tax purposes is subject to, among other things, continuing compliance by the District with the applicable

requirements of Sections 141, 148 and 149 of the Code and the regulations promulgated thereunder (collectively, the "Tax

Requirements"). In the opinion of Hodgson Russ LLP, the tax certificate and non-arbitrage certificate that are to be delivered in

connection with the issuance of the Notes (collectively the “Tax Certificates”) establishes requirements and procedures, compliance

with which will satisfy the Tax Requirements.

The Tax Requirements referred to above, which must be complied with in order that interest on the Notes remains excluded

from gross income for federal income tax purposes, include, but are not limited to:

(1) The requirement that the proceeds of the Notes be used in a manner so that the Notes are not obligations which

meet the definition of a "private activity bond" within the meaning of Section 141 of the Code.

(2) The requirements contained in Section 148 of the Code relating to arbitrage bonds, including, but not limited to

the requirement that the excess of all amounts earned on the investment of the gross proceeds of the Notes over

that which would have been earned on such gross proceeds had such gross proceeds been invested at a yield

equal to the yield on the Notes, and any investment income earned on such excess, be rebated to the United

States.

(3) The requirements that payment of principal or interest on the Notes not be directly or indirectly guaranteed (in

whole or in part) by the United States (or any agency or instrumentality thereof) as provided in Section 149(b)

of the Code.

In the Tax Certificates, the District has covenanted to comply with the Tax Requirements, and to refrain from taking any action

which would cause the interest on the Notes to be includable in gross income for federal income tax purposes. Any violation of the

Tax Requirements may cause the interest on the Notes to be included in gross income for federal income tax purposes from the date

of issuance of the Notes. Hodgson Russ LLP expresses no opinion regarding other federal tax consequences arising with respect to

the Notes.

The interest on the Notes is subject to, among others, the following provisions contained in the Code:

(1) Interest on the Notes is not an "item of tax preference" for purposes of the individual and corporate alternative

minimum taxes imposed by the Code. However, interest on the Notes is includable in the “adjusted current

earnings” of a corporate owner of the Notes and 75% of the interest on the Notes is thus includable in the tax

base for computing a corporation’s liability with respect to the 20% alternative minimum tax imposed on

corporations by the Code.

(2) If the Notes are held by certain foreign corporations doing business in the United States, the interest on the Notes

will be included in "effectively connected earnings and profits" for purposes of computing a branch profits tax of

up to 30%.

25

(3) A property casualty insurance company's deduction for the losses incurred will be reduced by 15% of the income

received from tax-exempt obligations.

(4) The United States Treasury Department has promulgated regulations which might have the effect of imposing a

tax at ordinary income rates with respect to interest on the Notes owned by "S Corporations" in certain cases.

(5) In addition, the Notes constitute "qualified tax-exempt obligations" within the meaning of the Code, and if the

Notes are held by a financial institution, a portion of the interest expense allocable to the Notes will be deductible

for federal income tax purposes.

Under the Code, the benefits of the exclusion of the interest on the Notes from gross income for federal income tax purposes

may be diminished by operation of certain provisions of the Code which affect recipients of Social Security and railroad retirement

benefits.

As noted under “NOTEHOLDER RISKS,” amendments to the Code could reduce or eliminate the favorable tax treatment

granted to municipal debt, including the Notes and other debt issued by the District. President Trump and the leaders of the

Republican majorities in both houses of Congress have stated that some sort of significant tax reform legislation will be a priority

for them in 2017, and a broad outline of the President’s tax proposal has been released.

While previous Congresses have been able to defer significant discussions regarding federal tax and spending policies by

voting to suspend the nation’s statutory debt ceiling, the latest such suspension expired on March 15, 2017. As of the date of this

Official Statement, Congress has not yet voted to raise or further suspend the debt ceiling, and as a result the Treasury Department

has indicated that it will use “extraordinary measures” to avoid defaulting on the nation’s obligations. The Congressional Budget

Office projects that these measures could provide sufficient cash to defer the threat of default until the fall of 2017. At this time the

outcome of negotiations in Washington about possible tax reform measures (and the nation’s debt limit) cannot be predicted.

Each purchaser of the Notes should consult his or her tax advisor regarding the impact of the foregoing and other provisions of

the Code on his or her individual tax position.

LEGAL MATTERS

The legality of the authorization and issuance of the Notes will be covered by the unqualified legal opinion of Hodgson Russ

LLP, Bond Counsel, of Buffalo, New York. Such legal opinion will state that in the opinion of Bond Counsel (i) the Notes have

been authorized and issued in accordance with the Constitution and statutes of the State of New York and constitute valid and

legally binding general obligations of the District, all the taxable property within which is subject to the levy of ad valorem taxes to

pay the Notes and interest thereon, without limitation as to rate or amount (subject to certain statutory limitations imposed by

Chapter 97 of the 2011 Laws of New York) provided that the enforceability (but not the validity) of the Notes (a) may be limited

by any applicable existing or future bankruptcy, insolvency or other law (State or federal) affecting the enforcement of creditors'

rights and (b) may be subject to the exercise of judicial discretion in appropriate cases; (ii) the District has the power to comply

with its covenants included in its tax certificate with respect to the Notes relating to compliance with the Code as it relates to the

Notes; provided, however, that the enforceability (but not the validity) of such covenants may be limited by any applicable existing

or future bankruptcy, insolvency or other law (State or federal) affecting the enforcement of creditors' rights; and (iii) assuming that

the District complies with such covenants, interest on the Notes is not includable in the gross income of the owners thereof for

federal income tax purposes under existing statutes and court decisions. Moreover, interest on the Notes is not an "item of tax

preference" for purposes of the individual and corporate alternative minimum taxes imposed by the Code. However, interest on the

Notes is includable in the “adjusted current earnings” of a corporate owner of the Notes and 75% of the interest on the Notes is thus

includable in the tax base for computing a corporation’s liability with respect to the 20% alternative minimum tax imposed on

corporations by the Code. Moreover, interest on the Notes may be subject to a branch profits tax of up to 30% when owned by

certain foreign corporations. Furthermore, interest on the Notes may be subject to a tax at ordinary income rates when owned by

"S Corporations" in certain cases. Interest on the Notes is exempt from personal income taxes imposed by the State of New York

or any political subdivision thereof, including The City of New York. Bond Counsel will express no opinion regarding other

federal income tax consequences arising with respect to the Notes.

Such legal opinion also will state that (i) in rendering the opinions expressed therein, Bond Counsel has assumed the accuracy

and truthfulness of all public records, documents and proceedings examined by Bond Counsel which have been executed or

certified by public officials acting within the scope of their official capacities, and has not verified the accuracy or truthfulness

thereof, and Bond Counsel also has assumed the accuracy of the signatures appearing upon such public records, documents and

proceedings and such certifications; (ii) the scope of Bond Counsel's engagement in relation to the issuance of the Notes has

extended solely to the examination of the facts and law incident to rendering the opinions expressed therein; (iii) the opinions

expressed therein are not intended and should not be construed to express or imply any conclusion that the amount of real property

26

subject to taxation within the boundaries of the District, together with other legally available sources of revenue, if any, will be

sufficient to enable the District to pay the principal of and interest on the Notes as the same respectively become due and payable;

(iv) reference should be made to the Official Statement for factual information which, in the judgment of the District, would

materially affect the ability of the District to pay such principal and interest; and (v) while Bond Counsel has participated in the

preparation of the Official Statement, Bond Counsel has not verified the accuracy, completeness or fairness of the factual

information contained therein and, accordingly, no opinion is expressed by Bond Counsel as to whether the District, in connection

with the sale of the Notes, has made any untrue statement of a material fact, or omitted to state a material fact necessary in order to

make any statements made, in the light of the circumstances under which they were made, not misleading.

LITIGATION

The District is subject to a number of lawsuits in the ordinary conduct of its affairs. The District does not believe, however,

that such suits, individually or in the aggregate, are likely to have a material adverse effect on the financial condition of the District.

There is no action, suit, proceedings or investigation, at law or in equity, before or by any court, public board or body pending

or, to the best knowledge of the School District, threatened against or affecting the School District to restrain or enjoin the

issuance, sale or delivery of the bonds and notes or the levy and collection of taxes or assessments to pay same, or in any way

contesting or affecting the validity of the bonds and notes or any proceedings or authority of the School District taken with respect

to the authorization, issuance or sale of the bonds and notes or contesting the corporate existence or boundaries of the School

District.


In order to assist the purchasers in complying with Rule 15c2-12 promulgated by the Securities and Exchange Commission

under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”), the District will enter into an Undertaking to provide

Material Event Notices, the description of which is attached hereto as “APPENDIX – C”.

Historical Compliance

The District on occasion did not file in a timely manner certain material event notices relating to rating changes of various

insurers of the District’s $4,690,000 School District Refunding (Serial) Bonds, 2003 and $11,045,000 School District Revenue

Bond Financing Program Revenue Bonds, 2011B. The underlying rating of the District was not affected by such rating actions.

The District also had failed to file a notice relating to the current refunding and notice of bond call for the refunding of its

$4,690,000 School District Refunding (Serial) Bonds, 2003 (the “Refunded Bonds”) dated April 15, 2003. The $2,210,000 School

District Refunding (Serial) Bonds, 2012 closed on April 10, 2012 and the Refunded Bonds were promptly redeemed on June 15,

2012. A failure to file notice was published to the Electronic Municipal Market Access (EMMA) website on August 1, 2017.

Other than as stated above, for the past five years, the District has been in compliance, in all material respects, with its

previous undertakings made pursuant to the Rule 15c2-12.

MUNICIPAL ADVISOR

Fiscal Advisors & Marketing, Inc. (the "Municipal Advisor"), is a Municipal Advisor, registered with the Securities and

Exchange Commission and the Municipal Securities Rulemaking Board. The Municipal Advisor serves as independent municipal

advisor to the District on matters relating to debt management. The Municipal Advisor is a municipal advisory and consulting

organization and is not engaged in the business of underwriting, marketing, or trading municipal securities or any other negotiated

instruments. The Municipal Advisor has provided advice as to the plan of financing and the structuring of the Notes and has

reviewed and commented on certain legal documents, including this Official Statement. The advice on the plan of financing and

the structuring of the Notes was based on materials provided by the District and other sources of information believed to be

reliable. The Municipal Advisor has not audited, authenticated, or otherwise verified the information provided by the District or

the information set forth in this Official Statement or any other information available to the District with respect to the

appropriateness, accuracy, or completeness of disclosure of such information and no guarantee, warranty, or other representation is

made by the Municipal Advisor respecting the accuracy and completeness of or any other matter related to such information and

this Official Statement.

27

RATING

The Notes are not rated. The purchaser(s) of the Notes may choose to have a rating completed after the sale at the expense of

the purchaser(s) pending the approval of the District, including any fees to be incurred by the District, as such rating action will

result in a material event notification to be posted to EMMA which is required by the District’s Disclosure Undertakings. See

“APPENDIX - C,” attached hereto.

S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC (“S&P”) has assigned their underlying

rating of “A” with a stable outlook to the District’s outstanding bonds. The rating reflects only the view of S&P and any desired

explanation of the significance of such rating should be obtained from S&P, Public Finance Ratings, 55 Water Street, 38th

Floor,

New York, New York 10041, Phone: (212) 438-2118.

Generally, rating agencies base their ratings on the information and materials furnished to it and on investigations, studies and

assumptions by the respective rating agency. There is no assurance that a particular rating will apply for any given period of time

or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing the rating,

circumstances so warrant. Any downward revision or withdrawal of the rating of the outstanding bonds may have an adverse effect

on the market price of the outstanding bonds.

MISCELLANEOUS

So far as any statements made in this Official Statement involve matters of opinion or estimates whether or not expressly

stated, they are set forth as such and not as representations of fact, and no representation is made that any of the statements will be

realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a

contract with the holders of the Notes.

Statements in this official statement, and the documents included by specific reference, that are not historical facts are forward-

looking statements, which are based on the District management’s beliefs as well as assumptions made by, and information

currently available to, the District’s management and staff. Because the statements are based on expectations about future events

and economic performance and are not statements of fact, actual results may differ materially from those projected. Important

factors that could cause future results to differ include legislative and regulatory changes, changes in the economy, and other

factors discussed in this and other documents that the District’s files with the repositories. When used in District documents or oral

presentation, the words “anticipate”, “estimate”, “expect”, “objective”, “projection”, “forecast”, “goal”, or similar words are

intended to identify forward-looking statements.

To the extent any statements made in this Official Statement involve matters of opinion or estimates, whether or not expressly

stated, they are set forth as such and not as representations of fact, and no representation is made that any of the statements will be

realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a

contract with the holder of the Notes.

Hodgson Russ LLP, of Buffalo, New York, Bond Counsel to the District, expresses no opinions as to the accuracy or

completeness of information in any documents prepared by or on behalf of the District for use in connection with the offer and sale

of the Notes, including but not limited to, the financial or statistical information in this Official Statement.

References herein to the Constitution of the State and various State and federal laws are only brief outlines of certain

provisions thereof and do not purport to summarize or describe all of such provisions.

Concurrently with the delivery of the Notes, the District will furnish a certificate to the effect that as of the date of the Official

Statement, the Official Statement did not contain any untrue statement of a material fact or omit to state a material fact necessary to

make the statements herein, in the light of the circumstances under which they were made, not misleading, subject to a limitation as

to information in the Official Statement obtained from sources other than the District.

The Official Statement is submitted only in connection with the sale of the Notes by the District and may not be reproduced or

used in whole or in part for any other purpose.

The District hereby disclaims any obligation to update developments of the various risk factors or to announce publicly any

revision to any of the forward-looking statements contained herein or to make corrections to reflect future events or developments

except to the extent required by Rule 15c2-12 promulgated by the Securities and Exchange Commission.

28

Fiscal Advisors & Marketing, Inc. may place a copy of this Official Statement on its website at www.fiscaladvisors.com.

Unless this Official Statement specifically indicates otherwise, no statement on such website is included by specific reference or

constitutes a part of this Official Statement. Fiscal Advisors & Marketing, Inc. has prepared such website information for

convenience, but no decisions should be made in reliance upon that information. Typographical or other errors may have occurred

in converting original source documents to digital format, and neither the District nor Fiscal Advisors & Marketing, Inc. assumes

any liability or responsibility for errors or omissions on such website. Further, Fiscal Advisors & Marketing, Inc. and the District

disclaim any duty or obligation either to update or to maintain that information or any responsibility or liability for any damages

caused by viruses in the electronic files on the website. Fiscal Advisors & Marketing, Inc. and the District also assume no liability

or responsibility for any errors or omissions or for any updates to dated website information.

The District’s contact information is as follows: Mr. Robert J. Lingenfelter, District Treasurer, One King Street, Belfast, New

York 14711-0336, Phone: (585) 365-8289, Fax: (585) 365-2648, email: [email protected].

