board of education of the urbana city school district

OFFICIAL STATEMENT DATED MARCH 4, 2015

New Issue Ratings: Standard & Poor’s Ratings ServicesBook Entry Only “AA” (State of Ohio Credit Enhancement) “A+” (Underlying) (See “Ratings” and “Ohio School District Credit Enhancement Program” herein)

In the opinion of Dinsmore & Shohl LLP, under existing law (i) interest on the Bonds will be excludable from gross income of the holders thereof for purposes of federal income taxation, (ii) interest on the Bonds will not be a specific item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and (iii) interest on and any profit made on the sale, exchange, or other disposition of, the Bonds, are exempt from the Ohio personal income tax, the net income base of the Ohio corporate franchise tax, the Ohio commercial activity tax, and municipal, school district, and joint economic development district income taxes in Ohio, all subject to the qualifications described herein under the heading “TAX EXEMPTION.”

BOARD OF EDUCATION OF THEURBANA CITy SCHOOL DISTRICTCOUNTy OF CHAMpAIgN, OHIO

$31,355,000SCHOOL IMpROVEMENT

gENERAL OBLIgATION BONDSSERIES 2015 (UNLIMITED TAX)

Dated: Date of Issuance Due: December 1, as shown on inside cover.

The captioned bonds (the “Bonds”), are issuable as serial bonds and term bonds. Interest on the Bonds will be payable, from the date of issuance, on June 1 and December 1, commencing December 1, 2015. The Bonds mature on December 1, as shown on inside cover. The Bonds are subject to redemption prior to maturity as set forth herein.

The Bonds will be prepared as fully registered Bonds and when delivered all Bonds will be registered in the name of CEDE & Co., as nominee of the Depository Trust Company, New York, New York (“DTC”). Principal on the Bonds will be payable to the record owner thereof (DTC or its nominee) at the designated office of U.S Bank National Association, as paying agent and registrar (the “Paying Agent and Registrar”). Interest on the Bonds will be paid by check, draft, or wire sent by the Paying Agent and Registrar. It is expected that delivery of the Bonds will be made in New York, New York (or in the case of a “fast” closing, delivery of the Bonds may be made locally to the Paying Agent and Registrar) through DTC on or about March 25, 2015.

The Bonds are issued for the purpose of paying a portion of the local share of school construction under the State of Ohio Classroom Facilities Assistance Program and other improvements, including construction of a new high school and K-8 building, handicap accessibility and security measures, equipment, furnishings, and site improvements, together with all necessary appurtenances thereto.

Fifth Third Securities, Inc., the Underwriter, will use its best efforts to satisfy the requirements of The Depository Trust Company (“DTC”) for the Bonds to be eligible for DTC services.

THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.

The Bonds are offered when, as and if issued and accepted by Fifth Third Securities, Inc., as underwriter, subject to the approving legal opinion of Dinsmore & Shohl LLP, Columbus, Ohio, Bond Counsel, and certain other conditions.

MATURITY SCHEDULE

$19,995,000 Serial Bonds

Year

(December 1) Principal Amount

Interest Rate

Price

CUSIP**

Serial Bonds 2015 $800,000 5.000% 103.205% 917151 BL5 2016 640,000 5.000 107.269 917151 BM3 2017 690,000 5.000 110.563 917151 BN1 2018 725,000 2.000 102.472 917151 BP6 2019 735,000 2.000 102.161 917151 BQ4 2020 770,000 2.000 101.345 917151 BR2 2021 785,000 2.000 100.373 917151 BS0 2022 800,000 2.250 100.774 917151 BT8 2023 835,000 2.500 101.327 917151 BU5 2024 525,000 2.500 100.255 917151 BV3 2024 330,000 5.000 121.667 917151 CJ9 2025 885,000 4.000 111.550 917151 BW1 2026 940,000 4.000 110.024 917151 BX9 2027 975,000 4.000 108.346 917151 BY7 2028 1,015,000 4.000 107.215 917151 BZ4 2029 1,075,000 4.000 106.441 917151 CA8 2030 1,120,000 4.000 105.503 917151 CB6 2031 1,165,000 4.000 104.490 917151 CC4 2032 1,225,000 3.375 96.436 917151 CD2 2033 1,270,000 3.500 97.447 917151 CE0 2034 1,315,000 3.500 96.809 917151 CF7 2035 1,375,000 4.000 102.664 917151 CG5

$11,360,000 Term Bonds

Year

(December 1) Principal Amount

Interest Rate

Price

CUSIP**

Term Bonds 2042 $11,360,000 3.750% 96.647% 917151 CH3

** Copyright 2015, CUSIP Global Services. CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services is managed on behalf of the American Bankers Association by S&P Capital IQ. CUSIP data herein are provided by CUSIP Global Services. The CUSIP numbers listed are being provided solely for the convenience of the holders only at the time of issuance of the Bonds, and the District does not make any representations with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions, including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

REGARDING THIS OFFICIAL STATEMENT

This Official Statement does not constitute an offering of any security other than theoriginal offering of the Bonds of the Board of Education (the “Board of Education”) of theUrbana City School District (the “District”). No dealer, broker, salesman or other person hasbeen authorized by the Board of Education to give any information or to make anyrepresentation, other than those contained in this Official Statement, and, if given or made, suchother information or representations must not be relied upon as having been authorized by theBoard of Education. This Official Statement does not constitute an offer to sell or thesolicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in anyjurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

The information and expressions of opinion herein are subject to change without notice.Neither the delivery of this Official Statement nor any sale made hereunder shall, under anycircumstances, create any implication that there has been no change in the affairs of the Board ofEducation or the District since the date hereof.

Upon issuance, the Bonds will not be registered by the Board of Education under anyfederal or 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, municipal or othergovernmental entity or agency (other than the Board of Education) will have, at the request ofthe Board of Education, passed upon the accuracy or adequacy of this Official Statement orapproved the Bonds for sale.

All financial and other information presented in this Official Statement has been providedby the Board of Education from its records, except for information expressly attributed to othersources. The presentation of information, including tables of receipts from taxes and othersources, is intended to show recent historic information, and is not intended to indicate future orcontinuing trends in the financial position or other affairs of the Board of Education. Norepresentation is made that past experience, as is shown by that financial and other information,will be necessarily continued or be repeated in the future.

Insofar as the statements contained in this Official Statement involve matters of opinionor estimates, even if not expressly stated as such, such statements are made as such and not asrepresentations of fact or certainty. No representation is made that any of such statements havebeen or will be realized, and such statements should be regarded as suggesting independentinvestigation or consultation of other sources prior to the making of investment decisions.Certain information may not be current; however, attempts were made to date and documentsources of information. Neither this Official Statement nor any oral or written representations byor on behalf of the Board of Education preliminary to sale of the Bonds should be regarded a partof the Board of Education’s contract with the underwriter or the holders from time to time of theBonds.

The underwriter has reviewed the information in this official statement pursuant to itsresponsibilities to investors under the federal securities laws, but the underwriter does notguarantee the accuracy or completeness of such information.

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References herein to provisions of Ohio law, whether codified in the Ohio Revised Code(the “Revised Code”) or uncodified, or to provisions of the Ohio Constitution or the Board ofEducation’s resolutions, are references to such provisions as they presently exist. Any of theseprovisions may from time to time be amended, repealed or supplemented.

As used in this Official Statement, “debt service” means principal of, and interest on, theobligations referred to; “County” means the County of Champaign; and “State” or “Ohio” meansthe State of Ohio.

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TABLE OF CONTENTS

Page

REGARDING THIS OFFICIAL STATEMENT ............................................................................ i

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

The Issuer.................................................................................................................................... 1Source of Payment of the Bonds................................................................................................. 1Book Entry.................................................................................................................................. 1Ohio School District Credit Enhancement Program................................................................... 1Purpose of the Bonds .................................................................................................................. 2Description of the Bonds ............................................................................................................ 2Investment Considerations.......................................................................................................... 3Tax Exemption............................................................................................................................ 3Parties to the Issuance of the Bonds ........................................................................................... 3Authority for Issuance ................................................................................................................ 3Offering and Delivery of the Bonds ........................................................................................... 3Disclosure Information ............................................................................................................... 4Additional Information ............................................................................................................... 4

SELECTED INFORMATION........................................................................................................ 4

Security and Source of Payment for Bonds ................................................................................ 4Risk Consideration Regarding Audited Financial Statements.................................................... 5Bankruptcy Considerations......................................................................................................... 5Fiscal Emergency Legislation..................................................................................................... 6Classroom Facilities Act ............................................................................................................. 8Accrued Interest and Premium ................................................................................................... 9

SOURCES AND USES OF FUNDS............................................................................................ 10

DESCRIPTION OF THE BONDS ............................................................................................... 10

General...................................................................................................................................... 10Redemption............................................................................................................................... 11Debt Service Schedule .............................................................................................................. 13

PURPOSE OF THE BONDS........................................................................................................ 15

OHIO SCHOOL DISTRICT CREDIT ENHANCEMENT PROGRAM..................................... 15

BOOK-ENTRY SYSTEM............................................................................................................ 17

GENERAL INFORMATION CONCERNINGTHE BOARD OF EDUCATION AND THE DISTRICT............................................................ 19

