$15,400,000 general obligation bonds, series 2016a school …
TRANSCRIPT
NEW ISSUE - BOOK-ENTRY-ONLY RATINGS:
NON-BANK QUALIFIED Moody’s: Aa1/Aa2
(See “RATINGS” herein)
Assuming the School District’s continued compliance with certain covenants, in the opinion of Bond Counsel, interest on the Bonds
is excludable from gross income for federal income tax purposes under existing statutes, regulations and court decisions. Interest
on the Bonds is not an item of tax preference for purposes of an individual’s alternative minimum tax. Under the present laws of
the State of South Carolina, the Bonds and the interest thereon will be exempt from all South Carolina income taxation except
estate or other transfer taxes and certain franchise tax. Such opinion is subject to certain limitations and conditions described in
the Section of this Official Statement entitled “TAX EXEMPTION AND OTHER TAX MATTERS.”
$15,400,000 GENERAL OBLIGATION BONDS, SERIES 2016A
SCHOOL DISTRICT OF OCONEE COUNTY, SOUTH CAROLINA
Dated: Date of Delivery Due: March 1, as shown below
The $15,400,000 General Obligation Bonds, Series 2016A (the “Bonds”) will be general obligation debt of the
School District of Oconee County, South Carolina (the “School District”), and as such the full faith, credit, resources
and taxing power of the School District will be irrevocably pledged for the payment thereof. Interest on the Bonds will
be payable semiannually on March 1 and September 1 of each year, until the Bonds mature, commencing September 1,
2016. The principal of the Bonds will be payable at the corporate trust office of Regions Bank (the “Paying Agent”) in
Atlanta, Georgia. Payment of interest accruing on the Bonds will be made by check or draft mailed by the Paying
Agent to the registered owner thereof. The Bonds will be issued in fully-registered form, in denominations of $5,000 or
any integral multiple thereof, in the name of Cede & Co., as nominee of The Depository Trust Company, New York,
New York, which will act as securities depository for the Bonds under a book-entry-only system, as described herein.
So long as the Bonds are held in book-entry-only form, beneficial owners of the Bonds will not receive physical
delivery of the Bonds. The Bonds will be dated their date of delivery, and will mature serially in successive annual
installments on March 1 in each of the years and in the principal amounts as shown below. The Bonds will not be
subject to redemption prior to their stated maturities.
MATURITY SCHEDULE
Year
Principal
Amount
Interest
Rate
Yield
CUSIP
No.
Year
Principal
Amount
Interest
Rate
Yield
CUSIP
No.
2017 $4,800,000 3.00% 0.50% 675600QC7 2021 $1,505,000 5.00% 0.97% 675600QG8
2018 1,300,000 4.00 0.63 675600QD5 2022 1,585,000 5.00 1.20 675600QH6
2019 1,365,000 5.00 0.75 675600QE3 2023 1,665,000 5.00 1.39 675600QJ2
2020 1,430,000 5.00 0.85 675600QF0 2024 1,750,000 5.00 1.56 675600QK9
The Bonds are offered when, as and if issued and subject to the approving opinion as to legality of McNair
Law Firm, P.A., Bond Counsel, Columbia, South Carolina. Compass Municipal Advisors, LLC, Columbia, South
Carolina, is acting as financial advisor to the School District with respect to the Bonds. It is expected that the Bonds in
definitive form will be delivered to DTC and be available for credit to the account of the DTC Participants on or about
March 8, 2016.
This cover page contains certain information for quick reference only. It is not a summary of the issue.
Investors should read the entire Official Statement to obtain information essential to the making of an informed
investment decision.
Dated: February 23, 2016.
This Official Statement speaks only as of its date, and the information contained herein is subject to change.
This Official Statement does not constitute an offering of any security other than the original offering of the
Bonds identified on the cover. No dealer, broker, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this Official Statement and, if given or
made, such other information or representations must not be relied upon as having been authorized by the School
District. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there
shall not be any sale of Bonds by any person in any jurisdiction in which it is unlawful to make such offer,
solicitation or sale.
For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, this document as the same may be supplemented or corrected by the
School District from time to time, may be treated as an “official statement” with respect to Bonds that is deemed
final as of the date hereof (or of any such supplement or correction) by the School District.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The
Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its
responsibilities under the federal securities laws as applied to the facts and circumstances of this transaction, but the
Underwriter does not guarantee the accuracy or completeness of such information.
The School District agrees that, no more than seven business days after the date of execution of a purchase
contract with the Underwriter and, in any event, in sufficient time to accompany confirmations requesting payment
from customers, it shall provide without cost to the Underwriter copies of this Official Statement in an amount
sufficient to permit the Underwriter to comply with Reg. §240.15c2-12(b)(4) promulgated by the Securities and
Exchange Commission and with the rules of the Municipal Securities Rulemaking Board.
Upon execution and delivery, the Bonds will not be registered under the Securities Act of 1933 as amended
or any state securities law, and will not be listed on any stock or other securities exchange. Neither the Securities
and Exchange Commission nor any other federal, state or other governmental entity or agency will have passed upon
the accuracy or adequacy of this Official Statement or approved Bonds for sale. Any representation to the contrary is
a criminal offense.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT OR ABOVE
THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET, AND SUCH STABILIZING MAY
BE DISCONTINUED AT ANY TIME.
Certain information contained in this Official Statement may have been obtained from sources other than
records of the School District and, while believed to be reliable, is not guaranteed as to completeness or accuracy.
This Official Statement is not to be construed as a contract or agreement between the School District and the
underwriter and the purchasers or owners of any of Bonds. The information and expressions of opinion in this
Official Statement are subject to change, and neither the delivery of this Official Statement nor any sale made under
such document shall create any implication that there has been no change in the affairs of the School District since
the date hereof.
References herein to laws, rules, regulations, resolutions, agreements, reports, and other documents do not
purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by
reference to the particular document, the full text of which may contain qualifications of and exceptions to statements
made herein. Where full texts have not been included as appendices to this Official Statement, they will be furnished
on request.
BOARD OF TRUSTEES
THE SCHOOL DISTRICT OF OCONEE COUNTY
SOUTH CAROLINA
Andrew P. Inabinet, Chairman
Jerry C. Lee, Vice Chairman
Denise P. McCormick, Clerk
Rosemary Bailes
Buddy G. Herring
Dr. Michael Thorsland
Superintendent
Gloria Moore
Executive Director of Financial Services
Bond Counsel
McNair Law Firm, P.A.
Columbia, South Carolina
Financial Advisor
Compass Municipal Advisors, LLC
Columbia, South Carolina
TABLE OF CONTENTS
INTRODUCTION ......................................................................................................................................................... 1
THE BONDS ................................................................................................................................................................. 1 Description ...................................................................................................................................................... 1 Redemption Provisions .................................................................................................................................... 1 Book-Entry-Only System ................................................................................................................................ 1 Authorization ................................................................................................................................................... 4 Purpose of Bonds ............................................................................................................................................ 4 Security ............................................................................................................................................................ 4 Defeasance ...................................................................................................................................................... 6
THE SCHOOL DISTRICT............................................................................................................................................ 7 Organization of the School District ................................................................................................................. 7 School District Employees .............................................................................................................................. 9 Education Finance Act of 1977 ....................................................................................................................... 9 Education Improvement Act of 1984 ............................................................................................................ 10 Adjustments to State Funds ........................................................................................................................... 11 Retirement Plan ............................................................................................................................................. 11 Compensated Absences ................................................................................................................................. 12 Insurance ....................................................................................................................................................... 12 Public School Enrollment in the School District ........................................................................................... 13
DEBT STRUCTURE .................................................................................................................................................. 13 Legal Debt Limit ........................................................................................................................................... 13 Outstanding General Obligation Indebtedness .............................................................................................. 14 Outstanding General Obligation Indebtedness by Issue ................................................................................ 14 Composite Debt Service ................................................................................................................................ 14 Long Range Building Plan ............................................................................................................................ 15 Legal Debt Limit of Counties, Incorporated Municipalities and Special Purpose Districts .......................... 15 Overlapping Debt .......................................................................................................................................... 15 Miscellaneous Debt Information ................................................................................................................... 16
CERTAIN FISCAL MATTERS .................................................................................................................................. 16 Property Taxation and Assessment ................................................................................................................ 16 Budget and Tax Collection Procedure ........................................................................................................... 17 2015-2016 Budget ......................................................................................................................................... 18 State Tax Reform ........................................................................................................................................... 18 Payments in Lieu of Taxes ............................................................................................................................ 21 Assessed Value of Taxable Property ............................................................................................................. 22 Assessed Value and Estimated Market Value of Taxable Property ............................................................... 22 Tax Rates ....................................................................................................................................................... 23 Tax Collections ............................................................................................................................................. 23 Ten Largest Taxpayers in the School District ............................................................................................... 23
FINANCIAL INFORMATION ................................................................................................................................... 24 Financial Statements ...................................................................................................................................... 24
ECONOMIC CHARACTERISTICS AND DATA ..................................................................................................... 25 General .......................................................................................................................................................... 25 Agriculture and Forestry ................................................................................................................................ 25 Commerce and Industry ................................................................................................................................. 25 Capital Investment ......................................................................................................................................... 27 Labor Force ................................................................................................................................................... 28
Retail Sales .................................................................................................................................................... 29 Largest Employers ......................................................................................................................................... 29 Construction Activities .................................................................................................................................. 30 Per Capita Personal Income........................................................................................................................... 30 Median Family Income .................................................................................................................................. 30 Unemployment Rates..................................................................................................................................... 31 Population Growth ........................................................................................................................................ 31 Utilities .......................................................................................................................................................... 32 Transportation ............................................................................................................................................... 32 Healthcare Services ....................................................................................................................................... 33 Other Services ............................................................................................................................................... 33 Higher Education ........................................................................................................................................... 33 Recreation and Tourism ................................................................................................................................ 34 Financial Institutions ..................................................................................................................................... 34
TAX EXEMPTION AND OTHER TAX MATTERS ................................................................................................ 34 Internal Revenue Code of 1986 ..................................................................................................................... 34 Other Tax Matters ......................................................................................................................................... 35 South Carolina Taxation ................................................................................................................................ 35 Premium Bonds ............................................................................................................................................. 35
LEGAL MATTERS ..................................................................................................................................................... 35 Opinion .......................................................................................................................................................... 35 Litigation ....................................................................................................................................................... 36 United States Bankruptcy Code ..................................................................................................................... 36
RATINGS .................................................................................................................................................................... 36
UNDERWRITING ...................................................................................................................................................... 37
CERTIFICATE CONCERNING THE OFFICIAL STATEMENT ............................................................................. 37
FINANCIAL ADVISOR ............................................................................................................................................. 37
CONTINUING DISCLOSURE CERTIFICATE ........................................................................................................ 37
MISCELLANEOUS .................................................................................................................................................... 38
Appendix A - Audited financial statements of the School District for the fiscal year ended June 30, 2015.
Appendix B - Form of Legal Opinion of McNair Law Firm, P.A.
Appendix C - Form of Continuing Disclosure Certificate
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SUMMARY STATEMENT
The following Summary Statement is qualified in its entirety by the more detailed information and
financial statements contained elsewhere in this Official Statement and the Appendices hereto (collectively, the
“Official Statement”). The offering of the Bonds to potential investors is made only by means of this entire
Official Statement, and no person is authorized to detach this Summary Statement from the Official Statement
or to otherwise use it without the entire Official Statement.
The Issuer The School District is coterminous with Oconee County (the “County”) and has a land
area of approximately 625 square miles. The School District currently operates eleven
elementary schools, three middle schools, four high schools, and three specialized
schools (an alternative school, a career center, and adult education). All the
elementary, middle, and high schools, along with the career center, are accredited and
in good standing with the Southern Association of Colleges and Schools Council on
Accreditation and School Improvement (SACS CASI), an accreditation division of
AdvancED, with the State Department of Education.
The Bonds The $15,400,000 General Obligation Bonds, Series 2016A (the “Bonds”) of the
School District are being issued as fully-registered bonds, initially registered in book-
entry-only form as more particularly described under the caption “THE BONDS –
Book-Entry-Only System” in principal amounts of $5,000 or any integral multiple
thereof not exceeding the principal amount of the Bonds maturing each year. See
“THE BONDS – Description.”
Dated Date and
Date of Delivery
The Bonds will be dated the date of their delivery. It is expected that the Bonds will
be available for delivery in definitive form on or about March 8, 2016.
Interest Payments Interest on the Bonds is payable semiannually on March 1 and September 1,
commencing September 1, 2016, by check or draft of the Paying Agent mailed to the
person in whose name each Bond is registered. See “THE BONDS – Description.”
Maturities The Bonds mature serially on March 1, 2017, through March 1, 2024, as indicated on
the front cover hereof.
Redemption The Bonds will not be subject to redemption prior to their stated maturities.
Security The Bonds will constitute binding general obligations of the School District, and the
full faith, credit, resources and taxing power of the School District are irrevocably
pledged for the payment of the Bonds. There shall be levied and collected annually in
the same manner as county taxes are levied and collected, a tax, without limit, on all
taxable property in the School District sufficient to pay the principal and interest on
the Bonds as they mature and to create such sinking fund as may be necessary
therefor.
Purpose The proceeds from the sale and issuance of the Bonds will be used for: (i) capital
projects in accordance with the School District’s long-term capital plan; (ii) paying
costs of issuance of the Bonds, and (iii) such other lawful purposes as the Board of
Trustees of the School District may determine.
ii
Tax Status of
Interest on the
Bonds
Assuming the School District’s continued compliance with certain covenants, in the
opinion of Bond Counsel, interest on the Bonds is excludable from gross income for
federal income tax purposes under existing statutes, regulations and court decisions.
Interest on the Bonds is not a specific item of tax preference for purposes of an
individual’s alternative minimum tax. Under the present laws of the State of South
Carolina, the Bonds and the interest thereon will also be exempt from all taxes in the
State of South Carolina except estate or other transfer and certain franchise taxes.
Such opinion is subject to certain limitations and conditions described in the forms of
opinion of Bond Counsel, set forth in Appendix B, and under the caption “TAX
EXEMPTION AND OTHER TAX MATTERS.”
Professionals
Involved in the
Offering
Regions Bank, Atlanta, Georgia, is serving as Registrar/Paying Agent for the Bonds.
McNair Law Firm, P.A., Columbia, South Carolina, is serving as Bond Counsel
(“Bond Counsel”). Compass Municipal Advisors, LLC, Columbia, South Carolina, is
serving as Financial Advisor.
Continuing
Disclosure
In accordance with Securities and Exchange Commission Rule 15c2-12(b)(c), the
School District has covenanted in the Resolution (hereinafter defined) to execute and
deliver prior to closing, and to thereafter comply with the terms of, a Continuing
Disclosure Certificate in substantially the form appearing as Appendix C to this
Official Statement.
Authorization The Bonds will be issued pursuant to and in accordance with the Constitution and
statutes of the State, including Article X, Section 15 of the Constitution of the State of
South Carolina, 1895, as amended; Title 59, Chapter 71, Article 1, Code of Laws of
South Carolina 1976, as amended; Title 11, Chapter 27, Code of Laws of South
Carolina 1976, as amended; and a resolution duly adopted by the Board of Trustees of
the School District (the “Resolution”).
General This Official Statement speaks only as of its date, and the information contained
herein is subject to change. Copies of the Preliminary Official Statement and the
Official Statement will be deposited with the Municipal Securities Rulemaking Board,
1900 Duke Street, Suite 600, Alexandria, Virginia 22314. Copies of the Preliminary
Official Statement, the Official Statement, the Resolution and other relevant
documents and information regarding the documents are available from Gloria Moore,
Executive Director of Financial Services, School District of Oconee County, South
Carolina, 414 S. Pine Street, Post Office Box 649, Walhalla, South Carolina 29691,
telephone (864) 886-4000 or Bond Counsel, Francenia B. Heizer, Esquire, McNair
Law Firm, P.A., 1221 Main Street, Suite 1800, Columbia, South Carolina 29201,
telephone (803) 799-9800.
The Official Statement, including the cover page and the attached Appendices,
contains specific information relating to the Bonds and the School District and other
information pertinent to this issue.
All information included herein has been provided by the School District except
where attributed to other sources. The summaries and references to all documents,
statutes, reports and other instruments referred to herein do not purport to be
complete, comprehensive or definitive, and each such reference or summary is
qualified in its entirety by reference to each such document, statute, report or other
instrument.
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INTRODUCTION
This Official Statement is provided for the purpose of furnishing certain information in
connection with the public invitation for bids for the purchase of $16,330,000* General Obligation
Bonds, Series 2016A (the “Bonds”) of the School District of Oconee County, South Carolina (the
“School District”). This Official Statement has been prepared under the supervision of Dr. Michael
Thorsland, Superintendent and Gloria Moore, Executive Director of Financial Services of the School
District. The information furnished herein includes a description of the Bonds, the School District and
its indebtedness, tax information, economic data, financial information and other matters. Also included
are certain information and data pertaining to Oconee County, South Carolina (the “County”), and the
State of South Carolina (the “State”).
THE BONDS
Description
The Bonds will be general obligation bonds of the School District; will be issuable in fully
registered form in denominations of $5,000 each or any whole multiple thereof and, when issued, will be
registered to Cede & Co., as nominee for The Depository Trust Company, New York, New York
(“DTC”); will be dated the date of their delivery; will bear interest payable on September 1, 2015, and
semiannually on March 1 and September 1 of each year thereafter; and will mature serially in successive
annual installments on March 1 in each of the years and in the principal amounts set forth on the front
cover hereof. The record date for the Bonds shall be the fifteenth (15th) day (whether or not a business
day) preceding an interest payment date on the Bonds.
Redemption Provisions
The Bonds will not be subject to redemption prior to their stated maturities.
Book-Entry-Only System
Beneficial ownership interests in the Bonds will be available only in book-entry form. Beneficial
owners of the Bonds (“Beneficial Owners”) will not receive physical Bonds certificates representing
their interests in the Bonds purchased. So long as DTC or its nominee is the registered owner of the
Bonds, references in this Official Statement to the Holders of the Bonds shall mean DTC or its nominee
and shall not mean the Beneficial Owners. Unless and until the book-entry only system has been
discontinued, the Bonds will be available only in book-entry form in principal amounts of $5,000 or any
integral multiple thereof.
THE FOLLOWING DESCRIPTION OF DTC, ITS PROCEDURES AND RECORD KEEPING
ON BENEFICIAL OWNERSHIP INTERESTS IN THE BONDS, PAYMENT OF INTEREST AND
OTHER PAYMENTS ON THE NOTES TO DTC PARTICIPANTS (AS DEFINED HEREIN) OR TO
BENEFICIAL OWNERS, CONFIRMATION AND TRANSFER OF BENEFICIAL OWNERSHIP
INTERESTS IN THE BONDS AND OF OTHER TRANSACTIONS BY AND BETWEEN DTC, DTC
PARTICIPANTS AND BENEFICIAL OWNERS IS BASED ON INFORMATION FURNISHED BY
DTC.
Depository Trust Company. The Depository Trust Company (“DTC”), New York, New York
will act as securities depository for the Bonds. The Bonds will be issued as fully-registered bonds
registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be
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requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued
for each maturity of the Bonds, in the aggregate principal amount of the Bonds, and will be deposited
with DTC.
DTC Participants and Indirect Participants. DTC, the world’s largest depository, is a limited-
purpose trust company organized under the New York Banking Law, a “banking organization” within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing
corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency”
registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
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 certificated Bonds. 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 (the “Indirect Participants”). DTC has Standard & Poor’s rating of AA+. The
DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More
information about DTC can be found at www.dtcc.com.
Beneficial Owners. Purchases of Bonds under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest
of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and
Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of
their purchases. Beneficial Owners are, however, expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Bonds, except in the event that the use of the book-entry only
system for the Bonds is discontinued.
Transfers and Exchanges. To facilitate subsequent transfers, all Bonds deposited by Direct
Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such
other name as may be requested by an authorized representative of DTC. The deposit of Bonds with
DTC and their registration in the name of Cede & Co., or such other nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds. DTC’s
records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited,
which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants; by Direct
Participants to Indirect Participants; and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
3
requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take
certain steps to augment the transmission to them of notices of significant events with respect to the
Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Resolution. For
example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their
benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial
Owners may wish to provide their names and addresses to the Registrar and request that copies of notices
be provided directly to them.
Notices; Redemption. Redemption notices shall be sent to DTC. If less than all of the Bonds
within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of
each Direct Participant in the Bonds to be redeemed.
Consents and Voting. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent
or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s
MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Registrar, as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to
those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Principal and Interest Payments. Payment of principal, redemption premium, if any, and interest
will be made to Cede & Co., or such other nominee as may be requested by an authorized representative
of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and
corresponding detail information from the School District or the Registrar and Paying Agent, on the
payable date in accordance with their respective holdings shown on DTC’s records. Payments by
Participants to Beneficial Owners will be governed by standing instructions and customary practices, as
is the case with securities held for the accounts of customers in bearer form or registered in “street
name,” and will be the responsibility of such Participant and not of DTC, the Registrar and Paying Agent
or the School District subject to any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal, redemption premium, if any, and interest payments to Cede & Co. (or such
other nominee as may be requested by an authorized representative of DTC) is the responsibility of the
School District or the Paying Agent, and disbursement of such payments to the Direct Participants will be
the responsibility of DTC, and disbursements of such payments to Beneficial Owners will be the
responsibility of the Direct and Indirect Participants. THE SCHOOL DISTRICT CAN GIVE NO
ASSURANCE THAT DIRECT AND INDIRECT PARTICIPANTS WILL PROMPTLY TRANSFER
PAYMENTS TO BENEFICIAL OWNERS.
DTC may discontinue providing its service as depository for the Bonds at any time by giving
reasonable notice to the Registrar or the School District. Under such circumstances, in the event that a
successor depository is not obtained, Bonds are required to be printed and delivered. The School District
may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor
securities depository). In that event, Bonds will be printed and delivered to DTC.
The information in this section concerning DTC and DTC’s book-entry system has been obtained
from sources the County believes to be reliable, but the School District takes no responsibility for the
accuracy thereof.
SO LONG AS CEDE & CO., AS NOMINEE FOR DTC, IS THE SOLE HOLDER OF THE
BONDS, THE SCHOOL DISTRICT SHALL TREAT CEDE & CO. AS THE ONLY HOLDER OF THE
BONDS FOR ALL PURPOSES, INCLUDING RECEIPT OF ALL PRINCIPAL AND PREMIUM OF
AND INTEREST ON THE BONDS, RECEIPT OF NOTICES, VOTING AND REQUESTING OR
4
DIRECTING THE SCHOOL DISTRICT. THE SCHOOL DISTRICT, THE REGISTRAR AND THE
PAYING AGENT HAVE NO RESPONSIBILITY OR OBLIGATION TO THE PARTICIPANTS OR
THE BENEFICIAL OWNERS WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS
MAINTAINED BY DTC OR ANY PARTICIPANT, OR THE MAINTENANCE OF ANY RECORDS;
(2) THE PAYMENT BY DTC OR ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY
BENEFICIAL OWNER IN RESPECT OF THE BONDS, OR THE SENDING OF ANY
TRANSACTION STATEMENTS; (3) THE DELIVERY OR TIMELINESS OF DELIVERY BY DTC
OR ANY PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED
OR PERMITTED UNDER THE RESOLUTION TO BE GIVEN TO BENEFICIAL OWNERS; (4) THE
SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENTS UPON ANY PARTIAL
REDEMPTION OF THE BONDS; OR (5) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY
DTC OR ITS NOMINEE AS THE REGISTERED OWNER OF THE BONDS, INCLUDING ANY
ACTION TAKEN PURSUANT TO AN OMNIBUS PROXY.
Discontinuance of Book-Entry-Only System. In the event that the Bonds are no longer in book-
entry-only form, the certificates held by DTC or a successor securities depository will be cancelled and
the School District will execute and deliver the Bonds in fully registered form to the Beneficial Owners
of the Bonds as shown on the records of the DTC Participants or the nominee of a successor securities
depository. If no other securities depository is named, interest on the Bonds shall be payable to the
Registered Owners on each interest payment date and principal of the Bonds at maturity upon
presentation and surrender thereof to the Paying Agent at its corporate trust office. The Bonds would be
transferable on the registration books of the School District maintained by the Registrar by the registered
owner in person or by his duly authorized attorney upon surrender of the Bond to be transferred together
with a written instrument of transfer duly executed by the registered owner or his duly authorized
attorney. The Registrar will, upon receipt thereof, authenticate and deliver a new Bond or Bonds in like
principal amounts as the Bond so presented. The School District and the Paying Agent will deem and
treat the person in whose name each Bond is registered as the absolute owner thereof for all purposes.
Notwithstanding the foregoing, at the request of the purchaser, the Bonds will be issued as one
single fully-registered bond and not issued through the book-entry system.