Additional copies of the Notice of Sale and the Official Statement may be obtained upon request from the offices of Fiscal

Advisors & Marketing, Inc., telephone number (315) 752-0051, or at www.fiscaladvisors.com

BELFAST CENTRAL SCHOOL DISTRICT

Dated: August 1, 2017 JOSIE PRESTON

PRESIDENT OF THE BOARD OF EDUCATION AND

CHIEF FISCAL OFFICER

http://www.fiscaladvisors.com/

APPENDIX - A

Belfast CSD

Fiscal Years Ending June 30: 2012 2013 2014 2015 2016

ASSETS

Unrestricted Cash 754,707$ 482,177$ 738,593$ 931,447$ 1,269,252$

Restricted Cash 403,306 404,018 310,556 235,011 272,789

Prepaid Expenditures - - - - -

State and Federal Aid Receivable 130,171 191,883 106,676 105,440 150,509

Due from Other Funds 243,929 357,725 263,583 172,662 387,368

Due from Other Governments - - - 819

Other Receivables - - - -

Accounts Receivable - 20,927 86,979 10,786 29,178

TOTAL ASSETS 1,532,113$ # 1,456,730$ # 1,506,387$ # 1,455,346$ 2,109,915$

LIABILITIES AND FUND EQUITY

Accounts Payable 24,440$ 41,024$ 130,182$ 79,544$ 61,839$

Accrued Liabilities 36,869 - - 53,206 -

Other Payable - - -

Due to Other Governments - - -

Due to Teachers' Retirement System 289,134 310,060 429,669 421,059 325,967

Due to Employees' Retirement System 42,511 46,834 47,137 39,397 30,598

Due to Other Funds 29,133 26,747 35,481 - 206,014

TOTAL LIABILITIES 422,087 424,665 642,469 593,206 624,418

FUND EQUITY

Restricted For:

Reserve for Encumbrances -$ -$ -$ -$ -$

Reserve for Debt Service - - - - -

Reserve for Buses 131,252 131,484 37,862 - -

Reserve for Employee Benefits 272,053 272,534 272,694 235,011 400,000

Assigned:

Unreserved:

Appropriated 235,617 240,065 162,979 202,093 124,579

Unappropriated 471,104 387,982 390,383 425,036 960,918

TOTAL FUND EQUITY 1,110,026 1,032,065 863,918 862,140 1,485,497

TOTAL LIABILITIES & FUND EQUITY 1,532,113$ 1,456,730$ 1,506,387$ 1,455,346$ 2,109,915$

Source: Audited financial reports of the School District. Appendix itself not audited.

GENERAL FUND

Balance Sheets

APPENDIX - A1

Belfast CSD

Fiscal Years Ending June 30: 2011 2012 2013 2014 2015

REVENUES

Real Property Taxes 1,159,656$ 1,181,531$ 1,231,740$ 1,281,440$ 1,721,389$

Real Property Tax Items 353,495 383,162 395,612 407,017 -

Non-Property Tax Items - - - - -

Charges for Services 3,412 14,580 24,711 81,980 21,734

Use of Money & Property 6,098 3,656 8,582 2,659 25,992

Sale of Property and

Compensation for Loss 1,556 827 4,233 4,420 6,812

Miscellaneous 514 300 20,789 124,420 154,471

Interfund Revenues - - - - -

Revenues from State Sources 6,839,505 6,290,141 6,381,981 6,527,525 6,764,151

Revenues from Federal Sources 139,418 15,518 42,483 27,384 39,334

Total Revenues 8,503,654$ 7,889,715$ 8,110,131$ 8,456,845$ 8,733,883$

Other Sources:

Interfund Transfers 53,491 - 23,648 23,648 -

Total Revenues and Other Sources 8,557,145$ 7,889,715 8,133,779 8,480,493 8,733,883

EXPENDITURES

General Support 1,169,401 1,093,902$ 1,153,765$ 1,297,376$ 1,292,979$

Instruction 3,778,044 3,534,060 3,603,662 3,739,227 3,951,458

Pupil Transportation 372,947 409,642 372,051 460,466 454,689

Community Services - - - - -

Employee Benefits 1,456,300 1,506,815 1,586,279 1,653,453 1,584,997

Debt Service 1,487,311 1,532,428 1,490,983 1,493,118 1,436,538

Total Expenditures 8,264,003 8,076,847$ 8,206,740$ 8,643,640$ 8,720,661$

Other Uses:

Interfund Transfers 5,000 5,000 5,000 5,000 15,000

Total Expenditures and Other Uses 8,269,003 8,081,847 8,211,740 8,648,640 8,735,661

Excess (Deficit) Revenues Over

Expenditures 288,142 (192,132) (77,961) (168,147) (1,778)

FUND BALANCE

Fund Balance - Beginning of Year 1,297,798 1,585,940 1,110,026 1,032,065 863,918

Prior Period Adjustments (net) - (283,782) - - -

Fund Balance - End of Year 1,585,940 1,110,026$ 1,032,065$ 863,918$ 862,140$

Source: Audited financial reports of the School District. Appendix itself not audited.

GENERAL FUND

Revenues, Expenditures and Changes in Fund Balance

APPENDIX - A2

Belfast CSD

GENERAL FUND

Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Fiscal Years Ending June 30: 2017 2018

Adopted Modified Adopted Adopted

Budget Budget Actual Budget Budget

REVENUES

Real Property Taxes 1,763,632$ 1,337,132$ 1,762,029$ 1,799,991$ 1,835,801$

Real Property Tax Items - 426,500 - - -

Non-Property Tax Items - - - - -

Charges for Services 25,800 1,900 40,353 19,150 8,000

Use of Money & Property - 3,500 3,967 - 1,750

Sale of Property and

Compensation for Loss - 400 9,772 - 100

Miscellaneous 93,861 113,861 111,929 94,967 10,000

Interfund Revenues - - - -

Revenues from State Sources 7,058,293 7,033,293 7,142,194 7,349,150 7,505,635

Revenues from Federal Sources - 25,000 60,729 25,000 -

Total Revenues 8,941,586$ 8,941,586$ 9,130,973$ 9,288,258$ 9,361,286$

Other Sources:

Interfund Transfers 23,648 23,648 - 23,648 -

Appropriated Fund Balance 135,000 202,093 - 75,000 -

Total Revenues and Other Sources 9,100,234 9,167,327 9,130,973 9,386,906 9,361,286

EXPENDITURES

General Support 1,250,491$ 1,285,761$ 1,228,738$ 1,280,187$ 1,332,824$

Instruction 4,151,511 4,174,267 3,802,060 4,328,840 4,447,443

Pupil Transportation 535,418 595,380 518,518 532,298 555,135

Community Services - 505 - - -

Employee Benefits 1,725,076 1,623,676 1,470,562 1,709,429 1,694,810

Debt Service 1,437,738 1,437,738 1,437,738 1,486,152 1,557,399

Total Expenditures 9,100,234$ 9,117,327$ 8,457,616$ 9,336,906$ 9,587,611$

Other Uses:

Interfund Transfers 50,000 50,000 50,000 75,000

Total Expenditures and Other Uses 9,100,234 9,167,327 - 8,507,616 - 9,386,906 9,662,611

Excess (Deficit) Revenues Over

Expenditures - - 623,357 - (301,325)

FUND BALANCE

Fund Balance - Beginning of Year - 862,140 - 301,325

Prior Period Adjustments (net) - - - - -

Fund Balance - End of Year -$ -$ 1,485,497$ -$ -$

Source: Audited financial report and budgets of the School District. Appendix itself not audited.

2016

APPENDIX - B

Belfast CSD

Fiscal Year

Ending

June 30th Principal Interest Total

2018 1,040,000$ 394,387.50$ 1,434,387.50$

2019 1,085,000 352,787.50 1,437,787.50

2020 760,000 314,937.50 1,074,937.50

2021 795,000 284,537.50 1,079,537.50

2022 830,000 244,787.50 1,074,787.50

2023 875,000 201,212.50 1,076,212.50

2024 925,000 155,275.00 1,080,275.00

2025 505,000 106,712.50 611,712.50

2026 80,000 80,200.00 160,200.00

2027 85,000 76,400.00 161,400.00

2028 90,000 72,362.50 162,362.50

2029 95,000 68,087.50 163,087.50

2030 100,000 63,575.00 163,575.00

2031 100,000 58,825.00 158,825.00

2032 105,000 54,075.00 159,075.00

2033 110,000 48,562.50 158,562.50

2034 120,000 42,787.50 162,787.50

2035 125,000 36,487.50 161,487.50

2036 130,000 29,925.00 159,925.00

2037 140,000 23,100.00 163,100.00

2038 145,000 15,750.00 160,750.00

2039 155,000 8,137.50 163,137.50

Total 8,395,000$ 2,732,912.50$ 11,127,912.50$

BONDED DEBT SERVICE

APPENDIX - B1

Belfast CSD

Fiscal Year

Ending

June 30th Principal Interest Total Principal Interest Total

2018 710,000$ 367,387.50$ 1,077,387.50$ 330,000$ 27,000.00$ 357,000.00$

2019 740,000 338,987.50 1,078,987.50 345,000 13,800.00 358,800.00

2020 760,000 314,937.50 1,074,937.50 - - -

2021 795,000 284,537.50 1,079,537.50 - - -

2022 830,000 244,787.50 1,074,787.50 - - -

2023 875,000 201,212.50 1,076,212.50 - - -

2024 925,000 155,275.00 1,080,275.00 - - -

2025 505,000 106,712.50 611,712.50 - - -

2026 80,000 80,200.00 160,200.00 - - -

2027 85,000 76,400.00 161,400.00 - - -

2028 90,000 72,362.50 162,362.50 - - -

2029 95,000 68,087.50 163,087.50 - - -

2030 100,000 63,575.00 163,575.00 - - -

2031 100,000 58,825.00 158,825.00 - - -

2032 105,000 54,075.00 159,075.00 - - -

2033 110,000 48,562.50 158,562.50 - - -

2034 120,000 42,787.50 162,787.50 - - -

2035 125,000 36,487.50 161,487.50 - - -

2036 130,000 29,925.00 159,925.00 - - -

2037 140,000 23,100.00 163,100.00 - - -

2038 145,000 15,750.00 160,750.00 - - -

2039 155,000 8,137.50 163,137.50 - - -

Total 7,720,000$ 2,692,112.50$ 10,412,112.50$ 675,000$ 40,800.00$ 715,800.00$

2011

DASNY

CURRENT BONDS OUTSTANDING

2012

Refunding of 2003 Refunding Serial Bonds

APPENDIX - C


In accordance with the provisions of Rule 15c2-12, as the same may be amended or officially interpreted from time to

time (the "Rule"), promulgated by the Commission pursuant to the Securities Exchange Act of 1934, unless the Notes are

purchased for the buyer’s own account as principal for investment and not for resale, the District has agreed to provide or cause to

be provided, in a timely manner not in excess of ten (10) business days after the occurrence of the event, during the period in which

the Notes are outstanding, to the EMMA system of the Municipal Securities Rulemaking Board (“MSRB”) or any other entity

designated or authorized by the Commission to receive reports pursuant to the Rule, notice of the occurrence of any of the

following events with respect to the Notes:

(a) principal and interest payment delinquencies

(b) non-payment related defaults, if material

(c) unscheduled draws on debt service reserves reflecting financial difficulties

(d) in the case of credit enhancement, if any, provided in connection with the issuance of the Notes, unscheduled draws

on credit enhancements reflecting financial difficulties

(e) substitution of credit or liquidity providers, or their failure to perform

(f) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability,

Notices of Proposed Issue (IRS Form 5701 TEB) or other material notices or determinations with respect to the tax

status of the Note, or other material events affecting the tax status of the Notes

(g) modifications to rights of Note holders, if material

(h) note calls, if material and tender offers

(i) defeasances

(j) release, substitution, or sale of property securing repayment of the Note

(k) rating changes

(l) bankruptcy, insolvency, receivership or similar event of the District

(m) the consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially

all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to

undertake such an action or the termination of a definitive agreement relating to any such actions, other than

pursuant to its terms, if material

(n) appointment of a successor or additional trustee or the change of name of a trustee, if material

Event (c) is included pursuant to a letter from the SEC staff to the National Association of Bond Lawyers dated September 19,

1995. However, event (c) is not applicable, since no "debt service reserves" will be established for the Notes.

With respect to event (d) the District does not undertake to provide any notice with respect to credit enhancement added after

the primary offering of the Notes.

For the purposes of the event identified in paragraph (l) of this section, the event is considered to occur when any of the

following occur: The appointment of a receiver, fiscal agent or similar officer for the District in a proceeding under the U.S.

Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed

jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the

existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental

authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental

authority having supervision or jurisdiction over substantially all of the assets or business of the District.

The District may from time to time choose to provide notice of the occurrence of certain other events, in addition to those

listed above, if the District determines that any such other event is material with respect to the Notes; but the District does not

undertake to commit to provide any such notice of the occurrence of any material event except those events listed above.

The District reserves the right to terminate its obligation to provide the aforedescribed notices of material events, as set forth

above, if and when the District no longer remains an obligated person with respect to the Notes within the meaning of the Rule.

The District acknowledges that its undertaking pursuant to the Rule described under this heading is intended to be for the benefit of

the holders of the Notes (including holders of beneficial interests in the Notes). The right of holders of the Notes to enforce the

provisions of the undertaking will be limited to a right to obtain specific enforcement of the District’s obligations under its material

event notices undertaking and any failure by the District to comply with the provisions of the undertaking will neither be a default

with respect to the Notes nor entitle any holder of the Notes to recover monetary damages.

The District reserves the right to modify from time to time the specific types of information provided or the format of the

presentation of such information, to the extent necessary or appropriate in the judgment of the District; provided that the District

agrees that any such modification will be done in a manner consistent with the Rule.

Unless the Notes are purchased for the buyer’s own account as principal for investment and not for resale, a “Disclosure

Undertaking” to this effect shall be provided to the purchaser(s) at closing. Under the scenario in which the Notes are purchased

for the buyer’s own account as principal for investment and not for resale the buyer shall deliver a certificate that documents such

intent (in a form satisfactory to Bond Counsel) establishing that an exemption from the Rule applies.

All documents provided to the EMMA system shall be accompanied by identifying information as prescribed by the MSRB.

There is no obligated person under the Rule other than the District.


APPENDIX - D


ALLEGANY COUNTY, NEW YORK

AUDITED FINANCIAL STATEMENTS

AND SUPPLEMENTARY INFORMATION

JUNE 30, 2016

Such Audited Financial Statement and opinion were prepared as of date thereof and have not been reviewed and/or

updated in connection with the preparation and dissemination of this Official Statement.

A

B

c

D

E

F

Schedule

2

3

4

5

6

7

8

9

BELFAST CENTRAL SCHOOL DISTRICT AS OF AND FOR THE YEAR ENDED JUNE 30, 2016

T ABU; OF CONTENTS

INDEPENDENT AUDITORS' REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

BASIC FINANCIAL STATEMENTS

District-wide Financial Statements:

Statement of Net Position

Statement of Activities

Fund Financial Statements:

Governmental Funds Balance Sheet/Statement of Net Position

Governmental Fund Revenues, Expenditures/Expenses and Changes in Fund Balances/Net Position and Statement of Activities

Statement of Fiduciary Net Position - Fiduciary Funds

Statement of Changes in Fiduciary Net Position - Fiduciary Funds

NOTES TO FINANCIAL STATEMENTS

REQUIRED SUPPLEMENTARY INFORMATION

Schedule of Funding Progress

Schedule of Revenues, Expenditures, and Changes in Fund Balance -Budget (Non-GAAP Basis) and Actual - General Fund

Schedule of Proportionate Share of the Net Pension Asset/Liability

Schedule of District Contributions

SUPPLEMENTAL SCHEDULES

Schedules of Change from Adopted Budget to Final Budget -and The Real Property Tax Limit - General Fund

Combining Schedule of Balance Sheets - Non-Major Governmental Funds

Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Non-Major Governmental Funds

Schedule of Net Investment in Capital Assets

Schedule of Project Expenditures - Capital Projects Fund

Page No.