Introduction............................................................................................................................... 19Organization of the District ...................................................................................................... 20Overlapping Governmental Entities ......................................................................................... 21Population ................................................................................................................................. 22Employment.............................................................................................................................. 22Income and Housing Data......................................................................................................... 24

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Building Permits ....................................................................................................................... 24Organization and Officials of the Board of Education ............................................................. 24Enrollment ................................................................................................................................ 26District Facilities....................................................................................................................... 27Employees................................................................................................................................. 27State Performance Standards .................................................................................................... 28

FINANCIAL MATTERS ............................................................................................................. 33

Introduction............................................................................................................................... 33Budgeting, Tax Levy and Appropriations Procedures.............................................................. 34Financial Reports and Examinations of Accounts .................................................................... 35Financial Condition of the District ........................................................................................... 36Current Financial Condition of the District .............................................................................. 36Five-Year Projection................................................................................................................. 36Insurance................................................................................................................................... 36Investment Policies of the District............................................................................................ 37Investment Policies of Champaign County .............................................................................. 39

AD VALOREM TAX REVENUES............................................................................................. 41

Ad Valorem Tax Base............................................................................................................... 41Assessed Valuation of the District............................................................................................ 46Largest Taxpayers..................................................................................................................... 46Collections and Delinquencies of Ad Valorem Taxes.............................................................. 46Unvoted and Voted Taxes for Local Purposes ......................................................................... 47Rates of Taxation ...................................................................................................................... 48Sources of Income .................................................................................................................... 49Voting Records ......................................................................................................................... 49State Funding for Public Schools.............................................................................................. 50

BOARD OF EDUCATION DEBTAND OTHER LONG-TERM OBLIGATIONS ........................................................................... 52

Security for and Sources of Payment of General Obligation Debt........................................... 52Direct Debt Limitations ............................................................................................................ 53Indirect Debt Limitation ........................................................................................................... 55Outstanding Obligations ........................................................................................................... 57Future Financings ..................................................................................................................... 57Pension Obligations .................................................................................................................. 57Accrued Fringe Benefits ........................................................................................................... 58

LITIGATION................................................................................................................................ 59

General...................................................................................................................................... 59School Funding ......................................................................................................................... 60

LEGAL MATTERS...................................................................................................................... 60

TRANSCRIPT AND CLOSING DOCUMENTS ........................................................................ 61

TAX EXEMPTION ...................................................................................................................... 61

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General...................................................................................................................................... 61

ORIGINAL ISSUE DISCOUNT AND PREMIUM BONDS...................................................... 63

Discount .................................................................................................................................... 63Premium.................................................................................................................................... 63

RATINGS ..................................................................................................................................... 64

UNDERWRITING ....................................................................................................................... 64

CONTINUING DISCLOSURE.................................................................................................... 65

APPENDICES

APPENDIX A-1 Audited Financial Reports for the Period July 1, 2013 - June 30, 2014APPENDIX A-2 Audited Financial Reports for the Period July 1, 2012 - June 30, 2013APPENDIX B Five Year Forecast for the DistrictAPPENDIX C Champaign County Tax RatesAPPENDIX D Financial StatementAPPENDIX E Specimen Opinion of Bond CounselAPPENDIX F Summary of Annual Appropriation ResolutionAPPENDIX G Investment Policy of the DistrictAPPENDIX H Form of Rule 15c2-12 Certificate (With Respect to the Preliminary Official

Statement)

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INTRODUCTION

The purpose of this Official Statement, which includes the cover page and appendiceshereto, is to provide certain information with respect to the issuance of not to exceed$31,355,000 aggregate principal amount of School Improvement General Obligation Bonds,Series 2015 (the “Bonds”) of the Board of Education (the “Board of Education”) of the UrbanaCity School District (the “District”), County of Champaign, Ohio.

This introduction is not a summary of this Official Statement. It is only a briefdescription of and guide to, and is qualified by, more complete and detailed informationcontained in the entire Official Statement, including the cover page and appendices hereto, andthe documents summarized or described herein. A full review should be made of the entireOfficial Statement. The offering of Bonds to potential investors is made only by means of theentire Official Statement.

The Issuer

The Bonds are being issued by the Board of Education of the Urbana City SchoolDistrict, a political subdivision and school district of the State of Ohio. The District is located inthe center of Champaign County, approximately 40 miles northeast of Dayton, Ohio and 45miles west of Columbus, Ohio. The District is approximately 53 square miles and serves thestudents residing in the City of Urbana and the Townships of Mad River, Salem, Union andUrbana.

Source of Payment of the Bonds

The Bonds are voted unlimited tax general obligation debt of the Board of Education.Principal of and interest on the Bonds, unless paid from other sources, are payable from an advalorem tax on all the taxable property in the District without limitation as to rate and amount(See “SELECTED INFORMATION – Security and Source of Payment for the Bonds,” herein).

Book Entry

The Bonds will be prepared as fully registered Bonds and when delivered all Bonds willbe registered in the name of CEDE & Co., as nominee of the Depository Trust Company, NewYork, New York (“DTC”) (or in the case of a “fast” closing, delivery of the Bonds may be madelocally to the Paying Agent and Registrar).

Ohio School District Credit Enhancement Program

The Bonds are payable from unlimited property taxes in the amount necessary to payannual debt service in the event that debt service of the Bonds could not be paid. As additionalsecurity for the Bonds, such bonds will be qualified as part of the State of Ohio CreditEnhancement Program, which directs the State Department of Education to pay the Paying Agentand Registrar certain state education aid payments otherwise payable to the Board of Educationin the event the District cannot meet its debt service payments on the Bonds. (See “OHIOSCHOOL DISTRICT CREDIT ENHANCEMENT PROGRAM”).

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Purpose of the Bonds

The Bonds are being issued for the purpose of paying a portion of the local share ofschool construction under the State of Ohio Classroom Facilities Assistance Program and otherimprovements, including construction of a new high school and K-8 building, handicapaccessibility and security measures, equipment, furnishings, and site improvements, togetherwith all necessary appurtenances thereto. (See “PURPOSE OF THE BONDS).

Description of the Bonds

General. The Bonds are dated, mature and bear interest as set forth on the inside coverpage hereof.

Redemption.

The Bonds are subject to redemption prior to maturity as follows:

Mandatory Sinking Fund Redemption. The Bonds maturing on December 1, 2042are subject to mandatory sinking fund redemption prior to maturity commencing onDecember 1, 2036. (See “DESCRIPTION OF THE BONDS – Redemption - MandatorySinking Fund Redemption” herein).

Optional Redemption. The Bonds maturing on and after December 1, 2025 aresubject to optional redemption, in whole or in part (in the amount of $5,000 or anyintegral multiple thereof) on any date at the option of the District on or after December 1,2024 at a price of par, which is 100% of the face value of such Bonds, plus accruedinterest to the redemption date. (See “DESCRIPTION OF THE BONDS - Redemption –Optional Redemption” herein).

Notice of Redemption. In the event any Bonds are called for redemption, noticeshall be given by mailing a copy of the redemption notice by regular first class mail, notless than thirty (30) days prior to the date fixed for redemption to the registered owner ofeach Bond to be redeemed.

Denominations. The Bonds will be issued in the denominations of $5,000 or any integralmultiple thereof.

Registration, Transfers and Exchanges. The Bonds will be fully registered and may betransferred at the designated corporate trust office of the Paying Agent and Registrar, withoutcost except for any taxes or other governmental charges.

Payments. Principal and any redemption premium (with respect to the Bonds) arepayable to the registered owner upon presentation and surrender at the designated corporate trustoffice of the Paying Agent and Registrar.

Registrar. Interest on the Bonds will be payable by check, draft or wire sent by thePaying Agent and Registrar to the person who is the registered owner as of the 15th day of thecalendar month preceding the applicable interest payment date.

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Investment Considerations

The Bonds, like all obligations of state and local governments, are subject to changes invalue due to changes in the condition of the tax-exempt bond market and/or changes in thefinancial position of the District.

Prospective purchasers of the Bonds may need to consult their own tax advisors prior toany purchase of the Bonds as to the impact of the Internal Revenue Code of 1986, as amended(the “Code”), upon their acquisition, holding or disposition of the Bonds.

It is possible under certain market conditions, or if the financial condition of the Districtshould change, that the market price of the Bonds could be adversely affected.

Tax Exemption

Under the laws, regulations, rulings and judicial decisions in effect as of the date hereof,interest on the Bonds is excludible from gross income for Federal income tax purposes, pursuantto the Code. Furthermore, interest on the Bonds will not be treated as an item of tax preference,under Section 57(a)(5) of the Code, in computing the alternative minimum tax for individualsand corporations. In rendering the opinions in this paragraph, we have assumed continuingcompliance with certain covenants designed to meet the requirements of Section 103 of theCode. We express no other opinion as to the federal tax consequences of purchasing, holding ordisposing of the Bonds.

See Appendix E for the form of the opinion that Bond Counsel proposes to deliver inconnection with the Bonds.

Parties to the Issuance of the Bonds

The Paying Agent and Registrar for the Bonds is U.S. Bank National Association,Cincinnati, Ohio. Legal matters incident to the issuance of the Bonds and with regard to the tax-exempt status of the interest thereon are subject to the approving legal opinion of Dinsmore &Shohl LLP, Columbus, Ohio, Bond Counsel. The Underwriter for the Bonds is Fifth ThirdSecurities, Inc., Columbus, Ohio.