Authorization
The Bonds will be issued pursuant to and in accordance with the Constitution and statutes of the
State, including Article X, Section 15 of the Constitution of the State of South Carolina, 1895, as
amended; Title 59, Chapter 71, Article 1, Code of Laws of South Carolina 1976, as amended; Title 11,
Chapter 27, Code of Laws of South Carolina 1976, as amended; and a resolution (the “Resolution”) duly
adopted by the Board of Trustees (the “Board”) of the School District.
Purpose of Bonds
The proceeds of the Bonds will be used for (i) capital projects in accordance with the School
District’s long-term capital plan; (ii) paying costs of issuance of the Bonds; and (iii) such other lawful
purposes as the Board may determine.
Security
The Bonds will constitute binding general obligations of the School District, and the full faith,
credit, resources and taxing power of the School District are irrevocably pledged for the payment of the
Bonds. There shall be levied and collected annually in the same manner as county taxes are levied and
5
collected, a tax, without limit, on all taxable property in the School District sufficient to pay the principal
and interest on the Bonds as they mature and to create such sinking fund as may be necessary therefor.
In addition, Article X of the Constitution of the State of South Carolina, 1895, as amended,
provides:
If at any time any political subdivision shall fail to effect the punctual payment of the
principal of or interest on its general obligation debt, then, in such instance, the State
Treasurer shall withhold from such political subdivision sufficient moneys from any
state appropriation to which such political subdivision may be entitled and apply so
much as shall be necessary to the payment of the principal and interest on the
indebtedness of the political subdivision then due.
The following table shows the amount of such State appropriations subject to being withheld
under the foregoing provisions of Article X received by the School District for the last five years for
which information is available and the amount projected for the current fiscal year:
Fiscal Year
Ended June 30
Amount
Received
2011 $45,896,725
2012 46,944,329
2013 48,777,801
2014 49,773,153
2015 52,300,771
2016* 50,895,103
*Projected
The Constitutional intercept provisions are enhanced by Section 59-71-155 of the Code of Laws
of South Carolina, 1976, as amended, which applies to all school district general obligation bonds
outstanding. Under the statutory enhancement, a County Treasurer is required to notify the State
Treasurer on the fifteenth day prior to the due date of any payment of principal or interest on school
district general obligation bonds if the County Treasurer or any other paying agent does not have on
deposit the sum required to make that payment. On the third business day prior to due date of the
payment, if the County Treasurer or any other paying agent does not have on hand the amount required to
effect such payment, the State Treasurer is directed to transfer to the County Treasurer from the general
fund of the State the sum necessary to effect such payment, provided that the total amount of the
payments so transferred in any fiscal year may not exceed the amount appropriated in the State’s budget
under the Education Finance Act for that fiscal year. The amount appropriated in the Education Finance
Act for the fiscal year beginning July 1, 2015, is $1,548,569,004. Thereafter, the State Treasurer shall
withhold from the School District from funds payable to it from the State amounts necessary to reimburse
the general fund of the State for any amounts so advanced, plus investment earnings foregone by the
State on such amounts pending reimbursement. The provision contains a mechanism to reimburse the
School District for such withholdings from taxes thereafter collected. If there is an advance from the
State Treasurer under these provisions, the County Auditor is directed to adjust the millage levied for the
payment of debt service on the bonds for the next fiscal year in order to file a report with the State
Treasurer demonstrating compliance not later than five business days after millage is set for the next
fiscal year.
6
Defeasance
The obligations of the School District under the Resolution and the pledges, covenants and
agreements of the School District therein made or provided for, shall be fully discharged and satisfied as
to any portion of the Bonds, and such Bond or Bonds shall no longer be deemed to be outstanding when:
(a) such Bond or Bonds shall have been purchased by the School District and surrendered to the
School District for cancellation or otherwise surrendered to the School District or the Paying Agent and
are canceled or subject to cancellation by the School District or the Paying Agent; or
(b) payment of the principal of and interest on such Bonds either (i) shall have been made or
caused to be made in accordance with the terms thereof, or (ii) shall have been provided for by
irrevocably depositing with a corporate trustee in trust and irrevocably set aside exclusively for such
payment (1) moneys sufficient to make such payment, or (2) Government Obligations (as defined below)
maturing as to principal and interest in such amounts and at such times as will ensure the availability of
sufficient moneys to make such payment and all necessary and proper fees, compensation and expenses
of the corporate trustee. At such time as the Bonds shall no longer be deemed to be outstanding
thereunder, such Bonds shall cease to draw interest from the due date thereof and, except for the
purposes of any such payment from such moneys or Government Obligations as set forth in (ii) above,
shall no longer be secured by or entitled to the benefits of the Resolution.
“Government Obligations” shall mean any of the following:
(i) direct obligations of the United States of America or agencies thereof or
obligations, the payment of principal or interest on which, in the opinion
of the Attorney General of the United States, is fully and unconditionally
guaranteed by the United States of America;
(ii) non-callable, U. S. Treasury Securities – State and Local Government
Series (“SLGS”);
(iii) general obligation bonds of the State, its institutions, agencies, school
districts and political subdivisions which, at the time of purchase, carry a
AAA rating from Standard & Poor’s or a Aaa rating from Moody’s
Investors Service.; and
(iv) a defeasance obligation as defined in Section 6-5-10 of the S.C. Code as
such as may be amended from time to time.
(c) Such Bond or Bonds shall be defeased as provided in Section 11-14-110 of the S.C. Code
as such may be amended from time to time.
7
THE SCHOOL DISTRICT
Organization of the School District
The Board was created by the South Carolina General Assembly on May 12, 1953. On that date,
the school districts located within the County were consolidated into the single, countywide School
District, which assumed all of the assets and liabilities of the former school districts.
The School District currently operates eleven elementary schools, three middle schools, four high
schools, and three specialized schools (an alternative school, a career center, and adult education). All the
elementary, middle, and high schools, along with the career center, are accredited and in good standing
with the Southern Association of Colleges and Schools Council on Accreditation and School
Improvement (SACS CASI), an accreditation division of AdvancED, with the State Department of
Education.
The School District is governed by a five-member Board elected for four-year staggered terms in
general elections in even-numbered years. The members of the Board are elected from districts
corresponding to County Council representation areas. The officers of the Board are chairman, vice
chairman and clerk. Officers are elected by majority vote of the Board for terms of two years at the first
Board meeting following each general election.
The Board of Trustees normally holds two monthly meetings. A work session is held on the
second Monday and a regular board meeting is held on the third Monday of each month. Meetings begin
at 6:00 pm and are held at the District Office, 414 South Pine Street, Walhalla, SC.
The Board has the responsibility of directing and managing the public educational system of
Oconee County. The powers and duties of the Board include the adoption of policies and procedures for
the School District including employment, procedures, position qualifications, and salary schedules, and
the employment of School District personnel. The Board is responsible for adopting a system of
budgetary controls and an annual budget, with the power to revise the budget when necessary. The Board
provides for the disbursement of all funds received by the School District and establishes and maintains a
central purchasing system. The Board is authorized to purchase and sell land, plan and construct new
school facilities, and maintain and repair existing facilities. The powers of the Board also include the
exercise of the right of eminent domain and the development of long-range planning for physical
facilities and educational programs of the School District.
The present members of the Board, the occupation of each member, and the number of years of
consecutive service each member has served on the Board are as follows:
Name
Occupation
Number of
Years on Board
Andrew P. Inabinet, Chairman Retired 9
Jerry C. Lee, Vice Chairman Retired 9
Denise P. McCormick, Clerk Marketing 11
Rosemary Bailes Retired 7
Buddy G. Herring Retired 7
8
The Superintendent of Education of Oconee County is elected in a non-partisan election
conducted at the same time as the State general election for a term of four years. No person is eligible to
qualify as a candidate for Superintendent who is not certified as a superintendent by the State and who
does not have five years of school administrative experience. The person elected Superintendent in the
non-partisan election takes office on July 1 following the election. In the event no person qualifies as
candidate for Superintendent, no election shall be held and the State Governor shall appoint a
Superintendent upon the recommendation of a majority of the Board of Trustees.
Beginning on July 1, 2003, the general duties and responsibilities for the direction and
management of the schools subject to the supervision of the Board of Trustees were invested in an
appointed employee of the Board to be known as the Oconee County School District Superintendent.
Since that time, all references to any duty or authority of the “superintendent” of the District in any
applicable law, and State or Federal regulation, or in the policies of the Board of Trustees are deemed to
refer to the Oconee County School District Superintendent unless the context plainly refers to the office
of the Superintendent of Education of Oconee County.
The Superintendent is charged with the responsibility of the general management of the schools
of the School District under the rules and regulations promulgated by the State Board of Education and
the policies of the Board. The Superintendent is responsible for guiding the development of the
educational objectives and programs of the School District, for fulfilling the educational needs of all
pupils, and for recommending these objectives and programs to the Board. His duties and
responsibilities include recommending personnel he deems necessary to be employed by the Board;
preparation and administration of annual budgets; operation of the school building and maintenance
program; and development of the guidance and instructional program. The Superintendent provides
overall direction to accomplish approved educational goals to administer the policies of the Board, to
conserve the School District’s assets and resources, and to maintain and enhance the School District’s
standing in all its major internal and external relationships. The Superintendent’s management
responsibilities extend to all activities of the School District, to all phases of its educational program, to
all parts of the physical plan, and to the conduct of any other duties as may be assigned to him by the
Board.
Dr. Michael Thorsland, the current Superintendent of the School District, has been an educator in
South Carolina for the past twenty-two years. He started his career as a math teacher in both Pickens and
Lexington counties before assuming assistant principal and principal positions in Pickens County. Dr.
Thorsland served as the Assistant Superintendent for Operational Services in the School District for nine
years prior to becoming District Superintendent. He is a graduate of Clemson University. He completed
graduate work at the University of South Carolina and Nova Southeastern University in the area of
Educational Leadership.
The Executive Director of Financial Services is Gloria Moore, who was appointed to that
position in March 2007. She was previously employed with the School District. Ms. Moore is a
Certified Government Finance Officer and a Certified Public Accountant and holds a bachelor’s degree
in accounting from Clemson University and a master’s degree in business administration from Southern
Wesleyan University.
9
School District Employees
The School District’s total professional and support staff for the year 2015-16, presented as full-
time equivalencies (FTE), is as follows:
Teachers 803.63
Aides 179.68
Custodians and Maintenance 136.63
Food Services 47.06
Secretaries and Clerks 105.00
Bus Drivers 68.25
School Administrators 50.00
Guidance Counselors 33.30
Administrators 15.00
Librarians 20.50
Psychologists/Social Workers 6.00
Other Professionals 21.95
School Nurses 18.00
Trustees 5.00
Total 1,510.00
Education Finance Act of 1977
In 1977 the General Assembly enacted the Education Finance Act of 1977 (the “EFA”) which
established a procedure for the distribution of State education funds in order to guarantee to each student
in the public schools the availability of at least minimum education programs and services appropriate to
his needs. The EFA established a procedure for the distribution of a specified portion of State education
funds and is determined by two factors: the School District’s “Index of Taxpaying Ability” and the
number of students, based on a weighted formula. A defined minimum program is established annually
by the State Board of Education; the State funds 70% of the costs, unless the local school district’s
taxpaying ability is greater, in which case the amount of State funding is decreased. The remainder is
funded locally.
The following table shows the amount of EFA funds received by the School District during the
last five fiscal years and the amount projected for the current fiscal year:
Fiscal Year
Ended June 30
Amount
Received
2011 $11,965,516
2012 12,374,485
2013 13,405,248
2014 14,111,579
2015 15,322,176
2016* 15,582,620
*Projected
EFA Litigation. On November 1, 1993, 29 small South Carolina school districts (not including
the School District), brought an action against the State and various state officials in an action styled
Abbeville County School District, et al. v. The State of South Carolina, et al. The complaint in this
action alleged that the current method of funding school district operations in the State discriminates
10
against the plaintiff school districts. The plaintiffs further alleged that they were entitled to various
forms of relief, including a declaration that the EFA is unconstitutional in that it discriminates against
smaller school districts, and a court order requiring the State to revise the present school funding method
to remove the discriminatory effects of such method. In September 1996, the trial court ruled against the
plaintiffs in this action, and plaintiffs appealed. On April 22, 1999, the Supreme Court of South Carolina
issued its opinion in the matter. Abbeville County Sch. Dist. V. South Carolina, 515 S.E.2d 535 (S.C.
1999). The Court held that the EFA is constitutional. The Court dismissed several other federal
constitutional challenges to the current method of funding school district operations in the State;
however, the Court held that the State Constitution “requires the General Assembly to provide the
opportunity for each child to receive a ‘minimally adequate’ education.”
The Court defined broadly what a “minimally adequate” education means as the ability to read,
write, and speak English and to know math, science, history and vocational skills. The Court remanded
the case to the lower court system in the State for determination of whether this standard is met. This
case was heard in South Carolina Circuit Court before Judge Thomas W. Cooper, Jr.
Judge Cooper issued an Order in the case on December 29, 2005 (the “Order”). The Order
reflects the Circuit Court’s holding that (i) the facilities in the plaintiff school districts were sufficient to
provide a minimally adequate education, (ii) the South Carolina Curriculum Standards were likewise
sufficient to meet the definition of minimally adequate, and (iii) the South Carolina system of teacher
licensure is sufficient to ensure at least minimally competent teachers to provide instruction consistent
with curriculum standards. The Circuit Court also held, however, that students in the plaintiff school
districts were denied a minimally adequate education because of a lack of effective and adequately
funded early childhood intervention programs designed to address the impact of poverty on the students’
educational abilities and achievements.
On September 6, 2007, both parties filed appeals with the South Carolina Supreme Court. Oral
arguments were held before the South Carolina Supreme Court on June 25, 2008. The South Carolina
Supreme Court held oral re-arguments on September 18, 2012.
On November 12, 2014, the South Carolina Supreme Court held the State has failed in its duty to
provide a “minimally adequate education” to children in the plaintiffs’ school districts and that “[i]t is
time for the [d]efendants to take a broader look at the principal causes for the unfortunate performance of
students in the [plaintiffs’ school districts], beyond mere funding.” The South Carolina Supreme Court
instructed both parties to reappear before the South Carolina Supreme Court within a reasonable time
from the issuance of its opinion to present a plan to address the constitutional violation with special
emphasis on the statutory and administrative pieces necessary to aid the myriad troubles facing the
districts at both state and local levels. As of the date hereof, the parties have not reappeared before the
South Carolina Supreme Court and the South Carolina General Assembly has not enacted legislation in
response to the decision of the South Carolina Supreme Court. The School District cannot predict the
ultimate impact this litigation may ultimately have on public education or the funding thereof in the
State.
Education Improvement Act of 1984
At its 1984 Session, the General Assembly of South Carolina enacted the Education
Improvement Act of 1984 (“EIA”), which provides for a program of strategies to improve public
education in the State. Funding for the EIA is derived from a one cent increase in the sales tax (from
$.04 to $.05 on the dollar).
11
The following table shows the amount of EIA funds received by the School District during the
last five fiscal years and the amount projected for the current fiscal year:
Fiscal Year
Ended June 30
Amount
Received
2011 $5,604,371
2012 8,074,111
2013 7,498,176
2014 7,228,490
2015 5,851,647
2016* 6,490,678
*Projected
Adjustments to State Funds
Appropriations made by the State are monitored against income throughout the fiscal year by the
Executive Budget Office and the Revenue and Fiscal Affairs Office. If State revenues are below budget
estimates, the Director of the Executive Budget Office has the authority to reduce appropriations during
the fiscal year by amounts sufficient to maintain a balanced budget for the State.
All school districts may transfer State-allocated funds, such as EIA funds, between instructional
programs with the same funding source provided that the expense is allowable under the guidelines set
forth in State Department of Education (SDE) Funding Manual. Unless specifically prohibited by the
SDE, school districts also may carry forward unexpended State-allocated funds from the prior fiscal year
into the current fiscal year, provided that they are used for the same purpose.
Retirement Plan
The School District offers full-time employees a choice between the traditional South Carolina
Retirement System (SCRS), which is a defined benefit plan, and the South Carolina State Optional
Retirement Plan (ORP), which is a defined contribution plan. Eligible employees have 30 days from their
date of hire to select a plan. If an employee does not make a selection, he or she will automatically
become a member of SCRS. These plans are administered by the South Carolina Public Employee
Benefit Authority, which appoints a director to exercise general supervision over SCRS. SCRS is a cost
sharing, multiple-employer pension plan. SCRS offers retirement and disability benefits, cost of living
adjustments on an ad-hoc basis, life insurance benefits, and survivor benefits.
Each employee participating in SCRS contributes 8.0% of their annual earnings to SCRS. The
School District is required to contribute at the actuarially determined rate of 10.75% of the employees’
earnings and 5.00% for post-retirement health care benefits, for a total contribution rate of 15.75%. All
employees with at least one year of full-time service under SCRS receive a group life benefit equal to the
employee’s annual salary at the time of death. The School District contributes 0.15% for the group life
benefit. Total employer contributions paid by the School District to SCRS for fiscal years ended June 30,
2015, June 30, 2014, and June 30, 2013, were $9,162,517, $8,911,392 and $8,633,537, respectively.
Each employee participating in ORP contributes 8.05% of their annual earnings to ORP. The
School District is required to contribute at the rate of 10.75% of the employees’ earnings, of which 5% is
directed to an approved investment provider to the employee’s account with the remainder of the
employer contribution to SCRS. An additional 5.00% is contributed to SCRS for post-retirement health
care benefits, for a total employer contribution to SCRS of 15.75%. Total employer contributions paid by
12
the School District with respect to employees participating in ORP for fiscal years ended June 30, 2015,
June 30, 2014, and June 30, 2013, were $1,261,060, $1,160,508 and $1,081,575, respectively.
Compensated Absences
Accumulated annual leave is accrued as a liability for absences for which it is expected that
employees will be paid. The conditions of such accrual are that future absences are attributable to
services already rendered, the rights vest or accumulate, payment of said compensation is probable, and
the amount of compensation can be reasonably estimated.
The School District’s annual leave policy contains two components which are reflected in the
financial statements: bonus for leave not taken, and deferred compensation.
Bonus for leave not taken: Each School District employee is permitted to accumulate a maximum
of 90 days leave. Each employee receives a bonus at the end of each school year when unused leave
exceeds 90 days. The bonus is based on the employee’s daily rate not to exceed $60 per day. The bonus
paid for the fiscal year ending June 30, 2015 was $110,363, including fringe benefits.
Deferred compensation: Upon separation from the School District, each eligible employee is
paid compensation based on their daily rate (calculated from the previous year’s salary schedule) for the
excess of days over 45, up to a maximum of 45 days, as deferred compensation for annual leave not
taken. The compensation paid to employees who separated from service during the fiscal year ended
June 30, 2015 was $521,334. The amount vested at June 30, 2015 for employees still employed by the
School District was $4,249,199. This amount has been recorded in the School District’s audited financial
statements as compensated absences payable.
Insurance
The State Supreme Court, in the case of McCall v. Batson on April 18, 1985, abolished the
doctrine of sovereign immunity in the State of South Carolina. In response to this decision, the South
Carolina General Assembly in its 1986 session enacted the South Carolina Torts Claim Act that
reestablished a qualified doctrine of sovereign immunity with respect to local government in South
Carolina. Subject to specific immunity set forth in the South Carolina Tort Claims Act, as amended,
local governments including the School District are liable for damages not to exceed $300,000 per
incident/person and $600,000 per occurrence/aggregate. No punitive or exemplary damages are
permitted under the South Carolina Tort Claims Act. Insurance protection to local government is
provided from either the Insurance Reserve Fund established by the State Fiscal Accountability
Authority, private carriers, self-insurance or pooled self-insurance fund. The School District currently
maintains liability insurance coverage with the Selective Way Insurance Company.
13
Public School Enrollment in the School District
Average daily membership in the School District, based on a 135-day average for the last five
school years (2015-16 is based on the 45-day enrollment) is shown in the following table.
School
Year
Kindergarten
Elementary
Grades 1-8
High School
Grades 9-12
Total
2010-11 828 6,371 3,069 10,268
2011-12 801 6,371 3,037 10,207
2012-13 834 6,609 3,000 10,442
2013-14 806 6,410 2,953 10,169
2014-15 793 6,315 2,988 10,096
2015-16 798 6,308 3,005 10,111
Note: Totals may not add due to rounding.
Source: State Department of Education
DEBT STRUCTURE
Legal Debt Limit
Article X, Section 15 of the Constitution of the State of South Carolina, 1895, as amended (the
“Constitution”), empowers each school district of the State to incur general obligation debt in such
manner and upon such terms and conditions as the General Assembly shall prescribe by law. After
November 30, 1982, each school district may incur general obligation debt, without an election and upon
such terms and conditions as the General Assembly may prescribe, in an amount not exceeding 8% of the
assessed value of all taxable property of such school district. Bonded indebtedness existing on
November 30, 1982, and bonded indebtedness authorized by a majority vote of the qualified electors of
the School District voting in a referendum will not be considered in the computation of the 8% limitation.
The School District’s debt limitation is computed below:
Assessed Value – as of June 30, 2015 $543,052,364
x 8%
Constitutional Debt Limit $ 43,444,189
Less Current Outstanding Debt Subject to Limit 43,412,000
Legal Debt Limit without a Referendum $ 32,189
Note: On March 1, 2016, the School District will make principal payments totaling $17,032,000 at
which time the amount of debt which can be incurred by the School District within its constitutional debt
limit will be $17,064,189. The Bonds will not be issued until after March 1, 2016.
14
Outstanding General Obligation Indebtedness
The following table shows general obligation indebtedness of the School District as of the end of
each of the last five fiscal years.
Year Ended
June 30
General Obligation
Indebtedness
2011 $51,270,000
2012 48,830,000
2013 40,093,751
2014 41,245,000
2015 41,750,000
Outstanding General Obligation Indebtedness by Issue
The following table gives specific information concerning each of the bond issues of the School
District outstanding as of the date hereof:
Date of Bonds Interest Rates Maturity Dates Amount Outstanding
08/01/2006 4.000%-5.000% 03/01/16-17 $ 2,215,000
01/29/2009 3.000%-4.000% 03/01/16-17 1,200,000
04/23/2009 4.000%-5.000% 03/01/16-17 3,150,000
03/25/2010 2.000%-2.750% 03/01/16-18 2,805,000
03/11/2011 2.000%-3.000% 03/01/16-19 2,330,000
04/11/2012 2.000%-5.000% 03/01/16-20 5,830,000
04/10/2013 2.000%-4.000% 03/01/16-21 2,695,000
03/04/2014 2.000%-5.000% 03/01/16-22 7,975,000
03/04/2015 2.125%-5.000% 03/01/16-23 13,550,000
09/17/2015 2.000% 03/01/16 1,662,000
Total $43,412,000
Composite Debt Service
The following table sets forth the debt service requirements for all outstanding general obligation
indebtedness of the School District including the debt service on the Bonds.
Calendar Year
Ending
December 31
Principal and
Interest on
Outstanding Bonds
Principal
and Interest on
the Bonds
Total
Debt Service
2016 $18,475,323.93 $ 317,647.22 $18,792,971.15
2017 9,015,543.76 5,389,000.00 14,404,543.76
2018 5,588,018.76 1,791,000.00 7,379,018.76
2019 4,618,118.76 1,795,875.00 6,413,993.76
2020 3,994,493.76 1,791,000.00 5,785,493.76
2021 2,678,993.76 1,792,625.00 4,471,618.76
2022 2,174,865.63 1,795,375.00 3,970,240.63
2023 834,281.25 1,794,125.00 2,628,406.25
2024 0.00 1,793,750.00 1,793,750.00
Totals $47,379,639.61 $18,260,397.22 $65,640,036.83
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Long Range Building Plan
The School District is currently renovating and building additions to Ravenel Elementary School
and Fair Oak Elementary School. The total estimated cost of the two projects is $16,000,000. Both
projects are on schedule to be completed by the summer of 2016.
The School District continues to monitor and prioritize the capital needs of the School District.
The Board and School District’s administration are committed to meeting these needs using only
resources generated using the School District’s 8% borrowing capacity.
Legal Debt Limit of Counties, Incorporated Municipalities and Special Purpose Districts
Under the provisions of Article X, Section 14 of the Constitution, each county, incorporated
municipality and special purpose district may, in such manner and upon such terms and conditions as the
General Assembly shall prescribe by general law, (a) incur general obligation debt authorized by a
majority vote of the qualified electors thereof voting in a referendum, without limitation as to amount,
and (b) incur, without an election, general obligation debt (in addition to bonded indebtedness existing on
November 30, 1977, and bonded indebtedness authorized by a majority vote of qualified electors) in an
amount not exceeding 8% of the assessed value of all taxable property therein.
In addition, Article X, Section 14 and Section 12 of the Constitution provides that bonded
indebtedness may be incurred by counties on such terms and provisions as the General Assembly may, by
general law, prescribe for sewage disposal or treatment, fire protection, street lighting, garbage collection
and disposal, water service, or any other service or facility benefiting only a particular geographical
section of the county, without an election and without limitation as to amount, provided a special
assessment, tax, or service charge, in an amount designed to provide debt service on bonded indebtedness
incurred for such purposes, shall be imposed upon the area or persons receiving the benefit therefrom;
and general obligation debt so incurred shall not be considered in computing the bonded indebtedness
under the 8% debt limitation.