1

3

12

13

14

15

16

17

18

43

44

45

46

48

49

50

51

52

Schedule

10

11

BELFAST CENTRAL SCHOOL DISTRICT AS OF AND FOR THE YEAR ENDED JUNE 30, 2016

TABLE OF CONTENTS (CONTINUED)

INTERNAL CONTROL AND COMPLIANCE

Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

Schedule of Findings and Responses

EXTRACLASSROOM ACTIVITY FUND

Independent Auditors' Report

Statement of Assets, Liabilities and Fund Balance - Cash Basis

Statement of Cash Receipts and Disbursements

Note to Financial Statements

Findings and Recommendations

Page No.

54

56

58

60

61

62

63

Cathie J. Bridges, CPA Kenneth S. Frank, CPA Roger J. Lis, Jr. , CPA Denise D. Yeloski , CPA Julie L. Jagoda-Booth , CPA Kathryn A. Larracuente, CPA

. . .. R. A. MERCER & CO., P.C.

Certified Public Accountants 63 South Main Street

Cattaraugus, NY 14719 Phone 716-257-95 11 Fax 716-257-95 13

www.ramercer.com


To the Board of Education Belfast Central School District Belfast, New York 14711

Report on the Financial Statements

Raymond A. Mercer. CPA 193 1-1983

Robert W. Irwin, CPA

We have audited the accompanying financial statements of the governmental activities, each major fund , and the aggregate remaining fund information of Belfast Central School District as of and for the year ended June 30, 2016, and the related notes to the financial statements. which collectively comprise the District's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to 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 auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion . An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinions

In our opinion, the financial statements referred to above present fairly , in all material respects, the respective financial position of the governmental activities, each major fund , and the aggregate remaining fund information of the Belfast Central School District as of June 30, 2016, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

CATIARAUG US 716-257-9511

WEST SENECA 716-675-4270

Member of

_AICPAJ SARDINI A

716-496-5028 SPRINGVILLE

716-592-0038

Change in Accounting Principle

As described in Note 1 to the financial statements, in 2016, the District adopted new accounting guidance, GASB Statement No. 72, Fair Value Measurement and Application and GASS Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. For the year ended June 30, 2015, the District Implemented GASB Statement No. 68 - Accounting and Financial Reporting for Pensions -Amendment to GASB Statement No. 27. Additional information received during the year ended June 30, 2016, resulted in an additional restatement to the financial statements. Our opinion is not modified with respect to these matters.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management's discussion and analysis , budgetary comparison information, the Schedule of Funding Progress, Schedule of Proportionate Share of the Net Pension Asset/Liability, and the Schedule of District Contributions, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Belfast Central School District's basic financial statements. The combining individual nonmajor fund financial statements and other schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining individual nonmajor fund financial statements and other schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic 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 combining individual nonmajor fund financial statements and other schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole .

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated September 20, 2016, on our consideration of the Belfast Central School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing , and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Belfast Central School District's internal control over financial reporting and compliance.

Cattaraugus, New York September 29, 2016

2

R.A. MERCER & CO., P.C.

f .,f\ tv'\tAOA_ e-Lq R c .

BELFAST CENTRAL SCHOOL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS

AS OF AND FOR THE YEAR ENDED JUNE 30, 2016

Within this section of the Belfast Central Scliool District's annual financial report, management provides narrative discussion and analysis of the financial activities of the District for the fiscal year ended June 30, 2016. The District's financial performance is discussed and analyzed within the context of the accompanying financial statements and disclosure following this section. The discussion focuses on the District's primary government and, unless otherwise noted, component units reported separately from the primary government are not included.

FINANCIAL HIGHLIGHTS

• The District's total net position at the close of this fiscal year was $7,865, 145.

• Total net position increased from $6,362,385 at June 30, 2015.

• Net Investment in Capital Assets of $5,310,196 include property and equipment, net of accumulated depreciation, and reduced for the outstanding debt related to the purchase or construction of capital assets.

• Net position of $712,897 is restricted by constraints imposed from outside the District such as debt covenants, granters, laws, or regulations.

• Unrestricted net position of $1,842,052 will be used in future operations of the District.

Total liabilities of the District are $10,857,339. Bo.nds payable total $9,395,000, of which $1,000,000 is the current portion.

OVERVIEW OF THE FINANCIAL STATEMENTS

Management's Discussion and Analysis introduces the District's basic financial statements. The basic financial statements include: (1) government-wide (district-wide) financial statements, (2) fund financial statements, and (3) notes to the financial statements. The District also includes in this report additional information to supplement the basic financial statements. ·

• The first two statements are government-wide financial statements that provide both short-term and longterm information about the School District's overall financial status. Financial reporting at this level uses a perspective similar to that found in the private sector with its basis in full accrual accounting and elimination or reclassification of internal activities.

• The remaining statements are fund financial statements that focus on individual funds of the School District, reporting the School District's operation in more detail than the government-wide statements. Major funds are separately reported while all others are combined into a single, aggregated presentation.

• Fiduciary funds statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others.

The following table summarizes the major features of the School District's financial statements, including the portion of the School District's activities they cover and the types of information they contain. The remainder of this overview section of MD&A highlights the structure and contents of each of the statements.

3

Major Features of the District-Wide and Fund Financial Statements

Fund Financial Statements

Feature District-Wide Governmental Funds Fiduciary Funds

Scope Entire District (except The activities of the Instances in which the fiduciary funds) School District that are School District

not proprietary or administers resources on fiduciary, such as special behalf of someone else, education and building such as scholarship maintenance programs and student

activities monies

Required financial Statement of Net Position Balance Sheet Statement of Fiduciary statements Net Position

Accounting basis and Accrual accounting and Modified accrual Accrual accounting and measurement focus economic resources accounting and current economic resources

focus financial focus focus

Type of asset/liability All assets and liabilities, Generally, assets All assets and liabilities, information both financial and capital, expected to be used up both short-term and long-

short-term and long-term and liabilities that come term; funds do not due during the year or currently contain capital soon thereafter; no assets, although they can capital assets or long-term liabilities included

Type of inflow/outflow All revenues and Revenues for which cash All additions and information expenses during the is received during or deductions during the

year, regardless of when soon after the end of the year, regardless of when cash is received or paid year; expenditures when cash is received or paid

goods or services have been received and the related liability is due and payable

Government-wide Statements

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

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

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

• To assess the School District's overall health, you need to consider additional non-financial factors such as changes in the School District's property tax base and the condition of school buildings and other facilities.

In the government-wide financial statements, the School District's activities are shown as Governmental activities. Most of the School District's basic services are included here, such as regular and special education, transportation, and administra.tion. Property taxes and State formula aid finance most of these activities.

4

Fund Financial Statements

A fund is an accountability unit used to maintain control over resources segregated for specific activities or objectives. The District uses funds to ensure and demonstrate compliance with finance-related laws and regulations. Within the basic financial statements, fund financial statements focus on the District's most significant funds rather than the District as a whole. Major funds are separately reported while all others are combined into a single, aggregated presentation. Individual fund data for non-major funds is provided in the form of combining statements in a later section of this report.

The District has two kinds of funds:

• Governmental Funds: Most of the School 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 funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the School District's programs. Since the government-wide focus includes the long-term view, comparisons between these two perspectives may provide insight into the long-term impact of short-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balance provide reconciliation to the government-wide statements to assist in understanding the differences between these two perspectives.

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

Notes to the Financial Statements

The financial statements also include Notes that provide information essential to a full understanding of the government-wide and fund financial statements. The notes to the financial statements immediately follow the basic financial statements.

Other Information

In addition to the basic financial statements and accompanying notes, this report also presents certain required supplemental information concerning the District's compliance with NYS Education requirements. Supplemental information follows the notes to the financial statements.

Financial Analysis of the District as a Whole

As year-to-year financial information is accumulated on a consistent basis, changes in net position may be observed and used to discuss the changing financial position of the District as a whole.

The District reported positive balances in net position for governmental activities.

The District's net position at fiscal year end 2016 was $7,865,145. This is an increase from net position of $6,362,385 at fiscal year end 2015.

5

Summary of Net Position

As of June 30, 2016 and 2015

Governmental Activities

(Restated) Amount of

2016 2015 Change Assets:

Current and Other Assets $ 4,060,630 3,840,212 220,418 Capital Assets 14,923,640 15, 177,431 (253,791)

Total Assets 18,984,270 19,017,643 (33,373)

Deferred Outflow of Resources:

Pensions 405, 194 20, 164 385,030

Total Deferred Outflow of Resources 405, 194 20, 164 385,030

Liabilities:

Current Liabilities 317,845 218,896 98,949

Non-Current Liabilities 10,539,494 11, 122,562 (583,068)

Total Liabilities 10,857,339 11,341,458 (484, 119)

Deferred Inflow of Resources:

Pensions 666,980 1,333,964 (666,984)

Total Deferred Inflow of Resources 666,980 1,333,964 (666,984)

Net Position:

Net ln1.estment in

Capital Assets 5,310, 196 4,827,431 482,765

Restricted 712,897 547,859 165,038

Unrestricted (Deficit) 1,842,052 987,095 854,957

Total Net Position $ 7,865, 145 6,362,385 1,502,760

The Net Investment in Capital Assets amount represents 68 percent of the District's total net position.

Resources that are subject to restrictions on how they may be utilized represent 9 percent of the District's net position. These restrictions are for Debt Service and Employee Benefit requirements.

The remaining category of net position, unrestricted at 23 percent, is a surplus and will be used in future operations of the District.

6

The following table provides a summary of the District's changes in net position:

Governmental Activities

(Restated) Amount of

2016 2015 Change Revenues:

Program Revenues:

Charges for Services $ 110,167 100,826 9,341

Operating and Capital Grants and Contributions 665,484 652,739 12,745

General Revenues:

Property Tax 1,373,000 1,345,986 27,014 Property Tax Items 431,829 417,367 14,462

State Formula Aid 7, 143,541 6,765,295 378,246

Medicaid Reimbursement 60,729 39,334 21,395 Miscellaneous 154,636 216,950 (62,314)

Total Re\oenues 9,939,386 9,538,497 400,889

Expenses:

General Support 1,502,838 1,560,218 (57,380) Instruction 5,597,706 5,691,882 (94, 176)

Transportation 652, 186 623,749 28,437

Community Services 53,897 50, 176 3,721

Debt Service - Interest 482,738 515, 153 (32,415)

Cost of Sales - Food 148,843 138,508 10,335

Total Expenses 8,438,208 8,579,686 (141,478)

Changes in Net Position 1,501,178 958,811 . 542,367

Gain on Disposition of Equipment 1,582 1,582

Net Position at Beginning of Year 6,362,385 5,403,574 958,811

Net Position at End of Year $ 7,865, 145 6,362,385 1,502,760

As shown above, the District is heavily reliant on state aid to support District operations. State Aid provided 72 percent of the District's total governmental revenues in 2016 and 71 percent in 2015. Property taxes and tax items provided 18 percent of total governmental revenues in 2016 and 14 percent in 2015, while operating and capital grants provided 8 percent in 2016 and 2015. Total governmental revenues increased $400,889 from 2015 to 2016.

The total governmental activities cost $8,438,208 for this year, compared to $8,579,686 in the prior year. Of this amount, Instruction, with $5,597, 706 was the largest operating services cost at 66 percent of total cost of services in fiscal year 2016. General Support cost was 18 percent of the total for 2016 and 2015. Each of these services were primarily funded by New York State and Federal Sources and the District's taxing authority. Other District activities with significant funding requirements include Pupil Transportation, which was 8 percent of the total cost at $652, 186, and Debt Service interest which totaled $482, 738. It should be noted that General Support, Instruction, and Transportation have been adjusted for depreciation expense in the amount of $628,059.

The prior year amounts have been restated due to further clarification of GASB 68 reporting requirements.

7

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS

Governmental Funds

Public Special School Debt

General Library Aid Lunch Service Capital Total

Fund Balance at June 30, $ 863,918 67,740 (29,903) 312,759 17,098 1,231,612

2014

Revenues 8,733,883 45,463 516,652 242,410 89 9,538,497

Expenditures (8,720,661) (44,047) (516,652) (271,020) (20,509) (9,572,889)

Other Financing Sources (15,000) 15,000

(Uses)

Fund Balance at June 30, 862,140 . 69,156 (43,513) 312,848 (3,411) 1,197,220

2015

Revenues 9,130,973 46,479 503,990 257,895 49 9,939,386

Expenditures (8,457,616) (46,590) (502,535) (311,319) (215,641) (9,533,701)

Other Financing Sources (50,000) 50,000

(Uses)

Fund Balance at June 30, $ 1,485,497 69,045 1,455 (46,937) 312,897 (219,052) 1,602,905

2016

As discussed, governmental funds are reported in the fund statements with a short-term, inflow and outflow of spendable resources focus. This information is useful in assessing resources available at the end of the year in comparison with upcoming financing requirements. Governmental funds reported an overall fund balance of $1,602,905. The General Fund reported a fund balance of $1,485,497. Restricted fund balances include: $312,897 committed to service debt and $400,000 for employee benefits. Nonspendable fund balance includes $9,440 for inventories. Fund balance has been assigned to General Support, Instruction, and Transportation totaling $49,579 for outstanding encumbrances at year end. There is also $69,045 in fund balance assigned to the Public Library. The amount of $75,000 has been assigned to reduce taxes for the subsequent year.

The total ending fund balances of governmental funds show an increase of $623,357 for the General Fund and $49 for the Debt Service Fund and an overall decrease of $219,176 for other governmental funds over the prior year. The changes are primarily the result of the events and programs described within the analysis of the District's governmental activities.

Major Governmental Funds

The General Fund is the District's primary operating fund and the largest source of day-to-day service delivery.

The Special Aid Fund accounts for the activity of the federal and state grant programs.

The Debt Service Fund is used for the accumulation of resources that are restricted to expenditure for the payment of principal and interest on debt.

8

General Fund Budgetary Highlights

The General Fund amended budget for fiscal year 2016 was $9,167,327. This was an increase of $177,222 over the previous year amended budget. The supplemental section includes a schedule detailing the General Fund budget, its amendments, and comparisons to actual amounts.

Capital Assets and Debt Administration

Capital Assets (Net of Depreciation)

The School. District's investment in capital assets includes land, buildings, equipment and infrastructure, including such things as parking lots and curbing, and construction in progress.

The following table details the capital assets, net of accumulated depreciation:

NondeEreciable Assets:

Land $

Construction in Progress

DeEreciable Assets:

Buildings

Furniture and Equipment

Subtotal

Accumulated Depreciation

Total $

Long-Term Debt

Ca pita I Assets,

Net of Accumulated Depreciation

As of June 30, 2016 and 2015

2016 2015

53,232 53,232

236, 150 20,509

19,723,975 19,723,975

1,937,474 1,909,917

21,950,831 21,707,633

(7,027, 191) (6,530,202)

14,923,640 $ 15, 177,431

Amount of

Change

215,641

27,557

243, 198

(496,989)

(253,791)

Total outstanding debt at June 30, 2016 was $10,539,494, which included general obligation bonds of $9,395,000, compensated absences of $420,555, post-employment obligation of $289,578, and a net pension liability of $434,361.