Authority for Issuance

Authority for the issuance of the Bonds is provided by Chapter 133 of the Ohio RevisedCode, the requisite majority vote of the electors of the District at an election held on November4, 2014 and a resolution passed by the Board of Education on December 16, 2014, assupplemented by a Bond Purchase Agreement.

Offering and Delivery of the Bonds

The Bonds are offered when, as and if issued and received by Fifth Third Securities, Inc.,Columbus, Ohio, the Underwriter, subject to prior sale, to withdrawal or modification of theoffer without notice. The Bonds will be delivered on or about March 25, 2015, in New York,

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New York, (or in the case of a “fast” closing, delivery of the Bonds may be made locally to thePaying Agent and Registrar) through the Depository Trust Company (“DTC”).

Disclosure Information

This Official Statement speaks only as of its date, and the information contained herein issubject to change. This Official Statement and continuing disclosure documents of the Board ofEducation are intended to be made available through one or more repositories. Copies of thebasic documentation relating to the Bonds, including the respective authorizing resolutions andthe respective bond forms are available from the Board of Education.

Certain information contained in this Official Statement is attributed to the OhioMunicipal Advisory Council (“OMAC”). OMAC compiles information from official and othersources. OMAC believes the information it compiles is accurate and reliable, but OMAC doesnot independently confirm or verify the information and does not guaranty its accuracy. OMAChas not reviewed this Official Statement to confirm that the information attributed to it isinformation provided by OMAC or for any other purpose.

The District has deemed this Official Statement to be final for the purposes of Securities andExchange Commission Rule 15c2-12(b)(3).

Additional Information

Additional information concerning this Official Statement, as well as copies of the basicdocumentation relating to the Bonds, is available from Ms. Mandy Hildebrand, Treasurer,Urbana City School District, 711 Wood Street, Urbana, Ohio 43078, (937) 653-1402.

SELECTED INFORMATION

Security and Source of Payment for Bonds

At an election held on November 4, 2014, pursuant to the provisions of Chapter 133 ofthe Ohio Revised Code, the electors of the District approved the issuance of bonds in theprincipal amount of $31,355,000 and the levy of taxes to pay the principal thereof and interestthereon. The Board of Education adopted a resolution authorizing the issuance of the Bonds inorder to pay for the local share of school construction under the State of Ohio ClassroomFacilities Assistance Program and other improvements, including construction of a new highschool and K-8 building, handicap accessibility and security measures, equipment, furnishings,and site improvements, together with all necessary appurtenances thereto. (See“INTRODUCTION – Purpose of the Bonds”). The Board of Education will pledge the full faith,credit and revenue of the Board of Education thereto, and levy on all the taxable property in theDistrict, in addition to all other taxes, an annual tax sufficient in amount to provide for paymentof the principal of and interest on the Bonds. The Bonds are voted general obligations of theBoard of Education. The authorizing legislation also covenants with respect to restricting the useof the proceeds of the Bonds as necessary to prevent them from constituting “arbitrage bonds”under Sections 103(b)(2) and 148 of the Code, and regulations prescribed thereunder.

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The ad valorem tax supporting the Bonds will first be collected in 2015. Such tax can beexpended only for the purpose of paying the principal of and interest on the Bonds (together withcosts of issuing the Bonds) and is unlimited as to rate or amount; therefore, the rate of millageactually levied in each year while the Bonds are outstanding will be such as is determined to benecessary by the County Auditor to produce the amount necessary to pay principal and interestdue in that year, giving due consideration to the District’s assessed valuation and previous taxcollection experience.

Risk Consideration Regarding Audited Financial Statements

The Board of Education uses a financial statement presentation methodology known as“cash basis.” This form of financial statement reporting is not in accordance with GenerallyAccepted Accounting Principles (“GAAP”) as required for Ohio school districts pursuant toSection 117-2-03(B) of the Ohio Administrative Code. The Schedule of Findings attached to theIndependent Auditor’s Report dated November 17, 2014 states, in part, that:

For fiscal year 2013, the District prepared financial statements that,although formatted similar to financial statements prescribed byGovernmental Accounting Standards Board No. 34, report on thebasis of cash receipts and disbursements, rather than GAAP. Theaccompanying financial statements and notes omit certain assets,liabilities, deferred inflows/outflows of resources, fund equities,and disclosures that, while material, cannot be determined at thistime. Pursuant to Ohio Rev. Code § 117.38, the District may befined and subject to various other administrative remedies for itsfailure to file the required financial report. (See Appendix A-1,Schedule of Findings)

As a result of the aforesaid practices, the District’s audited financial statements are notcompliant with GAAP or GASB 34. District personnel considered the cost-benefit of reportingin accordance with GAAP versus reporting on a cash basis methodology, and determined thatreporting on a cash basis of accounting was the more fiscally responsible format at this time (foradditional information, see “FINANCIAL MATTERS – Financial Reports and Examinations ofAccounts” herein).

Bankruptcy Considerations

Chapter 9 of the Federal Bankruptcy Code contains provisions relating to the adjustmentof debts of a State’s political subdivisions, public agencies and instrumentalities (“eligibleentity”), such as the District. Under the Bankruptcy Code, an eligible entity may be authorized toinitiate a Chapter 9 case without prior notice to or consent of its creditors, which case may resultin material and adverse modification or alteration of the rights of its secured and unsecuredcreditors, including holders of its bonds and notes.

Chapter 9 of the Bankruptcy Code protects holders of certain municipal revenue andspecial obligation bonds by providing that “special revenues” acquired by the eligible entity after

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the commencement of the bankruptcy case remain subject to any lien resulting from any securityagreement entered into by the eligible entity before commencement of the case.

Section 133.36 of the Ohio Revised Code permits a political subdivision, such as theDistrict, for the purpose of enabling such subdivision to take advantage of the provisions of theBankruptcy Code, and upon approval of the Ohio Tax Commissioner (the “Tax Commissioner”),to file a petition stating that the subdivision is insolvent or unable to meet its debts as theymature, and that it desires to effect a plan for the composition or readjustment of its debts, and totake such further proceedings as are set forth in the Bankruptcy Code as they relate to suchsubdivision. Under Section 133.36, the taxing authority of such subdivision may, upon likeapproval of the Tax Commissioner, refund its outstanding securities, whether matured orunmatured, and exchange refunding bonds for the securities being refunded. In its orderapproving such refunding, the Tax Commissioner shall fix the maturities of the applicablesecurities to be issued, which shall not exceed thirty years. Section 133.36 also provides that notaxing subdivision is permitted, in availing itself of the provisions of the Bankruptcy Code, toscale down, cut down or reduce the principal sum of its securities, except that interest thereonmay be reduced in whole or in part. See “SELECTED INFORMATION - Fiscal EmergencyLegislation.”

The financial condition of the District as well as the market for the Bonds could beaffected by a variety of factors, some of which are beyond the District's control. There can be noassurance that adverse events in the State and in other jurisdictions of the country, including, forexample, the seeking by a school district, municipality, or large taxable property owners ofremedies pursuant to the Federal Bankruptcy Code or otherwise, will not occur which mightaffect the market price of, and the market for the Bonds. If a significant default or other financialcrisis should occur in the affairs of the State or any of its agencies or political subdivisions or inother jurisdictions of the country thereby further impacting the acceptability of obligations issuedby borrowers with the State, both the ability of the District to arrange for additional borrowings,and the market value of outstanding debt obligations, including the Bonds, could be adverselyaffected.

Fiscal Emergency Legislation

Chapter 3316 of the Revised Code of Ohio (hereinafter in this section of this OfficialStatement the “Act”) provides methods for dealing with fiscal emergencies of school districts inOhio. The Act applies only to those school districts which are determined to have circumstancesthat constitute the existence of a fiscal watch or a fiscal emergency condition and therefore afiscal watch or a fiscal emergency pursuant to Sections 3316.01, 3316.02 and 3316.03 of theRevised Code, as set forth in the Act.

Section 3316.03 of the Ohio Revised Code sets forth a series of conditions that constitutegrounds for a fiscal watch. If a fiscal watch is determined to exist, the school district mustprepare and submit to the superintendent of public instruction a financial plan delineating thesteps the board of education will take to eliminate the school district’s current operating deficitand avoid future operating deficits. The school district is also provided technical and supportservices by the State Auditor’s Office to restore financial stability. If the fiscal watch conditions

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are not remedied the school district will remain under fiscal watch or be reclassified to a fiscalemergency.

Section 3316.03 of the Ohio Revised Code also sets forth a series of circumstances thatare defined “fiscal emergency conditions.” If a fiscal emergency condition is determined toexist, the school district is subjected to state oversight through a five-member Financial Planningand Supervision Commission (hereinafter in this section of this Official Statement the“Supervision Commission”). The Auditor of State may be required to assist the SupervisionCommission.

A school district subject to the Act because of the existence of a fiscal emergency mustdevelop and submit a detailed financial plan for the approval or rejection of the SupervisionCommission. Among other matters, the financial plan must show the actions to be taken by sucha school district to eliminate existing fiscal emergency conditions, avoid future fiscal emergencyconditions, and to restore such a school district’s ability to market long-term debt obligationsunder state law generally applicable to Ohio political subdivisions.