Overlapping Debt
The following table sets forth the total tax year 2014 assessed value of all taxable property in
each political subdivision having general obligation debt which overlaps the School District and the total
amount of general obligation indebtedness of each such political subdivision which was outstanding as of
June 30, 2015:
Political Subdivision Assessed Value General Obligation Debt
Oconee County $525,343,034 $15,645,178
Incorporated Municipalities
Town of Westminster 6,246,021 162,610
Special Purpose Districts
Keowee Fire District 46,442,827 680,000
*Included in Oconee County debt shown above
Source: County Auditor and Oconee County, South Carolina’s Comprehensive Annual Financial Report
for fiscal year ended June 30, 2015.
16
Miscellaneous Debt Information
The School District has not defaulted in the payment of principal or interest, or in any other
material respect, with respect to any of its securities at any time within the last 25 years, nor has the
School District within such time issued any bonds for the purpose of preventing a default in the payment
of principal or interest on any of its securities then outstanding. The School District has not used the
proceeds of any bonds for current operating expenses at any time within the last ten years.
CERTAIN FISCAL MATTERS
Property Taxation and Assessment
Article X, Section 1 of the State Constitution requires equal and uniform assessments of property
throughout the State for the following classes of property and at the following ratios of fair market value
of such property:
(1) Real and personal property owned by or leased to manufacturers, utilities and mining
operations and used in the conduct of such business - 10.5% of fair market value. Certain
real property owned by or leased to manufacturers for use in “research and development,”
office buildings and warehousing and wholesale distribution of wearing apparel is excluded
from this classification, and would be subject to the six percent assessment ratio for other
real property. Certain new industrial facilities may be entitled to pay a “fee-in-lieu-of-taxes”
computed on an assessment ratio of not less than 6% (4% for investments exceeding $400
million) of original cost less depreciation;
(2) Real and personal property owned by or leased to companies primarily engaged in
transportation for hire of persons or property and used in the conduct of such business - 9.5%
of fair market value;
(3) Legal residence and not more than five contiguous acres - 4% of fair market value (if the
property owner makes proper application and qualifies);
(4) Agricultural real property used for such purposes owned by individuals and certain
corporations - 4% of use value (if the property owner makes proper application and
qualifies);
(5) Agricultural property and timberlands belonging to corporations having more than 10
shareholders - 6% of use value (if property owner makes proper application and qualifies);
(6) All other real property - 6% of fair market value;
(7) Business inventories - 6% of fair market value (as of 1988, an exemption is available
from taxation of property in this category, hence this item is no longer significant, except that
the assessed value of business inventory as of tax year 1987 is taken into account in
determining total assessed value for purposes of the bonded debt limit);
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(8) (A) Except as set forth in (B) below, all other personal property - 10.5% of fair market
value; and
(B) Personal motor vehicles - 6.00%.
The South Carolina Department of Revenue (“DOR”) has been charged with the responsibility of
taking steps necessary to ensure equalization of assessments statewide in order that all property is
assessed uniformly and equitably throughout the State, and may require reassessment of any part or all of
the property within a County. Under law enacted by the South Carolina General Assembly in 1995,
every fourth year the County and the State are required by law to effect an appraisal of all property
within the County and to implement that appraisal as a new assessment in the following year. The
County completed its latest reassessment in Fiscal Year 2015. The County will complete its next
reassessment in Fiscal Year 2020. Regulations adopted by the DOR prior to the 1995 law and which are
still in place also require that a reappraisal program must be instituted by a county if the median appraisal
for all property in such county (as a whole or for any class of property) is higher than 105% or lower than
80% of fair market value.
The Comptroller General of the State may extend the time for assessment and collection of taxes
by county officials. Unpaid property taxes, both real and personal, constitute a first lien against the
property taxed.
The County Assessor appraises and assesses all the real property and mobile homes located
within such county and certifies the results to the County Auditor. The County Auditor appraises and
assesses all motor vehicles, marine equipment, business personal property and airplanes. The DOR
furnishes guides for use by the counties in the assessment of automobiles, automotive equipment, and
certain other classes of property and directly assesses the real and personal property of public utilities,
manufacturers and also of business equipment.
Each year the DOR certifies its assessments to the County Auditors each of whom prepares
assessment summaries from the respective certifications, determines the appropriate millage levies,
prepares tax bills and then in September charges the County Treasurer with the collection. South
Carolina has no statewide property tax.
Budget and Tax Collection Procedure
Beginning in the fall of each school year, the School Board and Superintendent’s educational
objectives and regulatory requirements are communicated to principals, department managers, and
project directors, who develop their annual budget request, assisted where appropriate by School
Advisory Committees and PTO’s, for the following fiscal year. The zero base method requires that each
expenditure account’s appropriation be justified. The Superintendent and his administrative budget
committee review the requests before a recommendation is made to the Board. Ensuing deliberations by
the Board allow for public comment.
Following approval of an initial operating budget by the Board, a funding request is made to the
Oconee County Council for the local appropriation to the General Fund only. After this action by
County Council and any further required review, modification, and balancing, a final General Fund
budget is adopted by the Board. The budget appropriates all revenues to line item expenditures as
identified by the State Department of Education’s chart of accounts.
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The Board on November 14, 2011, revised its policy on the General Fund balance to state: “At
the end of each fiscal year, it is the intent of the school board to have a general fund balance equal to at
least 20% of actual general fund expenditures as reported in the most recently published audit.”
In the County, taxes are collected for County and school purposes as a single tax bill which must
be paid in full by the individual taxpayer. Taxes are collected on a calendar year basis. A county is
authorized to implement a system of quarterly payments for real property taxes (except for property taxes
paid through an escrow account). Real and personal taxes in the County are payable on or before January
15 of each year with the exception of taxes on motor vehicles. All personal property taxes on motor
vehicles are due on or before the last day of the month in which the license tag for motor vehicles
expires. If taxes are not paid on or before January 15, a penalty of 3% thereon is added; if not paid by
February 1, an additional penalty of 7% is added; if not paid on or before March 16, an additional penalty
of 5% thereon is added and such taxes go into execution. Unpaid taxes, both real and personal, constitute
a first lien against the property taxed. The County Treasurer is empowered to seize and sell so much of
the defaulting taxpayer’s estate – real, personal or both – as may be sufficient to satisfy the taxes.
2015-2016 Budget
The following is the School District’s General Fund Budget for fiscal year 2015-2016:
General Fund Revenues and Other Financing Sources
Local Sources $43,538,234
State Sources 42,805,514
Transfers from Other Funds 4,093,722
Total Revenues and Other Financing Sources $90,437,470
General Fund Expenditures and Other Financing Uses
Instructional Expenses $55,059,298
Support Service Expenses 34,818,594
Other Use/Transfers 559,578
Total Expenditures and Other Financing Uses $90,437,470
State Tax Reform
Act No. 388 adopted by the South Carolina General Assembly on June 1, 2006 (“Act 388”),
provides, among other things, a new mechanism for the funding of a portion of school operations and a
limitation on annual growth in millage levied by political subdivisions and school districts for operations.
Sales Tax Imposition; Exemption of Owner-Occupied Property from School Operating Taxes.
Pursuant to Act 388, an additional one percent sales tax was imposed State-wide beginning on June
1, 2007. The additional tax does not apply to certain items, including certain accommodations (e.g., hotels,
motels, campgrounds and the like), items taxed at a defined minimum tax (e.g., automobiles, taxed at a
maximum of $300, regardless of sales price), and unprepared food (3% as of October 1, 2006). Receipts
from the new one percent sales tax must be credited to the “Homestead Exemption Fund” created pursuant
to Act 388.
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Effective beginning with tax year 2007, all owner-occupied real property in the State became
exempt from ad valorem real property taxes levied for school district operations (the “New Homestead
Exemption”). Proceeds of the sales tax deposited in the Homestead Exemption Fund is distributed to all
school districts of the State in substitution for the ad valorem real property taxes not collected as a
consequence of the New Homestead Exemption, provided, however, that in no event shall the amount of
sales taxes distributed to the school district or districts within one county be less than $2,500,000 in the
aggregate.
As described above, the New Homestead Exemption is for owner-occupied real property.
Commercial property and other non-owner-occupied residences will continue to be subject to ad valorem
real property taxes, including for school district operations. See “—Local Option Sales Tax for Additional
Tax Relief.”
Pursuant to Act 388, reimbursement in Fiscal Year 2007-08 for amounts not collected by reason of
the New Homestead Exemption were equal to the amount estimated to be otherwise collected in Fiscal Year
2007-08 by the school district from school operating millage imposed on owner-occupied residential
property therein. Beginning in Fiscal Year 2008-09 and continuing each year thereafter, the aggregate
reimbursement to the school districts of the State increased by and will continue to increase by an amount
equal to the percentage increase in the previous year of the Consumer Price Index, Southeast Region, as
published by the United States Department of Labor, Bureau of Labor Statistics plus the percentage increase
in the previous year in the population of the State as determined by the Revenue and Fiscal Affairs Office.
The aggregate amount of the reimbursement increase in any year will be distributed among the school
districts of the State proportionately based on each school district’s weighted pupil units as a percentage of
statewide weighted pupil units as determined annually pursuant to the State’s “Education Finance Act.”
Any amounts remaining in the Homestead Exemption Fund after the distribution of moneys as
described in the preceding paragraphs must be distributed to the 46 counties of the State, proportionately
based upon population, and applied as a credit against ad valorem real property taxes levied against, first,
owner-occupied real property, and, thereafter, to all other classes of taxable property, for county operating
purposes.
To the extent revenues in the Homestead Exemption Fund are insufficient to pay all
reimbursements to the school districts of the State as described above, the difference must be paid from the
State’s general fund. Enforcement of the requirement described in the preceding sentence is not self-
executing, and will in each applicable year be subject to the appropriation of the necessary amounts by the
General Assembly.
Limitation on Millage Increases
Act 388 also imposes a limitation on increases in millage levied for operational purposes by all
political subdivisions and school districts. As of July 1, 2007, annual millage levies may increase only at a
rate equal to the sum of (a) the increase in the consumer price index, plus (b) the rate of population growth
of the political subdivision or school district, as the case may be. An amendment to Act 388 (R 91) enacted
in 2011 provides that there may be added to the operating millage increase any such increase, allowed but
not previously imposed, for the three property tax years preceding the year to which the current limit
applies. This limitation does not apply to millage that is levied to pay bonded indebtedness. This limitation
may be overridden by a vote of two-thirds of the governing body of the political subdivision or school
district, as applicable, but only for the following purposes:
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(1) a deficiency of the preceding year;
(2) any catastrophic event outside the control of the governing body such as a natural disaster,
severe weather event, act of God, or act of terrorism, fire, war, or riot;
(3) compliance with a court order or decree;
(4) taxpayer closure due to circumstances outside the control of the governing body that
decreases by ten percent or more the amount of revenue payable to the taxing jurisdiction in the preceding
year;
(5) compliance with a regulation promulgated or statute enacted by the federal or state
government after the ratification date of Act 388 for which an appropriation or a method for obtaining an
appropriation is not provided by the federal or state government;
(6) certain purchases of undeveloped real property or of the residential redevelopment rights in
undeveloped real property near an operating United States Military base; or
(7) to purchase capital equipment and make expenditures related to the installation, operation,
and purchase of the capital equipment, in a county having a population of less than one hundred thousand
persons and having at least 40,000 acres of state forest land.
Local Option Sales Tax for Additional Tax Relief
Act 388 further authorizes the imposition within a county, subject to approval by referendum, of a
local sales tax to provide additional property tax relief. The local sales tax authorized by Act 388 may only
be imposed to the extent necessary to provide a 100% credit to all classes of taxable property against (a)
county operating taxes, (b) school operating taxes, or (c) both, as set forth on the referendum ballot. In no
event, however, may the rate of such local sales tax exceed one percent. Act 388 also provides a procedure
for rescinding this local sales tax, as well as any other local sales taxes in force as of June 1, 2006. No
assurance can be given that the County will not conduct such a referendum, or that such a local option sales
tax will not be implemented within the County.
Act 388 further provides that if a county has enacted a tax increment financing redevelopment plan,
or other financing plan that relies upon property tax for its funding to retire indebtedness or pay for project
costs, the rate of the local option sales tax must be set in an amount that considers the full funding for the
project or retirement of indebtedness, which includes compliance with any covenants in the governing
documents authorizing the indebtedness. The revenues of such tax attributable to the funding replacement
for a tax increment redevelopment financing plan or other plan that relies upon property tax for its funding
must be distributed by the county treasurer pursuant to Title 4, Chapter 10 of the Code of Laws of South
Carolina 1976, as amended.
Reassessment Valuations Limited
Act 388 also provides that the growth in valuation of real property attributable to reassessment may
not exceed 15% for each five-year reassessment cycle. Growth in valuation resulting from improvements to
real property is exempt from this restriction. Moreover, upon the sale (or other “assessable transfer of
interest” including long-term leases, conveyances out of trusts, and other defined events, but excluding
transfers between spouses) of any parcel of real property (“ATI Transfer”), such parcel will generally be
reassessed to its then-current market value at the time of the ATI Transfer (“Market Value”). Act No. 57
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adopted by the South Carolina General Assembly on June 8, 2011 (“Act 57”) provides that real property
subject to property tax at an assessment ratio of 6% which undergoes an ATI Transfer after 2010 will be
valued for property tax purposes using an “exemption value” instead of the real property’s Market Value if
the property is be subject to a 6% assessment ratio when held by the purchaser, unless the Market Value is
lower than the value of the property reflected on the books of the property tax assessor at the time of the
ATI Transfer (in which case the Market Value will be the value for property tax purposes). The “exemption
value” is calculated by reducing the market value of property at the time of an ATI Transfer by twenty-five
percent of the “ATI fair market value” of the property. “ATI fair market value” is the real property’s fair
market value as determined at the time the property last underwent an ATI Transfer. If the twenty-five
percent reduction in market value results in a value which is lower than the value of the property reflected
on the books of the property tax assessor at the time of the ATI Transfer, then the value of the property
reflected on the books of the property will be the “exemption value.”
Payments in Lieu of Taxes
The State of South Carolina has adopted an array of property tax inducements and incentives to
promote investment in the State. Qualifying investments of $2.5 million ($1 million in some counties
and for certain “brownfield” sites) or more may be negotiated for payments in lieu of taxes for a period
of 30 years based on assessment ratios of as little as 6% and using millage rates that are either fixed for
the term of the incentive or adjusted every fifth year. The term may be extended up to 10 years. In some
cases, owners of projects may also design an alternative payment schedule so long as the present value of
the payments under the schedule are equal to the present value of the payments that would have been
made without the schedule. The State also provides a more generous incentive for certain large projects
such as those creating at least 125 new jobs and providing new invested capital of not less than $150
million or those with a total investment of not less than $400 million. For these large projects payments
may be negotiated based on assessment ratios of as low as 4%.
The State provides alternative provisions respecting the distribution of payments in lieu of taxes
to entities having taxing jurisdiction at the location of the investment: (i) revenues received in respect of
property that is not included in a multicounty park are allocated in proportion to the amounts that would
have been received by the taxing entities if the payments were taxes; (ii) revenues received from property
that is in a multicounty park, however, is distributed in accordance with the agreement creating the park;
the amount of the distribution to each taxing entity is, for all practical purposes, controlled by the county.
Property may be included in a multicounty park under terms of agreements between two or more counties
with individual sites being determined primarily by the county in which they are located. The county has
sole discretion whether payments in lieu of taxes will be diverted from taxing entities and the use to
which the diverted payments will be applied.
In addition to the above-described incentives, under State law a county may issue special source
revenue bonds or grant equivalent credits against payments in lieu of taxes in order to pay for certain
infrastructure costs to support economic development activities. Such bonds or credits are payable from,
and effectively allow for the capturing of, portions of the payments in lieu of taxes payable by industry.
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The effect of the above-described incentives, is that, notwithstanding the fixed payments by the
industry, the School District’s share of these payments will vary in each year in accordance with the ratio
its millage rates for that year bear to the total millage that would otherwise apply to the property.
Projects on which these payments in lieu of taxes are made are considered taxable property at the level of
the negotiated payment for purposes of calculating bonded indebtedness limits and for purposes of
computing the index of taxpaying ability pursuant to the State EFA. If the property is situated in a
multicounty park, the calculation of assessed value for debt limit purposes is based upon the relative
share of payments received by all taxing entities which overlap the multicounty park. Accordingly, a
recipient of payments from a multicounty park is able to include only a fraction of the assessed value of
property therein in calculating its debt limit.
Assessed Value of Taxable Property
The assessed value of all taxable property in the School District for the last five fiscal years for
which data is available is set forth below.
Fiscal Year Real Property Personal Property* Total
2011 $311,038,504 $226,367,183 $537,405,687
2012 313,231,359 226,809,437 540,040,796
2013 319,811,254 217,114,911 536,926,165
2014 322,522,303 220,713,448 543,235,751
2015 322,349,253 220,703,111 543,052,364
* Includes total investment by utilities
Source: County Auditor
Assessed Value and Estimated Market Value of Taxable Property
Below is the assessed value and estimated market value of all taxable property in the School
District by classifications for the 2014 tax year.
Classification of Property Assessed Value Estimated True Value
Real Property $322,349,253 $6,665,187,871
Motor Vehicles 34,760,610 579,343,500
Public Utilities 142,779,110 1,359,801,047
Manufacturing Property 6,573,870 62,608,286
Marine Equipment 4,577,305 43,583,380
Business Personal Property 5,860,160 55,811,047
Airplanes 66,420 1,660,500
Railroad 1,530,697 17,007,744
Motor Carriers 1,995,328 19,003,123
Fee in Lieu 21,407,668 356,794,466
Merchants Inventory 1,151,943 10,970,885
Total $543,052,364 $9,171,771,849
Source: County Auditor
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Tax Rates
The millage assessed for School District purposes in each of the last five years is set forth below.
Fiscal Year Operations Debt Service Total
2011-2012 101.4 31.0 132.4
2012-2013 110.1 31.0 141.1
2013-2014 110.1 31.0 141.1
2014-2015 110.1 31.0 141.1
2015-2016 110.1 31.0 141.1
Source: County Auditor
Tax Collections
The following table shows taxes levied in the School District, for School District purposes, taxes
collected as of June 30 of the year following the year in which the levy was made, and the amount of
delinquent taxes collected for the last five years, as well as the total amounts collected for the current
year as of the latest data available. Delinquent taxes include taxes levied in prior years but collected in
the year shown.
Tax
Year
Taxes
Levied
Current
Taxes
Collected
Percentage
Collected
Delinquent
Taxes
Collected
Total
Taxes
Collected
Total
Percentage
Collected
2010 $76,878,071 $71,800,740 93.4% $2,342,765 $74,143,501 96.4%
2011 74,242,326 69,824,497 94.0 1,985,312 71,809,809 96.7
2012 76,883,456 72,733,991 94.6 1,766,722 74,500,713 96.9
2013 78,917,082 74,364,066 94.2 1,675,589 76,039,655 96.1
2014 79,700,974 75,216,387 94.4 1,986,104 77,202,491 96.9
Ten Largest Taxpayers in the School District
The ten largest taxpayers in the School District and the amount of tax year 2014 taxes paid for
each are shown below.
Taxpayer Assessed Value Taxes Paid
Duke Energy Corporation $129,995,850 $27,075,016.51
Blue Ridge Electric Coop Inc 6,689,610 1,439,116.89
Basf Catalyst Llc 4,774,487 1,004,665.53
Sandvik Inc 3,196,867 687,326.50
Cryovac Inc 2,883,840 598,673.67
Covidien Lp 2,741,460 437,590.09
Itron Electricity Metering Inc 2,183,112 469,369.15
Borg Warner Torq Systems Inc 2,165,254 465,529.72
Bellsouth Communications Inc 2,097,870 505,561.08
Johnson Controls 1,758,370 378,049.50
Source: County Treasurer
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FINANCIAL INFORMATION
Financial Statements
The following five-year summary of the general fund for fiscal years ended June 30, 2011 to
2015 should be reviewed together with the School District’s complete audited financial statements as a
whole, including but not limited to the report of the School District’s independent certified public
accountants and the notes to such financial statements. The audited financial statements of the School
District for fiscal year ended June 30, 2015 were audited by Stancil, Cooley, Estep & Stamey, LLP,
Certified Public Accountants, Seneca, South Carolina, and are attached to this Official Statement as
Appendix A. Copies of complete financial statements for prior years are available upon request at the
office of Gloria Moore, Executive Director of Financial Services, School District of Oconee County, 414
S. Pine Street, Walhalla, South Carolina 29691; telephone (864) 886-4400. Copies of complete audited
financial statements for prior years are available for inspection at the offices of the School District.
SUMMARY OF GENERAL FUND
2011 2012 2013 2014 2015
Revenues
Local Sources $41,771,561 $39,303,641 $41,455,219 $42,483,412 $42,668,739
State Sources 36,779,500 36,762,587 39,05,683 40,635,077 42,586,196
Intergovernmental 43,475 46,917 47,135 78,228 50,097
Total Revenues 78,594,536 76,113,145 80,558,037 83,196,717 85,305,032
Expenditures
Current:
Instruction 45,245,625 49,905,623 52,479,203 54,170,335 55,704,243
Support Services 32,079,711 32,717,317 32,873,019 34,384,936 34,701,542
Community Services --- 134 120 222 ---
Intergovernmental 37,391 42,628 42,636 24,063 23,735
Capital Outlay 142,270 274,933 32,302 195,948 185,874
Total Expenditures 77,506,897 82,940,635 85,424,280 88,775,504 90,615,394
Excess (Deficiency) Revenues
Over (Under) Expenditures 1,087,639 (6,827,490) (4,866,243) (5,578,787) (5,310,362)
Other Financing Sources (Uses)
Sale of Fixed Assets --- --- 7,517 8,053 8,203
Other Financing Sources --- --- --- --- ---
Operating Transfers In 2,23,987 4,276,640 5,297,924 4,923,640 6,361,297
Operating Transfers Out1 (1,236,949) (770,399) (721,742) (2,614,543) (444,315)
Total Other Financing
Sources (Uses) $987,038 3,506,241 4,583,699 2,317,150 5,925,185
Net Change in Fund Balance 2,074,677 (3,321,249) (282,544) (3,261,637) 614,823
Fund Balance Beginning of Year 23,643,550 25,718,227 22,396,978 22,114,434 18,852,797
Fund Balance End of Year $25,718,227 $22,396,978 $22,114,434 $18,852,797 $19,467,620
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ECONOMIC CHARACTERISTICS AND DATA
General
Oconee County, known as the “Golden Corner of South Carolina,” is located in the northwestern
portion of the State. The County abuts the State of North Carolina to the north, the State of Georgia to the
west, and Anderson and Pickens Counties to the east. The County has a land area of 625 square miles.
The largest incorporated municipality in the County is the City of Seneca, located in the eastern portion
of the County at the southernmost point of Lake Keowee. The county seat, the City of Walhalla, is
located near the center of the County. Greenville, South Carolina, is 46 miles east of Walhalla; Asheville,
North Carolina, is 80 miles northwest; and Atlanta, Georgia, is 110 miles southwest.
The boundaries of the County are formed by its numerous rivers and lakes which provide the
basis for the County’s growing recreational and travel industry. The County is surrounded by Lake
Hartwell to the south, Lakes Keowee and Jocassee to the east, the Tugaloo River to the southwest, and
the Chattooga River to the northwest. Lake Hartwell, which consists of 55,950 acres, was completed in
1962 by the United States Army Corps of Engineers. The two other manmade lakes, Keowee and
Jocassee, were created in 1972 and 1973, respectively, by Duke Power Company’s Keowee-Toxaway
hydro-nuclear energy project, one of the world’s largest operative nuclear stations. A total of 1,337 miles
of shoreline is provided by these three lakes.
Agriculture and Forestry
About 17.0% of the County’s land is used for agriculture (including crops and livestock),
according to the 2012 Census of Agriculture, conducted by the Agricultural Statistics Service of the U.S.
Department of Agriculture. Cash receipts from livestock totaled $128,873,000 in 2011, which ranked the
County 1st among the 46 counties of the State in overall livestock production. The County ranked 2nd in
the State in production of broilers. Cash receipts from crops totaled $5,467,000 in 2011, which ranked the
County 36th among the State’s 46 counties in overall crop production.
The County’s land is about 67% forested. The delivered value of privately-owned timber in the
County in 2011 was $5,964,619, which ranked the County 41st among the State’s 46 counties, according
to the U.S. Forest Service 2011 Timber Products Output Survey and the S.C. Forestry Commission.
Commerce and Industry
In July 2015, US Building Innovations, Inc., a company that specializes in the production of
advanced coatings, announced its plans to establish a new 17,000-square-foot facility in the County. The
facility, which is expected to be fully operational by the end of 2016, will serve as the future home of the
company’s headquarters, as well as house a research and development lab, warehouse and distribution
space and manufacturing operation. The $1 million investment is expected to generate 31 new jobs.