At the end of fiscal year 2015, the District had total bond debt outstanding of $10,350,000, compensated absences of $403,358, post-employment obligation of $271, 177 and a net pension liability of $98,027.

The Moody's rating of the outstanding Serial Bonds remains an insured Aaa.

Factors Bearing on the District's Future

At the time these financial statements were prepared and audited, the School District was aware of the following existing circumstances that could significantly affect its financial health in the future:

Uncertainties regarding Aid from New York State may adversely affect the School District's programs and financial position.

9

Contacting the District's Financial Management

This financial report is designed to provide the School District's citizens, taxpayers, customers, investors, and creditors with a general overview of the School District's finances and to demonstrate the School District's commitment to public accountability. If you. have questions about this report or need additional financial information, contact the Business Office, Belfast Central School District, One King Street, Belfast, New York, 14711.

10

FINANCIAL STATEMENTS

11

EXHIBIT A BELFAST CENTRAL SCHOOL DISTRICT

STATEMENT OF NET POSITION AS OF JUNE 30, 2016

Governmental

ASSETS Activities

Cash and Cash Equivalents Unrestricted $ 1,358,584 Restricted 585,665

Receivables Accounts Receivable, Net 29,178 State and Federal Aid Receivable, Net 316,641 Due From Other Governments 819 Due From Other Funds 1,000

Inventories 9,439 Net Pension Asset 1,759,304 Capital Assets, Net 14,923,640

Total Assets 18,984,270

DEFERRED OUTFLOW OF RESOURCES Pensions 405, 194

Total Deferred Outflow of Resources 405,194

LIABILITIES Payables

Accounts Payable 63,740 Bond Anticipation Notes Payable 220,372 Accrued Liabilities 23,069 Due to Other Funds 5,177 Due to Other Governments 158

Unearned Credits Unearned Revenue - Other 5,329

Long-Term Liabilities Due and Payable Within One Year

Bonds Payable 1,000,000 Due and Payable After One Year

Compensated Absences 420,555 Bonds Payable 8,395,000 Accrued Post Employment Obligation 289,578 Net Pension Liability 434,361

Total Liabilities 10,857,339

DEFERRED INFLOW OF RESOURCES Pensions 666,980

Total Deferred Inflow of Resources 666,980

NET POSITION

Net Investment in Capital Assets 5,310,196 Restricted for

Debt Service 312,897 Employee Benefits 400,000

Unrestricted (Deficit) 1,842,052 Total Net Position $ 7,865,145

The accompanying notes are an integral part of these financial statements.

12

Functions/Programs Governmental Activities

General Support Instruction Pupil Transportation Community Services Debt Service - Interest Cost of Sales

Total Governmental Activities

BELFAST CENTRAL SCHOOL DISTRICT STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2016

Program Revenues

Charges for Expenses Services

$ 1,502,838 5,597,706 41,276

652,186 53,897

482,738 148,843 68,891

$ 8,438,208 110,167

General Revenues Real Property Taxes and Tax Items Use of Money and Property Miscellaneous

Operating Grants and

Contributions

503,990

161,494 665,484

Sale of Property and Compensation for Loss State Sources Medicaid Reimbursement

Total General Revenues

Other Financing Sources and (Uses) Gain on Disposition of Equipment

Change in Net Position

Net Position-Beginning Restatement Net Position-Ending


13

EXHIBIT B

Net (Expenses) Revenue and Changes in Net Position

Total

(1,502,838) (5,052,440)

(652,186) (53,897)

(482,738) 81,542

(7,662,557)

1,804,829 4,029

140,664 9,943

7,143,541 60,729

9,163,735

1,582

1,502,760

5,850,633 511,752

$ 7,865,145

EXHIBITC

BELFAST CENTRAL SCHOOL DISTRICT GOVERNMENTAL FUNDS BALANCE SHEET/STATEMENT OF NET POSITION

AS OF JUNE 30, 2016

Special Debt Capital General Aid Service Projects Other Adjustments Statement of

Fund Fund Fund Fund Funds Total (Note II) Net Position

ASSETS Cash and Cash Equivalents

Unrestricted $ 1,269,252 9,618 79,714 1,358,584 1,358,584 Restricted 272,789 312,876 585,665 585,665 Receivables Accounts Receivable, Net 29,178 29,178 29,178 State and Federal Aid Receivable, Net 150,509 156.422 9,710 316,641 316,641 Due from Other Governments 819 819 819 Due from Other Funds 387,368 21 387,389 (386,389) 1,000 Inventories

9,439 9,439 9,439 Net Pension Asset 1,759,304 1,759,304 Capttal Assets, Net

14,923,640 14,923,640 Total Assets 2,109,915 156,422 312,897 9,618 98,863 2,687,715 16,296,555 18,984,270

DEFERRED OUTFOWS OF RESOURCES Pensions

405,194 405,194 Total Deferred Outflows of Resources 405,194 405,194

Total Assets and Deferred Outflows of Resources 2,109,915 156,422 312,897 9,618 98,863 2,687,715


Accounts Payable 61,839 409 1,492 63,740 63,740 Bond Anticipation Notes Payable 220,372 220,372 220,372 Accrued Liabiltties 2,025 791 2,816 20,253 23,069 Due to Other Funds 206,014 111,618 8,298 65,636 391,566 (386,389) 5,177 Due to Other Governments 158 158 158 Due to Teachers' Retirement System 325,967 35,394 361,361 (361,361) Due to Employees' Retirement System 30,598 5,521 3,349 39,468 (39,468) Unearned Credits

Unearned Revenue - Other 5,329 5,329 5,329 Long-Term Liabiltties

Due Wtthin One Year Compensated Absences Bonds Payable

Due After One Year 1,000,000 1,000,000 Compensated Absences

420,555 420,555 Bonds Payable 8,395,000 8,395,000 Accrued Post Employment Obligation

289,578 289,578 Net Pension Liabiltty 434,361 434,361 Total Liabilities 624,418 154,967 228,670 76,755 1,084,810 9,772,529 10,857,339

DEFERRED INFLOWS OF RESOURCES Pensions

666,980 666,980 Total Deferred Inflows of Resources 666,980 666,980

FUND BALANCES/NET POSITION Fund Balances

Nonspendable: Inventories

9,440 9,440 (9,440) Restricted for: Debt Service 312,897 312,897 (312,897) Employee Benefits 400,000 400,000 (400,000) Assigned to: Appropriated Fund Balance 75,000 75,000 (75,000) General Support 3,095 3,095 (3,095) Instruction 42,354 42,354 (42,354) Transportation 4,130 4,130 Public Library

69,045 69,045 (69,045) Unassigned: Unassigned Fund Balance 960,918 1.455 (219,052) (56,377) 686,944 686,944 Total Fund Balances 1,485,497 1,455 312,897 (219,052) 22,108 1,602,905 (224,887)

Total Liabilities , Deferred Inflows of Resources and Fund Balances $ 2,109,915 156,422 312,897 9,618 98,863 2,687,715

Net Position Net Investment in Capttal Assets Restricted For: 5,310,196 5,310,196

Debt Service 312,897 312,897 Employee Benefrts 400,000 400,000 Unrestricted (Deficit)

1,842,052 1,842,052 Total Net Position 7,865,145 7,865,145


14

~

BELFAST CENTRAL SCHOOL DISTRICT GOVERNMENTAL FUND REVENUES, EXPENDITURES/EXPENSES

AND CHANGES IN FUND BALANCES/NET POSITION AND STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2016

Special Debt Capital General Aid Service Projects Other Adjustments Statement of

Fund Fund Fund Fund Funds Total (Note II) Activities REVENUES

Real Property Truces and Tax llems $ 1,762,029 42,800 1,804,829 1,804,829 Charges for Services 40,353 923 41,276 41,276 Use of Money and Property 3,967 49 13 4,029 4,029

·Sale of Property and Compensation for Loss 9,772 171 9,943 9,943 Miscellaneous 111,929 28,735 140,664 140,664 State Sources 7,142,194 6,510 7,148,704 7,148,704 Medicaid Reimbursement 60,729 60,729 60,729 Local Sources 863 863 863 Federal Sources 503,127 156,331 659,458. 659,458 Sales 68,891 68,891 68,891

Total Revenue!! 9,130,973 503,990 49 304,374 9,939,386 9,939,386

EXPENDITURES/EXPENSES General Support 1,228,738 117,630 1,346,368 156,470 ·1,502,838 Instruction 3,802,060 419,299 4,221,359 1,376,347 5,597,706 Pupil Transportation 518,518 518,518 133,668 652,186 Community Services 44.422 44.422 9,475 53,897 Employee Benefits 1,470,562 83,236 72,952 1,626,750 (1,626,750) Debt Service Principal 955,000 955,000 (955,000) Interest 482,738 482,738 482,738

Cost of Sales 122,905 122,905 25,938 148,843 Capital Outlay 215,641 215,641 (215,641)

Total Expenditures/Expenses 8,457,616 502,535 215,641 357,909 9,533,701 (1,095,493) 8,438,208

Excess (Deficiency) of Revenues

Over Expenditures/Expenses 673,357 1,455 49 (215,641) (53,535) 405,685 1,095,493 1,501,178

OTHER FINANCING SOURCES AND (USES) Gain on Disposition of Equipment 1,582 1,582 lnterfund Transfers In 50,000 50,000 (50,000) lnterfund Transfers Out (50,000) (50,000) 50,000

Total Other Financing Sources (Uses) (50,000) 50,000 1,582 1,582

Excess (Deficiency) of Revenues and Other Financing Sources over Expenditures/ Expenses and Other Financing (Uses) 623,357 1,455 49 (215,641) (3,535) 405,685 (405,685)

CHANGE IN NET POSITION 1,502,760 1,502,760

FUND BALANCES/NET POSITION Beginning of Year 862,140 312,848 (3,411) 25,643 1,197,220 : 4,653,413 5,850,633 Restatement 511,752 511,752 End of Year $ 1,485,497 1,455 312,897 (219,052) 22,108 1,602,905 6,262,240 7,865,145


15

BELFAST CENTRAL SCHOOL DISTRICT STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS AS OF JUNE 30, 2016

Agency Fund


Unrestricted $ 7,880 Restricted 64,698 Due From Other Funds 5,177

Total Assets 77,755

LIABILITIES Accrued Liabilities 13,057 Due to Other Funds Extraclassroom Activity 64,698

Total Liabilities $ 77,755

NET POSITION Reserved For Endowment Scholarships

EXHIBIT E

Private Purpose Trusts

10,746

10,746

1,000

1,000

9,746

Total Net Position $ 9,746 =======


16

EXHIBIT F

BELFAST CENTRAL SCHOOL DISTRICT STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, 2016

ADDITIONS Interest and Earnings Donations

Total Additions

DEDUCTIONS Scholarships and Awards

Total Deductions

Change in Net Position

Net Position, Beginning of Year

Net Position, End of Year

$

Private Purpose Trusts

1 575

, 576

3,000

3,000

(2,424)

12, 170

$ 9,746 =======


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BELFAST CENTRAL SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS

AS OF AND FOR THE YEAR ENDED JUNE 30, 2016

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING_POLICIES

The financial statements of the Belfast Central School District (the "District") have been prepared in conformity with Generally Accepted Accounting Principles (GAAP) as applied to governmental units. Those principles are prescribed by the Governmental Accounting Standards Board (GASS), which is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. Significant accounting principles and policies utilized by the District are described below:

A. Reporting Entity

The Belfast Central School District is governed by the laws of New York State. The District is an independent entity governed by an elected Board of Education consisting of seven members. The President of the Board serves as the chief fiscal officer and the Superintendent is the chief executive officer. The Board is responsible for, and controls all activities related to public school education within the District. Board members have authority to make decisions, power to appoint management, and primary accountability for all fiscal matters.

The reporting entity of the District is based upon criteria set forth by GASS Statement 14, The Financial Reporting Entity, as amended by GASS Statement 39, Component Units. The financial reporting entity consists of the primary government, organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete.

The accompanying financial statements present the activities of the District. The District is not a component unit of another reporting entity. The decision to include a potential component unit in the District's reporting entity is based on several criteria including legal standing, fiscal dependency, and financial accountability. Based on the application of these criteria, the following is a brief description of a certain entity included in the District's reporting entity.

Extraclassroom Activity Fund

The Extraclassroom Activity Fund of the District represents funds of the students of the District. The Board of Education exercises general oversight of these funds. The Extraclassroom Activity Fund is independent of the District with respect to its financial transactions and the designation of student management. Separate audited financial statements (cash basis) of the Extraclassroom Activity Fund can be found at the end of these financial statements. The District accounts for assets held as an agent for various student organizations in an Agency Fund.

8. Joint Venture

The District is a component district in the Cattaraugus, Allegany, Erie, and Wyoming Board of Cooperative Educational Services (BOCES). A BOCES is a voluntary, cooperative association of school districts in a geographic area that shares planning, services, and programs which provide educational and support activities. There is no authority or process by which a school district can terminate its status as a BOCES component.

BOCES are organized under §1950 of New York State Education Law. A BOCES Board is considered a corporate body. Members of a BOCES Board are nominated and elected by their component member boards in accordance with provisions of §1950 of the New York State Education Law. All BOCES property is held by the BOCES Board as a corporation (§1950(6)). In addition, BOCES Boards are also considered municipal corporations to permit them to contract with other municipalities on a cooperative basis under §119-n(a) of the New York State General Municipal law.

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A BOCES budget is comprised of separate budgets for administrative, program, and capital costs. Each component district's share of administrative and capital cost is determined by resident public school district enrollment, as defined in the New York State Education Law, §1950(4)(b)(7). In addition, component districts pay tuition or a service fee for programs in which students participate.

During the year, the District was billed $1,631,778 for BOCES administrative and program costs. Participating school districts issue debt on behalf of BOCES. During the year, the District did not issue debt on behalf of BOCES and there was no BOC ES debt outstanding as of the year end.

The District's share of BOCES aid amounted to $1,004,508.

Financial statements for the BOC ES are available from the BOC ES administrative office.

C. Basis of Presentation

1. District-wide Statements

The Statement of Net Position and the Statement of Activities present financial information about the District's governmental activities. These statements include the financial activities of the overall government in its entirety, except those that are fiduciary. Eliminations have been made to minimize the double counting of internal transactions. Governmental activities generally are financed through taxes, State Aid, intergovernmental revenues, and other exchange and non-exchange transactions. Operating grants include operating-specific and discretionary (either operating or capital) grants.

The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the District's governmental activities. Direct expenses are those that are specifically associated with and are clearly identifiable to a particular function. Indirect expenses, principally employee benefits, are allocated to functional areas in proportion to the payroll expended for those areas. Program revenues include charges paid by the recipients of goods or services offered by the programs, and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

2. Fund Financial Statements

The fund statements provide information about the District's funds, including fiduciary funds. Separate statements for each fund category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as non-major funds.

Governmental Funds

The District reports the following major governmental funds:

General Fund: This is the District's primary operating fund. It accounts for all financial transactions that are not required to be accounted for in another fund.

Special Aid Fund: This fund accounts for the proceeds of specific revenue sources, such as Federal and State Grants that are restricted to expenditures for specified purposes other than debt service and capital projects. These restrictions may be imposed either by governments that provide the funds, by outside parties or by the government itself.