The Supervision Commission must approve the amount and purpose of any issue of debtobligations. The Supervision Commission, among other powers, shall require the school districtto establish monthly levels of expenditures and encumbrances consistent with the financial planand shall monitor such monthly levels and require justification to substantiate any departure froman approved level. The Supervision Commission must disapprove the issuance of debtobligations if the issuance would impede the purposes of the financial plan or be inconsistentwith the financial plan or the Act; debt limits would be exceeded; the ability of overlappingsubdivisions to issue unvoted faith and credit debt obligations would be impaired; and theirissuance would be likely to lead to the reallocation of minimum levies of other politicalsubdivisions. Expenditures may not be made contrary to an approved financial plan.Expenditures may not be made contrary to a proposed financial plan after it is submitted to theSupervision Commission and before it is approved or disapproved; and if it is disapproved, noexpenditures may be made which are inconsistent with the reasons given for disapproval.

The Act provides, among other requirements and provisions, that a school district subjectto such Act must develop an effective financial accounting and reporting system; budgets,appropriations and expenditures are to be consistent with the purposes of the financial plan; sucha school district may include certain covenants in its debt obligations, including a state pledgenot to repeal such Act; and permits the school district to issue current revenue notes andadvanced tax payment notes pursuant to the authorization and subject to the restrictions of suchAct. During any fiscal emergency period that a school district will incur an operating deficit,such school district must work with the county auditor and the Tax Commissioner to estimate theamount and rate of a tax levy that is needed to generate a positive fiscal year end cash balance bythe fifth year of the school district’s five-year forecast and recommend to the SupervisionCommission whether it supports or opposes proposing the levy of a tax under Sections 5705.194or 5705.21 or Chapter 5748 of the Ohio Revised Code. The Supervision Commission must thenadopt a resolution to either submit a ballot question proposing a tax levy or not to submit such aquestion.

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The Treasurer of the District has reviewed applicable portions of the Act and hasreviewed records pertaining to the District’s circumstances with respect to the Act. Based uponthe Treasurer’s understanding of the Act, the Treasurer is of the opinion that, with respect to theDistrict, no circumstances or conditions exist that will cause a fiscal caution, watch or emergencycondition to be determined to exist under the Act.

Classroom Facilities Act

The Ohio Facilities Construction Commission (formerly known as the Ohio SchoolFacilities Commission) (the “Commission”) offers two programs, the Expedited LocalPartnership Program (“ELPP”) and the Classroom Facilities Assistance Program, to assist Ohioschool districts in the financing of construction and renovation of local school district facilities.In order to qualify for State assistance under the programs, a school district must meet certaincriteria. Annually, the Department of Education calculates the adjusted valuation per pupil ofeach district and the three-year average adjusted valuation per pupil in the state and ranks thedistricts in order from lowest to highest. Those percentile rankings are forwarded to theCommission and the Commission uses those rankings to determine district eligibility forassistance. While some districts with the highest eligibility rankings qualify for immediate Stateassistance, other districts with middle or low eligibility rankings must wait for State assistanceuntil the highest ranked school districts’ needs are met. The districts which do not qualify forimmediate State assistance may enter into the ELPP while waiting to qualify for the ClassroomFacilities Program.

The Commission administers a program known generally as the Classroom FacilitiesAssistance Program which provides for essentially non-recourse loans to be made by the State ofOhio, said loan money to be applied directly to the cost of construction or renovation of local schooldistrict facilities. To qualify for State assistance under this program certain criteria must be met.Under the Classroom Facilities Assistance Program, the State pays part of the costs of constructingclassroom facilities for school districts. The program is a graduated cost-sharing program where theState and the school district shares are based on the relative wealth of the district. Under thisprogram, the districts with the least resources are served first and receive a greater amount of stateassistance than districts with greater resources will receive.

Once a district qualifies to participate in the Ohio Classroom Facilities Program, theCommission will examine any classroom facilities needs assessment that has been conducted by thedistrict. The Commission will then conduct an on-site evaluation to determine the need ofadditional classroom facilities, the number of classroom facilities to be included in a project, theamount the district can supply from funds, and the amount the state will supply from availablefunds. The district and the Commission will work together to create a master plan.

The project cost portion for a district will be the greater of (a) the required percentage or (b)an amount necessary to raise the district’s net bonded indebtedness within $5,000 of the requiredlevel of indebtedness, but in no event will the district’s share be more than 95%. A district isresponsible for paying its portion of the project usually through the issuance of bonds. In addition, adistrict must levy a 0.5 mill or more property tax for maintenance of the facility constructed (for aterm of 23 years), or have in place a continuing levy for certain authorized purposes, where theproceeds may be used for maintenance, to earmark from the proceeds of that on-going levy an

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amount equivalent of the 0.5 mill additional levy. Once the Commission conditionally approves adistrict’s project, electors must vote favorably on a bond issue and/or a maintenance tax levy withinone year.

At the end of the 23-year period the State will cease to require the District to use the 0.5 millmaintenance levy to pay the cost of the purchase of the school facilities from the State. During thisprocess the school district is not restricted, inhibited, or impaired from incurring additional debt inconventional capital markets for any needed capital improvement projects (subject to its maximumdebt limitations) but does need State consent to issue such debt.

The State of Ohio has contracted with the District to provide the above describedState-subsidized financing for constructing new school improvements and facilities. Theaggregate cost of the constructing the project is $68,655,422. The District’s local share is$23,847,811. The proceeds of the Bonds will be used to finance the District’s local share.The District has determined to provide $7,507,189 of locally funded initiatives. Thebalance of the cost of constructing new school improvements and facilities, which is$37,300,422, will be provided by the State of Ohio. In addition, the District is currently incompliance with its obligation to provide for the equivalent of a 23-year half-millmaintenance tax and intends to make annual payments from voted and continuingpermanent improvement tax levy approved by the electors of the District on November 5,2013 (see “GENERAL INFORMATION CONCERNING THE BOARD OF EDUCATIONAND THE DISTRICT – District Facilities”).

Accrued Interest and Premium

Premium or accrued interest on the Bonds, if any, shall be deposited into the District’sbond retirement fund to be applied to the payment of the principal of and interest on the Bonds inthe manner provided by law.

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SOURCES AND USES OF FUNDS

SourcesPar Amount of Bonds $31,355,000.00Net Original Issue Premium 354,165.65Total Sources 31,709,165.65UsesProject Costs 31,355,000.00Costs of Issuance† 354,165.65Total Uses 31,709,165.65

______†Includes Bond Counsel fees, Rating Agency fees, Underwriter’s Discount, Paying Agent andRegistrar fees, and miscellaneous costs of issuance.

DESCRIPTION OF THE BONDS

The Bonds are issuable as bonds which pay interest semiannually. The Bonds will bedated, mature, and bear interest, all as more particularly described herein.

General.

The Bonds shall be dated March 25, 2015, shall bear semiannual interest, payable eachJune 1 and December 1, commencing December 1, 2015, computed on the basis of a 360-dayyear consisting of twelve 30-day months, from such date at the rates set forth on the inside coverpage hereof, and shall mature on December 1, of the years set forth on the inside cover pagehereof. The Bonds are being issued as fully registered bonds, without coupons, in the principalamounts of $5,000 and any integral multiple thereof. Annual principal, and any premium, on allBonds, are payable upon presentation and surrender by the registered owner thereof at thedesignated office of the Paying Agent and Registrar. Interest on the Bonds shall be paid bycheck, draft, or wire sent by the Paying Agent and Registrar to the registered owner as shown inthe registration records maintained by the Paying Agent and Registrar as bond registrar on the15th day preceding such interest payment date.

The Bonds are dated their date of delivery if authenticated prior to the first interestpayment date of the Bonds and otherwise will be dated as of the interest payment date nextpreceding the date the Bonds are authenticated except that if the Bonds are authenticated on aninterest payment date they will be dated as of such date of authentication; provided that if at thetime of authentication, interest thereon is in default, they will be dated as of the date to whichinterest has been paid. The Bonds mature as indicated on the cover of this Official Statement.

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Redemption.

The Bonds are subject to redemption prior to maturity as follows:

Mandatory Sinking Fund Redemption. The Bonds that are Term Bonds are subject tomandatory sinking fund redemption prior to maturity as follows:

The Term Bond due December 1, 2042 is subject to mandatory sinking fundredemption which is to occur at 100% of the principal amount thereof plus accruedinterest to the date of redemption, according to the following schedule:

YearPrincipal Amountto be Redeemed

12/1/2036 $1,430,00012/1/2037 1,485,00012/1/2038 1,560,00012/1/2039 1,620,00012/1/2040 1,680,00012/1/2041 1,760,00012/1/2042† 1,825,000TOTAL $11,360,000

______†Maturity

Optional Redemption. The Bonds maturing on and after December 1, 2025 are subject tooptional redemption, in whole or in part (in the amount of $5,000 or any integral multiplethereof) on any date at the option of the District on or after December 1, 2024 at a price of par,which is 100% of the face value of such Bonds, plus accrued interest to the redemption date.