Founded in Pickens, South Carolina, the company began as a wholesale provider of hydrophobic surface
coatings. In an effort to meet the growing demands of its customer base, the company expanded its
operations to include product development and manufacturing. Specializing in advanced coatings, the
company serves a vast spectrum of industries, ranging from marine, auto and aviation to electronics,
architectural and residential applications.
Borg Warner Inc., a global leader in powertrain solutions, announced in May 2015 that it intends
to expand its existing manufacturing operations in the County with a $13.3 million investment. Aimed at
increasing the facility’s transfer case production, the expansion will be achieved with the purchase of
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new machinery and the expected hiring of 50 new employees, which will bring its total local employment
to more than 750. In addition to this expansion, BorgWarner also has recently reached an agreement
with the City of Seneca, South Carolina to lease approximately 100,000 square feet, which the company
will use as warehouse space. Hiring for the new positions began in 2015.
In May 2015, ITT Corporation announced a planned investment of approximately $1 million to
build a new test facility. The investment is part of a total of $2.5 million that the company expects to
invest in the facility over five years. ITT Corporation is a focused multi-industrial company that designs
and manufactures highly engineered critical components and customized technology solutions. The
expansion features a new specialized testing facility for natural gas vehicle (NGV) components, which
are part of the company’s highly engineered Conoflow brand of products. These NGV components
consist of compressed natural gas pressure regulators and liquid natural gas regulators for heavy vehicles.
In April 2015, ITECH South, LLC announced its plans to expanding its existing plant in the
County. The $6.03 million investment is expected to create 34 new jobs over five years.
Established in 1987 and headquartered in Arden, North Carolina, ITECH aims to provide a broad range
of molding-based services to its diverse customer-base. The company provides specific services such as
product and packaging design, material selection, prototype development, mold flow and mold design.
Expansion of ITECH’s facility includes the construction of a 32,000-square-foot addition to the
company’s existing building. ITECH will also be adding seven new molding machines and two new
shipping doors to the facility.
In September 2014, thermoplastics processor and recycler ACI Plastics, Inc. announced its plans
to expand manufacturing operations into the County. The company's $4.1 million investment is expected
to create 25 new jobs. Flint, Mich.-basesd ACI Plastics is known for its seperation technologies for
paint removal, instrument panels, electrostatic and optical seperation. ACI Plastics purchased a former
textile warehouse building and renovated the 88,000-square-foot facility for its operations.
In June 2014, TDC Cutting Tools, Inc. announced that it will establish its overseas headquarters
in the County at the same site as its subsidiary, Greenfield Industries, resulting in an additional 38 new
positions in the County. The company, which is based in China, will invest $8.2 million in the
construction of the new TDC Overseas campus, including a 32,000-square-foot office building and a
10,000-square-foot recycling center added to the existing 168,000-square-foot facility. The County site
was selected over options in Chicago and Switzerland. TDC Cutting Tools and Greenfield Industries
manufacture and sell drills, taps, end mills and other cutting tools. Together, both companies employ
more than 3,300 individuals worldwide and produce more than 300 million tools annually. A
groundbreaking ceremony was held on June 6, 2014.
In May 2014, Plastic Products Company Inc., a manufacturer of plastics and injection molding,
selected the County for the company's new facility. The $3.2 million investment is expected to create 68
new jobs. Operations began at the new facility in the fall of 2014. PPC was established in 1962 and is a
100 percent employee-owned company headquartered in Lindstrom, Minn. The new Seneca facility will
be the company's eighth location and its first in South Carolina.
In February 2014, U.S. Engine Valve, a global automotive supplier of high-engineered valves,
announced its plans to expand operations in the County through a $29.5 million investment that is
expected to add at least 125 new jobs to the company's existing facility. U.S. Engine Valve supplies high-
engineered valves that help increase fuel economy as well as improve a vehicle's overall efficiency and
performance. Through this latest expansion, the company will bring on a new line of equipment to serve
its customers in North America.
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In January 2014, Sandvik, Inc., manufacturer of carbide inserts for the metal cutting industry and
subsidiary of the Swedish company Sandvik, AB, announced its intentions to expand its operations in the
County. Their $12 million investment is expected to increase the company's production at its existing
facility. Sandvik is a high-technology engineering group with advanced products and a world-leading
position in three core areas: tooling, mining and construction, and materials technology. The company
creates products and carbide inserts that are used in mechanical engineering, automotive, oil and gas, and
aerospace applications.
Capital Investment
The following table sets forth the total recruited capital investment for new and expanded
industry within the County for the last five years for which information is available, but only includes
new and expanded industry that the South Carolina Department of Commerce was instrumental in
bringing to the County.
Year
New
Investment
New
Employment
2011 $62,000,000 25
2012 33,360,000 105
2013 71,209,000 230
2014 15,400,000 130
2015 45,100,000 230
Source: South Carolina Department of Commerce
The totals in the previous table includes the following companies and projects in which the South
Carolina Department of Commerce played a major role.
Year Company Project Type Investment Jobs
2011 Altera Polymers LLC New $ 4,000,000 75
Collins Craft Corporation Expansion --- 20
BASF Catalysts Expansion 60,000,000 25
2012 Borg Warner Inc. Expansion --- 30
A.I.D. Company New 7,000,000 75
2013 Borg Waner Inc. Expansion 24,600,000 105
Ulbrich Precision Flat Wire, Inc. Expansion 5,000,000 ---
2014 Sandvik, Inc. Expansion 12,000,000 ---
U.S. Engine Valve Expansion 29,5000,000 125
Plastic Products Company New 3,200,000 68
TDC Cutting Tools, Inc. and
Greenfield Industries
Expansion
8,200,000 38
ACI Plastics Inc. Expansion 4,100,000 25
2015 ITECH South LLC Expansion 6,030,000 34
ITT Corporation – Westminster Expansion 2,500,000 ---
Borg Warner Inc. – Seneca Expansion 13,300,000 50
US Building Innovations, Inc. New 1,000,000 31
Source: South Carolina Department of Commerce
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Labor Force
The labor force participation rates of residents of the County (regardless of place of employment)
for the five calendar years shown are as follows:
2010 2011 2012 2013 2014
Civilian Labor Force 33,315 33,206 33,264 33,045 33,963
Employment 29,523 29,878 30,341 30,493 31,809
Unemployment 3,792 3,328 2,923 2,552 2,154
Source: U.S. Department of Labor, Bureau of Labor Statistics.
The South Carolina Department of Employment and Workforce compiles data on current
employment on the basis of location of employment. Labor force participation rates, however, are
compiled on the basis of residence. The composition of the civilian labor force employed at jobs in the
County, on a place-of-work basis, for the five calendar years shown, is as follows:
2010 2011 2012 2013 2014
Manufacturing 5,008 5,338 5,534 5,699 5,883
Construction & Mining 2,321 1,980 1,823 1,865 1,913
Transportation and Public Utilities * * * * *
Wholesale and Retail Trade 3,976 4,044 4,013 4,010 4,019
Information 352 397 414 322 380
Finance, Insurance and Real Estate 1,822 1,909 1,821 1,868 1,973
Services (incl. Agricultural Services) 7,097 7,533 6,451 7,960 8,928
Government 4,841 4,721 4,586 4,488 4,353
TOTAL 28,217 28,772 29,032 29,139 30,349
* Not shown to avoid disclosure of confidential information. Estimates are included in the totals.
Note: Totals may not add due to rounding.
Source: South Carolina Department of Employment and Workforce, Labor Market Information Division.
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Retail Sales
The following table shows retail sales for businesses located in the County for the last five years
for which information is available:
Calendar Year Total Retail Sales
2010 1,020,716,865
2011 1,097,111,155
2012 1,210,715,834
2013 1,244,394,052
2014 1,248,487,667
Source: South Carolina Department of Revenue
Largest Employers
The following table shows the ten largest employers located within the County, its number of
employees, and the product/service manufactured/provided by each.
Company
Number of
Employees Product/Service
Duke Energy Corporation 3,038 Power generation
School District of Oconee County 1,605 Education
Oconee Memorial Hospital 1,300 Healthcare
Borg Warner Torq Systems Inc. 750 Electric vehicle charging stations
Itron, Inc. 720 Electronic measuring devices
ITEKT/Koyo Bearings USA, LLC 620 Automotive bearings
Schneider Electric 550 Motor control centers
Oconee County Government 450 Local government
U.S. Engine Valve Corp. 410 Engine valves
Greenfield Industries, Inc. 360 Twist drills
Source: Oconee County, South Carolina’s Comprehensive Annual Financial Report for fiscal year ended
June 30, 2015
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Construction Activities
The following table shows the number of building permits issued by the County for new,
privately-owned, residential units, and for non-residential construction, and the approximate cost of new
construction represented by those permits in each of the last five years for which information is available.
Year
Residential
Permits
Residential
Construction
Cost
Non-
residential
Permits
Non-residential
Construction
Cost
Total
Permits
Total
Construction
Cost
2011 145 $44,151,035 133 $ 9,873,197 278 $ 54,024,232
2012 179 50,243,947 140 20,455,914 310 70,699,861
2013 217 65,812,523 154 43,779,129 371 109,591,652
2014 223 65,440,099 226 44,048,511 449 109,488,610
2015 292 66,721,382 120 4,368,559 538 71,089,941
Note: Permits for manufactured homes and for additions to existing structures are not included in the
figures above.
Source: Oconee County Building & Codes Officials.
Per Capita Personal Income
The per capita income in the County, State, and U.S. for each of the last five years for which
information is available is shown below.
Year County State United States
2010 $31,655 $32,853 $40,272
2011 33,988 34,220 42,453
2012 34,387 35,461 44,266
2013 34,650 35,472 44,438
2014 35,794 36,677 46,049
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
Median Family Income
The table below shows the median family income for the County, State and the United States for
the last five years:
Year County State United States
2011 $46,300 $55,100 $64,200
2012 47,000 55,800 65,000
2013 56,700 55,000 64,400
2014 54,800 54,300 63,900
2015 48,000 55,500 65,800
Source: U.S. Department of Housing and Urban Development
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Unemployment Rates
The average unemployment rate in the County, State, and United States for each of the last five
years available is shown below.
Year County State U.S.
2010 11.4% 11.2% 9.6%
2011 10.0 10.6 8.9
2012 8.8 9.2 8.1
2013 7.7 7.6 7.4
2014 6.4 6.4 6.2
Source: U.S. Department of Labor, Bureau of Labor and Statistics.
The average unemployment rate in the County for each of the last 12 months for which data is
available is shown below.
Date Unemployment Date Unemployment
December 2014 6.1% June 2015 6.5%
January 2015 6.5 July 2015 6.2
February 2015 6.4 August 2015 5.8
March 2015 5.8 September 2015 5.6
April 2015 5.7 October 2015 5.3
May 2015 6.3 November 2015 5.2(P)
(P) Preliminary.
Source: U.S. Department of Labor, Bureau of Labor Statistics.
Population Growth
The 2014 population of the County was estimated at 75,192 by the U.S. Bureau of the Census.
The following table illustrates the population growth of the County. Population statistics for the State
and the United States are included for comparison purposes.
Oconee County South Carolina United States
Population % change Population % change Population % change
1970 40,728 - 2,590,516 - 203,302,031 -
1980 48,611 19% 3,121,820 21% 226,545,805 11%
1990 57,494 18 3,486,703 12 248,709,873 10
2000 66,215 15 4,012,012 15 281,421,960 13
2010 74,273 12 4,625,364 15 308,745,538 10
2014* 75,192 1 4,832,482 5 318,857,056 3
*Estimate
Source: U.S. Census Bureau, Population Division.
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The following table shows the 2000 and 2010 Census populations of all incorporated
municipalities located within the County:
Municipality 2000 Census 2010 Census
City of Seneca 7,652 8,102
City of Walhalla 3,801 4,263
Town of Westminster 2,743 2,418
Town of West Union 297 291
Town of Salem 126 135
Source: U.S. Census Bureau, Population Division.
Utilities
Located within the County are five incorporated municipalities which include the Towns of
Salem, West Union, and Westminster, and the Cities of Seneca and Walhalla. Each of these provides fire
and police protection to its residents by city-funded departments. All other rural residents are served by
the Oconee County Rural Fire Control System which presently operates 17 stations.
Water and sewerage services are primarily the responsibility of the municipalities although some
areas within the County are served by the Pioneer Water District. The Oconee County Sewer
Commission, whose members are appointed by the Oconee County Council, authorized the construction
of pumping facilities and a treatment plant in 1976 to consolidate sewer treatment for the County. This
system is entirely self-supporting by user fees. The Commission has no authority to levy a tax to finance
its system or operations.
The major power supplier in the County is Duke Power, followed by Blue Ridge Electric
Cooperative and the cities of Seneca and Westminster. There is one private power producer which
wholesales all of the power it generates to these entities and has no retail customers.
Transportation
The South Carolina Department of Transportation is charged with the systematic planning,
construction, maintenance, and operation of the State Highway System, which is funded from the
revenues derived from the State gasoline tax. In South Carolina, counties receive a portion of the
gasoline tax revenues for use in maintaining county roads not in the State system. The County is served
by U.S. Highways 76 and 123 and by South Carolina Highways 24, 28, 59, 107, 130, 182, 183, 188, 243
and Scenic 11. Interstate 85 runs through the southernmost portion of the County, connecting it with
Atlanta, Georgia and Charlotte, North Carolina.
The County is served by the Norfolk-Southern Rail Lines which is mainly used for shipping and
receiving freight and bulk goods. Passenger service is not available within the County; however, it is
available at a station approximately one mile outside the County line.
While the County has no commercial air carriers, it does own and operate the Oconee County
Regional Airport by and through its aeronautics commission. This airport provides service, rentals, and
instruction primarily to private plane owners and operators. It has 5,000 feet of runway, taxiway, and
safety overrun and is NDB Instrument approved. The nearest commercial airport is Greenville-
Spartanburg International, approximately 51 miles east of Seneca.
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Healthcare Services
Oconee Memorial Hospital is a member of the Greenville Health System. Oconee Medical
Center has 169 licensed acute beds and more than 1,400 employees, including 250 physicians. The Lila
Doyle Rehabilitation and Nursing Care Facility is a 120-bed long-term care unit and a 30-bed
rehabilitation unit for those recovering from surgery or illness located on the Medical Center campus.
The Medical Center receives County funds for the operation of its Emergency Medical Service which
provides ambulance service throughout the County.
In June 2009, Oconee Medical Hospital moved operations into its newly-constructed 155-bed
patient tower which replaced most of the patient rooms in the former hospital. The $44.8 million,
210,000-square-foot patient tower has six floors, and in addition to the 155 private rooms includes a
pharmacy, chapel, café, and gift shop.
In 2007, Cottingham House was established and is the first and only freestanding hospice facility
in the County providing a comfortable home-like setting for patients with end-stage illnesses.
Other Services
The County government provides a broad range of local services to its residents, commuters, and
business visitors and tourists. These local functions are in addition to the substantial services provided in
the County by the State and federal governments, and other local government entities.
Among the services which the County government funds in whole or in part are the following:
(1) General government, which includes financial, administrative, executive, and judicial
departments;
(2) Law enforcement;
(3) Unpaved public highways and streets;
(4) Public health and welfare;
(5) An array of parks, recreational facilities, and cultural institutions;
(6) Solid waste disposal; and
(7) Other miscellaneous services.
All of the above services are funded by the County. None are self-supporting from revenues,
fees, or charges imposed by the County for their use. The County government currently has no plans for
increasing the above services or providing services in addition to those described above.
The several municipalities in the County provide some of the foregoing services and additional
services not provided by the County government. The special purpose districts created by the State
Legislature within the County may provide certain services authorized by State law.
Higher Education
A campus of Tri-County Technical College opened in the city of Seneca, in the County in 2007.
Tri-County Technical College is a 2-year public institution accredited by the Commission on Colleges of
the Southern Association of Colleges and Schools to award the associate degree. According to the South
Carolina Commission on Higher Education, the total headcount enrollment at all campuses of Tri-County
Technical College was 6,386 in Fall 2014, the latest date for which such data is available.
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Recreation and Tourism
Domestic travelers spent $56.18 million in the County in 2014 (the latest date for which such
statistics are available), according to the South Carolina Department of Parks, Recreation, and Tourism.
Tourism accounts for $8.36 million in payroll for 44,000 employees in the County and results in $2.91
million in local tax receipts.
The Andrew Pickens District of the Sumter National Forest occupies 84,000 acres, or 21% of the
County’s land area, in the northwestern portion of the County. The national forest offers many
recreational opportunities to the public, including 120 miles of trails for hiking and horseback riding, and
15 waterfalls. The rivers in the national forest offer whitewater rafting, and there are a number of
campgrounds.
The County has four state parks or recreation areas. Oconee State Park is a 1,165-acre park with
cabins, campgrounds, seasonal swimming, whitewater rafting, fishing, and hiking on six trails ranging
from 1 to 2.2 miles each. It also serves as the southern trailhead for the Foothills Trail, an 80-mile
wilderness hike on the dramatic Blue Ridge Escarpment to Table Rock, North Carolina. Oconee Station
State Historic Site is a 210-acre historic site which offers public access to two historic structures: a U.S.
military outpost dating from 1792, and a trading post built in 1805. The historic site also has a 4-acre
fishing pond and 1.5-mile nature trail that leads into Sumter National Forest and ends at Station Cove
Falls, a 60-foot waterfall. Devil’s Fork State Park is a 6220-acre park offering public access to Lake
Jocassee, including modern villas for rent as well as campgrounds. Devil’s Fork offers fishing, boating,
scuba diving, and 3 miles of hiking trails. Lake Hartwell State Recreation Area is a 680-acre recreation
area focused on fishing and boating on Lake Hartwell, but also offers hiking, camping, and cabins.
Financial Institutions
According to the Federal Deposit Insurance Corporation, as of June 30, 2015, there were 20
branches of commercial banks and 4 branches of savings institutions in the County, with deposits at all
financial institutions in the County totaling approximately $1,116,000,000. The continuing
reorganization of the banking system in the United States, with its attendant mergers and consolidations,
is likely to affect the total number of branch offices in the County.
TAX EXEMPTION AND OTHER TAX MATTERS
Internal Revenue Code of 1986
The Internal Revenue Code of 1986, as amended (the “Code”) includes provisions that relate to
tax-exempt obligations, such as the Bonds, including, among other things, permitted uses and investment
of the proceeds of the Bonds and the rebate of certain net arbitrage earnings from the investment of such
proceeds to the United States Treasury. Noncompliance with these requirements may result in interest on
the Bonds becoming subject to federal income taxation retroactive to the date of issuance of the Bonds.
The School District has covenanted to comply with the requirements of the Code to the extent required to
maintain the exclusion of interest on the Bonds from gross income for federal tax purposes. Failure of
the School District to comply with the covenant could cause the interest on the Bonds to be taxable
retroactively to the date of issuance.
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The Code imposes an alternative minimum tax on a taxpayer’s alternative minimum taxable
income. Bond Counsel has also opined that interest on the Bonds is not an item of tax preference for
purposes of the federal alternative minimum tax imposed on individuals and corporations; however, such
interest is taken into account in determining adjusted current earnings for the purpose of computing the
alternative minimum tax imposed on certain corporations. Bond Counsel expresses no opinion regarding
other federal tax consequences arising with respect to the Bonds.
Other Tax Matters
Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in
collateral federal income tax consequences to certain taxpayers, including, without limitation, financial
institutions, property and casualty insurance companies, individual recipients of Social Security or
Railroad Retirement benefits, certain S corporations with “excess net passive income,” foreign
corporations subject to the branch profits tax, and taxpayers who may be deemed to have incurred or
continued indebtedness to purchase or carry the Bonds. Bond Counsel will not express an opinion
regarding such collateral tax consequences. Prospective purchasers of the Bonds should consult their tax
advisors as to collateral federal income tax consequences.
South Carolina Taxation
The interest on the Bonds is exempt from all State taxation except estate or other transfer taxes.
Section 12-11-20 of the South Carolina Code of Laws of 1976, as amended, imposes upon every bank
engaged in business in the State a fee or franchise tax computed at the rate of 4-1/2% of the entire net
income of such bank. Regulations of DOR require that the term “entire net income” includes income
derived from any source whatsoever including interest on obligations of any state and any political
subdivision thereof. Interest on the Bonds will be included in such computation.
Premium Bonds
The Bonds have been sold at public offering prices which are greater than the amount payable at
maturity (“Premium Bonds”). An amount equal to the excess of the purchase price of the Premium
Bonds over their stated redemption prices at maturity constitutes premium on such Premium Bonds. A
purchase of Premium Bonds must amortize any premium over such Bonds’ term using constant yield
principles, based on the purchaser’s yield to maturity. As premium is amortized, the purchaser’s basis in
such Premium Bond is reduced by a corresponding amount, resulting in an increase in the gain (or
decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such
Premium Bond prior to its maturity. Even though the purchaser’s basis is reduced, no federal income tax
deduction is allowed. Purchasers of any Bonds at a premium, whether at the time of initial issuance or
subsequent thereto, should consult with their own tax advisors with respect to the determination and
treatment of premium for federal income tax purposes and with respect to state and local tax
consequences of owning such Premium Bonds.
LEGAL MATTERS
Opinion
The issuance of the Bonds is subject to the favorable opinion of McNair Law Firm, P.A., Bond
Counsel, as to the validity of the issuance of the Bonds under the Constitution and laws of the State of
South Carolina.
36
McNair Law Firm, P.A. has assisted the County by compiling certain information supplied to
them by the County and others and included in this Official Statement, but McNair Law Firm, P.A. has
not made an independent investigation or verification of the accuracy, completeness or fairness of such
information. The opinion of McNair Law Firm, P.A. will be limited solely to the legality and
enforceability of the Bonds, and no opinion will be given with respect to this Official Statement.
Litigation
There is no controversy or litigation of any nature now pending or, to the knowledge of the
County officials, threatened to restrain or enjoin the issuance, sale, execution or delivery of the Bonds or
the levy and collection of taxes to pay the Bonds; or questioning the proceedings or authority pursuant to
which the Bonds are issued and taxes levied; or questioning or relating to the validity of the Bonds, or
contesting the corporate existence of the County or the titles of its present officers to their respective
offices.
The absence of such litigation will be confirmed at the time of delivery of the Bonds.
United States Bankruptcy Code
This undertaking of the County should be considered with reference to Chapter 9 of the
Bankruptcy Code, 11 U.S.C. 901, et seq., as amended, and other laws affecting creditors’ rights and
municipalities generally. Chapter 9 permits a municipality, political subdivision, public agency, or other
instrumentality of a state that is insolvent or unable to meet its debts as such debts mature to file a
petition in the United States Bankruptcy Court for the purpose of effecting a plan to adjust its debts;
directs such a petitioner to file with the court a list of its creditors; provides that the filing of the petition
under that Chapter operates as a stay of the commencement or continuation of any judicial or other
proceeding against the petitioner; directs a petitioner to file a plan for the adjustment of its debts; permits
the petitioner in its plan to modify the rights to payment of its creditors; and provides that the plan must
be accepted in writing by or on behalf of creditors; and provides that the plan must be accepted in writing
by or on behalf of creditors of each impaired class of claims holding at least two-thirds in amount and
more than one-half in number of the creditors which have accepted or rejected the plan. The plan may be
confirmed notwithstanding the negative vote of one or more classes of claims if the court finds that the
plan is in the best interest of creditors, is feasible, and is fair and equitable with respect to the dissenting
classes of creditors. A petitioner has the right to reinstate indebtedness under its plan according to the
original maturity schedule of such indebtedness notwithstanding any provision in the documents under
which the indebtedness arose relating to the insolvency or financial condition of the debtor before the
confirmation of the plan, the commencement of a case under the Bankruptcy Code, or the appointment of
or taking possession by a trustee in a case under the Bankruptcy Code or by a receiver or other custodian
prior to the commencement of a case under the Bankruptcy Code.
RATINGS
Moody’s Investors Service, Inc. (“Moody’s”) has assigned its municipal bond rating of “Aa1” to
the Bonds upon the basis of the State of South Carolina constitutional intercept provisions described
under the heading “Security” herein. Moody’s has assigned it underlying rating of “Aa2” to the Bonds.
Such ratings reflect only the views of Moody’s and an explanation of the significance of such ratings
may be obtained from Moody’s. The School District has furnished to Moody’s certain information and
materials respecting the School District and the Bonds. Generally, Moody’s bases its ratings on such
information and materials and on investigations, studies and assumptions furnished to and obtained and
made by them. There is no assurance that such ratings will remain unchanged for any period of time or
37
that they may not be lowered or withdrawn entirely by Moody’s, if in its judgment circumstances so
warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the
market price of the Bonds.
UNDERWRITING
The Bonds have been purchased at a competitive sale from the School District for resale by J. P.