Debt Service Fund: This fund accounts for the accumulation of financial resources that are restricted or assigned to expenditure the payment of principal and interest on long-term debt of governmental activities.

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Capital Projects Funds: These funds are used to account for the financial resources that are restricted or assigned to expenditures for acquisition, construction, or major repair of capital facilities and bus purchases.

The District reports the following non-major funds:

School Lunch Fund: This fund is used to account for all of the financial transactions, including . federal and state grants, related to child nutrition.

Public Library Fund: The Public Library Fund shall be used to record transactions of a library established and sponsored by the school district.

Fiduciary Funds

Fiduciary activities are those in which the District acts as trustee or agent for resources that belong to others. These activities are not included in the District-wide financial statements, because their resources do not belong to the District, and are not available to be used.

The District reports the following fiduciary funds:

Private Purpose Trust Funds: These funds are used to account for trust arrangements in which principal and income benefits annual third party awards and scholarships for students. Established criteria govern the use of the funds and members of the District or representatives of the donors may serve on committees to determine who benefits.

Agency Funds: These funds are strictly custodial in nature and do not involve the measurement of results of operations. Assets are held by the District as agent for various student groups or extraclassroom activity funds, and for payroll or employee withholding.

D. Measurement Focus and Basis of Accounting

The District-wide and fiduciary fund 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 at the time liabilities are incurred, regardless of when the related cash transaction takes place. Non-exchange transactions, in which the District gives or receives value without directly receiving or giving equal value in exchange include property taxes, grants, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

The fund statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The District considers all revenues reported in the governmental funds to be available if the revenues are collected within 365 days after the end of the fiscal year, except for real property taxes which are considered to be available if collected within 60 days after the end of the fiscal year.

Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term.debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources.

E. Property Taxes

Real property taxes are levied annually by the Board of Education no later than September 1 and became a lien on August 13, 2015. Taxes were collected during the period September 1, 2015 to October 31, 2015.

20

Uncollected real property taxes are subsequently enforced by the County in which the District is located. The County pays an amount representing uncollected real property taxes transmitted to the County for enforcement to the District no later than the following April 1.

F. Restricted Resources

When an expense is incurred for purposes for which both restricted and unrestricted net position is available, the District's policy concerning which to apply first varies with the intended use, and with associated legal requirements, many of which are described elsewhere in these Notes.

G. lnterfund Transactions

The operations of the District include transactions between funds. These transactions may be temporary in nature, such as with interfund borrowings. The District typically loans resources between funds for the purpose of providing cash flow. These interfund receivables and payables are expected to be repaid within one year. Permanent transfers of funds include the transfer of expenditure and ·revenues to provide financing or other services.

In the District-wide statements, the amounts reported on the Statement of Net Position for interfund receivables and payables represent amounts due between different fund types (governmental activities and fiduciary funds). Eliminations have been made for all interfund receivables and payables between the funds, with the exception of those due from or to the fiduciary funds.

The governmental funds report all interfund transactions as originally recorded. lnterfund receivables and payables may be netted on the accompanying governmental funds balance sheet when it is the District's practice to settle these amounts at a net balance based upon the right of legal offset.

A detailed disclosure by individual fund for interfund receivables, payables, expenditures and revenues activity is presented later in these notes.

H. 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 amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are made in a variety of areas, including computation of encumbrances, compensated absences, potential contingent liabilities, and useful lives of long-lived assets.

I. Cash and Cash Equivalents/Investments

The District's cash and cash equivalents consist of cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.

New York State law governs the District's investment policies. Resources may be deposited in FDICinsured commercial banks or trust companies located within the State. Permissible investments include obligations of the United States Treasury, United States Agencies, repurchase agreements and obligations of New York State or its localities.

Collateral is required for demand and time deposits and certificates of deposit not covered by FDIC insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the State and its municipalities and school districts.

J. Receivables

Receivables are reported at their gross value, and when appropriate, are reduced by the estimated portion that is expected to be uncollectible. No allowance for uncollectible accounts has been provided since it is believed that such allowance would not be material.

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K. Inventories

Inventories of food in the School Lunch Fund are recorded at cost on a first-in, first-out basis, or in the case of surplus food, at stated value which approximates market. Purchases of inventory items in other funds are recorded as expenditures at the time of purchase, and are considered immaterial in amount.

L. Capital Assets

Capital assets are reported at actual cost for acquisitions subsequent to July 1, 2003. For assets acquired prior to July 1, 2003, estimated historical costs, based on appraisals conducted by independent third-party professionals were used. Donated Assets are reported at estimated fair market value at the time received.

Capitalization thresholds (the dollar value above which asset acquisitions are added to the capital asset accounts}, depreciation methods, and estimated useful lives of capital assets reported in the District-wide statements are as follows:

Buildings

Building lmpro\.ements


M. Unearned Revenues

Capitalization

Threshold

$ 1,500

1,500

1,500

Depreciation Estimated

Method Useful Life

Straight-line 40

Straight-line 20 -40

Straight-line 5 - 15

Unearned revenues are reported when potential revenues do not meet both the measurable and available criteria for recognition in the current period. Unearned revenues also arise when resources are received by the District before it has legal claim to them, as when grant monies are received prior to the incurring of qualifying expenditures. In subsequent periods, when both recognition criteria are met, or when the District has legal claim to the resources, the liability for unearned revenues is removed and revenues are recorded.

N. Deferred Outflows and Inflows of Resources

The Statement of Net Position reports a separate section for deferred outflows of resources which represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government has two items that qualify for reporting in this category. The first item is related to pensions reported in the district-wide Statement of Net Position. This represents the effect of the net change in the District's proportion of the collective net pension asset or liability and difference during the measurement period between the District's contributions and its proportion share of total contributions to the pension systems not included in .pension expense. The second item is the District contributions to the pension systems (TRS and ERS Systems) subsequent to the measurement date.

· The Statement of Net Position also reports a separate section for deferred inflows of resources which represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. This represents the effect of the net change in the District's proportion of the collective net pension liability or net pension asset, and the difference during the measurement periods between the District's contributions and its proportion share of total contributions to the pension systems not included in pension expense.

0. Compensated Absences

Compensated absences consist of unpaid accumulated annual sick leave and vacation time. 22

Sick leave eligibility and accumulation is specified in negotiated labor contracts, and in individual employment contracts. Upon retirement, resignation, or death, employees may contractually receive a payment based on unused accumulated sick leave.

District employees are granted vacation in varying amounts, based primarily on the length of service and service position. Some earned benefits may be forfeited if not taken within varying time periods.

Consistent with GASS Statement 16, Accounting for Compensated Absences, the liability has been calculated using the vesting/termination method, and an accrual for that liability is included in the District-wide financial statements. The compensated absences liability is calculated based on the pay rates in effect at year-end.

In the funds statements only the amount of matured liabilities is accrued within the General Fund based upon expendable and available financial resources. These amounts are expensed on a payas-you-go basis.

: P. Other Benefits

District employees participate in the New York State Employees' Retirement System and the New York State Teacher's Retirement System.

In addition to providing pension benefits, the District provides other post-employment benefits (OPES), including health insurance coverage and survivor benefits to retired employees and their survivors in accordance with the provision of various employment contracts in effect at the time of retirement. Substantially all of the District's employees may become eligible for these benefits if they reach normal retirement age while working for the District. Health care benefits are provided through plans whose premiums are based on the benefits paid during the year. The District recognizes the cost of providing health insurance by recording its share of insurance premiums as an expenditure.

Belfast Central School District also offers its employees a deferred compensation plan created in accordance with the Internal Revenue Code Section 403b - Tax Sheltered Annuities. The plan is available to all school employees and permits them to defer taxation on a portion of their salary until future years. The deferred portion is withheld by the District and disbursed to the employees' plan administrator. The plans are owned by the individuals and held in trust by the plan administrator. The District has a fiduciary responsibility for funds withheld and remittance to trustees. The assets in the plan remain the property of the District until paid subject only to the claims of the District's creditors.

: Q. Short-term Debt

The District may issue Bond Anticipation Notes (BAN) in anticipation of proceeds from the subsequent sale of bonds. These notes are recorded as current liabilities of the funds that will actually receive the proceeds from the issuance of the bonds. State law requires that BANs issued for capital purposes be converted to long-term financing within five years after the original issue date.

R. Accrued Liabilities and Long-term Obligations

Payables, accrued liabilities and long-term obligations are reported in the District-wide financial statements. In the governmental funds, payables and accrued liabilities are paid in a timely manner and in full from current financial resources. Claims and judgments, and compensated absences that will be paid from governmental funds, are reported as a liability in the funds financial statements only to the extent that they are due for payment in the current year. Bonds and other long-term obligations

. that will be paid from governmental funds are recognized as a liability in the fund financial statements when due.

Long-term obligations represent the District's future obligations or future economic outflows. The liabilities are reported as due within one year or due after one year in the Statement of Net Position.

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S. Equity Classifications

In the District-wide statements there are three classes of net position:

Net Investment in Capital Assets - consists of net capital assets (cost less accumulated depreciation) reduced by outstanding balances of related debt obligations from the acquisition, construction, or improvement of those assets.

· Restricted Net Position - reports net position when constraints placed on the assets are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments, or imposed by law through constitutional provisions or enabling legislation.

Unrestricted net position - reports all other net position that does not meet the definition of the above two classifications and are deemed to be available for general use by the District.

T. Funds Statements

In the fund basis statements there are five classifications of fund balance:

Non-spendable fund balance - Includes amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Non-spendable fund balance includes the inventory recorded in the School Lunch Fund of $9,440.

Restricted - includes amounts with constraints placed on the use of resources either externally imposed by creditors, granters, contributors or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. All encumbrances of funds other than the General fund are classified as restricted fund balance. The School District has established the following restricted fund balances:

Debt Service - According to General Municipal Law, the Mandatory Reserve for Debt Service must be established for the purpose of retiring outstanding obligations .. Interest and earnings on outstanding obligations and remaining bond proceeds not utilized for the intended purpose are recorded in the Reserve for Debt Service. These monies must be used to pay the debt service of the obligations from which they originated. This reserve is accounted for in the Debt Service Fund. ·

Reserve for Employee Benefit Accrued Liability - The purpose of this account is to reserve funds for the payment of any accrued employee benefit due to an employee upon termination of the employee's service. This reserve fund may be established by majority vote of the Board of Education and is funded by budgetary appropriations and such other reserves and funds that may be legally appropriated. This reserve is accounted for in the General Fund.

Encumbrances - Encumbrance accounting, under which purchase orders, contracts and other commitments of expenditures are recorded for budgetary control purposes in order to reserve applicable appropriations, is employed as a control in preventing over-expenditure of established appropriations. Open encumbrances are reported as restricted fund balance in all funds other than the General Fund, since they do not constitute expenditures or liabilities and will be honored through budget appropriations in the subsequent year.

24

Restricted fund balance includes the following:

General Fund: Employee Benefit Accrued Liability $ 400,000

Debt Service Fund: 312,897

Total Restricted Funds $ 712,897

Committed - Includes amounts that can only be used for the specific purposes pursuant to constraints imposed by formal action of the School District's highest level of decision making authority, i.e., the Board of Education. The School District has no committed fund balances as of June 30, 2016.

Assigned - Includes amounts that are constrained by the School. District's intent to be used for specific purposes, but are neither restricted nor committed. All encumbrances of the General Fund are classified as Assigned Fund Balance in the General Fund. Encumbrances reported in the General Fund amounted to $49,579. The amount of $75,000 has been appropriated to reduce taxes in the subsequent year.

Unassigned - Includes all other General Fund net position that does not meet the definition of the above four classifications and are deemed to be available for general use by the School District.

NYS Real Property Tax Law 1318 limits the amount of unexpended surplus funds a school district can retain to no more than 4% of the School District's budget for the General Fund for the ensuing fiscal year. Nonspendable and restricted fund balance of the General Fund are excluded from the 4% limitation. Amounts appropriated for the subsequent year and encumbrances are also excluded from the 4% limitation.

The District's policy is to apply expenditures against nonspendable fund balance, restricted fund balance, committed fund bala·nce, assigned fund balance, and unassigned fund balance at the end of the fiscal year. For all funds, nonspendable fund balances are determined first and then restricted fund balances for specific purposes are determined. Any remaining fund balance amounts for funds

· other than the General Fund are classified as restricted fund balance. In the general fund, committed fund balance is determined next and then assigned. The remaining amounts are reported as unassigned. Assignments of fund balance cannot cause a negative unassigned fund balance.

Along with the Board of Education, the Superintendent and/or the Business Manager of the District has the authority to assign fund balances for particular purposes.

U. New Accounting Standards The District has adopted all current Statements of the Governmental Accounting Standards Board (GASB) that are applicable. At June 30, 2016, the District implemented the following new standards issued by GASB:

GASB Statement No. 72 - "Fair Value Measurement and Application," effective for the year ended June 30, 2016.

GASB Statement No. 76 - "The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments", effective for the year ended June 30, 2016.

V. Accounting Standards Issued But Not Yet Implemented GASB Statement No. 73 - "Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68", effective for the year ending June 30, 2017.

Statement No 74 - "Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans" establishes new accounting and financial reporting requirements for OPEB plans. Effective for the year ending June 30, 2017.

25

GASB Statement No. 75 - "Accounting and Financial Reporting for Postemployment Benefits Other than Pension." This Statement replaces the requirements of Statements No. 45, - "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions" as amended, and No. 57 - "OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans" for OPEB. Effective for the year ending June 30, 2018.

GASB Statement No. 77....: "Tax Abatement Disclosures." Effective for the year ending June 30, 2017.

GASB Statement No. 78 - "Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans." Effective for the year ending June 30, 2017.

GASB Statement No. 79 - "Certain External Investment Pools and Pool Participants." Effective for the year ending June 30, 2017.

GASB Statement No. 80 - "Blending Requirements for Certain Component Units - an amendment of GASB Statement No. 14." Effective for the year ending June 30, 2017.

GASB Statement No. 81 - "Irrevocable Split-Interest Agreements." Effective for the year ending June 30, 2018.

GASB Statement No. 82 - "Pension Issues - an amendment of GASB Statements No. 67, No. 68, and No. 73." Effective for the year ending June 30, 2017.

The District will evaluate the impact each may have on its financial statements and will implement them as applicable and when material. .

NOTE 2 - EXPLANATION OF CERTAIN DIFFERENCES BETWEEN GOVERNMENTAL FUND STATEMENTS AND DISTRICT-WIDE STATEMENTS.

Due to the differences in the measurement focus and basis of accounting used in the governmental fund statements and the District-wide statements, certain financial transactions are treated differently. The basic financial statements contain a full reconciliation of these items. The differences result primarily from the economic focus of the Statement of Activities, compared with the current financial resources focus of the governmental funds.

A. Total Fund Balances of Governmental Funds vs. Net Position of Governmental Activities

Total fund balances of the District's governmental funds differ from "net position" of governmental activities reported in· the Statement of Net Position. This difference primarily results from the additional long-term economic focus on the Statement of Net Position versus the solely current financial resources focus of the governmental fund Balance Sheets.

The costs of building and acquiring capital assets (land, construction in progress, buildings and equipment) financed from the governmental funds are reported as expenditures in the year they are incurred, and the assets do not appear on the Governmental Funds Balance Sheet. However, the Statement of Net Position includes those capital assets among the assets of the District as a whole, and their original costs are expensed annually over their useful lives.