Notice of Redemption. If fewer than all of the outstanding Bonds of a single maturity arecalled for redemption, the selection of Bonds to be redeemed, or portions thereof in amounts of$5,000 or any integral multiple thereof, shall be made by lot by the Paying Agent and Registrarin any manner which the Paying Agent and Registrar may determine. In the case of a partialredemption of Bonds when Bonds of denominations greater than $5,000 are then outstanding,each $5,000 unit of face value of principal thereof shall be treated as though it were a separateBond of the denomination of $5,000. If one or more, but not all, of such $5,000 units of facevalue represented by a Bond are to be called for redemption, then upon notice of redemption of a$5,000 unit or units, the registered holder of that Bond shall surrender the Bond to the PayingAgent and Registrar (a) for payment of the redemption price for the $5,000 unit or units of facevalue called for redemption (including without limitation, the interest accrued to the date fixedfor redemption and any premium), and (b) for issuance, without charge to the registered holderthereof, of a new Bond or Bonds of the same series, of any authorized denomination ordenominations in an aggregate principal amount equal to the unmatured and unredeemed portionof, and bearing interest at the same rate and maturing on the same date as, the Bond surrendered.

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The notice of the call for redemption of Bonds shall identify (a) by designation, letters,numbers or other distinguishing marks, the Bonds or portions thereof to be redeemed, (b) theredemption price to be paid, (c) the date fixed for redemption, and (d) the place or places wherethe amounts due upon redemption are payable. The notice shall be given by the Paying Agentand Registrar by regular first class mail, at least thirty (30) days prior to the date fixed forredemption, to the registered holder’s address shown on the bond registration records on thefifteenth (15th) day of the calendar month preceding that mailing. Failure to receive notice bymailing or any defect in the proceedings regarding any Bond, however, shall not affect thevalidity of the proceedings for the redemption of any Bond. Notice having been mailed in themanner provided above, Bonds and the portion therefor called for redemption shall become dueand payable on the redemption date and on such redemption date, interest on such Bonds orportions thereof so called shall cease to accrue; and upon presentation and surrender of suchBonds or portions thereof at the place or places specified in that notice, such Bonds or portionsthereof shall be paid at the redemption price, including interest accrued to the redemption date.

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Debt Service Schedule

The following table lists the debt service for the Bonds:

Period Ending Principal InterestPeriod

Debt ServiceAnnual

Debt Service06/01/2015 - -12/01/2015 $800,000.00 $775,664.48 $1,575,664.48 $1,575,664.4806/01/2016 - 547,559.38 547,559.3812/01/2016 640,000.00 547,559.38 1,187,559.38 1,735,118.7606/01/2017 - 531,559.38 531,559.3812/01/2017 690,000.00 531,559.38 1,221,559.38 1,753,118.7606/01/2018 - 514,309.38 514,309.3812/01/2018 725,000.00 514,309.38 1,239,309.38 1,753,618.7606/01/2019 - 507,059.38 507,059.3812/01/2019 735,000.00 507,059.38 1,242,059.38 1,749,118.7606/01/2020 - 499,709.38 499,709.3812/01/2020 770,000.00 499,709.38 1,269,709.38 1,769,418.7606/01/2021 - 492,009.38 492,009.3812/01/2021 785,000.00 492,009.38 1,277,009.38 1,769,018.7606/01/2022 - 484,159.38 484,159.3812/01/2022 800,000.00 484,159.38 1,284,159.38 1,768,318.7606/01/2023 - 475,159.38 475,159.3812/01/2023 835,000.00 475,159.38 1,310,159.38 1,785,318.7606/01/2024 - 464,721.88 464,721.8812/01/2024 855,000.00 464,721.88 1,319,721.88 1,784,443.7606/01/2025 - 449,909.38 449,909.3812/01/2025 885,000.00 449,909.38 1,334,909.38 1,784,818.7606/01/2026 - 432,209.38 432,209.3812/01/2026 940,000.00 432,209.38 1,372,209.38 1,804,418.7606/01/2027 - 413,409.38 413,409.3812/01/2027 975,000.00 413,409.38 1,388,409.38 1,801,818.7606/01/2028 - 393,909.38 393,909.3812/01/2028 1,015,000.00 393,909.38 1,408,909.38 1,802,818.7606/01/2029 - 373,609.38 373,609.3812/01/2029 1,075,000.00 373,609.38 1,448,609.38 1,822,218.7606/01/2030 - 352,109.38 352,109.3812/01/2030 1,120,000.00 352,109.38 1,472,109.38 1,824,218.7606/01/2031 - 329,709.38 329,709.3812/01/2031 1,165,000.00 329,709.38 1,494,709.38 1,824,418.7606/01/2032 - 306,409.38 306,409.3812/01/2032 1,225,000.00 306,409.38 1,531,409.38 1,837,818.7606/01/2033 - 285,737.50 285,737.5012/01/2033 1,270,000.00 285,737.50 1,555,737.50 1,841,475.0006/01/2034 - 263,512.50 263,512.5012/01/2034 1,315,000.00 263,512.50 1,578,512.50 1,842,025.0006/01/2035 - 240,500.00 240,500.0012/01/2035 1,375,000.00 240,500.00 1,615,500.00 1,856,000.0006/01/2036 - 213,000.00 213,000.0012/01/2036 1,430,000.00 213,000.00 1,643,000.00 1,856,000.0006/01/2037 - 186,187.50 186,187.5012/01/2037 1,485,000.00 186,187.50 1,671,187.50 1,857,375.0006/01/2038 - 158,343.75 158,343.75

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12/01/2038 1,560,000.00 158,343.75 1,718,343.75 1,876,687.5006/01/2039 - 129,093.75 129,093.7512/01/2039 1,620,000.00 129,093.75 1,749,093.75 1,878,187.5006/01/2040 - 98,718.75 98,718.7512/01/2040 1,680,000.00 98,718.75 1,778,718.75 1,877,437.5006/01/2041 - 67,218.75 67,218.7512/01/2041 1,760,000.00 67,218.75 1,827,218.75 1,894,437.5006/01/2042 - 34,218.75 34,218.7512/01/2042 1,825,000.00 34,218.75 1,859,218.75 1,893,437.50

TOTALS $31,355,000.00 $19,263,770.90 $50,618,770.90 $50,618,770.90


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PURPOSE OF THE BONDS

The Bonds are being issued for the purpose of paying a portion of the local share ofschool construction under the State of Ohio Classroom Facilities Assistance Program and otherimprovements, including construction of a new high school and K-8 building, handicapaccessibility and security measures, equipment, furnishings, and site improvements, togetherwith all necessary appurtenances thereto.

The Bonds are also being issued for the purpose of paying certain costs of issuance underChapter 133 of the Ohio Revised Code including, without limitation, the cost of printing thebonds, expense in delivery of the bonds, service charges of the paying agent and registrar, legalservices, costs associated with the verification agent, and obtaining an approving legal opinionand all necessary costs in connection therewith.

The construction period for such project is estimated to take up to sixty months based onestimates of the District’s architect.

OHIO SCHOOL DISTRICT CREDIT ENHANCEMENT PROGRAM

Certain Ohio school districts, including the District, that meet State-established criteriamay participate in the Ohio School District Credit Enhancement Program established underSection 3317.18 of the Ohio Revised Code (the “Credit Enhancement Program”). Districtobligations are eligible for the Credit Enhancement Program only if (a) the projected amount tobe distributed to the District from state education aid for the current fiscal year exceeds themaximum annual debt charges due in the current or any future fiscal year by a ratio of 2.5 to one;and (b) at any time during the current or any fiscal year, the projected amount of state educationaid remaining to be distributed in the fiscal year exceed the debt charges remaining to be paid inthat fiscal year by a ratio of 1.25 to one. Under the Credit Enhancement Program, and to providefurther security for the Bonds, the Board of Education, the State Department of Education, (the“Department”) and the Paying Agent and Registrar will enter into an agreement (the“Agreement”) concurrently with the issuance of the Bonds establishing a mechanism by whichcertain state education aid payments to the Board of Education can be transferred directly to thePaying Agent and Registrar for the payment of debt service on the Bonds if a shortfall occurs inthe Board of Education’s funding of debt service.

Under the Agreement, the Paying Agent and Registrar and the Board of Education are toimmediately notify the Department if, on the fifteenth business day prior to a debt servicepayment date, the amount on deposit with the Paying Agent and Registrar for the payment ofdebt service on the Bonds is less than the amount of the debt service due on that payment date.In this event, the Department must pay to the Paying Agent and Registrar certain state educationaid payments otherwise payable to the Board of Education. Those payments are to be made nolater than one day prior to a debt service payment date and are to be in an amount equal to thelesser of (a) the amount by which funds on deposit with the Paying Agent and Registrar on thatdate are less than the required debt service payment on the immediately succeeding debt servicepayment date, or (b) the state education aid amount due the Board of Education for the remainderof the then current fiscal year. The Agreement is irrevocable as long as any of the enhancedBonds are outstanding. If state education aid payments are paid to the Paying Agent and

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Registrar pursuant to the Agreement, the Department is required to evaluate the Board ofEducation’s inability to meet the debt service payments and to recommend corrective actions tobe implemented by the Board of Education.

In accordance with the Credit Enhancement Program, the Board of Education hascovenanted that it will not pledge state education aid payments (“Foundation ProgramPayments”) as primary security for any debt having a claim on the state education aid paymentsunless the projected state education aid to be distributed to the District in the current fiscal yearexceeds the maximum annual debt charges due in the current or any future year on alloutstanding or proposed obligations to which state aid is pledged as the primary security by aratio of 2.5 to one. The aforesaid maximum annual debt charges due shall be referred to as“Credit Enhanced Maximum Annual Debt Service” or “CEMADS.”