Morgan Securities LLC (the “Purchaser”). The Purchaser has agreed, subject to certain conditions, to
purchase the Bonds at par plus a bid premium of $2,044,524.25. The initial public offering yield of the
Bonds is as shown on the front page of this Official Statement and may be changed from time to time by
the Purchaser. The Purchaser may also allow a concession from the public offering prices to certain
dealers. If the Bonds are sold at the public offering yield or price as set forth on the front page of this
Official Statement, the Purchaser anticipates total selling compensation of $50,591.00 for the Bonds.
The Purchaser of the Bonds has received no fee from the School District for underwriting the Bonds.
CERTIFICATE CONCERNING THE OFFICIAL STATEMENT
Concurrently with the delivery of the Bonds, the Superintendent of the School District will
deliver to the Purchaser of the Bonds a certificate stating that, to the best of his knowledge, this Official
Statement did not as of its date and as of the sale date, and the final Official Statement does not, as of the
date of delivery of the Bonds, contain any untrue statement of a material fact or omit to state a material
fact required to be included therein for the purpose for which this Official Statement or the final Official
Statement is to be used or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, providing such certificate shall not include consideration of
information supplied by, or which should have been supplied by, the successful bidder for the Bonds.
FINANCIAL ADVISOR
Compass Municipal Advisors, LLC has acted as Financial Advisor to the School District in
connection with the issuance of the Bonds. In this capacity, Compass Municipal Advisors, LLC provided
technical assistance in the preparation of the offering documents and assisted the School District in
preparing for this financing.
CONTINUING DISCLOSURE CERTIFICATE
The School District has covenanted, pursuant to Section 11-1-85, South Carolina Code of Laws
1976, as amended, to file with a central repository for availability in the secondary bond market, an
annual independent audit within 30 days of its receipt and event specific information within 30 days of
an event adversely affecting more than 5% of tax revenue or the School District’s tax base.
In accordance with the Securities and Exchange Commission Rule 15c2-12(b)(5), the School
District has covenanted in the Resolution to execute and deliver prior to closing, and to thereafter comply
with the terms of, a Continuing Disclosure Certificate in substantially the form appearing as Appendix C
to this Official Statement. In the event of a failure of the School District to comply with any of the
provisions of the Continuing Disclosure Certificate, an event of default under the Resolution shall not be
deemed to have occurred. In such event, the sole remedy of any bondholder or beneficial owner shall be
an action to compel performance by the School District.
In connection with the issuance of its General Obligation Bonds described in the section hereof
entitled “General Obligation Indebtedness by Issue,” the School District has executed Continuing
38
Disclosure Certificates requiring the filing of annual reports with each of the nationally recognized
municipal securities information repositories (“NRMSIRs”) (now EMMA) by not later than February 1
of each calendar year after the end of each fiscal year (currently ending June 30).
For fiscal year ended June 30, 2010, the School District caused its audited financial statements
and continuing disclosure report to each be filed on the Municipal Securities Rulemaking Board’s
Electronic Municipal Market Access (“EMMA”) on January 30, 2011. The School District’s
supplemented its annual report on January 8, 2013 to include the amount of funding received by the
School District under the School Building Aid Program during the fiscal year ended June 30, 2011.
For fiscal year ended June 30, 2011, 2012, 2013, 2014 and 2015, the School District caused its
audited financial statements and annual reports to be filed on EMMA on January 31, 2012, January 8,
2013, December 16, 2013, January 8, 2015 and January 7, 2016, respectively.
On February 17, 2015, the School District caused a material event notice to be untimely filed
relating the upgrade of the School District’s issuer credit rating by Standard & Poor’s Ratings Services
on February 22, 2011 from A+ to AA-.
On February 16, 2016, the School District caused a material event notice to be timely filed
relating the upgrade of the School District’s underlying rating by Moody’s Investors Service on February
12, 2016 from Aa3 to Aa2.
The School District failed to cause the filings of timely material event notices relating to the
current refunding of its $5,000,000 General Obligation Bonds, Series 1998, dated August 1 1998, on
March 1, 2009 and the current refunding of its $15,455,000 General Obligation Refunding Bonds, Series
2003, dated October 1, 2003, on January 1, 2013. The School District caused a notice of failure to file
and a material event notice relating to each of these refundings to be filed on EMMA on February 27,
2015. The School District has adopted written procedures related to its continuing disclosure
obligations.
MISCELLANEOUS
Any statements in this Official Statement involving matters of opinion or estimates, whether or
not expressly so stated, are intended as such and not as representations of fact. Reference herein to the
State Constitution and legislative enactments are only brief outlines of certain provisions thereof and do
not purport to summarize or describe all provisions thereof.
If there are further inquiries, or requests for additional copies of this Official Statement, please
address them to Francenia B. Heizer, Esquire, Bond Counsel, McNair Law Firm, P.A., Post Office Box
11390, Columbia, South Carolina 29211; telephone (803) 799-9800, e-mail: [email protected] or to the
School District’s financial advisor, Brian G. Nurick, Managing Director, Compass Municipal Advisors,
LLC, 1310 Pulaski Street, Columbia, South Carolina 29201, direct telephone (859) 368-9616, e-mail:
s/Michael Thorsland
Superintendent, School District of Oconee County,
South Carolina
APPENDIX A
AUDITED FINANCIAL STATEMENTS FOR FISCAL
YEAR ENDED JUNE 30, 2015
2
financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Change in Accounting Principle
As disclosed in the notes to the financial statements, in the fiscal year ended June 30, 2015 the District adopted the provisions of Governmental Accounting Standards Board (“GASB”) Statement No. 68, “Accounting and Financial Reporting for Pensions- an Amendment of GASB Statement No. 27” and GASB No. 71, “Pension Transition for Contributions Made Subsequent to the Measurement Date – an Amendment of GASB Statement No. 68”. Our opinion is not modified with respect to this change in accounting principle.
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, and the pension plan schedules, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the 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 School District of Oconee County’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, and statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards 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 and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole.
3
4
MANAGEMENT’S
DISCUSSION AND
ANALYSIS
5
SCHOOL DISTRICT OF OCONEE COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS
For the Fiscal Year Ended June 30, 2015
As management of the School District of Oconee County (the District), we offer readers of the District's financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended June 30, 2015. We encourage readers to consider the information presented here in conjunction with the District's financial statements, additional information furnished in the notes to the financial statements and the supplementary statements. FINANCIAL HIGHLIGHTS
► The assets and deferred outflows of the District exceeded its liabilities at the close of the most recent fiscal year by $36,000,112 (net position), a decrease of $111,003,249 from the prior year, primarily due to the implementation of Governmental Accounting Standards Board’s (GASB) Statement No. 68, “Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27” (GASB 68) and GASB Statement No.71, “Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement no. 68” (GASB 71).
► The District's governmental funds as of June 30, 2015 had combined ending fund balances of
$29,590,243 a decrease of $3,254,771 in comparison with the prior year. The capital projects funds are responsible for this decrease.
► At the end of the current fiscal year, unassigned fund balance for the general fund was
$19,381,490 or 21.4 % of total general fund expenditures.
► The District decreased its outstanding long-term debt by $1,493,440 or 2.6% over the prior year. The decrease is the net result of the issuance of debt in accordance with the district’s ongoing capital projects plan and the repayment of maturing debt issues.
► The District implemented GASB 68 and GASB 71 (Statements) in 2015. These Statements
require the recognition of a net pension liability, deferred outflows of resources and deferred inflows of resources for its participation in the South Carolina Retirement System and the South Carolina Police Officers’ Retirement System (Plans), cost-sharing multiple employer defined benefit pension plans on financial statements prepared on the economic resources measurement focus and accrual basis of accounting and presents more extensive note disclosures.
The adoption of these Statements had no impact on the District’s governmental fund financial
statements, which continue to report expenditures in the amount of the actuarially determined contributions, as required by the South Carolina Public Employee Benefit Authority who administers the plan. But, the adoption has resulted in the restatement of the District’s net position as of July 1, 2014 for its government-wide financial statements to reflect the reporting of the net pensions liability, deferred outflows or resources, and deferred inflows of resources for its qualified pension plan in accordance with the provisions of these Statements. Net Position of the District’s government-wide financial statements as of July 1, 2014 was decreased by $116.4 million, reflecting the cumulative change in accounting principle related to the adoption of these Statements. See Note 1-D for more information
.
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OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of a series of financial statements and notes to those statements. The statements are organized to first facilitate an understanding of the District as a financial whole, an entire operating entity. The statements then proceed to provide an increasingly detailed look at specific financial activities. Basic financial statements: The District's basic financial statements consist of the government-wide financial statements, the fund financial statements, and the notes to the financial statements. Government-wide financial statements: The Statement of Net Position and Statement of Activities
provide information about the activities of the whole District, presenting both an aggregate view of the District’s finances and a longer-term view of those finances. These statements are presented taking into account all of the current year's revenues and expenses regardless of when cash is received or paid. They report the District’s net assets and changes in those assets. This change is important because it shows whether, for the District as a whole, its financial position has improved or diminished. The causes of change may be the result of many factors, some financial and some not. Non-financial factors include the District’s property tax base, current property tax laws, condition of facilities, required educational programs, and other factors.
Both the Statement of Net Position (page 14) and the Statement of Activities (page 18), report
functions of the District that are principally supported by taxes and intergovernmental revenues (governmental activities) separated from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). Governmental activities are the activities where most of the District’s programs and services are reported including, but not limited to, instruction, support services, operation and maintenance of plant, and pupil transportation. The business-type activity is the District's school breakfast and lunch program.
Fund financial statements: These statements provide the next level of detail of operations. The
relationship (or difference) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is reconciled in the financial statements. There are six statements: two for all governmental funds (pages 16-19), three for the proprietary fund (page 20-22), and finally the fiduciary fund (page 23).
Governmental funds: Most of the District's basic services are included in governmental funds,
which generally focus on how cash and other financial assets can readily be converted to cash flow. They also show the balances left at year-end that are available for spending. The accounting method used to create this information base in this manner is referred to as modified accrual accounting. References in this analysis to governmental funds include the General Fund, Special Revenue-Special Projects Funds, Special Revenue-EIA Funds, the Debt Service Fund, and Building Funds.
Proprietary funds: Services for which a fee is charged are generally reported in proprietary
funds. Proprietary funds are reported in the same way as the government-wide statements. The District has one proprietary fund, its Food Service Fund.
Fiduciary funds: The District is the trustee, or fiduciary, for some assets that belong to others.
The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. These activities are excluded from the government-wide financial statements because the District may not use these assets to finance its operations. The District's Pupil Activity Fund is classified as a fiduciary fund.
Notes to the financial statements: The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. They can be found on pages 24 - 46.
7
Required supplementary information: In addition to the basic financial statements this report includes required supplementary information that further supports the financial statements with a comparison of the District's budget for the year (page 45). Other supplementary information: This section, beginning on page 55, contains schedules required by the South Carolina State Department of Education and requested by the District's Board of Trustees. FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE The table below shows a condensed version of the Statement of Net Position which provides a simplified perspective of the District as a whole for fiscal year 2015. Current assets decreased as invested bond proceeds were used as work on the new Walhalla High School progressed. Total liabilities increased by about 177% as a result of the adoption of the new GASB statements. Overall, the district’s net position decreased by 75.5%.
Condensed Statement of Net Position
Governmental Activities Business-type Activities Total School District
Total Percent Change
2014 2015 2014 2015 2014 2015 2014-2015
Current and
other assets 42,485,542 38,572,954 1,670,202 2,147,075 44,155,744 40,720,029 -7.8%
Capital assets 168,189,162 176,826,357 231,970 190,226 168,421,132 177,016,583 5.1%
Total assets 210,674,704 215,399,311 1,902,172 2,337,301 212,576,876 217,736,612 2.4%
Deferred outflows of
resources 2,575 9,992,127 - 170,736 2,575 10,162,863 3945.7%
Long-term debt
outstanding 57,420,378 55,926,938 - - 57,420,378 55,926,938 -2.6%
Other liabilities 8,005,920 123,543,850 149,792 2,473,113 8,155,712 126,016,963 1445.1%
Total liabilities 65,426,298 179,470,788 149,792 2,473,113 65,576,090 181,943,901 177.5%
Deferred pension
credits - 9,788,210 - 167,252 - 9,955,462,
Net position
invested in
capital assets,
net of related
Debt 124,110,458 130,007,669 231,970 190,226 124,342,428 130,197,895 4.7%
Restricted 6,758,239 6,858,222 - - 6,758,239 6,858,222 1.5%
Unrestricted 14,382,284 (100,733,451) 1,520,410 (322,554) 15,902,694 (101,056,005) -735.5%
Total net position 145,250,981 36,132,440 1,752,380 (132,328) 147,003,361 36,000,112 -75.5%
8
The table below summarizes the changes in net position caused by revenues for the fiscal year. Total revenues reflect an increase of 1.2% when compared to the prior year. This can be attributed to small increases in local property tax collections and in state and federal funding.
Governmental Activities Business-type Activities Total School District
Total Percent Change
2014 2015 2014 2015 2014 2015
2014-2015
REVENUES Program revenues
Charges for sales and services 2,150,691 314,723 1,263,407 1,102,632 3,414,098 1,417,355 -58.5%
Operating grants & contrib. 38,811,646 42,086,552 3,937,609 3,966,463 42,749,255 46,053,015 7.7%
Capital grants & contrib. 1,100,000 - - - 1,100,000 - -100.0% General revenues
Property taxes 58,686,412 58,710,230 - - 58,686,412 58,710,230 0.04% Federal and state formula aid 17,873,753 18,192,749 - - 17,873,753 18,192,749 1.8% Other 248,309 1,180,861 1,859 3,034 250,168 1,183,895 373.2%
Total revenues 118,870,811 120,485,115 5,202,875 5,072,129 124,073,686 125,557,244 1.2%
This table shows the changes in net assets resulting from expenditures for the fiscal year. This year the cost of programs increased 3.4%.
Governmental Activities Business-type Activities Total School District
Total Percent Change
2014 2015 2014 2015 2014 2015
2014-2015
EXPENSES Instruction 66,049,638 69,462,105 - - 66,049,638 69,462,105 5.2% Support Services 42,771,009 44,003,156 - - 42,771,009 44,003,156 2.9% Community Services 13,646 204,338 - - 13,646 204,338 1397.4% Intergovernmental 650,965 295,872 - - 650,965 295,872 -54.6% Interest and Other Charges 1,514,153 1,036,602 - - 1,514,153 1,036,602 -31.5% Food Service - - 5,221,073 5,145,607 5,221,073 5,145,607 -1.5% Transfers 288,635 144,505 (288,635) (144,505) - -
Total Expenses 111,288,046 115,146,578 4,932,438 5,001,102 116,220,484 120,147,680 3.48%
Increase(Decrease) in Net Position 7,582,765 5,338,537 270,437 71,027 7,853,202 5,409,564 31.1% Cumulative change in accounting principle (114,457,078) (1,955,735) (116,412,813) NET POSITION, JULY 1 137,668,216 145,250,981 1,481,943 1,752,380 139,150,159 147,003,361 5.6%
NET POSITION, JUNE 30 145,250,981 36,132,440 1,752,380 (132,328) 147,003,361 36,000,112 -75.5%
9
GOVERNMENTAL ACTIVITIES The chart below shows revenues by source for governmental activities and illustrates the dependence of the District on local tax revenues for its general operations. Grants from federal, state, and private sources comprise only 34.93% of total revenues. Other general revenues include, but are not limited to, unrestricted state grants, contributions, and interest earnings.
The following chart shows expense by category for governmental activities and illustrates the cost of the two major areas of instruction and support services, plus the minor activities of community services, intergovernmental payments, interest, and other charges grouped together. Salaries and fringe benefits for classroom teachers make up the major portion of instructional expenses. Support costs include other educational personnel outside the classroom, administration, school operation and maintenance, and pupil transportation.
CHARGES FOR SALES/SERVICES
0.26%
OPERATING GRANTS 34.93%
PROPERTY TAXES 48.73%
FEDERAL/STATE AID
15.10%
OTHER 0.98%
INSTRUCTION 60.40%
SUPPORT 38.26%
OTHER 1.34%
10
BUSINESS-TYPE ACTIVITIES
The District's only activity categorized as a business-type is its school food service operation. Food Service receives no funding from tax revenues. While it receives an operating transfer from the General Fund, the original source of these funds is a state allocation. The figure below showing revenues by source demonstrates that the majority of its revenues are derived from USDA operating grants such as the free and reduced lunch program and commodity foods.
All expenditures in the Food Service Fund are considered support. Workers' salaries and fringe make up 29.64% of its total operating expense. Beginning in July 2011, the school district contracted with Sodexo to manage the food service activities. Payments to the food service management company totaled 62.3% of total operating expenses. Food service operating expenses decreased by about 1.5% and revenues decreased by about 2.5% and the food service fund ended the year with a loss of $73,478 before transfers. FINANCIAL ANALYSIS OF DISTRICT FUNDS The District's governmental funds ended the year with a combined fund balance of $29,590,243. This was a decrease of $3,254,771 from the beginning of the year. This decrease is primarily the result of using cash and investments to complete the construction of the new Walhalla High School. State revenues in the general fund increased by $1,951,119 and local tax revenues increased by $185,327. The Debt Service Fund increased by about $676,000. The collection and disbursement of these funds are under the management of the County Treasurer and therefore the District offers no comment on this change. The balance in this fund is designated for principal and interest payments on long-term debt. BUDGETARY HIGHLIGHTS The General Fund operating budget was reviewed in the spring of this fiscal year as is our customary practice. The mid-year review allows the administration to recommend budgetary changes as a result of staffing changes due to employee turnover and new positions required by pupil count increases or in response to revenue shortfalls. This year the budget was amended only for changes in state revenues and staffing changes. CAPITAL ASSET AND DEBT ADMINISTRATION The new Walhalla High School opened in August of 2015. Projects currently underway include renovations and additions at Fair Oak and Ravenel Elementary campuses. These projects are scheduled for completion in the summer of 2016.
CHARGES FOR SALES/SERVICES
21.15%
OPERATING GRANTS/
CONTRIBUTIONS 76.08%
TRANSFERS 2.77%
11
The Board of Trustees closely monitors the long-range needs of the district. Currently, the board is committed to the capital plan adopted several years ago. As needs are identified, projects will be added to the plan and they will be financed using 8% debt and keeping the county’s debt service millage rate constant. FUTURE FINANCIAL POSITION The Fiscal Year 2016 approved budget included an increase in general fund expenditures. A state mandate for a salary schedule step increase for teachers, an increase in South Carolina Retirement Systems matching, and employer insurance cost increases are the causes. The millage rate for school operations for fiscal year 2015-16 remained constant at 110.1 mills. REQUESTS FOR INFORMATION This financial report is designed to provide the District's citizens, taxpayers, customers, investors, and creditors with a general overview of the District's finances and to demonstrate the District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Financial Services Department, School District of Oconee County, 414 S Pine Street, Walhalla, SC 29691.
12
BASIC FINANCIAL
STATEMENTS
13
SCHOOL DISTRICT OF OCONEE COUNTY
STATEMENT OF NET POSITION
Amounts are in dollars
ASSETS
Governmental
Activities
Business-type
Activities TOTAL
Cash and Cash Equivalents 2,166,173 687,567 2,853,740
Investments 20,704,745 1,321,647 22,026,392
Taxes Receivable, net 2,404,209 - 2,404,209
Other Receivables 71,473 - 71,473
Due from Pupil Activities Fund 372,557 - 372,557
Internal Balances (40,941) 40,941 -
Due from State Department of Education 358,408 - 358,408
Due from Other Governmental Units 12,450,200 94,442 12,544,642
Inventories 50,738 - 50,738
Prepaid Expenses 35,392 2,478 37,870
Capital Assets:
Land and Construction in Progress 59,786,299 - 59,786,299
Other Capital Assets, Net of Depreciation 117,040,058 190,226 117,230,284
TOTAL ASSETS 215,399,311 2,337,301 217,736,612
DEFERRED OUTFLOWS OF RESOURCES
Deferred Pension Charges 9,992,127 170,736 10,162,863
LIABILITIES
Current Liabilities:
Accounts Payable 962,187 437,713 1,399,900
Construction Contracts Payable 42,933 - 42,933
Accrued Salaries 538,318 2,175 540,493
Employer Retirement Payable 1,592,428 - 1,592,428
Accrued Interest Payable 628,673 - 628,673
Other Accrued Liabilities 2,662,184 - 2,662,184
Due to Pupil Activity Funds 2,684 - 2,684
Due to Other Governmental Units 140,750 - 140,750
Unearned Revenues 881,198 49,545 930,743
Net Pension Liability 116,092,495 1,983,680 118,076,175
Non-Current Liabilities:
Due Within One Year 17,361,767 - 17,361,767
Due In More than One Year 38,565,171 - 38,565,171
TOTAL LIABILITIES 179,470,788 2,473,113 181,943,901
DEFERRED INFLOWS OF RESOURCES
Deferred Pension Credits 9,788,210 167,252 9,955,462
NET POSITION
Invested in Capital Assets, Net of Related Debt 130,007,669 190,226 130,197,895
Restricted For:
Debt Service 6,598,123 - 6,598,123
Special Projects 260,099 - 260,099
Unrestricted (100,733,451) (322,554) (101,056,005)
TOTAL NET POSITION 36,132,440 (132,328) 36,000,112
See accompanying independent auditor's report and notes to financial statements.
June 30, 2015
14
SCHOOL DISTRICT OF OCONEE COUNTY
STATEMENT OF ACTIVITIES
For the fiscal year ended June 30, 2015
Amounts are in dollars
FUNCTIONS/PROGRAMS Operating Capital
Charges for Grants and Grants and Governmental Business-type
PRIMARY GOVERNMENT: Expenses Services Contributions Contributions Activities Activities Totals
Governmental Activities:
Instruction 69,462,105 22,398 30,416,973 - (39,022,734) - (39,022,734)
Supporting Services 44,003,156 292,325 11,645,841 - (32,064,990) - (32,064,990)
Community Services 204,338 - 23,738 - (180,600) - (180,600)
Intergovernmental 295,872 - - - (295,872) - (295,872)
Interest and Other Charges 1,036,602 - - - (1,036,602) - (1,036,602)
Total Governmental Activites 115,002,073 314,723 42,086,552 - (72,600,798) - (72,600,798)
Business-Type Activities:
Food Service 5,145,607 1,102,632 3,966,463 - - (76,512) (76,512)
TOTAL PRIMARY GOVERNMENT 120,147,680 1,417,355 46,053,015 - (72,600,798) (76,512) (72,677,310)
GENERAL REVENUES AND TRANSFERS:
Property Taxes Levied for General Purpose 42,482,249 - 42,482,249
Property Taxes Levied for Debt Service 16,227,981 - 16,227,981
Unrestricted State Grants 18,192,749 - 18,192,749
Miscellaneous 1,116,366 - 1,116,366
Unrestricted Investment Earnings 56,292 3,034 59,326
Sale of Fixed Assets 8,203 - 8,203
Transfers (144,505) 144,505 -
Total General Revenues and Transfers 77,939,335 147,539 78,086,874
CHANGE IN NET POSITION 5,338,537 71,027 5,409,564
NET POSITION - Beginning , As Previously Reported 145,250,981 1,752,380 147,003,361
Cumulative Change in Accounting Principle - GASB 68 and GASB 71 (114,457,078) (1,955,735) (116,412,813)
NET POSITION - Beginning, As Adjusted 30,793,903 (203,355) 30,590,548
NET POSITION - Ending 36,132,440 (132,328) 36,000,112
Primary Government
PROGRAM REVENUES
NET REVENUE (EXPENSE) AND
CHANGE IN NET POSITION
See accompanying independent auditor's report and notes to financial statements.
15
SCHOOL DISTRICT OF OCONEE COUNTY
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2015
Amounts are in Dollars
Special Other Total
Revenue - Debt Capital Governmental Governmental
General EIA Service Projects Funds Funds
ASSETS
Current Assets
Cash and Cash Equivalents 1,911,131 - - 255,042 - 2,166,173
Investments 18,683,830 - - 1,262,602 758,313 20,704,745
Taxes Receivable, Net 1,851,023 - 553,186 - - 2,404,209
Due from Other Funds 2,019,485 22,590 - - 1,705,321 3,747,396
Due from State Dept. of Education 229,177 129,231 - - - 358,408
Due from Other Governmental Units 1,523,141 - 6,529,587 - 4,397,472 12,450,200
Accounts Receivable 52,544 120 - - 18,717 71,381
Other Receivables 92 - - - - 92
Inventory 50,738 - - - - 50,738
Prepaid Expenses 35,392 - - - - 35,392
TOTAL ASSETS 26,356,553 151,941 7,082,773 1,517,644 6,879,823 41,988,734
LIABILITIES
Accounts Payable 723,176 36,578 - 99,978 102,454 962,186
Construction Contracts Payable - - - 42,933 - 42,933
Due to Other Funds - - - 3,346 3,415,121 3,418,467
Accrued Salaries 235,768 5,220 - - 297,330 538,318
Employer Retirement Payable 1,592,427 - - - - 1,592,427
Other Accrued Liabilities 2,662,184 - - - - 2,662,184
Due to State Dept. of Education - 4,673 - - 136,077 140,750
Unearned Revenue - Other - 105,470 - - 775,728 881,198
TOTAL LIABILITIES 5,213,555 151,941 - 146,257 4,726,710 10,238,463
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes 1,675,378 - 484,650 - - 2,160,028
FUND BALANCES
Nonspendable:
Prepaid Expenses 35,392 - - - - 35,392
Inventories 50,738 - - - - 50,738
Restricted For:
Special Projects - - - - 260,099 260,099
Debt Service - - 6,598,123 - - 6,598,123
Capital Projects - - - 1,371,387 - 1,371,387
Assigned:
Special Projects - - - - 1,893,014 1,893,014
Unassigned 19,381,490 - - - - 19,381,490
TOTAL FUND BALANCES 19,467,620 - 6,598,123 1,371,387 2,153,113 29,590,243
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOUCES, AND FUND BALANCES 26,356,553 151,941 7,082,773 1,517,644 6,879,823 41,988,734
`
See accompanying independent auditor's report and notes to financial statements.