Original Cost of Capital Assets

Accumulated Depreciation

$ 21,950,831

(7,027, 191)

$ 14,923,640

Long-term liabilities are reported in the Statement of Net Position, but not in the governmental funds, because they are not due and payable in the current period. Balances at year end were:

26

Due in Due After

One Year One Year Total

Bonds Payable $ 1,000,000 8,395,000 9,395,000 Compensated Absences 420,555 420,555

Post Employment Obligation 289,578 289,578

Net Pension Liability 434,361 434,361

$ 1,000,000 $ 9,539,494 $ 10,539,494

Interest on long-term debt is recorded as an expenditure in governmental funds when it is due, and thus requires the use of current financial resources. On the Statement of Net Position, interest is recognized as it accrues, regardless of when it is due. The accrued interest on the bonds payable increased from the prior year by $469.

As indicated previously, the amounts reported on the Statement of Net Position for due to and due from other funds represent amounts due between different fund types (governmental activities and Fiduciary Funds). Eliminations have been made for amounts due to and from within the same fund type. ·

B. Statement of Revenues, Expenditures and Changes in Fund Balance vs. Statement of Activities

Differences between the governmental funds Statements of Revenues, Expenditures and Changes in Fund Balances and the Statement of Activities fall into one of four broad categories. The amounts shown below represent:

1. Long-Term Revenue Differences

Long-term revenue differences arise because governmental funds report revenues only when they are considered "available," whereas the Statement of Activities reports revenue when earned. Differences in long-term expenses arise because governmental funds report on a modified accrual basis, whereas the accrual basis of accounting is used on the Statement of Activities.

2. Capital Related Differences

Capital related differences include the difference between proceeds for the sale of capital assets reported on governmental fund statements and the gain or loss on the sale of assets as reported on the Statement of Activities, and the difference between recording an expenditure for the purchase of capital items in the governmental fund statements and depreciation expense on those items as recorded in the Statement of Activities.

3. Long-Term Debt Transaction Differences

Long-term debt transaction differences occur because both interest and principal payments are recorded as expenditures in the governmental fund statements, whereas interest payments are recorded in the Statement of Activities as incurred, and principal payments are recorded as a reduction of liabilities in the Statement of Net Position.

4. Allocation of Indirect Expenses

Indirect expenses, principally employee benefits, are allocated to functional areas in proportion to the payroll expended for those areas.

27

Differences between the governmental funds Operating Statement and Statement of Activities

Total Revenue and Other Funding Sources of Governmental Funds Total re\enue and other funding sources of go\emmental funds

Gain on Disposition of Equipment

Elimination of interfund re\enue from go\emmental funds:

lnterfund transfers in

Total re\enues and other funding sources of go\emmental

activities in the Statement of Activities

Total Expenditures and Other Uses Reported in Governmental Funds Total expenditures and other uses reported in go\emmental funds

In the Statement of Activities, certain operating expenses (compensated absences) are measured by the amounts earned during the year. In the go\emmental funds, howe\er, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). The estimated liability for compensated absences was higher than the amounts paid by $17, 197.

When the purchase or construction of capital assets is financed through go\emmental funds, the resources expended for those assets are reported as expenditures in the years they are incurred. Howe\er, in the Statement of Activities, the cost of those assets is allocated o\er their estimated useful li\es and reported as depreciation expense. This is the amount by which depreciation of $628,059 exceeded capital expenditures of $372,686 in the current year.

Elimination of interfund expenditures from go\emmental funds:

lnterfund transfers out

Net Other Post Employment Obligation Repayment of bond principal is an expenditure in the go\emmental funds, but it reduces long-term liabilities in the Statement of Net Position, and does not affect the Statement of Activities

Interest on long-term debt in the Statement of Activities differs from the amount reported in the go\ernmental funds because interest is recorded as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the Statement of Activities, howe\er, interest expense is recognized as the interest accrues, regardless of when it is due. The net interest reported in the Statement of Activities is the result of accrued interest on bonds payable.

(Increases) decreases in proportionate share of net pension asset/liability reported in the Statement of Activities do not provide for or require the use of current financial resources and therefore are not reported as re\enues or expenditures in the go\ernmental funds.

Teachers' Retirement System

Employees' Retirement System

Total expenses and other uses of go\ernmental activities

28

$

$

$

$

9,989,386

1,582

(50,000)

9,940,968

9,583,701

17, 197

255,373

(50,000)

18,401

(955,000)

469

(458,638)

26,705

8,438,208

NOTE 3- STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

A. Budget Policies

General Fund and School Lunch Fund

The District administration prepares a proposed budget for approval by the Board of Education for the General Fund and School Lunch Fund.

The voters of the District approved the proposed appropriation budget for the General Fund.

Appropriations are adopted at the program line item level.

Appropriations established by the adoption of the budget constitute a limitation on expenditures (and encumbrances) that may be incurred. Appropriations lapse at the end of the fiscal year unless expended or encumbered. Encumbrances will lapse if not expended in the subsequent year.

·Appropriations authorized for the current year are increased by the planned use of specific reserves, and budget amendments approved by the Board of Education as a result of selected new reven'ue sources not included in the original budget (when permitted by law). These supplemental appropriations may occur subject to legal restrictions, if the Board approves them because of a need that exists which was not determined at the time the budget was adopted. No supplemental appropriations occurred during the year.

Appropriations authorized for the year are increased by the amount of encumbrances carried forward from the prior year.

The Board of Education approves transfers among budgetary line items as deemed necessary.

Budgets are established and used for individual capital project funds expenditures as approved by a special referendum of the District's voters. The maximum project amount authorized is based primarily upon the cost of the project, plus any requirements for external borrowings; not annual appropriations. These budgets do not lapse and are carried over to subsequent fiscal years until the completion of the projects.

Special Aid Fund

Individual budgets are all adopted based on each federal, state, and local grant award. Transfers among budgetary line items are made as deemed necessary after approval by the grantor agency. Appropriations lapse at the end of the grant period versus the School District's fiscal year end.

B. Encumbrances

Encumbrance accounting is used for budget control and monitoring purposes and is reported as a part of the governmental funds. Under this method, purchase orders, contracts, and other

· commitments for the expenditure of monies are recorded to reserve applicable appropriations. Outstanding encumbrances as of year-end are presented as reservations of fund balance and do not represent expenditures or liabilities. These commitments will be honored in the subsequent period. Related expenditures are recognized at that time, as the liability is incurred or the commitment is paid.

C. Unassigned Fund Balance

The District's unassigned fund balance was in excess of the New York State Real Property Tax Law 1318 limit, which restricts it to an amount not greater than 4% of the District's budget for the upcoming school year.

29

NOTE 4 - CASH AND CASH EQUIVALENTS - CUSTODIAL CREDIT, CONCENTRATION OF CREDIT, AND INTEREST RATE RISKS

Cash and Cash Equivalents

Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. While the District does not have a specific policy for custodial credit risk, New York State statutes govern the District's investment policies, as discussed previously in these Notes.

The District's aggregate bank balances (disclosed in the financial statements), included balances not covered by depository insurance at year-end, collateralized as follows:

Uncollateralized

Collateralized with securities held by the pledging financial institution, or

its trust department or agent, but not in the District's name

$

$ 1,711,184

Restricted cash represents cash and cash equivalents where use is limited by legal requirements. These assets represent amounts required by statute to be reserved for various purposes. Restricted cash as of year-end includes $585,665 in governmental funds and $75,444 in the fiduciary funds.

NOTE 5 - RECEIVABLES

Receivables at year-end for individual major and non-major funds, which are stated at net realizable value, including the applicable allowances for uncollectible accounts, are as follows:

Description

Due from State and Federal $

Due From Other Go\ernments

Other Receivables

Total $

Governmental Funds

Major Non-Major

General

150,509

819

29, 178

180,506

Special Aid

156,422

156,422

School Lunch

9,710

9,110

District management has deemed the amounts to be fully collectible.

30

Total

316,641

819

29, 178

346,638

NOTE 6 - CAPITAL ASSETS

Capital asset balances and activity for the year ended June 30, 2016 were as follows:

Nondepreciable:

Land

Construction in Progress

Subtotal

Depreciable:

Buildings


Subtotal

Less Accumulated Depreciation:

Buildings


Total Accumulated Depreciation

Net Capital Assets

$

Balance

7/1/15

53,232

20,509

73,741

19,723,975

1,909,917

21,633,892

5, 134,006

1,396, 196

6,530,202

$ 15, 177,431

Additions

215,641

215,641

159,545

159,545

514,229

113,830

628,059

(252,873)

Depreciation expense was charged to go\iernmental functions as follows:

General Support

Instruction

Pupil Transportation

Total

NOTE 7- SHORT-TERM DEBT

$

$

43,964

395,677

188,418

628,059

Deletions

(131,988)

(131,988)

(131,070)

(131,070)

(918)

Balance

6/30/16

53,232

236, 150

289,382

19,723,975

1,937,474

21,661,449

5,648,235

1,378,956

7,027, 191

14,923,640

The District issued a $220,372 bond anticipation note during the year ended June 30, 2016, to finance capital project expenditures. The details of this transaction are as follows:

Maturity

Bond Anticipation Note 8/4/2016

Interest

Rate

1.09%

Beginning

Balance

$

Issued Redeemed

220,372

Ending

Balance

$ 220,372

Interest expense reported by the District associated with this bond anticipation note amounts to $2, 171, which is reported as an accrued liability at year end.·

NOTE 8 - LONG-TERM DEBT

Long-term liability balances and activity for the year are summarized below:

31

Serial Bonds Payable

Compensated Absences

Post Employment Benefit Obligation

Net Pension Liability

Total Long-Term Liabilities

$

$

Balance

7/1/15

10,350,000

403,358

271,177

98,027

11, 122,562

Additions Deletions

955,000

420,555 403,358

289,578 271,177

336,334

1,046,467 1,629,535

Balance

6/30/16

9,395,000

420,555

289,578

434,361

10,539,494

Amounts

Due Within

One Year

1,000,000

1,000,000

The General Fund has typically been used to liquidate long-term liabilities such as compensated absences.

Existing serial and statutory bond obligations are as follows:

Issue Final Interest

Description Date Maturity Rate Balance

Advanced Refunding Bonds 4/10/2012 6/15/2019 2.0 - 4.00% $ 995,000

Serial Bonds 6/8/2011 6/15/2039 2.0 - 5.25% 8,400,000

$ 9,395,000

The following is a summary of debt service requirements:

Fiscal Year Ending Serial Bonds

June 30, Principal Interest

2017 1,000,000 473,437

2018 1,040,000 428,388

2019 1,085,000 352,788

2020 760,000 314,938

2021 795,000 284,538

2022-2026 3,215,000 788, 187

2027-2031 470,000 339,250

2032-2036 590,000 211,838

2037-2039 . 440,000 46,888

Total $ 9,395,000 3,240,252

Interest paid on long-term debt for the year was $482, 738. This payment was recorded in the General Fund.

In the prior year certain general obligation bonds were defeased by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for those bonds are not included in the District's financial statements. The District advance refunded the bonds to revise its payment schedule due to changes in New York State's aid payment schedules. The School District is expected to realize, as a result of the issuance of the bonds, and

32

in accordance with the Refunding Financial Plan, cumulative dollar and present value debt service savings in the amount of $112,888. $1,605,000 of bonds outstanding are considered defeased.

NOTE 9 - PENSION PLANS

The District participates in the New York State and local Employees' Retirement System (NYSERS) and the New York State Teachers' Retirement System (NYSTRS). These are cost-sharing multiple employer public employee retirement systems.

A. Plan Descriptions

1. Teachers' Retirement System

TRS provides retirement benefits as well as, death and disability benefits to plan members and beneficiaries as authorized by the Education Law and the Retirement and Social Security Law of the State of New York. The System is governed by a 10 member Board of Trustees. System benefits are established under New York State Law. Membership is mandatory and automatic for all full-time teachers, teaching assistants, guidance counselors and administrators employed in New York Public Schools and BOC ES who elected to participate in TRS. Once a public employer elects to participate in the System, the election is irrevocable. The New York State Constitution provides that pension membership is a contractual relationship and plan benefits cannot be diminished or impaired. Benefits can be changed for future members only by enactment of a State statute. Additional information regarding the System, may be obtained by writing to the New York State Teachers' Retirement System, 10 Corporate Woods Drive, Albany, NY 12211-2395 or by referring to the NYSTRS Comprehensive Annual Financial report which can be found on the System's website at www.nystrs.org.

2. Employees' Retirement System

ERS provides retirement benefits as well as death and disability benefits. The net position of the System is held in the New York State Common Retirement Fund (the Fund), which was established to hold all net assets and record changes in plan net position allocated to the System. The Comptroller of the State of New York serves as the trustee of the Fund and is the administrative head of the System. System benefits are established under the provisions of the New York State Retirement and Social Security Law (RSSL). Once a public employer elects to participate in the System, the election is irrevocable. The New York State Constitution provides that pension membership is a contractual relationship and plan benefits cannot be diminished or impaired. Benefits can be changed for future members only by enactment of a State statute. The District also participates in the Public Employees' Group Life Insurance Plan (GLIP), which provides death benefits in the form of life insurance. The System is included in the State's financial report as a pension trust fund. That report, including information with regard to benefits provided, may be found at www.osc.state.ny.us/retire/publications/index.php or obtained by writing to the New York State and Local Retirement System, 110 State Street, Albany, NY 12244.

8. Funding Policies

The Systems are noncontributory except for employees who joined after July 27, 1976, who contribute 3 percent of their salary for the first ten years of membership, and employees who joined on or after January 1, 201 O who generally contribute 3.0 to 3.5 percent of their salary for their entire length of service. In addition, employee contribution rates under ERS tier VI vary based on a sliding salary scale. For ERS, the Comptroller annually certifies the actuarially determined rates expressly used in computin'g the employers' contributions based on salaries paid during the Systems' fiscal year ending March 31. For TRS, contribution rates are established annually by the New York State Teachers' Retirement Board pursuant to Article 11 of the Education law.

Contributions for the current year and two preceding years were equal to 100 percent of the contributions required, and were as follows:

33

2016

2015

2014

$

NYSTRS

460,724

429,679

307,326

$

NYSERS

138,613

135,219

201,231

C. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Inflows of Resources Related to Pension

At June 30, 2015, the District reported the following asset/liability for its proportionate share of the net pension asset/liability for each of the Systems. The net pension asset/liability was measured as of March 31, 2015 for ERS and June 30, 2014 for TRS. The total pension asset/liability used to calculate the net pension asset/liability was determined by an actuarial valuation. The District's proportion of the net pension asset/liability was based on a projection of the District's long-term share of contributions to the Systems relative to the projected contributions of all participating members, actuarially determined. This information' was provided by the ERS and TRS Systems in reports provided to the District.