The following table presents the amount of state education aid payments distributed tothe Board of Education during the fiscal years indicated and the ratio of that amount to the Boardof Education’s Credit Enhanced Maximum Annual Debt Service (“CEMADS”).

Fiscal YearEnding June 30

FoundationProgram

Payments* CEMADS**

Ratio of FoundationProgram Payments

to CEMADS2015 8,047,058.12 2,081,900.00 3.87

______* Total Foundation Program Payments less certain deductions and adjustments**CEMADS occurs in FY 2016FY 2015 used for application to Credit Enhancement Program

There can be no assurance as to the future levels of State funding of the FoundationProgram.

The Department’s responsibilities under the Agreement are a mechanism for deliveringmoney to the Paying Agent and Registrar which would otherwise go to the Board of Education,and are an obligation of the Department only to the extent that money is appropriated by theGeneral Assembly of the State for Chapter 3317 of the Revised Code or for the purposes of theCredit Enhancement Program. They do not constitute obligations or debts or pledges of thefaith, credit or taxing power of the State of Ohio, and the holders or owners of the enhancedBonds have no right to have taxes levied or appropriations made by the General Assembly forthe payment of debt service on such Bonds. A statement to that effect will be contained in theenhanced Bonds. The Agreement and any payments by the State thereunder do not constitute theassumption by the State of any debt of the Board of Education.

The Department’s participation in the Credit Enhancement Program is solely for thepurpose of enhancing the rating on and marketability of the Bonds, and should not indicate anyprojected possibility of the Credit Enhancement Program being called upon to perform. Asdescribed above, the Bonds are payable from unlimited property taxes in the amount necessary topay annual debt service.

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BOOK-ENTRY SYSTEM

The following information on the Book Entry System applicable to all Bonds has beensupplied by DTC and neither the District, the Underwriter nor Bond Counsel (each as defined)make any representation, warranties or guarantees with respect to its accuracy or completeness.

The Depository Trust Company (“DTC”), New York, NY, will act as securitiesdepository for the Bonds (the “Securities”). The Securities will be issued as fully-registeredsecurities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other nameas may be requested by an authorized representative of DTC. One fully-registered Securitycertificate will be issued for each issue of the Securities, each in the aggregate principal amountof such issue, and will be deposited with DTC.

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

Purchases of Securities under the DTC system must be made by or through DirectParticipants, which will receive a credit for the Securities on DTC’s records. The ownershipinterest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recordedon the Direct and Indirect Participants’ records. Beneficial Owners will not receive writtenconfirmation from DTC of their purchase. Beneficial Owners are, however, expected to receivewritten confirmations providing details of the transaction, as well as periodic statements of theirholdings, from the Direct or Indirect Participant through which the Beneficial Owner entered intothe transaction. Transfers of ownership interests in the Securities are to be accomplished byentries made on the books of Direct and Indirect Participants acting on behalf of BeneficialOwners. Beneficial Owners will not receive certificates representing their ownership interests in

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Securities, except in the event that use of the book-entry system for the Securities isdiscontinued.

To facilitate subsequent transfers, all Securities deposited by Direct Participants withDTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other nameas may be requested by an authorized representative of DTC. The deposit of Securities with DTCand their registration in the name of Cede & Co. or such other DTC nominee do not effect anychange in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of theSecurities; DTC’s records reflect only the identity of the Direct Participants to whose accountssuch Securities are credited, which may or may not be the Beneficial Owners. The Direct andIndirect Participants will remain responsible for keeping account of their holdings on behalf oftheir customers.

Conveyance of notices and other communications by DTC to Direct Participants, byDirect Participants to Indirect Participants, and by Direct Participants and Indirect Participants toBeneficial Owners will be governed by arrangements among them, subject to any statutory orregulatory requirements as may be in effect from time to time. Beneficial Owners of Securitiesmay wish to take certain steps to augment the transmission to them of notices of significantevents with respect to the Securities, such as redemptions, tenders, defaults, and proposedamendments to the Security documents. For example, Beneficial Owners of Securities may wishto ascertain that the nominee holding the Securities for their benefit has agreed to obtain andtransmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to providetheir names and addresses to the registrar and request that copies of notices be provided directlyto them.

Redemption notices shall be sent to DTC. If less than all of the Securities within an issueare being redeemed, DTC’s practice is to determine by lot the amount of the interest of eachDirect Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote withrespect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMIProcedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon aspossible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or votingrights to those Direct Participants to whose accounts Securities are credited on the record date(identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Securities will bemade to Cede &. Co., or such other nominee as may be requested by an authorized representativeof DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of fundsand corresponding detail information from the District or Agent, on payable date in accordancewith their respective holdings shown on DTC’s records. Payments by Participants to BeneficialOwners will be governed by standing instructions and customary practices, as is the case withsecurities held for the accounts of customers in bearer form or registered in “street name,” andwill be the responsibility of such Participant and not of DTC, Agent, or the District, subject toany statutory or regulatory requirements as may be in effect from time to time. Payment ofredemption proceeds, distributions, and dividend payments to Cede & Co. (or such othernominee as may be requested by an authorized representative of DTC) is the responsibility of the

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District or Agent, disbursement of such payments to Direct Participants will be the responsibilityof DTC, and disbursement of such payments to the Beneficial Owners will be the responsibilityof Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the Securities atany time by giving reasonable notice to the District or Agent. Under such circumstances, in theevent that a successor depository is not obtained, Security certificates are required to be printedand delivered.

The District may decide to discontinue use of the system of book-entry-only transfersthrough DTC (or a successor securities depository). In that event, Security certificates will beprinted and delivered to DTC.

The information in this section concerning DTC and DTC’s book-entry system has beenobtained from sources that the District believes to be reliable, but the District takes noresponsibility for the accuracy thereof.

GENERAL INFORMATION CONCERNINGTHE BOARD OF EDUCATION AND THE DISTRICT

Introduction

About the District. The District is located in the center of Champaign County,approximately 40 miles northeast of Dayton, Ohio and 45 miles west of Columbus, Ohio. TheDistrict is approximately 53 square miles and serves the students residing in the City of Urbanaand Townships of Mad River, Salem, Union and Urbana.

Resident population in the district has been relatively stable since 2000, with a slightdecline of just under 2 percent for the time period between 2006 and 2012. The assessedvaluation of residential property within the District grew roughly 22 percent between the years of2000-2001 to its highest amount in 2007-2008, but has decreased by just over 9.5 percent fromthat point through 2013-2014.

The 2012 population of the District was estimated at 15,159. The District consists of one(1) pre-kindergarten school, three (3) elementary schools (grades K-5), one (1) junior highschool (grades 6-8) and one (1) high school (grades 9-12).

In addition to academic and related services, students have the opportunity to participatein a wide range of extra-curricular activities for both boys and girls. These include athleticsteams such as soccer, basketball, football, cheerleading, cross-country, baseball, golf, softball,track, and volleyball. Students may also participate in such activities as Quiz Team, schoolplays, honor society, student council, Future Farmers of America and various other studentgroups.

The major sources of revenue to the District are local property taxes on real and personalproperty, along with State aid. Other funds, such as lunch programs and special classes arefunded for their expenditures by designated State and Federal grants.

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Residents in the community can access U.S. and state routes, interstates and the DaytonInternational (42 miles) and Port Columbus International (53 miles) Airports. Though located ina generally rural area, the district is home to several manufacturers including Honeywell, Orbis,Ultra-Met, and The Bundy Corporation.

Organization of the District

Effective with the 2013-14 school year, the District organization for grades K-12 is asfollows:

Grades Enrollment Capacity

3 Elementary SchoolsNorth Elementary K-1 366 375South Elementary 2-3 319 330East Elementary 4-5 323 375

1 Junior High SchoolUrbana Junior High School 6-8 435 450

1 High SchoolUrbana High School 9-12 566 675

TOTAL 2009 2,205_______Source: Records of the Treasurer of the District

The District’s administrative staff consists of the following: Superintendent (1),Principals (6), Special Education Director (1), Curriculum Director (1), Technology Directors(2), Business Manager (1), and Treasurer (1).

The 2013-2014 school year student enrollment was 2,009. The District currentlyemploys 152 certificated personnel and 88 support personnel. The District is providingtransportation for 486 public school students, 27 community school students, and 56 privateschool students.


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Overlapping Governmental Entities

The major political subdivisions overlapping all or a portion of the territory of theDistrict, the approximate percentages of the assessed valuation of such subdivisions locatedwithin the District and the net overlapping debt (excluding special assessment and self-supporting debt) attributable to the District from such subdivisions are as follows:

Subdivision

% of AssessedValuation

Within District Net DebtUrbana City School District 100.00% $ 0Champaign County 32.13 870,000Urbana City 99.91 2,105,000Mad River Township 0.55 0Salem Township 5.48 0Union Township 22.61 0Urbana Township 99.73 0Ohio Hi-Point Career Center Jt. Voc. School District 8.61 0Champaign Library District 44.02 0Logan-Champaign Mental Health District 13.42 0_______Source: Ohio Municipal Advisory Council, as of January 28, 2015

OMAC dates are approximately two weeks ahead of actual date

NET DEBT

Total Per Capita % of A/V$0 $0 0.00%

NET OVERLAPPING DEBT

Total Per Capita % of A/V$2,382,637 $158 0.90%

_______Source: Ohio Municipal Advisory Council, as of January 28, 2015

OMAC dates are approximately two weeks ahead of actual date

Each of these entities operates independently under and is governed by Ohio law with itsown budget, tax rate and sources of revenue. All such entities may levy unvoted ad valoremproperty taxes within the “ten-mill limitation” discussed herein at “BOARD OF EDUCATIONDEBT AND OTHER LONG-TERM OBLIGATIONS - Indirect Debt Limitation.”