16
Amounts are in Dollars
TOTAL FUND BALANCES - GOVERNMENTAL FUNDS 29,590,243
Amounts reported for the governmental activities in the statement of net assets
are different because:
Some property taxes receivable are not available to pay for current period
expenditures and are deferred in the funds 2,160,028
Capital assets used in governmental activities are not financial resources and
therefore are not reported as assets in governmental funds. The cost of the
assets is $281,981,101 and the accumulated depreciation is $105,154,744. 176,826,357
Accrued interest on the bonds in governmental accounting is not due and payable
in the current period and therefore is not reported as a liability in the funds. (628,673)
The District's proportiionate share of the net pension liability, deferred outflows of resources,
and deferred inflows of resources related to its participation in the State pension plans are
not recorded in the governmental funds but are recorded in the Statement of Net Position. (115,888,578)
Long-term liabilites, including bonds payable, are not due and payable in the
current period and therefore are not reported as liabilities in the funds.
Long-term liabilities at year-end consist of:
Bonds Payable (51,677,738)
Compensated Absences (4,249,199) (55,926,937)
TOTAL NET POSITION - GOVERNMENTAL ACTIVITIES 36,132,440
See accompanying independent auditor's report and notes to financial statements.
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION
June 30, 2015
SCHOOL DISTRICT OF OCONEE COUNTY
17
SCHOOL DISTRICT OF OCONEE COUNTY
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Fiscal Year Ended June 30, 2015
Amounts are in Dollars Special Other Total
Revenue- Debt Capital Governmental Governmental
General EIA Service Projects Funds Funds
REVENUES
Local Property Taxes 42,542,496 - 16,234,104 - - 58,776,600
Other Local 126,243 - 7,484 924,197 1,562,498 2,620,422
Total Local 42,668,739 - 16,241,588 924,197 1,562,498 61,397,022
State 42,586,196 5,851,647 752,707 - 3,110,221 52,300,771
Federal - - - - 6,795,395 6,795,395
Intergovernmental 50,097 - - - - 50,097
TOTAL REVENUES 85,305,032 5,851,647 16,994,295 924,197 11,468,114 120,543,285
EXPENDITURES
Current:
Instruction 55,704,243 1,366,633 - - 7,709,639 64,780,515
Support Services 34,701,542 470,584 - 224,709 4,101,147 39,497,982
Community Services - - - - 23,723 23,723
Intergovernmental 23,735 - - - 272,137 295,872
Debt Service:
Principal - - 16,372,923 - - 16,372,923
Interest - - 1,715,219 - - 1,715,219
Capital Outlay 185,874 - - 16,284,811 223,003 16,693,688
TOTAL EXPENDITURES 90,615,394 1,837,217 18,088,142 16,509,520 12,329,649 139,379,922
Excess (Deficiency) of Revenues Over
(Under) Expenditures (5,310,362) 4,014,430 (1,093,847) (15,585,323) (861,535) (18,836,637)
OTHER FINANCING SOURCES (USES)
Proceeds of General Obligation Bonds - - - 14,712,000 500,000 15,212,000
Premium on Bonds Sold - - - 706,802 - 706,802
Sale of Fixed Assets 8,203 - - - 8,203
Transfers In 6,361,297 - 1,770,568 783,449 487,563 9,402,877
Transfers Out (444,315) (4,014,430) - (4,517,834) (771,437) (9,748,016)
TOTAL OTHER FINANCING
SOURCES (USES) 5,925,185 (4,014,430) 1,770,568 11,684,417 216,126 15,581,866
Net Change in Fund Balances 614,823 - 676,721 (3,900,906) (645,409) (3,254,771)
Fund Balances July 1, 2014 18,852,797 - 5,921,402 5,272,293 2,798,522 32,845,014
.
Fund Balances June 30, 2015 19,467,620 - 6,598,123 1,371,387 2,153,113 29,590,243
See accompanying independent auditors' report and notes to financial statements
18
Amounts are in Dollars
TOTAL NET CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS (3,254,771)
Amounts reported for governmental activities in the statement of activities are different because:
Revenues in the Statement of Activities that do not provide current financial resources are not
reported as revenues in the funds. (66,371)
The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt consumes the
current financial resources of the governmental funds. Neither transaction, however, has any
effect on net assets. Also, governmental funds report the effect of issuance costs, premiums,
discounts, and similar items when debt is first issued, whereas these amounts are deferred
and amortized in the statement of activities. This amount is the net effect of these
differences in the treatment of long-term debt and related items. 1,169,621
Interest on long-term debt in the statement of activities differs from the amount reported in the
governmental funds because interest is recognized as an expenditure in the funds when it is due,
and thus requires the use of current financial resources. In the statement of activities, however,
interest expense is recognized as the interest accrues, regardless of when it is due. (36,884)
Some expenses reported in the statement of activities do not require the use of current financial
resources and therefore are not reported as expenditures in the governmental funds. These
include the net decrease in compensated absences. 140,632
Changes in the District's proportionate share of net pension liability, deferred outflows of resources,
and deferred inflows of resources for the current year are not reported in the governmental funds
but are reported in the Statement of Activities. (1,431,500)
Governmental funds report capital outlays as expenditures ($16,587,314) However, in the
statement of activities, the cost of those assets is allocated over their estimated useful lives
as depreciation ($7,769,504). This is the amount by which depreciation exceeded
capital outlays in the current period. 8,817,810
CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 5,338,537
SCHOOL DISTRICT OF OCONEE COUNTY
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES
For the fiscal year ended June 30, 2015
See accompanying independent auditor's report and notes to financial statements.
19
Amounts are in Dollars
Enterprise Fund -
Food Service
ASSETS
Current Assets:
Cash 687,567
Due From Other Governmental Units 94,442
Due From Other Funds 40,941
Investments 1,321,647
Prepaid Expenses 2,478
Total Current Assets 2,147,075
Noncurrent Assets
Equipment 1,868,838
Less Accumulated Depreciation (1,678,612)
Total Noncurrent Assets 190,226
Total Assets 2,337,301
DEFERRED OUTFLOWS OF RESOURCES
Deferred Pension Charges 170,736
LIABILITIES
Current Liabilities
Accounts Payable 437,713
Accrued Salaries 2,175
Unearned Revenue 49,545
Total Current Liabilities 489,433
Long-term Liabilities
Net Pension Liability 1,983,680
Total Liabilities 2,473,113
DEFERRED INFLOWS OF RESOURCES
Deferred Pension Credits 167,252
NET POSITION
Net Investment in Capital Assets 190,226
Unrestricted (322,554)
Total Net Position (132,328)
SCHOOL DISTRICT OF OCONEE COUNTY
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
June 30, 2015
See accompanying independent auditor's report and notes to financial statements.
20
Enterprise Fund -
Amounts are in Dollars Food Service
Operating Revenues:
Proceeds Sale of Meals 1,102,632
Operating Expenses:
Food Costs 255,304
Salaries and Employee Benefits 1,525,114
Contracted Services 3,167,853
Depreciation 57,858
Supplies 42,944
Repairs and Maintenance 60,209
Other 36,325
Total Operating Expenses 5,145,607
Operating Income (Loss) (4,042,975)
Non-Operating Revenues (Expenses):
Interest 3,034
USDA Reimbursements 3,710,918
Commodities Received from USDA 255,107
Other Federal and State Aid 438
Total Non-Operating Revenue (Expenses) 3,969,497
Income (Loss) Before Operating Transfer (73,478)
Transfers In/(Out) 144,505
Change In Net Position 71,027
Net Position, July 1, 2014, As Previously Reported 1,752,380
Cumulative Change in Accounting Principle - GASB 68 and Gasb 71 (1,955,735)
Net Position, July 1, 2014, As Adjusted (203,355)
Net Position, June 30, 2015 (132,328)
See accompanying independent auditor's report and notes to financial statements.
For the fiscal year ended June 30, 2015
SCHOOL DISTRICT OF OCONEE COUNTY
PROPRIETARY FUND TYPES
STATEMENT OF REVENUES, EXPENSES, AND CHANGES
IN NET POSITION
21
Amounts are in Dollars
Enterprise Fund -
Food Service
CASH FLOWS FROM OPERATING ACTIVITIES
Received from Patrons 1,216,452
Payments for Employee Benefits (487,956)
Payments to Employees for Services (996,587)
Payments for Workers' Compensation and Unemployment Claims (13,935)
Payments to Suppliers for Goods and Services (3,254,966)
Net Cash Provided by (Used for) Operating Activities (3,536,992)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers From Other Funds 144,505
Nonoperating Grants Received 3,701,006
Net Cash Provided by (Used for) Noncapital Financing Activities 3,845,511
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Acquisition of Capital Assets (16,114)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Investments (137,556)
Proceeds from Sale of Investments 75,691
Interest on Investments 3,034
Net Cash Provided by (Used for) Investing Activities (58,831)
Net Increase (Decrease) in Cash and Cash Equivalents 233,574
Cash and Cash Equivalents - July 1, 2014 453,993
Cash and Cash Equivalents - June 30, 2015 687,567
Reconciliation of Operating Income (Loss) to Net Cash
Provided by (Used for) Operating Activities:
Operating Income (Loss) (4,042,975)
Adjustments to Reconcile Operating Income (Loss) to Net Cash
Provided by (Used for) Operating Activities:
Depreciation 57,858
Commodities Used 255,107
Changes in Assets and Liabilities:
Receivables 112,872
Prepaid Expenses (2,478)
Due from Other Funds (40,941)
Accounts Payable 336,518
Due to Other Funds (240,537)
Accrued Salaries 2,175
Pension Liability, Deferred Charges, and Deferred Credits 24,461
Unearned Revenue 948
Net Cash Provided by (Used for) Operating Activities (3,536,992)
Noncash Transactions:
During the year the District received $255,107 of food commodities from the US Department of Agriculture.
See accompanying independent auditor's report and notes to financial statements.
SCHOOL DISTRICT OF OCONEE COUNTY
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Fiscal Year Ended June 30, 2015
22
Amounts are in dollars
AGENCY
FUND
ASSETS
Cash in Bank 1,527,933
Returned Checks 5,718
Investments 126,060
Accounts Receivable 3,678
Due From General Fund 2,684
Due from State Department of Education 778
Due from Federal Government 2,465
TOTAL ASSETS 1,669,316
LIABILITIES
Accounts Payable 48,271
Accrued Salaries 2,508
Due to General Fund 372,557
Due to Pupil Activity 1,245,980
TOTAL LIABILITIES 1,669,316
NET POSITION -
SCHOOL DISTRICT OF OCONEE COUNTY
STATEMENT OF NET POSITION
June 30, 2015
See accompanying independent auditor's report and notes to financial statements.
FIDUCIARY FUNDS
23
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Board of Trustees of the School District of Oconee County was created by the South Carolina General Assembly on May 12, 1953. On that date, the school districts located within Oconee County were consolidated into the single, countywide School District of Oconee County, which assumed all of the assets and liabilities of the former school districts. The School District is governed by a five-member Board of Trustees elected to four-year terms in a general election. The Board has the responsibility of directing and managing the public education system of Oconee County. The School District is fiscally dependent on the County because the County approves the amount of local funds from property taxes that the School District will receive and sets the millage rate for property taxes. The School District of Oconee County’s major operations include general operations, federal and state grants, building construction, food service, and pupil activities. All funds that are controlled by or dependent on the School District are included in this financial statement. Control by or dependence on the School District is determined on the basis of financial interdependency, selection of governing authority, designation of management, budget adoption, outstanding debt obligations, obligations to fund deficits, and accountability for fiscal manners. B. Government-wide and Fund Financial Statements The government-wide financial statements include the statement of net position and the statement of activities. These statements report financial information for the District as a whole excluding fiduciary activities. Individual funds are not displayed but the statements distinguish governmental activities, generally supported by taxes and District general revenues from business-type activities, generally financed in whole or in part with fees charged to external customers. The statement of activities reports the expenses of a given function offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Program revenues include 1) charges for services and other charges to users of the District’s services; 2) operating grants and contributions which finance annual operating activities; and 3) capital grants and contributions which fund the acquisition, construction, or rehabilitation of capital assets. These revenues are restricted to meeting the requirements of a particular program. Taxes and other revenue sources not properly included with program revenues are reported as general revenues. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The financial statements of the District are prepared in accordance with generally accepted accounting principles (GAAP). The District’s reporting entity applies all relevant Governmental Accounting Standards Board (GASB) pronouncements and applicable Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles (APB) opinions issued on or before November 30, 1989 unless they conflict with GASB pronouncements. The District’s reporting entity does not apply FASB pronouncements or APB opinions issued after November 30, 1989.
24
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation, continued The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting generally including the reclassification or elimination of internal activity (between or within funds). Reimbursements are reported as reductions to expenses. Proprietary and fiduciary fund financial statements also report using this same focus and basis of accounting although internal activity is not eliminated in these statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property tax revenues are recognized in the year for which they are levied while grants are recognized when grantor eligibility requirements are met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to pay current liabilities. The District considers revenues to be available if they are collected within 60 days of the end of the fiscal year. Expenditures are recorded when the related fund liability is incurred, except for general obligation bond principal and interest which are reported as expenditures in the year due. Major revenue sources susceptible to accrual include: property taxes, franchise taxes (fees), intergovernmental revenues, and investment income. In general, other revenues are recognized when cash is received. Operating income reported in proprietary fund financial statements includes revenues and expenses related to the primary, continuing operation of the funds. Principal operating revenues for proprietary funds are charges to customers for sales or services. Principal operating expenses are the costs of providing goods or services and include administrative expenses and depreciation of capital assets. Other revenues and expenses are classified as non-operating in the financial statements. The District’s practice is to use restricted amounts first when both restricted and unrestricted (committed, assigned, and unassigned) fund balance is available unless there are legal documents, contracts, or agreements that prohibit doing such. Additionally, the District generally would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. D. Adoption of Accounting Standards
The School District implemented GASB Statement No. 68 “Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27” (“GASB 68”) and GASB No. 71, “Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB No. 68” (“GASB 71” and collectively “Statements”) for the fiscal year ended June 30, 2015. The primary objective of these Statements is to improve accounting and financial reporting by state and local governments for pensions. In addition, state and local governments who participate in a cost-sharing multiple employer plan are now required to recognize a liability for its proportionate share of the net pension liability of that plan. It is the GASB’s intention that these statements will provide citizens and other users of the financial statements with a clearer
25
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued D. Adoption of Accounting Standards, continued picture of the size and nature of the District’s financial obligations to current and former employees for past services rendered. In particular, these Statements require the District to recognize a net pension liability, deferred outflows of resources and deferred inflows of resources for its participation in the South Carolina Retirement System and the South Carolina Police Officers’ Retirement System (“Plans”), cost-sharing multiple employer defined benefit pensions plans, on financial statements prepared on the economic resources measurement focus and accrual basis of accounting (i.e., the statement of net position) and present more extensive note disclosures. The adoption of these Statements had no impact on the District’s governmental fund financial statements, which continue to report expenditures in the amount of the contractually required contributions, as required by the South Carolina Public Employee Benefit Authority (“PEBA”) who administers the Plans. However, the adoption has resulted in the restatement of the District’s net position as of July 1, 2014 for its government-wide financial statements to reflect the reporting of net pensions liabilities and deferred outflows of resources for each of its qualified Plans in accordance with the provisions of these Statements. Due to the operation of an enterprise fund, the Net Pension Liability and Deferred Pension Charges and Credits are allocated between governmental activities and business type activities. The allocations are shown in the table below. The net position of the District’s government-wide activities in the government-wide financial statements as of July 1, 2014 was decreased by $114,457,078 and net position for the business-type activities was decreased by $1,955,735.
Activity Type Net Pension Liability Deferred Pension
Charges Deferred Pension
Credits Governmental $ 116,092,495 $ 9,992,127 $ 9,788,210 Business 1,983,680 170,736 167,252
Total $ 118,076,175 $ 10,162,863 $ 9,955,462 E. Fund Types Due to the legal requirements and the diverse nature of the operations of a school district, there must be a separation of transactions by class or nature of activity. The accounts of a school district are organized on the basis of funds or account groups, each of which is a separate, independent accounting entity. The operations of each fund are recorded in a separate, self-balancing set of accounts showing its assets, liabilities, fund balance, revenues, and expenditures. The types of funds maintained by the School District of Oconee County are as follows:
1. Governmental Funds
The General Fund is the District’s primary operating fund. It accounts for all financial resources except those required to be accounted for in other funds.
The Special Revenue Funds account for the proceeds of specific revenue sources (such as federal and state grants) that are legally restricted to expenditures for specific purposes.
26
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued E. Fund Types, continued
The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds.
The Capital project accounts for financial resources to be used for the acquisition or construction of major capital facilities.
2. Proprietary Funds
The School Food Service Fund accounts for operations in a manner similar to private business enterprises – where the intent of the School District is that costs (including depreciation) will be financed or recovered primarily through user charges and U.S.D.A. reimbursements. 3. Fiduciary Funds The Pupil Activities Fund accounts for assets held in trust for student clubs and other similar activities.
F. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position/Fund
Balance
1. Cash and Cash Equivalents
The School District’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.
1. Investments
The District’s investment policy is designed to operate within existing statutes (which are identical for all funds, fund types and component units within the State of South Carolina) that authorize the District to invest in the following:
a. Obligations of the United States and agencies thereof; b. General obligations of the State of South Carolina or any of its political units; c. Savings and loan associations to the extent that the same is insured by an agency of
the federal government; d. Certificates of deposit and funds in deposit accounts with banking institutions
provided that such certificates and funds in deposit accounts are collaterally secured by securities of the type described in a. and b. above, held by a third party as escrow agent, or custodian of a market value, not less than the amount of the certificates or funds in deposit accounts so secured, including interest; provided, however, such collateral shall not be required to the extent the same are insured by an agency of the federal government.
e. Obligations of the United States and agencies thereof; f. General obligations of the State of South Carolina or any of its political units; g. Savings and loan associations to the extent that the same is insured by an agency of
the federal government; h. Certificates of deposit and funds in deposit accounts with banking institutions
provided that such certificates and funds in deposit accounts are collaterally secured
27
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued F. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position/Fund Balance, continued
i. by securities of the type described in a. and b. above, held by a third party as escrow agent, or custodian of a market value, not less than the amount of the certificates or funds in deposit accounts so secured, including interest; provided, however, such collateral shall not be required to the extent the same are insured by an agency of the federal government;
j. Collateralized repurchase agreements when collateralized by securities as set forth in a. and b. above and held by the District or a third party as escrow agent or custodian;
k. South Carolina Local Government Investment Pool established and maintained by the State Treasurer.
2. Inventories
Inventories held by the School District are recorded at cost using the first-in, first-out method. Inventories shown in the General Fund consist of expendable supplies held for consumption.
Food Service Fund. General Fund inventories are equally offset by a fund balance reserve which indicates that they do not represent a spendable resource. 3. Prepaid Expenses Payments made to vendors for services benefiting future periods are recorded as prepaid expenses, using the consumption method. A current asset for the prepaid amount is recorded at the time of the purchase and an expenditure/expense is reported in the year in which services are consumed.
4. Capital Assets
General capital assets are those assets not specifically related to activities reported in the proprietary funds. These assets generally result from expenditures in the governmental funds. These assets are reported in the governmental activities column of the government-wide statement of net assets, but are not reported in the fund financial statements. Proprietary capital assets are reported in their respective fund statements as well as the government-wide statements.
All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Donated fixed assets are recorded at their fair market values as of the date received. The School District maintains a capitalization threshold of $5,000 for furniture and equipment, vehicles, land improvements, buildings, building improvements and infrastructure. Prior to the year ended June 30, 2002 a lower capitalization threshold was used for the Food Service Fund. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset’s life are not capitalized. All reported capital assets except land and construction-in-progress are depreciated. Construction projects are depreciated upon completion, at which time the complete costs of the project are transferred to the appropriate fixed assets category. Depreciation is computed using the straight-line method over the following useful lives:
28
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
F. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position/Fund
Balance, continued
Description
Estimated Lives
Land Improvements 20-30 years Buildings and Improvements 5-30 years Furniture and Equipment 5-12 years Vehicles 5-20 years Infrastructure 20 years Portables 20 years Food Service Equipment 12 years
5. Receivables and Payables
Transactions between funds that are representative of reimbursement arrangements outstanding at the end of the fiscal year are referred to as “due to/from other funds”. These amounts are eliminated in the governmental and business-type activities, which are presented as “internal balances”. All property taxes and other receivables are shown net of an allowance for uncollectibles. 6. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government only has one item that qualifies for reporting in this category. It is the deferred charge on refunding reported in the government-wide statement of net position. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The government has only one type of item, which arises only under a modified accrual basis of accounting, that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenue from property taxes. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.
7. Fund Balance
In accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions (“GASB 54”), the District classifies governmental fund balances as follows:
Nonspendable – includes amounts that inherently cannot be spent either because it is not in spendable form (i.e. prepaids, inventories, etc.) or because of legal or contractual requirements (i.e. principal on an endowment, etc.).
29
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued F. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position/Fund Balance, continued
Restricted – includes amounts that are constrained by specific purposes which are externally imposed by (a) other governments through laws and regulations, (b) grantors or contributions through agreements, (c) creditors through debt covenants or other contracts, or (d) imposed by law through constitutional provisions or enabling legislation. Committed – includes amounts that are constrained for specific purposes that are internally imposed by the government through formal action made by the Board of Trustees, which is the highest level of decision making authority, before the end of the reporting period. Those committed amounts cannot be used for any other purpose unless the government removes or changes the specified use by taking the same type of action it employed to previously commit those amounts.
7. Fund Balance, continued Assigned – includes amounts that are intended to be used for specific purposes that are neither considered restricted or committed and that such assignments are made before the report issuance date. The Assistant Superintendent of Operations and the Executive Director of Finance are responsible for assigning amounts for a specific purpose. Unassigned – includes amounts that do not qualify to be accounted for and reported in any of the other fund balance categories. This classification represents the amount of fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. The General Fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, if the expenditures incurred for specific purposes exceeded the amounts restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance.
In November 2011, the Board of Trustees revised the minimum fund balance requirement. The minimum was increased to twenty percent of the actual general fund expenditures as reported in the most recent audit.
8. Net Position
Net position represents the difference between assets and deferred outflows and liabilities and deferred inflows in the statement of net position. Net position is classified as net investment in capital assets; restricted and unrestricted. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the School District or through external restrictions imposed by creditors, grantors, or laws or regulations of other governmental entities.
G. Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the District’s management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
30
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued G. Accounting Estimates, continued
financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
H. Pensions
In government-wide financial statements, pensions are required to be recognized and disclosed using the accrual basis of accounting, regardless of the amount recognized as pension expenditures on the modified accrual basis of accounting. The District recognizes a net pension liability for each qualified pension plan in which it participates, which represents the excess of the total pension liability over the fiduciary net position of the qualified pension plan, or the district’s proportionate share thereof in the case of a cost-sharing multiple employer plan, measured as of the District’s fiscal year-end. Changes in the net pension liability during the period are recorded as pension expense, or as deferred outflows or inflows of resources depending on the nature of the change, in the period incurred. Those changes in net pension liability that are recorded as deferred outflows or inflows of resources that arise from changes in actuarial assumptions or other inputs and differences between expected or actual experience are amortized over the weighted average remaining service life of all participants in the respective qualified pension plan and recorded as a component of pension expense beginning with the period in which they are incurred. Projected earnings on qualified pension plan investments are recognized as a component of pension expense. Differences between projected and actual investment earnings are reported as deferred outflows or inflows of resources and amortized as a component of pension expense on a closed basis over a five-year period beginning with the period in which the difference occurred.
I. Other Post-Employment Benefits
Other Postemployment Benefits (“OPEB”) cost for retiree healthcare and similar, non-pension retiree benefits, is required to be measured and disclosed using the accrual basis of accounting, regardless of the amount recognized as OPEB expense on the modified accrual basis of accounting. Annual OPEB cost is equal to the annual required contributions to the OPEB plan, calculated in accordance with GAAP.