For the year ended June 30, 2016, the District recognized pension expense of $87,364 for ERS and the actuarial value of $76,029 decrease to pension expense for TRS. At June 30, 2016, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Differences between expected and actual experience $

Deferred Outflows Resources ERS lRS

Deferred Inflows Resources ERS lRS

51,486 48,758

Change in Assumptions

2, 195

115,831

Net difference between projected and actual earnings on pension ini,.estments 257,687 12,717 556, 125

Changes in proportion and differences between the District's contributions and proportionate share of contributions 16, 764 8,251 2,360

Total ------

$ 392,477 12,717 59,737 607,243

District contributions subsequent to the measurement date were recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ending: ERS TRS

2017 2018 2019 2020

Thereafter

D. Actuarial Assumptions

$ 84,022 84,022 84,022 80,673

$ (223, 136) (223, 136)

(93,657) (4,907)

(13,867)

The total pension liability as of the measurement date was determined by using an actuarial valuation as noted in the table below, with update procedures used to roll forward the total pension liability to the measurement date. The actuarial valuations used the following significant actuarial assumptions:

34

Measurement Date

Actuarial Valuation Date

Interest Rate

Salary Scale

Decrement Tables

Inflation Rate

ERS

March 31, 2016

April 1, 2015

7.50%

4.90%

April 1, 2005 -March 31, 2010 ERS' Experience

2.70%

TRS

June 30, 2015

June 30, 2014

8.00%

4.01% - 10.91%

July 1, 2005 -June 30, 2010 TRS' Experience

3.00%

For ERS, annuitant mortality rates are based on April 1, 2005 - March 31, 2011 System's experience with adjustments for mortality improvements based on MP-2014. For TRS, annuitant mortality rates are based on July 1, 2005 - June 30, 2010 System's experience with adjustments for mortality improvements based on Society of Actuaries Scale AA.

For ERS, the actuarial assumptions used in the April 1, 2011 valuation are based ori the results of an actuarial experience study for the period April 1, 2005 - March 31, 2010. For TRS, the actuarial assumptions used in the June 30, 2013 valuation are based on the results of an actuarial experience study for the period July 1, 2005 - June 30, 2010.

The long term rate of return on pension plan investments was determined using a building block method in which best estimate ranges of expected future real rates of return (expected returns net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long term expected rate of return by weighting the expected future real rates of return by each of the target asset allocation percentages and by adding expected inflation. Best estimates of the arithmetic real rates of return for each major asset class included in the target asset allocation are summarized below:

ERS TRS

Measurement Date March 31, 2016 June 30, 2015

Asset Type: Domestic Equity 7.30% 7.30% International Equity 8.55% 8.50% Real Estate 8.25% 5.00% Alternati~ ln~stments 0.00% 11.00% Domestic Fixed Income Securities 0.00% 1.50% Absolute Return Strategy ln~stment 6.75% 0.00% Opportunistic Funds 8.60% 0.00% Real Assets 8.65% 0.00% Private Equity 11.00% 0.00% Global Fixed Income Securities 0.00% 1.40% Bonds and Mortgages 4.00% 3.40% Cash 2.50% 0.00% Inflation-indexed Bonds 4.00% 0.00% Short-Term 0.00% 0.80%

35

E. Discount Rate

The discount rate used to calculate the total pension liability was 7.0% for ERS and 8% for TRS. The projection of cash flows used to determine the discount rate assumes that contributions from plan members will be made at the current contribution rates and that contributions from employers will be made at statutorily required rates, actuarially. Based upon the assumptions, the Systems' fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore the long term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

F. Sensitivity of the Proportionate Share of the Net Pension Liability to the Discount Rate

G.

Assumption ·

The following presents the District's proportionate share of the net pension liability calculated using the discount rate of 7.0% for ERS and 8% for TRS, as well as what the District's proportionate share of the net pension asset/liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.0% for ERS and 7% for TRS) or 1-percentage point higher (8.0% for ERS and 9% for TRS) than the current rate:

ERS 1% Current 1%

Decrease Assumption Increase (6.0%) (7.0%) (8.0%)

Employer's Proportionate Share of the Net Pension Asset (Liability) $ (979,453) (434,361) (26,218)

TRS 1% Current 1%

Decrease Assumption Increase (7%) (8%) (9%)

Employer's Proportionate Share of the Net Pension Asset (Liability) $ 120,007 1,759,304 3,361,961

Pension Plan Fiduciary Net Position

Detailed information about the pension plan's fiduciary net position is available in separately issued ERS and TRS financial reports.

H. Payables to the Pension Plan

For ERS, employer contributions are paid annually based on the System's fiscal year which ends on March 31 51

. Accrued retirement contributions as of June 30, 2016 represent the projected employer contribution for the period of April 1, 2016 through June 30, 2016 based on paid ERS wages multiplied by the employer's contribution rate, by tier. Accrued retirement contributions as of June 30, 2016 amounted to $39,468.

For TRS, employer and employee contributions for the fiscal year ended June 30, 2016 are paid to the System in September, October and November 2016 through a state aid intercept. Accrued retirement contributions as of June 30, 2016 represent employee and employer contributions for the fiscal year ended June 30, 2016 based on paid TRS wages multiplied by the employer's contribution rate, by tier and employee contributions for the fiscal year as reported to the TRS System. Accrued retirement contributions as of June 30, 2016 amounted to $361,361.

36

I. Restatement of Net Position

For the fiscal year ended June 30, 2015, the District implemented GASB Statement No. 68 Accounting and Financial Reporting for Pensions - Amendment to GASB Statement No. 27. The implementation of Statement No. 68 resulted in the reporting of an asset, deferred outflow of resources, liability and deferred inflow of resources related to the District's participation in the New York State Teachers' and Employees' retirement systems. The District's net position has been restated to remove prior year liabilities reported in the governmental funds as follows:

Net Position, Beginning of Year, As Previously Stated

GASB Statement No. 68 Implementation

Beginning Accrued Liability - TRS Beginning Accrued Liability - ERS

Net Position, Beginning of Year, Restated

NOTE 10- INTERFUND TRANSACTIONS

$

$

5,850,633

463,931 47,821

6,362,385

lnterfund receivables and payables, other than between governmental activities and fiduciary funds, are eliminated on the Statement of Net Position.

The District typically loans resources between funds for the purpose of mitigating the effects of transient cash flow issues.

All interfund payables are expected to be repaid within one year.

lnterfund lnterfund

Receivable Payable Revenues Expenditures

Governmental Funds

Major:

General Fund $ 387,368 206,014 50,000

Special Aid 111,618

Capital Projects 8,298

Debt Service 21

Non-Major:

School Lunch 65,636 50,000

Public Library

Fiducia[Y Funds

Agency 5, 177 1,000

Total $ 392,566 392,566 50,000 50,000

NOTE 11 - COMMITMENTS AND CONTINGENCIES

The District has received grants which are subject to audit by agencies of the state and federal governments. Such audits may result in disallowances and a request for a return of funds. Based on prior audits, the District's administration believes disallowances, if any, will be immaterial.

37

NOTE 12 - RISK MANAGEMENT

The District is exposed to various risks of loss related to torts, theft, damage, injuries, errors and omissions, natural disasters, and other risks. These risks are covered by commercial insurance purchased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past two years. ·

NOTE 13- OTHER POST-EMPLOYMENT BENEFITS-GASS STATEMENT 45

School District

In addition to providing pension benefits, the District also provides health care benefits for retired employees, their dependents, and certain survivors. Substantially all of the District's employees may become eligible for those benefits if they reach normal retirement age while working for the District. Prior to 2009, the District recognized the cost of providing post-retirement health insurance benefits by expensing those costs when paid.

During 2009, the District implemented GASB Statement No. 45, Accounting and Financial Reporting by Employers for Post-employment Benefits Other Than Pensions, prospectively. This statement establishes standards for the recognition, measurement, and display of other post-employment benefits (retiree health insurance), expenses, and related liabilities and note disclosure.

Plan Description

The District administers its Retiree Medical Plan (the Plan), as a single-employer defined benefit other PostEmployment Benefit (OPEB) plan. The Plan provides for the continuation of medical benefits to certain qualifying retirees of the District and their spouses, and can be amended by action of the District. The Plan does not issue a stand-alone financial report since there are no assets legally segregated for the sole purpose of paying benefits under the Plan.

Funding Policy

The obligations of the Plan members, employers, and other entities are established by employment · agreements. The required contribution rates of the employer and the members varies depending on the applicable agreement covering the retiree, the retiree's hiring date, and number of years of service to the District. The District currently contributes enough money to the plan to satisfy current obligations on a pay-asyou-go basis. For 2016 and 2015, the District contributed approximately $27,126 and $27,684, respectively for current premiums. The costs of administering this plan are paid by the District.

Funded Status and Funding Progress

The schedule of funding progress presents multi-year (when available) trend information that is useful in determining whether the actuary's value of Plan assets, if any, is increasing or decreasing over time relative to the actuarial accrued liability. The following table sets forth the actuarial accrued liability and funded status of the Plan as of July 1, 2015, the latest valuation date.

38

Actuarial Accrued Liability (AAL)

Actuarial accrued liability

Actuarial value of plan assets

Unfunded Actuarial Accrued Liability (UAAL)

Funded ratio

Annual covered payroll

Ratio of unfunded actuarial accrued liability to

covered payroll

2015 normal cost

$ 456,529

$ 456,529

0%

$ 3,205,861

14.20%

24,329

The following table summarizes the amortization calculation of the UAAL as of the latest valuation date:

UAAL

Amortization period (years)

Amortization discount rate

Present value factor

2015 UAAL amortization amount

Annual OPEB Cost and Net OPEB Obligation

$ 456,529

30

4.50%

17.9837

18,621

The District's annual OPEB cost (expense) is calculated based on the Annual Required Contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfounded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the District's annual OPEB cost for 2016:

Normal cost

·Amortization of UAAL

Interest

ARC

Interest on OPEB obligation

Adjustment to ARC

OPEB expense

39

$

$

24,329

18,621

42,950

1,933

44,883

12,203

(11,559)

45,527

The following table reconciles the District's OPES obligation at June 30, 2016:

Net OPES obligation at beginning of year

2016 OPES expense

2016 OPES contributions

Net OPES obligation at end of year

Less: estimated current portion of OPES obligation

Estimated long-term portion of OPES obligation

Percentage of expense contributed

Actuarial Methods and Assumptions

$

$

271, 177

45,527

(27, 126)

289,578

289,578

62.00%

Actuarial valuation of an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revisions as actual results are compared with past expectations and new estimates are made about the future. Projections of benefits for financial reporting purposes are based on the substantive plan and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs (if any) 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.

The actuarial cost method used to calculate the costs of the Plan for age, disability, vested and surviving spouse's benefits is the Projected Unit Credit Actuarial Cost Method. Under this method, each participant's projected benefit is calculated at all possible ages based on the Plan provisions as well as the initial data and actuarial assumptions. For active participants, that AAL is determined by pro-rating the projected benefit based upon service accrued to the valuation date divided by service projected to be accrued at the first age of benefit eligibility. The normal cost is determined by dividing the projected benefit by service projected to be accrued at the first age of benefit eligibility.

The measurement date for the calculation was July 1, 2015, and the discount rate utilized was 4.5%. No salary increases were assumed since benefits are now based on compensation. Health care costs for the governmental activities were assumed to increase as follows:

Year

2016

2017

2018

2019

2020

2021

2022

2023+

Trend Increase

Medical Trend Rate

40

8.50%

8.00%

7.50%

7.00%

6.50%

6.00%

5.50%

5.00%

NOTE 14 - ADDITIONAL DISCLOSURES

A. Budget Modifications

The 2015-2016 operating budget is summarized as follows:

Original Adopted Budget $ June 30, 2015, Carryover Encumbrances

Revised Budget $

B. Excess Bond Proceeds

9, 100,234

67,093

9, 167,327

As of June 30, 2016, the Capital Projects fund balance includes $10,220 of unspent bond borrowings.

C. Deficit Fund Balance

As of June 30, 2016, the Capital Projects Fund had a deficit fund balance of $219,052. This deficit will be funded by future serial bond issuance.

NOTE 15- SUBSEQUENT EVENTS

Management has evaluated subsequent events through September 20, 2016, the date on which the financial statements were available to be issued.

41

REQUIRED SUPPLEMENTARY INFORMATION

42

Actuarial Actuarial Date Assets

July 01, 2015 July 01, 2014 July 01, 2013 July 01, 2012 July 01, 2011

BELFAST CENTRAL SCHOOL DISTRICT REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF FUNDING PROGRESS FOR THE YEAR ENDED JUNE 30, 2016

(AAL) Actuarial Unfunded Accrued AAL Funded Liability (UAAL) Ratio

456,529 456,529 0% 454,718 454,718 0% 899,632 899,632 0% 899,176 899,176 0%

1,058,912 1,058,912 0%

Supplemental Schedule 1

UAALasa Percentage

Covered of Covered Payroll Payroll

3,205,861 14.20% 3,112,486 14.60% 3,164,732 28.40% 3,072,055 29.30% 3,225,430 32.80%

The accompanying independent auditors' report should be read in conjunction with these financial statements.

43



SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE • BUDGET (NON-GAAP BASIS) AND ACTUAL ·GENERAL FUND


Original Final Actual Budget Budget (Budgetary Basis)

REVENUES Local Sources

Real Property Taxes $ 1,337,132 1,337,132 1,332,622 Real Property Tax Items 426,500 426,500 429,407 Charges for Services 1,900 1,900 40,353 Use of Money and Property 3,500 3,500 3,967 Sales of Property and Compensation for Loss 400 400 9,772 Miscellaneous 113,861 113,861 111,929

State Sources 7,033,293 7,033,293 7,142,194 Medicaid Reimbursement 25,000 25,000 60,729

Total Revenues 8,941,586 8,941,586 9,130,973

OTHER FINANCING SOURCES lnterfund Transfers In 23,648 23,648

Total Revenues and Other Financing Sources 8,965,234 8,965,234 9,130,973

APPROPRIATED FUND BALANCE 135,000 202,093

Total Revenues, Other Financing Sources and Appropriated Fund Balance 9,100,234 9,167,327

Original Final Actual Year-end Budget Budget (Budgetary Basis) Encumbrances

EXPENDITURES General Support

Board of Education 21,587 22,629 20,454 117 Central Administration 189,436 200,132 197,006 Finance 204,229 204,617 203,826 52 Staff 132,341 132,146 127,329 Central Services 440,532 475,487 438,106 2,926 Special Items 262,366 250,750 242,017

Total General Support 1,250,491 1,285,761 1,228,738 3,095

Instruction Administration & Improvement 302,927 303,227 221,617 Teaching - Regular School 2,250,083 2,277,556 2,186,675

135 34,1.89

Programs for Students with Handicapping Conditions 864,098 798,528 666,776 109 Occupational Education 193,400 181,713 167,525 Teaching - Special Schools 10,380 10,380 5,580 Instructional Media 196,903 220,020 215,400 3,352 Pupil Services 333,720 382,843 338,487 4,569

Total Instruction 4,151,511 4,174,267 3,802,060 42,354

Pupil Transportation 535,418 595,380 518,518 4,130

Community Service 505

Employee Benefits 1,675,076 1,623,676 1,470,562

Debt Service Principal 955,000 955,000 955,000 Interest 482,738 482,738 482,738

Total Expenditures 9,050,234 9, 117,327 8,457,616 49,579

OTHER FINANCING USES lnterfund Transfers Out 50,000 50,000 50,000

Total Expenditures and Other Financing Uses 9,100,234 9, 167,327 8,507,616 49,579

Net Change in Fund Balance 623,357

Fund Balance, Beginning 862,140 862,140 862, 140 Fund Balance, Ending $ 862,140 862,140 1,485,497

Final Budget Variance With

Budgetary Actual

(4,510) 2,907

38,453 467

9,372 (1,932)

108,901 35,729

189,387

(23,648)