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Population

Population statistics for the District, the City of Urbana, and Champaign County are asfollows:

DISTRICTCITY OFURBANA

CHAMPAIGNCOUNTY

Year Population % Change Population % Change Population % Change1980 14,040 -- 10,762 -- 33,649 --1990 15,250 8.6% 11,353 5.4% 36,019 7.0%2000 15,349 0.6 11,613 2.2 38,890 7.92010 15,342 (0.0) 11,793 1.5 40,097 3.12012 15,159 (1.1) 11,675 (1.0) 39,892 (0.5)

_______Sources: U.S. Department of Commerce, Bureau of Census & U.S. Census Bureau, 2012 American Community

Survey 5-year estimate,Ohio Municipal Advisory Council

Employment

Unemployment Statistics. The following table lists the average annual unemploymentrates for the United States, the State of Ohio and Champaign County for the five most recentyears and the unemployment rates for the most recent month for which such data is available.The figures are expressed in percentages and represent the ratio of the total unemployed to thetotal labor force. The monthly data is not seasonally adjusted.

Year United States State of OhioChampaign

County2009 9.3% 10.2% 11.6%2010 9.6 10.0 11.12011 8.9 8.6 9.12012 8.1 7.2 7.22013 7.4 7.4 6.7

Dec, 2014* 5.4 4.7 3.9_____*Not seasonally adjustedSource: Ohio Bureau of Employment Services, Ohio Labor Market Information: Civilian Labor Force Estimates.

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Labor Force Statistics - Champaign County

YearTotal Labor

Force Employment UnemploymentPercent

Unemployed2009 20,300 17,900 2,400 11.6%2010 19,900 17,700 2,200 11.12011 19,600 17,800 1,800 9.12012 19,500 18,100 1,400 7.22013 20,200 18,800 1,400 6.7

December, 2014* 20,200 19,400 800 3.9_______*Not seasonally adjustedSource: Ohio Bureau of Employment Services, Ohio Labor Market Information: Civilian Labor Force Estimates.

Champaign County Largest Employers

Name of EmployerNature of Activity

or Business1. Community Mercy Health Partners Service2. Graham Local School District Government3. Honeywell International Inc. Manufacturing4. Johnson Welded Products Manufacturing5. KTH Parts Industries Inc. Manufacturing6. Menasha Corp/ORBIS Manufacturing7. Rittal Corp. Manufacturing8. Urbana City School District Government9. Urbana University Service10. Wal-Mart Stores Inc. Trade

_______Source: Champaign County Chamber of Commerce

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Income and Housing Data

The following shows the Median Household Income, Per Capita Income and MedianHome Value of Owner-Occupied Housing Units for 2013 for Champaign County, the State ofOhio and the United States:

ChampaignCounty

State ofOhio

UnitedStates

Median Household Income $ 49,157 $ 48,308 $ 53,046Per Capita Income 23,358 26,046 28,155Median Value of Owner Occupied Units 124,600 130,800 176,700

_______Source: U.S. Census Bureau, 2013 American Community Survey 5-year estimate

Building Permits

The chart below indicates the number of permits and the estimated value of the projectsconstructed pursuant to such permits for the County of Champaign.

Year Number Estimated Value2010 421 $15,519,2002011 387 12,220,5472012 408 15,915,6312013 391 39,022,3162014 380 16,805,820

______Source: Champaign County Building Regulations

Organization and Officials of the Board of Education

The Board of Education is a body politic and corporate and, as such, can be sued and cansue, can enter into contracts and can be contracted with, can acquire, hold, possess and dispose ofreal and personal property, and take and hold in trust for the use and benefit of the District, anygrant or devise of land, and any donation or bequest of money or other personal property.

The Board of Education is comprised of five members who are elected for overlappingfour-year terms. The Board of Education is charged with the duties and responsibilities ofmanaging the affairs of the District pursuant to the laws governing public education in Ohio.The Board of Education directly employs the Superintendent and Treasurer. The Board ofEducation serves as the legislative body of the District.

The Treasurer is appointed by the Board of Education for a term not longer than fiveyears and serves as the fiscal officer of the Board of Education and, with the president of theBoard of Education, executes all conveyances made by the Board of Education.

The Superintendent is appointed by the Board of Education for a term not longer thanfive years and is the executive officer of the Board of Education. The Superintendent isresponsible for administering Board of Education-adopted policies, is expected to provide

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leadership in all phases of policy formulation and is the chief advisor to the Board of Educationon all aspects of the educational program and total operation of the schools governed by theBoard of Education.

The Board of Education employs all certificated and classified employees only upon therecommendation of the Superintendent.

The current members of the Board of Education, and the Superintendent and Treasurer ofthe District are as follows:

Board of Education

Name Term ExpiresYears asMember Occupation

Alyssa Dunham, President 12/31/17 5 SecretaryJan Engle, Vice President 12/31/15 7 Self-Employed Lawn CareJack Beard 12/31/17 1 Retired TeacherTim Lacy 12/31/17 1 TeacherWarren Stevens 12/31/15 13 Retired from Honda

Superintendent. The Superintendent is the chief executive officer of the District,responsible directly to the Board of Education for all educational and support operations. Mr.Charles Thiel has been superintendent of the District since August 1, 2009. Before becomingsuperintendent he served as Urbana High School Principal and Urbana High School AssistantPrincipal. Mr. Thiel received his Bachelors degree in Industrial Technology Education from TheOhio State University and his Masters degree in Educational Administration from University ofCincinnati.

Treasurer. The Treasurer is the chief financial officer of the District, responsible directlyto the Board of Education for maintaining all financial records, issuing all payments, maintainingcustody of all District funds and assets and investing idle funds as specified by Ohio Law. Ms.Mandy Hildebrand is the treasurer for the District and has served in this position since November1, 2008. Before becoming treasurer she served as Payroll Coordinator with Urbana CitySchools. Ms. Hildebrand received her Bachelors degree in Business Administration fromUrbana University and her Masters degree in Accounting from Wright State University.

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Enrollment

Enrollment in the District for the school years 2009-2010 through 2013-2014 is shown inthe tables below:

School Year K-5 6-8 9-12 Total Enrollment2009-2010 1,004 522 667 2,1932010-2011 1,010 516 654 2,1802011-2012 988 472 638 2,0982012-2013 1,010 461 624 2,0952013-2014 1,008 435 566 2,009

_______Source: Records of the Treasurer of the District

Certain additional statistical information concerning enrollment in the District for theschool years 2008-2009 through 2012-2013 follows:

Per PupilExpenditure

Per PupilAssessed

Valuation

Fiscal YearK-12

EnrollmentDistrictAverage

StateAverage

DistrictAverage

StateAverage

2008-2009 2,363 $ 9,696 $10,254 $117,222 $143,5432009-2010 2,399 10,175 10,565 110,884 144,1092010-2011 2,395 10,839 10,697 106,121 139,3742011-2012 2,311 10,804 10,597 110,375 140,4812012-2013 2,367 9,999 10,446 109,300 137,515

_________Note: The K-12 Enrollment figures in this table are based on average daily membership (as defined by the Ohio Department ofEducation) and do not exactly match the figures provided by the District, listed above, which are based on a headcount (asdescribed above). The methodologies differ due to adjustments for funding purposes per funding regulations.Source: Ohio Department of Education


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District Facilities

The District operates six school buildings consisting of a pre-kindergarten school, threeelementary schools, one junior high school and one high school. Through the use of a five-yearbuilding grounds and maintenance plan, all facilities are kept in the best operating and physicalcondition possible. The District has been sensitive to an energy conservation program. Thefacilities of the District are described as follows:

BuildingGradesHoused

Date ofOriginal

ConstructionDates of

ImprovementDescription ofImprovement

Urbana Local Pre-K 1900 1948 AdditionNorth Elementary K-1 1901 1948,1954 AdditionsSouth Elementary 2-3 1920 1954 AdditionEast Elementary 4-5 1955 1960 AdditionUrbana Junior High School 6-8 1896 1920,1931,

1955,1960,1987

Additions after fire/additions

Urbana High School 9-12 1950 1955,1960 Additions

The project financed through the issuance of the Bonds will involve replacing all currentschool buildings with new facilities. A new pre-kindergarten through eighth grade (PK-8)combined elementary and middle school will be constructed, and after its completion, theDistrict will build a new high school for grades nine through twelve (9-12) on the current highschool site. The District’s current high school gymnasium and auditorium will be retained forDistrict use as part of the plan.