NOTE 2. BUDGETARY INFORMATION Budgets are presented as required supplementary information for the general fund. The budget is presented on the modified accrual basis of accounting which is consistent with accounting principles generally accepted in the United States of America. The budget is prepared by function and object as dictated by the State of South Carolina adopted Program Oriented Budgeting and Accounting System and for management control purposes. The School District’s policies allow funds to be transferred between functions. However, the total budget cannot be increased beyond that level without approval of the Board in supplementary action. The legal level of control is at the fund level. The following procedures are followed in establishing the budgetary data reflected in the financial statements:
1. In the fall of the preceding year, the School District begins its budget process for the next succeeding fiscal year beginning on July 1.
31
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 2. BUDGETARY INFORMATION, continued
2. After the School District’s budget committee reviews all requests and allocation requirements and related revenue, it presents a tentative proposed budget to the Superintendent for review and adjustment.
3. The Superintendent then presents a proposed budget to the Board of Trustees which reviews it in a series of workshops and makes any adjustments it deems necessary.
4. Prior to July 1, the budget is legally enacted through passage of a resolution by the Board.
5. Prior to July 1, the approved budget is submitted to the Oconee County Council which determines the amount of local funds from property taxes the School District will receive. Subsequently, the property tax millage rate is adjusted to fund this amount.
The administration has discretionary authority to make transfers between appropriation accounts. The revised budget amounts in the financial statements are as amended by the administration. No budgets are prepared for the Debt Service fund, Capital Projects fund, or Agency fund. All annual appropriations lapse at fiscal year end. NOTE 3. CASH AND INVESTMENTS Custodial credit risk-deposits – in the case of deposits, this is the risk that in the event of a bank failure, the District’s deposits may not be returned to it. As of June 30, 2015, the District’s bank balance was $4,378,038 and none of that amount was exposed to custodial credit risk because the entire balance was either insured or collateralized. Investments as of June 30, 2015 totaled $22,152,442, consisting of $22,026,392 invested in the South Carolina Local Government Investment Pool and $126,050 invested in certificates of deposit. Investments are recorded at cost and interest receivable is accrued at year-end. All investments are expected to be held to maturity, if applicable. Any significant discount or premium on the purchase of investments is amortized over the term of the investment by the straight-line method. The School District invests in funds secured by notes and bonds of the U.S. Government, or its related agencies, certificates of deposit at FDIC insured banking institutions, and banking instruments collateralized by U.S. Government Securities. Funds invested with the S.C. Local Government Investment Pool are fully guaranteed as to principal and interest by the U.S. Government. The fair value of a position in the Pool is materially the same as the value of Pool shares. Regulatory oversight for the Pool is performed by the State of South Carolina. The District does not have a deposit or investment policy for credit risk, custodial credit risk, concentration of credit risk, or interest rate risk.
32
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 4. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2015 was as follows: Governmental activities:
Beginning Balance
Increases
Decreases
Ending Balance
Capital assets, not depreciated: Land $ 2,718,931 $ - $ - $ 2,718,931 Construction in Progress 41,482,060 16,315,009 729,701 57,067,368
Total capital assets, not depreciated
44,200,991
16,315,009
729,701
59,786,299
Capital assets, depreciated: Land improvements 396,443 21,405 - 417,848 Buildings and improvements 211,201,622 164,616 260,086 211,106,152 Infrastructure 1,423,147 404,600 - 1,827,747 Portables 920,042 - - 920,042 Vehicles 2,593,265 197,606 82,967 2,707,904 Furniture and equipment 5,001,330 213,779 - 5,215,109
Total capital assets, depreciated
221,535,849
1,002,006
343,053
222,194,802
Less accumulated depreciation for: Land improvements 165,141 7,995 - 173,136 Buildings and improvements 89,407,992 7,229,406 79,471 96,557,927 Infrastructure 777,647 64,002 - 841,649 Portables 635,761 58,760 - 694,521 Vehicles 2,288,541 161,661 82,967 2,367,235 Furniture and equipment 4,272,596 247,680 - 4,520,276
Total accumulated depreciation
97,547,678
7,769,504
162,438
105,154,744
Total capital assets, depreciated, net
123,988,171
(6,767,498)
180,615
117,040,058
Governmental activities capital assets, net
$168,189,162
$9,547,511
$ 910,316
$ 176,826,357
Business-type activities: Capital assets, depreciated Food service equipment $ 1,852,724 $ 16,114 $ - $ 1,868,838 Less accumulated depreciation 1,620,754 57,858 - 1,678,612
Business-type capital assets, net
$ 231,970
$ (41,744)
$ -
$ 190,226
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental activities: Instruction $ 3,924,376 Support 3,845,128
Total depreciation expense – governmental activities
$ 7,769,504
Business-type activities: Food service $ 57,858
33
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 5. LONG-TERM DEBT The following is a summary of changes to long-term debt for the year ended June 30, 2015: Governmental Activities:
Balance July 1, 2014
Additions
Reductions
Balance June 30,
2015
Due
Within One Year
General obligation bonds payable
$ 41,245,000
$15,212,000
$(14,707,000)
$ 41,750,000
$ 15,370,000
Unamortized bond premium
3,498,937
697,961
(709,234)
3,487,664
-
Deferred amount on refunding
(2,575)
-
2575
-
-
Total bonds payable
44,741,362
15,909,961
(15,413,659)
45,237,664
15,370,000
Acquisition, Use and Security Agreement 8,000,000 - (1,559,925) 6,440,075 1,579,710 Notes Payable 105,997 - (105,997) - - Compensated absences payable
4,570,444
-
(321,245)
4,249,199
412,057
Total Governmental Activities
$ 57,417,803
$15,909,961
$(17,400,826)
$ 55,926,938
$ 17,361,767
Unreserved fund balances from the General Fund have been used to liquidate compensated absences payable in prior years. The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds outstanding as of June 30, 2015 are composed of the following:
Bonds
Interest Rate
Maturity Date
Amount Outstanding
2006 General Obligation Bonds 4.0%-5.0% 3-1-17 $ 2,215,000 2009A General Obligation Bonds 3.0%-4.0% 3-1-17 1,200,000 2009C General Obligation Bonds 4.0%-5.0% 3-1-17 3,150,000 2010A General Obligation Bonds 2.0%-2.75% 3-1-18 2,805,000 2011 General Obligation Bonds 2.0%-3.0% 3-1-19 2,330,000 2012 General Obligation Bonds 2.0%-5.0% 3-1-20 5,830,000 2013 General Obligations Bonds 2.0%-4.0% 3-1-21 2,695,000 2014A General Obligation Bonds 2.0%-5.0% 3-1-22 7,975,000 2015A General Obligation Bonds 2.125%-5.0% 3-1-23 13,550,000
Total $ 41,750,000
34
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 5. LONG-TERM DEBT, continued The annual requirements to amortize all bonds outstanding, including interest of $4,835,805 as of June 30, 2015 are as follows:
Year Ending June 30
Principal
Interest
Amount Amortized
2016 15,370,000 1,772,477 17,142,477 2017 8,105,000 1,079,119 9,184,119 2018 4,945,000 741,421 5,686,421 2019 2020
4,160,000 3,705,000
544,069 372,169
4,704,069 4,077,169
2021 2022 2023
2,525,000 2,115,000
825,000
206,819 101,169 18,562
2,731,819 2,216,169
843,562
Total
$ 41,750,000
$ 4,835,805
$ 46,585,805
Under the provisions of the South Carolina Constitution, Oconee County is permitted to incur general obligation (general purpose) bonded indebtedness not to exceed 8% of the assessed value of county property without a referendum.
Computation of Legal Debt Margin:
Assessed Property Value for School Purposes $543,052,364
Debt Limit – 8% of Assessed Property Value $ 43,444,189 Less Debt Issued that was not approved by Voter Referendum
41,750,000
Plus Amounts Available in the Debt Service Fund to Pay Principal
6,529,587
Legal Debt Margin $ 8,223,776
On August 30, 2013 the School District entered into an Acquisition, Use and Security Agreement through the Equipment Acquisition Program of the South Carolina Association of Governmental Organizations in the amount of $8,000,000 for the purpose of obtaining funds to acquire certain equipment. The amount of the agreement is not included when calculating the School District’s constitutional debt limit. The amount outstanding as of June 30, 2015 is comprised of the following:
Security Agreement
Interest Rate
Maturity Date
Amount Outstanding
2013ACQ 1.268% 12-1-18 $ 6,440,075
35
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 5. LONG-TERM DEBT, continued The annual requirements to amortize the 2013ACQ outstanding, including interest of $205,488 as of June 30, 2015 are as follows:
Year Ending June 30
Principal
Interest
Amount Amortized
2016 1,579,710 81,680 1,661,390 2017 1,599,746 61,645 1,661,391 2018 1,620,036 41,355 1,661,391 2019 1,640,583 20,808 1,661,391
Total
$ 6,440,075
$ 205,488
$ 6,645,563
The School District entered into a note payable in Fiscal Year 2011 for the purpose of purchasing a new chiller system at West Oak High School. The note was for $500,000 at 3% interest and is payable in five years. The notes outstanding were paid off as of June 30, 2015. The final loan payment of $109,177.56 was made on February 17, 2015. NOTE 6. MAJOR SOURCE OF PROPERTY TAX REVENUE Duke Energy paid 2014 property taxes amounting to $27,075,017. This amount is based on an assessed valuation of the company’s Oconee County property of $129,995,580. The School District received $18,342,414 of the total property taxes paid by Duke Energy. This amount represents approximately 29% of the total current property tax collections for the School District. NOTE 7. PROPERTY TAXES The Oconee County Treasurer collects property taxes, one of the primary sources of revenue for the General and Debt Service Funds, for the School District. Property taxes are levied by the County Auditor’s office on September 30
th of each year based on
the assessed value as of the prior December 31st. Taxes are due and payable by January 15
th.
An initial penalty of 3% is added to all unpaid bills after January 15th increasing to 10% after
February 1st and 15% plus $10 after March 16
th.
The millage rate (tax per $1,000 of assessed value) for the fiscal year was 110.1 mills for school operations and 31 mills for debt service. Taxes receivable in the General Fund and Debt Service Fund at June 30, 2015 represent uncollected tax levies less allowances for doubtful accounts and are as follows:
Receivable Allowance General Fund $ 1,888,799 $ 37,776 Debt Service Fund $ 564,475 $ 11,290
36
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 7. PROPERTY TAXES, continued The amount recorded as “Due from County Government” in the General Fund is taxes collected and held by Oconee County as an intermediary. NOTE 8. EMPLOYEES’ RETIREMENT SYSTEM Plan Description The School District participates in the State of South Carolina’s retirement plans, which are administered by the South Carolina Public Employee Benefit Authority (“PEBA”), which was created on July 1, 2012 and administers the various retirement systems and retirement programs managed by its Retirement Division. PEBA has an 11 member Board of Directors, appointed by the Governor and General Assembly leadership, which serves as co-trustee and co-fiduciary of the systems and the trust funds. By law, the Budget and Control Board, which consists of five elected officials, also reviews certain PEBA Board decisions regarding the funding of the Systems and serves as a co-trustee of the Systems in conducting that review. PEBA issues a Comprehensive Annual Financial Report (“CAFR”) containing financial statements and required supplementary information for the South Carolina Retirement Systems’ Pension Trust funds. The CAFR is publicly available on the Retirement Benefits’ link on PEBA’s website at www.peba.sc.gov, or a copy may be obtained by submitting a request to PEBA, PO Box 11960, Columbia, SC 29211-1960. PEBA is considered a division of the primary government of the state of South Carolina and therefore, retirement trust fund financial information is also included in the comprehensive annual financial report of the state. The South Carolina Retirement System (“SCRS”), a cost-sharing multiple employer defined pension plan, was established effective July 1, 1945, pursuant to the provisions of Section 9-1-20 of the South Carolina Code of Laws for the purpose of providing retirement allowances and other benefits for the employees of the state, its public school districts, and political subdivisions. The State Optional Retirement Program (“ORP”) is a defined contribution plan that is offered as an alternative to certain newly hired state, public school, and higher education employees. State ORP participants direct the investment of their funds into a plan administered by one of four investment providers. The South Carolina Police Officers’ Retirement System (“PORS”), a cost-sharing multiple employer defined benefit pension plan, was established effective July 1, 1962 pursuant to the provisions of Section 9-11-20 of the South Carolina Code of Laws for the purpose of providing retirement allowances and other benefits for police officers and firemen of the state and its political subdivisions. Plan Membership Membership requirements are prescribed in Title 9 of the South Carolina Code of Laws. A summary of the requirements of each system is listed below.
SCRS – Generally, all employees of covered employers are required to participate in and contribute to the system as a condition of employment. This plan covers general employees and teachers and individuals newly elected to the South Carolina General Assembly beginning with the November 2012 general election. An employee member of the system with an effective date of membership prior to July 1, 2012, is a Class Two member. An employee member of the system with an effective date of membership on or after July 1, 2012, is a class Three member.
37
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 8. EMPLOYEES’ RETIREMENT SYSTEM, continued Plan Membership, continued
State ORP – As an alternative to membership in SCRS, newly hired state, public school, and higher education employees and individuals newly elected to the S.C. General Assembly beginning with the November 2012 general election have the option to participate in the State Optional Retirement Program (State ORP), which is a defined contribution plan. State ORP participants direct the investment of their funds into a plan administered by one of four investment providers. For this reason, State ORP programs are not considered part of the retirement systems for financial statement purposes. Employee and Employer contributions to the State ORP are at the same rates as SCRS. A direct remittance is required from the employer’s to the member’s account with investment providers for the employee contribution (8%) and a portion of the employer contribution (5%). A direct remittance is also required to SCRS for the remaining portion of the employer contribution (5.75%) and an incidental death benefit contribution (0.15%), if applicable, which is retained by SCRS.
PORS – To be eligible for PORs membership, an employee must be required by the terms of his employment, by election or appointment, to preserve public order, protect life and property, and detect crimes in the state; to prevent and control property destruction by fire; or to serve as a peace officer employed by the Department of Corrections, the Department of Juvenile Justice, or the Department of Mental Health. Probate judges and coroners may elect membership in PORS. Magistrates are required to participate in PORS for service as a magistrate. PORS members, other than magistrates and probate judges, must also earn at least $2,000 per year and devote at least 1,600 hours per year to this work, unless exempted by statute. An employee member of the system with an effective date of membership prior to July 1, 2012, is a Class Two member. An employee member of the system with an effective date of membership on or after July 1, 2012, is a Class Three member.
Plan Benefits Benefit terms are prescribed in Title 9 of the South Carolina Code of Laws. PEBA does not have the authority to establish or amend benefits terms without a legislative change in the code of laws. Key elements of the benefit calculation include the benefit multiplier, years of service, and average final compensation. A summary of benefits terms for each system is presented here.
SCRS – A Class Two member who has separated from service with at least five or more years of earned service is eligible for a monthly pension at age 65 or with 28 years credited service regardless of age. A member may elect early retirement with reduced pension benefits payable at age 55 with 25 years of service credit. A Class Three member who has separated from service with at least eight or more years of earned service is eligible for a monthly pension upon satisfying the Rule of 90 requirement that the total of the member’s age and the member’s creditable service equals at least 90 years. Both Class Two and Class Three members are eligible to receive a reduced deferred annuity at age 60 if they satisfy the five- or eight-year earned service requirement, respectively. An incidental death benefit is also available to beneficiaries of active and retired members of employers who participate in the death benefit program. The annual retirement allowance of eligible retirees or their surviving annuitants is increased by the lesser of one percent or five hundred dollars every July 1. Only those annuitants in receipt of a benefit on July 1 of the preceding year are eligible to receive the increase. Members who retire under the early retirement provisions at age 55 with 25 years of service are not eligible for the benefit adjustment until the second July 1 after
38
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 8. EMPLOYEES’ RETIREMENT SYSTEM, continued Plan Benefits, continued
reaching age 60 or the second July 1 after the date they would have had 28 years of service credit had they not retired.
PORS – A Class Two member who has separated from service with at least five or more years of earned service is eligible for a monthly pension at age 55 or with 25 years of service regardless of age. A Class Three member who has separated from service with at least eight or more years of earned service is eligible for a monthly pension at age 55 or with 27 years of service regardless of age. Both Class Two and Class Three members are eligible to receive a deferred annuity at age 55 with five or eight years of earned service, respectively. An incidental death benefit is also available to beneficiaries of active and retired members of employers who participate in the death benefit program. Accidental death benefits are also provided upon the death of an active member working for a covered employer whose death was a natural and proximate result of an injury incurred while in the performance of duty. The retirement allowance of eligible retirees or their surviving annuitants is increased by the lesser of one percent or five hundred dollars every July 1. Only those annuitants in receipt of a benefit on July 1 of the preceding year are eligible to receive the increase.
Plan Contributions Contributions are prescribed in Title 9 of the South Carolina Code of Laws. The PEBA Board may increase the SCRS employer and employee contribution rates on the basis of the actuarial valuations, but any such increase may not result in a differential between the employee and employer contribution rate that exceeds 2.9% of earnable compensation for SCRS. An increase in the contribution rates adopted by the board may not provide for an increase of more than one-half of one percent in any one year. If the scheduled employee and employer contributions provided in statute or the rates last adopted by the board are insufficient to maintain a thirty year amortization schedule of the unfunded liabilities of the plans, the board shall increase the contributions rates in equal percentage amounts for the employer and employee as necessary to maintain the thirty-year amortization period; and this increase is not limited to one-half of one percent per year. As noted above, both employee and the district are required to contribute to the Plans at rates established and as amended by the PEBA. The district’s contributions are actuarially determined, but are communicated to and paid by the District as a percentage of the employees’ annual eligible compensation as follows for the past three years: SCRS and State ORP
Rates PORS Rates
2013 2014 2015 2013 2014 2015
Employer Rate: Retirement* 10.45% 10.45% 10.75% 11.90% 12.44% 13.01% Incidental Death Benefit 0.15% .0.15% 0.15% 0.20% 0.20% 0.20% Accidental Death Contributions 0.00% 0.00% 0.20% 0.20% 0.20% 0.20%
10.60% 10.60% 10.90% 12.30% 12.84% 13.41% Employee Rate 7.00% 7.5% 8.00% 7.00% 7.84% 8.41% *Of the rate for the State ORP Plan, 5% of the earnable compensation must be remitted by the employer directly to the ORP vendor to be allocated to the member’s account with the remainder of the employer contribution remitted to the SCRS.
39
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 8. EMPLOYEES’ RETIREMENT SYSTEM, continued Plan Contributions, continued
SCRS Three-Year Trend Information
Year Ending Total
Payroll Covered Payroll
Employer Contribution
Actual % Contributed
6-30-13 6-30-14 6-30-15
57,556,914 57,979,130 58,174,711
57,556,914 57,979,130 58,174,711
8,633,537 8,911,392 9,162,517
15.000% 15.370% 15.750%
ORP Three-Year Trend Information
Year Ending
Total Payroll
Covered Payroll
Employer Contribution
Actual % Contributed
6-30-13 6-30-14 6-30-15
7,210,499 7,550,475 8,027,025
7,210,499 7,550,475 8,027,025
1,081,575 1,160,508 1,261,060
15.000% 15.370% 15.750%
PORS Three-Year Trend Information
Year Ending Total
Payroll Covered Payroll
Employer Contribution
Actual % Contributed
6-30-13 6-30-14 6-30-15
7,147 13,143 15,523
7,147 13,143 18,523
1,176 2,282 3,336
16.450% 17.362% 18.010%
Pension Liabilities, Pension Expense, and Deferred Outflows/Inflows or Resources Related to Pensions The most recent annual actuarial valuation reports adopted by the PEBA Board and Budget and Control Board are as of July 1, 2013. The net pension liability of each defined benefit pension plan was therefore determined based on the July 1, 2013 actuarial valuations, using membership data as of July 1, 2013, projecting forward to the end of the fiscal year, and financial information of the pension trust funds as of June 30, 2014, using generally accepted actuarial procedures. Information included in the following schedules is based on the certification provided by PEBA’s consulting actuary, Gabriel, Roeder, Smith and Company. The net pension liability (“NPL”) is calculated separately for each system and represents that particular system’s total pension liability determined in accordance with GASB No. 67 less that system’s fiduciary net position. For the year ended June 30, 2014, NPL amounts and the change in NPL amounts for SCRS and PORS are as follows:
40
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 8. EMPLOYEES’ RETIREMENT SYSTEM, continued Plan Contributions, continued
System Total Pension
Liability Plan Fiduciary Net Position
Employers’ Net Pension Liability
(Asset)
Plan Fiduciary Net Position as a
Percentage of the Total Pension
SCRS $42,955,205,796 $25,738,521,026 $17,216,684,770 59.92% PORS $ 5,899,529,434 $ 3,985,101,996 $ 1,914,427,438 67.55% At June 30, 2015, the District reported a liability of $118,076,175 for its proportionate share of the net pension liabilities for the SCRS plan $118,051,364 and PORS plan $24,811. The net pension liabilities were measured as of June 30, 2014, and the total pension liabilities for the plans used to calculate the net pension liabilities were determined based on the most recent actuarial valuation report of July 1, 2013 that was projected forward to the measurement date. The District’s proportion of the net pension liabilities were based on a projection of the District’s long-term share of contributions to the plans relative to the projected contributions of all participating South Carolina state and local governmental employers, actuarially determined. At June 30, 2014, the District’s SCRS proportion was 0.685680 percent, which was equal to its proportion measured as of June 30, 2013. At June 30, 2014, the District’s PORS proportion was 0.00130 percent, which was equal to its proportion measured as of June 30, 2013. For the year ended June 30, 2015, the District recognized pension expense on its government-wide financial statements of $8,276,230, consisting of $8,274,059 for SCRS and $2,171 for the PORS. At June 30, 2015, the District reported deferred outflows or resources and deferred inflows of resources related to pension from the following sources:
Description
Deferred Outflows of Resources
Deferred Inflows of Resources
SCRS Differences between expected and actual experience $ 3,345,079 $ - Net Difference between projected and actual earnings on pension plan investments - 9,952,591 District’s contributions subsequent to the measurement date 6,814,638 -
Total SCRS 10,159,717 9,952,591
PORS
Differences between expected and actual experience 662 - Net Difference between projected and actual earnings on pension plan investments - 2,871 District’s contributions subsequent to the measurement date 2,484 -
Total PORS 3,146 2,871
Total SCRS and PORS $ 10,168,632 $ 9,955,462
41
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 8. EMPLOYEES’ RETIREMENT SYSTEM, continued $6,814,638 and $2,484 that were reported as deferred outflows of resources related to the District’s contributions subsequent to the measurement date to the SCRS and PORS, respectively, will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the SCRS and PORS will be recognized in pension expense as follows: Year Ended June 30, SCRS PORS Total
2016 $ (1,453,481) $ (546) $ (1,454,027) 2017 (1,453,481) (546) (1,454,027) 2018 (1,453,481) (546) (1,454,027) 2019 (2,247,069) (571) (2,247,640)
Total $ (6,607,512) $ (2,209) $ (6,609,721)
Actuarial Assumptions and Methods Actuarial valuations involve estimates of the reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and future salary increases. Amounts determined during the valuation process are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. South Carolina state statute requires that an actuarial experience study be completed at least once in each five-year period. The last experience study was performed on data through June 30, 2010, and the next experience study is scheduled to be conducted after the June 30, 2015 annual valuation is complete. The following table provides a summary of the actuarial cost method and assumptions used in the July 1, 2013, valuations for SCRS and PORS. SCRS PORS
Actuarial cost method Entry age Entry age
Actuarial assumptions:
Investment Rate of Return
7.5%
7.5%
Salary increases Levels off at 3.5% Levels off at 4.0%
Includes inflation at 2.75% 2.75%
Benefits adjustments Lesser of 1% or $500 Lesser of 1% or $500
The post-retiree mortality assumption is dependent upon the member’s job category and gender. This assumption includes base rates which are automatically adjusted for future improvement in mortality using published Scale AA projected from the year 2000.
Former job class Males Females
Educators and judges RP-2000 Males (with white collar adjustment) multiplies by 110%
RP-2000 Females (with white collar adjustment) multiplies by 95%
General employees and members of the General Assembly
RP-2000 Males multiplied by 100%
RP-2000 Females multiplied by 90%
Public safety, firefighters, and members of the South Carolina National Guard
RP-2000 Males (with blue collar adjustment) multiplied by 115%
RP-2000 Females (with blue collar adjustment) multiplied by 115%
42
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 8. EMPLOYEES’ RETIREMENT SYSTEM, continued Actuarial Assumptions and Methods, continued The long-term expected rate of return on pension plan investments for actuarial purposes is based upon the 30 year capital market outlook at the end of the third quarter 2012. The actuarial long-term expected rates of return represent best estimates of arithmetic real rates of return for each major asset class and were developed in coordination with the investment consultant for the Retirement System Investment Commission (“RSIC”) using a building block approach, reflecting observable inflation and interest rate information available in the fixed income markets as well as Consensus Economic forecasts. The actuarial long-term assumptions for other asset classes are based on historical results, current market characteristics and professional judgment. The RSIC has exclusive authority to invest and manage the retirement trust funds’ assets. As co-fiduciary of the Systems, statutory provisions and governance policies allow the RSIC to operate in a manner consistent with a long-term investment time horizon. The expected real rates of investment return, along with the expected inflation rate, form the basis for the target asset allocation adopted annually by the RSIC. For actuarial purposes, the long-term expected rate of return is calculated by weighting the expected future real rates of return by the target allocation percentage and then adding the actuarial expected inflation which is summarized in the table below. For actuarial purposes, the 7.5% assumed annual investment rate of return used in the calculation of the total pension liability includes a 4.75% real rate of return and a 2.75% inflation component.