165,739

Final Budget Variance With

Budgetary Actual And Encumbrances

2,058 3,126

739 4,817

34,455 8,733

53 928

81,475 56,692

131,643 14, 188 4,800 1,268

39,787 329,853

72,732

505

153,114

610, 132

610,132


44



SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION ASSET/LIABILITY FOR THE YEAR ENDED JUNE 30, 2016

2015 2016 NYSLRS Pension Plan

District's proportion of the net pension liability 0.0029017% 0.0027063%

District's proportionate share of the net pension liability $ 98,027 $ 434,361

District's covered-employee payroll $ 994,897 $ 852,272

District's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 9.85% 50.97%

Plan fiduciary net position as a percentage of the total pension liability 97.90% 90.70%

NYSTRS Pension Plan District's proportion of the net pension asset 0.0173450% 0.0169380%

District's proportionate share of the net pension asset $ 1,932, 128 $ 1,759,304

District's covered-employee payroll $ 2,544,268 $ 2,646,733

District's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 75.94% 66.47%

Plan fiduciary net position as a percentage of the total pension liability 111.48% 97.90%


45


BELFAST CENTRAL SCHOOL DISTRICT REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF DISTRICT CONTRIBUTIONS


2015 NYSLRS Pension Plan

Statutorily Required Contributions $ 135,219

Contributions In Relation To Statutorily Required Contributions 135,219

Contribution Deficiency (Excess) "$

Employer's Covered-Employee Payroll $ 994,897

Contributions As A Percentage of Covered-Employee Payroll 13.59%

NYSTRS Pension Plan

Statutorily Required Contributions $ 429,679

Contributions In Relation To Statutorily Required Contributions 429,679

Contribution Deficiency (Excess) $

Employer's Covered-Employee Payroll $ 2,544,268

Contributions As A Percentage of Covered-Employee Payroll 16.89%

2016

138,613

138,613

852,272

16.26%

460,724

460,724

2,646,733

17.41%


46

SUPPLEMENTAL SCHEDULES

47


SCHEDULES OF CHANGE FROM ADOPTED BUDGET TO FINAL BUDGET

AND THE REAL PROPERTY TAX LIMIT


CHANGE FROM ADOPTED BUDGET TO FINAL BUDGET

Adopted Budget

Add: Prior Year's Encumbrances

Original budget

Budget Revisions:

Final Budget

Next year's budget is a voter-approved budget $ 9,386,906


$ 9,100,234

67,093

9,167,327

$ 9,167,327 ===========

SECTION 1318 OF REAL PROPERTY TAX LAW LIMIT CALCULATION

*

2015-2016 Voter-Approved Expenditure Budget

Maximum Allowed (4% of 2016-2017 budget) $ 375,476 =======

General Fund Fund Balance Subject to Section 1318 of Real Property Tax Law*:

Unrestricted fund balance:

Assigned Fund Balance

Unassigned Fund Balance

Total Unrestricted Fund Balance

Less:

Appropriated Fund Balance

Encumbrances Included in Assigned Fund Balance Total Adjustments

General Fund Fund Balance Subject to Section 1318 of Real Property Tax Law

Actual percentage

$ 124,579

960,918

$ 1,085,497

$ 75,000

49,579

$ 124,579

Per Office of the State Comptroller's "Fund Balance Reporting and Governmental Fund Type Definitions", Updated

April 2011 (Originally Issued November 2010), the portion of [General Fund] fund balance subject to Section 1318

$

of the Real Property Tax Law is: unrestricted fund balance (i.e., the total of the committed, assigned, and unassigned

classifications), minus appropriated fund balance, amounts reserved for insurance recovery, amounts reserved for tax reduction, and encumbrances included in committed and assigned fund balance.

960,918

10.24%


48


BELFAST CENTRAL SCHOOL DISTRICT COMBINING SCHEDULE OF BALANCE SHEETS

NON-MAJOR GOVERNMENTAL FUNDS AS OF JUNE 30, 2016

School Public Lunch Library Fund Fund


Unrestricted $ 3,884 75,830 Receivables

State and Federal Aid Receivable, Net 9,710 Inventories 9,439

Total Assets 23,033 75,830


Accounts Payable 36 1,456 Accrued Liabilities 791 Due to Other Funds 65,636 Due to Other Governments 158 Due to Employees' Retirement System 3,349

Unearned Credits Unearned Revenue - Other 5,329

Total Liabilities 69,970 6,785

FUND BALANCES Nonspendable:

Inventories 9,440 Assigned to:

Public Library 69,045 Unassigned (Deficit) (56,377)

Total Fund Balances (Deficit) (46,937) 69,045

Total Liabilities and Fund Balances $ 23,033 75,830

Total Non-Major

Funds

79,714

9,710 9,439

98,863

1,492 791

65,636 158

3,349

5,329

76,755

9,440

69,045 (56,377)

22,108

98,863


49


BELFAST CENTRAL SCHOOL DISTRICT COMBINING SCHEDULE OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2016

School Public Lunch Library Fund Fund

REVENUES Real Property Tax $ 42,800 Charges for Services 923 Use of Money and Property 5 8 Sale of Property 171 Miscellaneous 27,505 1,230 State Sources 5,163 1,347 Federal Sources 156,331 Sales 68,891

Total Revenues 257,895 46,479

EXPENDITURES General Support 117,630 Community Services 44,422 Employee Benefits 70,784 2,168 Cost of Sales 122,905 Capital Outlay

Total Expenditures 311,319 46,590

Excess (Deficiency) of Revenues Over Expenditures (53,424) (111)

OTHER FINANCING SOURCES AND (USES) lnterfund Transfers In 50,000

Net Other Financing Sources (Uses) 50,000

Excess (Deficiency) of Revenues and Other Financing Sources Over Expenditures and

Other Financing Uses (3,424) (111)

Fund Balance (Deficit), Beginning of Year (43,513) 69,156

Fund Balance (Deficit), End of Year $ (46,937) 69,045

Total Non-Major

Funds

42,800 923

13 171

28,735 6,510

156,331 68,891

304,374

117,630 44,422 72,952

122,905

357,909

(53,535)

50,000

50,000

(3,535)

25,643

22,108

. The accompanying independent auditors' report should be read in conjunction with these financial statements.

50


BELFAST CENTRAL SCHOOL DISTRICT , SCHEDULE OF NET INVESTMENT IN CAPITAL ASSETS

AS OF JUNE 30, 2016

Capital Assets, Net

Deduct:

Bond Anticipation Notes Payable Short-Term Portion of Bonds Payable Long-Term Portion of Bonds Payable

Net Investment in Capital Assets

218,444 1,000,000 8,395,000

$ 14,923,640

9,613,444

$ 5,310,196 =====


51


BELFAST CENTRAL SCHOOL DISTRICT SCHEDULE OF PROJECT EXPENDITURES

CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2016

Ex[!enditures Methods of Financing Fund Original Revised Prior Current Unexpended Proceeds of State Local Balance

A[![!rO[!riation A[![!rO[!riation Years Year Total Balance Obligations Aid Sources June 30, 2016 Project Title

EXCEL $ 9,977,550 10,127,550 10,034,022 10,034,022 93,528 10,084,810 332,299 92,337 10,220

Steel Building 18,750 18,750 19,894 19,894 (1, 144) 19,894

Bus Garage 2,530,896 3,383,040 2,700,200 218,444 2,918,644 464,396 3,000,000 (226,379)

Energy Performance Contract 502,167 502, 167 2,893 2,893 499,274 (2,893)

Totals $ 13,029,363 14,031,507 12,754,116 221,337 12,975,453 1,056,054 13,104,704 332,299 92,337 (219,052) ••

**Fund Balance includes unspent proceeds at June 30, 2016


52

INTERNAL CONTROL AND COMPLIANCE

53

Cathie J . Bridges, CPA Kenneth S. Frank, CPA Roger J. Lis, Jr., CPA Denise D. Veloski , CPA Julie L. Jagoda-Booth , CPA Kathryn A. Larracuente, CPA

II II R. A. MERCER & CO., P.C.


Cattaraugus, NY 14719 Phone 7 16-257-95 11 Fax 7 16-257-9513

www.ramercer.com

Raymond A. Mercer. CPA 1931-1983

Robe1t W. Irwin, CPA

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL

STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Education Belfast Central School District Belfast, New York 14711

We have audited , in accordance with the auditing standards generally accepted in the United States of America and the standards appl icable to financial aud its contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund , and the aggregate remaining fund information of Belfast Central School District, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise Belfast Central School District's basic financial statements, and have issued our report thereon dated September 20, 2016.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Belfast Central School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opin ions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Belfast Central School District's internal control. Accordingly , we do not express an opinion on the effectiveness of Belfast Central School District's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis . A material weakness is a deficiency, or a combination of deficiencies, in internal control , such that there is a reasonable possibil ity that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, sign ificant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

CATTARAUGUS 716-257-9511


Member of

, Al€ PAJ SARDINIA

716-496-5028 SPRINGVILLE

716-592-0038

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Belfast Central School District's financial statements are free from material misstatement, we performed tests of its compl iance with certain provisions of laws, regulations , contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance of noncompliance or other matter that is required to be reported under Government Auditing Standards and is described in the accompanying schedule of findings and responses as item 2016-01 .

District's Response to Finding

The District's response to the finding identified in our audit is described in the accompanying schedule of find ings and responses . The District's response was not subjected to the auditing procedures applied in the audit of the financia l statements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing , and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, th is communication is not suitable for any other purpose.


55

R.A. MERCER & CO., P.C.

R-A (V\~<! . U>I P.c._.

BELFAST CENTRAL SCHOOL DISTRICT SCHEDULE OF FINDINGS AND RESPONSES

JUNE 30, 2016

2016-01 - Unassigned Fund Balance

Conditions and criteria: New York State Property Tax Law 1318 limits the amount of unexpended surplus funds a school district can retain to no more than 4% of the District's General Fund budget for the ensuing fiscal year. At June 30, 2016, the District's unassigned fund balance amounted to 10.24% of the 2016-2017 General Fund budget.

Effect: The District is in violation of New York State Property Tax Law 1318.

Auditors' Recommendation: The District should continue to monitor fund balance during the fiscal year and consider reservation of fund balance options as permitted by New York State.

District's Response: The District will continue to monitor fund balance and will review all allowed reservation options as al lowed by New York State.

56

•.

EXTRACLASSROOM ACTIVITY FUND

57

Cathie J. Bridges, CPA Kenneth S. Frank, CPA Roger J. Lis, Jr. , CPA Denise D. Veloski, CPA Julie L. Jagoda-Booth , CPA Kathryn A. Lam1cuente, CPA

To the President and Members of the Board of Education

Belfast Central School District Belfast, New York 14711

II II R. A. MERCER & CO., P.C.


Cattaraugus, NY 14 719 Phone 716-257-95 11 Fax 716-257-9513

www.ramcrcer.com


Raymond A. Mercer. CPA 1931 -1983

Robert W. Irwin, CPA

We have audited the accompanying statements of assets and liabilities arising from cash transactions and the statement of revenues collected and expenses paid of the Extraclassroom Activity Fund , a component unit of the Belfast Central School District as of and for the year ended June 30, 2016.

Management's Responsibility for the Financial Statements

Management is responsib le for the preparation and fair presentation of these financial statements in accordance with the cash basis of accounting; this includes the design, implementation, and maintenance of internal control re levant to the preparation and fa ir presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opin ion on these financial statements based on our audit. Except as expla ined in the following paragraph , we conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards requ ire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain aud it evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the aud itors' 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 aud itor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating

CAITARAUGUS 716-257-9511


Mtmberof

,Ale PA) SARDINIA 716-496-5028

SPRINGVILLE 716-592-0038

the appropriateness of accounting principles used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement.

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

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the recorded cash transactions of the Extraclassroom Activity Fund of Belfast Central School District as of and for the year ended June 30, 2016, on the basis of accounting described in Note 1.

Basis of Accounting

We draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financial statements are prepared on the basis of cash receipts and disbursements, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.


59

R. A. MERCER & CO., P.C.

~ N\lAC.AA-a... lq Re...


Assets

BELFAST CENTRAL SCHOOL DISTRICT STATEMENT OF ASSETS, LIABILITIES

AND FUND BALACE - CASH BASIS EXTRACLASSROOM ACTIVITY FUND

AS OF JUNE 30, 2016

Cash - Checking $ 64,698

Total Assets 64,698

Liabilities and Fund Balance

Due to Other Funds

Total Liabilities

Fund Balance 64,698

Total Liabilities and Fund Balance $ 64,698

See accompanying note to extraclassroom activity fund financial statements.

60


BELFAST CENTRAL SCHOOL DISTRICT STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS

EXTRACLASSROOM ACTIVITY FUND . FOR THE YEAR ENDED JUNE 30, 2016

Extra classroom Balances Total Total Accounts 7/1/15 Receipts Disbursements

Class of 2013 $ 2,355 2,355 Class of 2014 836 836 Class of 2015 1,028 2,383 1,175 Class of 2016 8,573 7,570 11,200 Class of 2017 5,745 6,390 3,016 Class of 2018 2,276 4,366 1,957 Class of 2019 6,059 231 Student Council 4,257 5,452 3,991 National Honor Society 967 2,236 1,888 Middle School 16,802 25,901 22, 158 Band 4,467 56 211 Choir 5,166 211 Yearbook 1,951 6,695 7,604

Totals $ 541423 671108 561833

Balances 6/30/16

2,236 4,943 9,119 4,685 5,828 5,718 1,315

20,545 4,312 4,955 1,042

641698

See accompanying note to extraclassroom activity fund financial statements.

61

BELFAST CENTRAL SCHOOL DISTRICT NOTE TO FINANCIAL STATEMENTS

EXTRACLASSROOM ACTIVITY FUND AS OF AND FOR THE YEAR ENDED JUNE 30, 2016

NOTE 1 - ACCOUNTING POLICY

The transactions of the Extraclassroom Activity Fund are independent of the reporting entity of Belfast Central School District. Consequently, such transactions are not included in the financial statements of the District. The Board of Education exercises general oversight of these funds, therefore, as of and for the year ended June 30, 2016, the cash and corresponding liabilities of the Extraclassroom Activity Fund are being included in the Agency Fund on the Statement of Fiduciary Net Position.

The accounts of the Extraclassroom Activity Fund of Belfast Central School District are maintained on a cash basis, and the statement of cash receipts and disbursements reflects only cash received and disbursed. Therefore, receivables (other than returned bank items) and payables, inventories, Icing-lived assets, and accrued income and expenses (other than sales tax), which would be recognized under generally accepted accounting principles, and which may be material in amount, are not recognized in the accompanying financial statements.

62

Student Records

BELFAST CENTRAL SCHOOL DISTRICT EXTRACLASSROOM ACTIVITY FUND FINDINGS AND RECOMMENDATIONS FOR THE YEAR ENDED JUNE 30, 2016

We noted instances where student disbursement records did contain a copy of the activity minutes authorizing approval of the disbursement as required by District policy.

We noted an instance where a student treasurer did not sign the payment order on a disbursement made.

We recommend District policy regarding disbursement be carefully monitored and followed for all transactions made.

Central Treasurer

The current procedures in place for processing disbursements of the Extraclassroom Funds does not include oversight by the Board appointed Central Treasurer. As the Central Treasurer is charged with oversight of all Extraclassroom Activities financial data, it is recommended that procedures be implemented to include the Central Treasurer in the disbursement process.

63

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