Asset Class Target
Allocation Expected Arithmetic Real Rate of Return
Long Term Expected Portfolio Real Rate of
Return
Short Term 5% Cash 2% 0.30 0.01 Short Duration 3% 0.60 0.02 Domestic Fixed Income 13% Core Fixed Income 7% 1.10 0.08 High Yield 2% 3.5 0.07 Bank Loans 4% 2.80 0.11 Global Fixed Income 9% Global Fixed Income 3% 0.80 0.02 Emerging Markets Debt 6% 4.10 0.25 Global Public Equity 31% 7.80 2.42 Global Tactical Asset Allocation 10% 5.10 0.51 Alternatives 32% Hedge Funds (Low Beta) 8% 4.00 0.32 Private Debt 7% 10.20 0.71 Private Equity 9% 10.20 0.92 Real Estate (Broad Market) 5% 5.90 0.29 Commodities 3% 5.10 0.15
Total Expected Real Return 100% 5.88
Inflation for Actuarial Purposes 2.75
Total Expected Nominal Return 8.63
Discount Rate The discount rate used to measure the total pension liability was 7.5%. The projection of cash flows used to determine the discount rate assumed that contributions from participating
43
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 8. EMPLOYEES’ RETIREMENT SYSTEM, continued Discount Rate, continued employers in SCRS and PORS will be made based on the actuarially determined rates based on provisions in the South Carolina State Carolina Code of Laws. Based on those assumptions, each System’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The following table presents the sensitivity of net pension liability of the Plan as of June 30, 2014 to changes in the discount rate, calculated using the discount rate of 7.5%, as well as what the Plan’s net pension liability would be if it were calculated using a discount rate that is 1% point lower (6.5%) or 1% point higher (8.5%) than the current rate:
Plans’ Fiduciary Net Position Detailed information regarding the fiduciary net position of the plans administered by PEBA is available in the separately issued CAFR containing financial statements and required supplementary information for SCRS and PORS. The CAFR of the Pension Trust Funds is publicly available on PEBA’s Retirement Benefits’ website at www.retirement.sc.gov, or a copy may be obtained by submitting a request to PEBA, PO Box 11960, Columbia, SC 29211-1960. Post-employment Benefits In accordance with the South Carolina Code of Laws and the annual Appropriations Act, the State of South Carolina (“State”) provides health, dental, and long-term disability benefits (“OPEB Plan”) to retired State and school district employees and their covered dependents. The OPEB plans have been determined to be cost-sharing multiple-employer defined benefit plans and are administered by the Employee Insurance Program (‘EIP”), a part of the State of South Carolina. The Code of Laws of the State, as amended, requires these post-employment healthcare and long-term disability benefits be funded through annual appropriation by the General Assembly for active employees to the EIP and participating retirees to the State of South Carolina except for the portion funded through the pension surcharge (retiree surcharge) who are not funded by State General Fund appropriations. Employers participating in the healthcare plan are mandated by the State statute to contribute at a rate assessed each year by the Office of the State Budget and Control Board. The EIP sets the employer contribution rate based on a pay-as-you go basis. The School District has no liability beyond the payment of monthly contributions.
System 1% Decrease
(6.5%) Current Discount Rate
(7.5%) 1% Increase
(8.5%)
District’s proportionate share of the net pension liability of the SCRS $ 152,765,769 $ 118,051,364 $ 9,089,592 District’s proportionate share of the net pension liability of the PORS $ 34,781 $ 24,811 $ 16,703
44
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 8. EMPLOYEES’ RETIREMENT SYSTEM, continued Post-employment Benefits, continued The required employer contribution surcharge percentages were 5.00%, 4.92%, and 4.55% for the years ended June 30,2015, 2014, and 2013, respectively. NOTE 9. COMPENSATED ABSENCES Accumulated annual leave is accrued as a liability for absences for which it is expected that employees will be paid. The conditions of such accrual are that future absences are attributable to services already rendered, the rights vest or accumulate, payment of said compensation is probable, and the amount of compensation can be reasonably estimated. The School District’s annual leave policy contains two components which are reflected in the financial statements. Bonus for Leave Not Taken: Each School District employee is permitted to accumulate a maximum of 90 days leave. Each employee receives a bonus at the end of each school year when unused leave exceeds 90 days. The bonus is based on the employee’s daily rate not to exceed $60 per day. The bonus paid for the fiscal year ending June 30, 2015 was $110,363, including fringe benefits. Deferred Compensation:
Upon separation from the School District, each eligible employee is paid compensation based on their daily rate (calculated from the previous year’s salary schedule) for the excess of days over 45, up to a maximum of 45 days, as deferred compensation for annual leave not taken. The compensation paid to employees who separated from service during the fiscal year ended June 30, 2015 was $521,334, including fringe benefits. The amount vested at June 30, 2015 for employees still employed by the School District was $4,249,199. This amount has been recorded as compensated absences payable. NOTE 10. DUE TO/FROM OTHER FUNDS AND INTERFUND TRANSFERS Generally, outstanding balances between funds reported as “due to/from other funds” include outstanding charges by one fund to another for services or goods, subsidy commitments outstanding at year-end, and other miscellaneous receivables/payables between funds. All of these balances are expected to be repaid within the next fiscal year.
45
SCHOOL DISTRICT OF OCONEE COUNTY NOTES TO FINANCIAL STATEMENTS
NOTE 10. DUE TO/FROM OTHER FUNDS AND INTERFUND TRANSFERS, continued s of June 30, 2015, interfund receivables and payables that resulted from various interfund transactions were as follows:
Due From Other Funds
Due To Other Funds
Governmental Activities General Fund $ 2,019,486 $ - Special Revenue Fund – Special Projects 1,705,321 3,415,121 Special Revenue Fund – EIA 22,590 - School Capital project - 3,346 Business-type Activities Food Service Fund 40,941 - Fiduciary Funds Pupil Activities Fund 2,684 372,555
Total $ 3,791,022 $ 3,791,022
Transfers and payments within the reporting entity are substantially for the purposes of subsidizing operating functions, funding capital projects and asset acquisitions, or maintaining debt service on a routine basis. Resources are accumulated in a fund to support and simplify the administration of various projects or programs. As of June 30, 2015, interfund transfers that resulted from various interfund transactions were as follows:
Interfund Transfers In
Interfund Transfers Out
Governmental Activities General Fund $ 6,361,297 $ 444,315 Special Revenue Fund – Special Projects 487,563 771,436 Special Revenue Fund – EIA - 4,014,430 Debt Service Fund 1,770,568 - Capital Projects 783,449 4,517,834 Business-Type Activities Food Service Fund 144,505 - Fiduciary Funds Pupil Activities Fund 560,617 359,984
Total $ 10,107,999 $ 10,107,999
NOTE 11. CONSTRUCTION COMMITMENTS The District has construction commitments totaling $35,316,731 at June 30, 2015. Costs of $33,959,745 had been incurred on these contracts as of June 30, 2015. NOTE 12. RISK MANAGEMENT The District is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omissions, injuries to employees, and natural disasters. The District is insured for these risks of loss by commercial insurance.
46
REQUIRED
SUPPLEMENTARY
INFORMATION
47
Amounts are in Dollars
Variance with
Final Budget
Original Final Favorable
Budget Budget Actual (Unfavorable)
REVENUES
Local Sources 42,920,924 42,913,424 42,668,739 (244,685)
State Sources 41,682,781 41,797,413 42,586,196 788,783
Intergovernmental - - 50,097 50,097
TOTAL REVENUES 84,603,705 84,710,837 85,305,032 594,195
EXPENDITURES
Instruction 59,515,818 58,727,252 55,704,243 3,023,009
Support Services 31,800,961 32,276,987 34,887,416 (2,610,429)
Community Services 250 250 - 250
Intergovernmental 40,000 40,000 23,735 16,265
TOTAL EXPENDITURES 91,357,029 91,044,489 90,615,394 429,095
Excess (Deficiency) of Revenues
Over (Under) Expenditures (6,753,324) (6,333,652) (5,310,362) 1,023,290
OTHER FINANCING SOURCES (USES)
Sale of Fixed Assets - - 8,203 8,203
Transfers In 3,918,621 4,011,120 6,361,297 2,350,177
Transfers Out (834,583) (834,583) (444,315) 390,268
TOTAL OTHER FINANCING
SOURCES (USES) 3,084,038 3,176,537 5,925,185 2,748,648
Net Change in Fund Balance (3,669,286) (3,157,115) 614,823 3,771,938
Fund Balance July 1, 2014 18,852,797 18,852,797 18,852,797 -
Fund Balance June 30, 2015 15,183,511 15,695,682 19,467,620 3,771,938
SCHOOL DISTRICT OF OCONEE COUNTY
GENERAL FUND BUDGETARY COMPARISON SCHEDULE
For the fiscal year ended June 30, 2015
48
The special revenue fund EIA is presented as a major fund and does not have a legally adopted
budget. Therefore, no budgetary comparison schedule is presented for this fund.
SCHOOL DISTRICT OF OCONEE COUNTY
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
NOTE 1. MAJOR SPECIAL REVENUE FUNDS
49
Year Ended
June 30, 2015
District's Proportion of the Net Pension Liability (Asset) 0.685680%
District's Proportion of the Net Pension Liability (Asset) $118,051,364
Dstrict's Covered-Employee Payroll $65,529,605
District's Proporionate Share of the Net Pension Liability (Asset) as a
Percentage of its Covered-Employee Payroll180.15%
Plan Fiduciary Net Position as a Percentage of the Total Pension
Liability59.92%
Notes to Schedule:
Only the current fiscal year is present because ten year data is not yet available.
**The amounts presented were determined as of the prior fiscal year ending June 30th.
SCHOOL DISTRICT OF OCONEE COUNTY
SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
SOUTH CAROLINA RETIREMENT SYSTEM
LAST TEN FISCAL YEARS**
50
Year Ended
June 30, 2015
Contractually Required Contribution 6,814,638$
Contributions in Relation to the Contractually Required Contribution: 6,814,638
Contribution Deficiency (Excess) -$
School District of Oconee County Covered-Employee Payroll 66,201,736$
Contributions as a Percentage of Covered-Employee Payroll 10.29%
Notes to Schedule:
Only the current fiscal year is present because ten year data is not yet available.
SCHOOL DISTRICT OF OCONEE COUNTY
SCHEDULE OF THE DISTRICT'S CONTRIBUTIONS
SOUTH CAROLINA RETIREMENT SYSTEM
LAST TEN FISCAL YEARS
51
Year Ended
June 30, 2015
District's Proportion of the Net Pension Liability (Asset) 0.001300%
District's Proportion of the Net Pension Liability (Asset) $24,811
Dstrict's Covered-Employee Payroll $13,143
District's Proporionate Share of the Net Pension Liability (Asset) as a
Percentage of its Covered-Employee Payroll188.78%
Plan Fiduciary Net Position as a Percentage of the Total Pension
Liability67.55%
Notes to Schedule:
Only the current fiscal year is present because ten year data is not yet available.
**The amounts presented were determined as of the prior fiscal year ending June 30th.
SCHOOL DISTRICT OF OCONEE COUNTY
SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
POLICE OFFICERS' RETIREMENT SYSTEM
LAST TEN FISCAL YEARS**
52
Year Ended
June 30, 2015
Contractually Required Contribution 2,484$
Contributions in Relation to the Contractually Required Contribution: 2,484
Contribution Deficiency (Excess) -$
School District of Oconee County Covered-Employee Payroll 18,523$
Contributions as a Percentage of Covered-Employee Payroll 13.41%
Notes to Schedule:
Only the current fiscal year is present because ten year data is not yet available.
SCHOOL DISTRICT OF OCONEE COUNTY
SCHEDULE OF THE DISTRICT'S CONTRIBUTIONS
POLICE OFFICERS' RETIREMENT SYSTEM
LAST TEN FISCAL YEARS
53
APPENDIX B
FORM OF BOND COUNSEL OPINION
B-1
(Date of Delivery)
Board of Trustees
School District of Oconee County, South Carolina
Walhalla, South Carolina
$_________ GENERAL OBLIGATION BONDS, SERIES 2016A
SCHOOL DISTRICT OF OCONEE COUNTY, SOUTH CAROLINA
We have served as bond counsel for the School District of Oconee County, South Carolina (the
“School District”) in connection with the issuance of $_________ General Obligation Bonds, Series 2016A,
dated ______ __, 2016 (the “Bonds”). In such capacity, we have examined such law and certified
proceedings, certifications, and other documents as we have deemed necessary to render this opinion.
Regarding questions of fact material to our opinion, we have relied on the representations of the
School District contained in the Resolution of the School District authorizing the Bonds and the Federal Tax
Certificate of the School District dated the date hereof, and in the certified proceedings and other
certifications of public officials and others furnished to us without undertaking to verify the same by
independent investigation. We have assumed that all signatures on documents, certificates and instruments
examined by us are genuine, all documents, certificates and instruments submitted to us as originals are
authentic and all documents, certificates and instruments submitted to us as copies conform to the originals.
In addition, we have assumed that all documents, certificates and instruments relating to the issuance of the
Bonds have been duly authorized, executed and delivered by all parties thereto other than the School
District, and we have further assumed the due organization, existence and powers of such other parties other
than the School District.
As bond counsel, we have been retained solely for the purpose of examining the validity and legality
of the Bonds and of rendering the specific opinion herein stated and for no other purpose. We have not acted
as a municipal advisor (within the meaning of Section 15B of the Securities Exchange Act of 1934) to the
School District in connection with the execution and delivery of the Bonds. We have not verified the
accuracy, completeness or fairness of any representation or information concerning the business or financial
condition of the School District or the purchaser of the Bonds in connection with the sale of the Bonds.
Accordingly, we express no opinion on the completeness, fairness or adequacy of any such representation or
information.
We refer you to the Bonds and the Resolution for a further description of the Bonds the purposes for
which the Bonds are issued, the uses of the proceeds from the sale of the Bonds and the security therefor.
Based on the foregoing, we are of the opinion that, under existing law:
1. The Bonds have been authorized and executed by the School District and are valid and
binding general obligations of the School District.
B-2
2. The School District has power and is obligated to levy and collect annually a tax, without
limit, on all taxable property in the School District sufficient to pay the principal of and interest on the
Bonds as they respectively mature and to create such sinking fund as may be necessary therefor.
3. Interest on the Bonds is excludable from gross income for federal income tax purposes and
is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals
and corporations; however, such interest is taken into account in determining adjusted current earnings for
the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion set
forth in the preceding sentence is subject to the condition that the School District comply with all
requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the
issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for
federal income tax purposes. The School District has covenanted to comply with such requirements.
Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross
income for federal income tax purposes to be retroactive to the date of issuance of the Bonds.
4. Under the laws of the State of South Carolina, the Bonds and the interest thereon are
presently exempt from all taxation in the State, except estate or other transfer taxes. It should be noted,
however, that Section 12-11-20, Code of Laws of South Carolina 1976, as amended, imposes upon every
bank engaged in business in the State a fee or franchise tax computed on the entire net income of such bank
which includes interest paid on the Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds are limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting
creditors’ rights generally, and by equitable principles, whether considered at law or in equity.
We express no opinion regarding the accuracy, adequacy, or completeness of the Official Statement
relating to the Bonds. Further, we express no opinion regarding tax consequences arising with respect to the
Bonds other than as expressly set forth herein.
This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this
opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law
that may hereafter occur.
Very truly yours,
McNAIR LAW FIRM, P.A.
APPENDIX C
FORM OF CONTINUING DISCLOSURE CERTIFICATE
C-1
FORM OF CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered
by the School District of Oconee County, South Carolina (the “School District”) in connection with the
issuance of $_________ General Obligation Bonds, Series 2016A, School District of Oconee County,
South Carolina (the “Bonds”). The Bonds are being issued pursuant to a Resolution adopted by the
Board of Trustees of the School District (the “Resolution”). The School District covenants and agrees as
follows:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being
executed and delivered by the School District for the benefit of the beneficial owners and in order to
assist the Participating Underwriters (defined below) in complying with the Rule (defined below).
SECTION 2. Definitions. The following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the School District pursuant to, and
as described in, Sections 3 and 4 of this Disclosure Certificate.
“Bonds” shall mean the $__________ General Obligation Bonds, Series 2016A, School District
of Oconee County, South Carolina, dated _________, 2016.
“Dissemination Agent” shall mean the School District or any successor Dissemination Agent
designated in writing by the School District and which has filed with the School District a written
acceptance of such designation.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate.
“Repository” shall mean for purposes of the Rule, the Electronic Municipal Market Access
(EMMA) system created by the Municipal Securities Rulemaking Board.
“Participating Underwriter” shall mean ______________ and any other original underwriter of
the Bonds required to comply with the Rule in connection with offering of the Bonds.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as the same may be amended from time to time.
SECTION 3. Provision of Annual Reports.
(a) The School District shall, or shall cause the Dissemination Agent to provide, not later
than February 1 of each year, commencing in 2017, to the Repository an Annual Report which is
consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than fifteen (15)
business days prior to such date the School District shall provide the Annual Report to the Dissemination
Agent, if other than the School District; provided, that if the audited financial statements required
pursuant to Section 4 hereof to be included in the Annual Report are not available for inclusion in the
Annual Report as of such date, unaudited financial statements of the School District may be included in
such Annual Report in lieu thereof, and the School District shall replace such unaudited financial
statements with audited financial statements within fifteen (15) days after such audited financial
statements become available for distribution. The Annual Report may be submitted as a single document
or as separate documents comprising a package, and may cross-reference other information as provided
C-2
in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the School
District may be submitted separately from the balance of the Annual Report.
(b) If the School District is unable to provide to the Repository an Annual Report by the date
required in subsection (a), the School District shall send a notice to the Repository, in substantially the
form attached hereto as Exhibit A.
(c) The Dissemination Agent shall:
(1) determine each year prior to the date for providing the Annual Report the name
and address of the Repository; and
(2) if the Dissemination Agent is other than the School District, file a report with the
School District and (if the Dissemination Agent is not the Registrar) the Registrar certifying
whether the Annual Report has been provided pursuant to this Disclosure Certificate, and, if
provided, stating the date it was provided, and listing the Repository to which it was provided.
SECTION 4. Content of Annual Reports. The School District’s Annual Report shall contain or
incorporate by reference the most recent audited financial statements, which shall be prepared in
conformity with generally accepted accounting principles (or, if not in such conformity, to be
accompanied by a qualitative discussion of the differences in the accounting principles and the impact of
the change in the accounting principles on the presentation of the financial information) applicable to
governmental entities such as the School District, and shall, in addition, contain or incorporate by
reference the following information relating to the most recently completed fiscal year:
(a) School District enrollment;
(b) Total state appropriations subject to withholding under Article X, Sec. 15, South
Carolina Constitution;
(c) Funding under Education Finance Act and Education Improvement Act;
(d) Outstanding Indebtedness of the School District;
(e) Market Value/Assessment Summary of taxable property in School District;
(f) Tax levy for School District;
(g) Tax collections for School District; and
(h) Ten largest taxpayers (including fee-in-lieu-of-tax) for School District.
Any or all of the items listed above may be incorporated by reference from other documents,
including official statements of debt issues with respect to which the School District is an “obligated
person” (as defined by the Rule), which have been filed with the Repository or the Securities and
Exchange Commission. If the document incorporated by reference is a final official statement, it must be
available from the Municipal Securities Rulemaking Board. The School District shall clearly identify
each such other document so incorporated by reference.
C-3
SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the School District shall give, or cause to be
given, notice of the occurrence of any of the following events (the “Listed Events”):
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-
TEB) or other material notices or determinations with respect to the tax status of
the security, or other material events affecting the tax status of the security;
(7) Modifications to rights of security holders;
(8) Bond calls;
(9) Tender offers;
(10) Defeasances;
(11) Release, substitution, or sale of property securing repayment of the securities;
(12) Rating changes;
(13) Bankruptcy, insolvency, receivership or similar event of the School District;
(14) The consummation of a merger, consolidation, or acquisition involving the
School District or the sale of all or substantially all of the assets of the School
District other than in the ordinary course of business, the entry into a definitive
agreement to undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its terms;
(15) Appointment of a successor or additional trustee or the change of name of a
trustee.
(b) Whenever the School District obtains knowledge of the occurrence of a Listed Event
described in subsections (a)(2), (7), (8), (11), (14), or (15) above, the School District shall as soon as
possible determine if such event would be material under applicable federal securities laws. If the School
District determines that knowledge of the occurrence of such event would be material under applicable
federal securities laws, the School District shall promptly, and no later than 10 days after the occurrence
of the event, file a notice of such occurrence with the Repository.
(c) Whenever the School District obtains knowledge of the occurrence of a Listed Event
described in subsections (a)(1), (3), (4), (5), (6), (9), (10), (12), or (13) above, the School District shall
promptly, and no later than 10 days after the occurrence of the event, file a notice of such occurrence
with the Repository.
(d) Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8),
(9), and (10) above need not be given under this subsection any earlier than the notice (if any) of the
underlying event is given to owners of affected Bonds. For the purposes of the event identified in (a)(13)
above, the event is considered to occur when any of the following occur: the appointment of a receiver,
fiscal agent or similar officer for the School 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 School District, or if such
jurisdiction has been assumed by leaving the existing governing body and officials or officers in
C-4
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 School
District.
SECTION 6. Termination of Reporting Obligation. The School District’s obligations under this
Disclosure Certificate shall terminate upon the defeasance, prior redemption or payment in full of the
Bond.
SECTION 7. Dissemination Agent. The School District may, from time to time, appoint or
engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate,
and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The
initial Dissemination Agent shall be the School District.
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the School District may amend this Disclosure Certificate and any provision of this
Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of
counsel expert in federal securities laws acceptable to the School District, to the effect that such
amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such
amendment or waiver had been effective on the date hereof but taking into account any subsequent
change in or official interpretation of the Rule. In the event of any amendment or waiver of a provision
of this Disclosure Certificate, the School District shall describe such amendment in the next Annual
Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or
wavier.
SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to
prevent the School District from disseminating any other information, using the means of dissemination
set forth in this Disclosure Certificate or any other means of communication, or including any other
information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is
required by this Disclosure Certificate. If the School District chooses to include any information in any
Annual Report or notice of occurrence of a Listed Event, in addition to that which is specifically required
by this Disclosure Certificate, the School District shall have no obligation under this Certificate to update
such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the School District, or the Dissemination
Agent to comply with any provision of this Disclosure Certificate, any beneficial owner may take such
actions as may be necessary and appropriate, including seeking injunctive relief or specific performance
by court order, to cause the School District, or the Dissemination Agent, as the case may be, to comply
with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall
not be deemed an event of default under the Resolution, and the sole remedy under this Disclosure
Certificate in the event of any failure of the School District, or the Dissemination Agent to comply with
this Disclosure Certificate shall be an action to compel performance.
SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The provisions of
this Section 11 shall apply if the Issuer is not the Dissemination Agent. The Dissemination Agent shall
have only such duties as are specifically set forth in this Disclosure Certificate, and the School District
agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents,
harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or
performance of their powers and duties hereunder, including the costs and expenses (including attorneys’
C-5
fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination
Agent’s negligence or willful misconduct. The obligations of the School District under this Section shall
survive resignation or removal of the Dissemination Agent and payment of the Bond.
SECTION 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the
School District, the Dissemination Agent, the Participating Underwriters, and Holders from time to time
of the Bonds and shall create no rights in any other person or entity.
SECTION 13. Counterparts. This Disclosure Certificate may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
SCHOOL DISTRICT OF OCONEE COUNTY,
SOUTH CAROLINA
By:
District Superintendent
Dated: _______ __, 2016
C-6
EXHIBIT A
NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT
Name of School District: School District of Oconee County, South Carolina
Name of Bond Issue: $__________ General Obligation Bonds, Series 2016A,
School District of Oconee County, South Carolina
Date of Issuance: _________, 2016
NOTICE IS HEREBY GIVEN that School District of Oconee County, South Carolina (the
“School District”) has not provided an Annual Report with respect to the above-named Bonds as required
by Sections 3 and 4 of the Continuing Disclosure Certificate executed and delivered by the School
District as Dissemination Agent. The School District has notified us in writing that the Annual Report
will be filed by ________________________.
Dated:__________________
SCHOOL DISTRICT OF OCONEE COUNTY,
SOUTH CAROLINA