Employees

The Board of Education currently employs 227 full-time (20 or more hours a week)employees (including non-teaching personnel) and 13 part-time employees. In fiscal year 2013,the Board paid $10,725,079 in salaries and wages from the general fund to employees (includingsubstitutes) and $4,276,778 for fringe benefits which include state employer retirementcontributions, workers' compensation insurance coverage, unemployment compensation,severance payments, medical, and life insurance premiums. Of the Board's current employees,152 are certified by the Ohio Department of Education serving as classroom teachers, educationspecialists and administrators. The starting salary for a teacher with a bachelor's degree for theperiod beginning August 1, 2014 was $35,216. The maximum teacher salary in 2014-2015 for amaster’s degree, plus 30 semester hours, is $70,305 with 20 or more years of experience.


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The number of persons employed by the District, the collective bargaining agents, if any,which represent them and the dates of expiration of the various collective bargaining agreementsfollow:

No. of Employees2013-2014 Union Contract Expiration Date

142 Ohio Education Association 5/31/1768 Ohio Association of Public School

Employees6/30/16

State Performance Standards

The District received the following report card from the State based on its performanceduring the 2013-2014 school year:

2013-2014 Report Card

Component GradeDistrict Grade N/A

Achievement N/APerformance Indicators (12/24) (50.0%) DPerformance Index (95.1/120.0) (79.3%) C

Progress N/AAll Students AGifted Students DStudents in the Lowest 20% in Achievement BStudents with Disabilities C

Gap Closing N/AAnnual Measurable Objectives (52.9%) F

Graduation RateFour-Year Graduation Rate (83.0%) DFive-Year Graduation Rate (78.5%) F

K-3 Literacy N/A

Prepared for Success N/A_______Source: Ohio Department of Education

The State has created and implemented a new report card methodology which is reflectedin the report cards issued in August 2013 and thereafter. Previous designations such as“excellent” and “effective” were replaced with letter grades such as “A” and “B.” Under the

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new methodology, school districts are assigned an overall grade of “A” to “F.” Each schooldistrict’s overall grade is determining by combining six graded components: (a) Achievement,(b) Progress, (c) Gap Closing, (d) Graduation Rate, (e) K-3 Literacy and (f) Prepared forSuccess. Each component is assigned a grade of “A” to “F.” Some components are assigned agrade based upon a single measure, while other components are assigned a grade based upon thecombination of grades assigned to multiple measures. Each measure is assigned a grade of “A”to “F.” The State has not finalized methodologies for all components and measures.Additionally, the State has not finalized how much weight to assign each component andmeasure for purposes of determining a school district’s overall grade. The State has announcedthat such weighting will be finalized by August 2015. Additional information about State reportcards can be found at http://reportcard.education.ohio.gov/Pages/Resources.aspx. What followsis a brief, general overview of each component and each measure within each component.

Achievement. The Achievement component quantifies how well students are performingon state tests and consists of two measures: (a) Performance Indicators and (b) PerformanceIndex. The Performance Indicators show how many students of the school district have aminimum, or proficient, level of knowledge. The Performance Indicators are based upon a seriesof twenty-four state tests that measure the level of achievement for each student in a grade andsubject. In 2012-2013 school districts were required to have at least 75% of its students scoreproficient in a test in order to receive credit for a particular Performance Indicator for the 2012-2013 school year. Starting in the 2013-2014 school year, a school district must have at least 80%of its students score proficient in a test in order to receive credit. The Performance Index isbased upon a 120 point scale. The Performance Index measures the achievement of everystudent in a school district, not just the proficient ones. School districts receive points for everystudent’s level of achievement, regardless of whether he or she is proficient. A school districtwill receive more points for a higher achieving student and fewer points for lower achievingones.

Grading Methodology for Performance Indicators

Number of PerformanceIndicators Satisfied

Percentage ofPerformance

Indicators Satisfied Grade22-24 90.0-100.0% A20-21 80.0-89.9% B16-19 70.0-79.9% C12-15 50.0-69.9% D0-11 0.0-49.9% F

Grading Methodology for Performance IndexNumber of Points

EarnedPercentage of Points

Earned Grade108-120 90.0-100.0% A96-107.9 80.0-89.9% B84-95.9 70.0-79.9% C60-83.9 50.0-69.9% D0-59.9 0.0-49.9% F

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Progress. The Progress component quantifies whether each student in each measurelearned a year’s worth of material in a year. The Progress component consists of four measures:(a) All Students (overall rating of a school district), (b) Gifted Students (math, reading orsuperior cognitive only), (c) Students with Disabilities (all students who have an IEP and take theOAA) and (d) students in the lowest twenty percent of achievement statewide (based on adistribution of scores for the entire state). Each measure is assigned a grade based upon a Value-Added designation which is determined by how that measure’s students did on state tests. Thedata from state tests over multiple years is examined through a series of calculations to produce aValue-Added designation for each school district. Each Value-Added designation is based upona Value-Added index. A range of -1 to +1 represents one year of growth in one year. Up tothree years of growth computations are used to assure the accuracy and precisions of themeasure; school districts are not penalized just because one year of poor growth.

Grading Methodology for All Students, Gifted Students, Students with Disabilities andStudents in the Lowest Twenty Percent of Achievement Statewide

Value-Added Index Score Grade+2 and higher A

Greater or equal to +1 but less than +2 BGreater or equal to -1 but less than +1 CGreater or equal to -2 but less than -1 D

Less than -2 F

Gap Closing. The Gap Closing component consists of one measure: Annual MeasurableObjectives. Annual Measurable Objectives are minimum performance objectives in reading,math and graduation rate set annually by the State. Annual Measurable Objectives measure theperformance of ten student groups in reading, math and graduation rate against the collectiveperformance of all students in the State and then assigns a grade for efforts to close achievementgaps in all groups. The ten groups measured are: (a) All Students, (b) American Indian/AlaskanNative, (c) Asian/Pacific Islander, (d) Black, non-Hispanic, (e) Hispanic, (f) Multiracial, (g)White, non-Hispanic, (h) Economically Disadvantaged, (i) Students with Disabilities, and (j)Limited English Proficiency. If a group within a school district contains fewer than thirtystudents it is not rated and its performance is not used in calculating the school district’s grade.The 2014 Annual Measurable Objectives were 84.9% in reading, 80.5% in math and 78.2% forgraduation rate.

Grading Methodology for Gap Closing

Score Grade90.0-100.0% A80.0-89.9% B70.0-79.9% C60.0-69.9% D0.0-59.9% F

Graduation Rate. The Graduation component quantifies how many students graduatewith a diploma within a certain amount of time. The Graduation Component consists of two

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measures: (a) Four-Year Graduation Rate and (b) Five-Year Graduation Rate. The Four-YearGraduation Rate includes only those students who earn a diploma within four years of enteringthe ninth grade for the first time, while the Five-Year Graduation Rate includes only thosestudents who earn a diploma within five years of entering the ninth grade for the first time.

Grading Methodology for Graduation Rate

Four-Year Graduation Rate

Score Grade93-100.0% A89-92.9% B84-88.9% C79-83.9% D

Less than 79% F

Five-Year Graduation Rate

Score Grade95-100.0% A90-94.9% B85-89.9% C80-84.9% D

Less than 80% F

K-3 Literacy. The K-3 Literacy component consists of one measure: K-3 LiteracyImprovement. K-3 Literacy Improvement measures how well districts are helping youngstudents who are reading below grade level. Diagnostic assessments will be given to all studentsin kindergarten through grade three and students will be classified as on-track or not-on-track.Each not-on-track student is required to be placed on a Reading Improvement and MonitoringPlan within sixty days of the assessment. Any District with fewer than five percent of theirkindergartners reading below grade level will not receive a letter grade for this component. Allother Districts will receive a score that will be assigned a Grade A - F based on the percentage ofnot-on-track students who improve to on-track or proficient after their next diagnosticassessment. Districts’ scores will decrease if a student that is classified as not-on-track after adiagnostic assessment is not given a Reading Improvement and Monitoring Plan or is removedfrom such a plan and such student is not classified as proficient after his or her next diagnosticassessment. The State will provide additional, detailed technical guidance concerning thiscomponent at a later date. The 2016 report card and subsequent report cards will display onegrade for Kindergarten through Grade 3.

Prepared for Success. The Prepared for Success component quantifies whether studentsgraduating from Ohio high schools are ready for college and careers without needing to takeremedial classes. The Prepared for Success component consists of six ungraded measures: (a)College Admission Test (participation rate and percent receiving non-remediation score), (b)Dual Enrollment Credits (percent earning at least three credits), (c) Industry Credentials (percentof students with a credential), (d) Honors Diplomas Awarded (percent of students with an

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Honors Diploma), (e) Advanced Placement (participation rate and percent scoring three orabove), and (f) International Baccalaureate Program (participation rate and percent scoring fouror above). Additionally, the State may decide to use the results of the state administered Collegeand Career Readiness Assessment in the component grade. The methodology for assigning agrade to the Prepared for Success component has not yet been created by the State. The Stateanticipates developing a methodology by 2016.

Comparative Position of the District. The following tables compare the District with itssimilar district cohorts (as defined by the Department) and the State average in the areas ofsources of revenue and expenditures by category.

Sources of Revenue, 2011-2012

District Similar Districts State of OhioLocal Funding 42.65% 39.82% 48.63%State Funding 48.06 50.63 43.08Federal Funding 9.28 9.55 8.29__________Source: Ohio Department of Education

Sources of Revenue, 2012-2013

District Similar Districts State of OhioLocal Funding 34.42% 34.99% 42.25%State Funding 49.42 46.94 42.03Other Non-Tax Funding 7.55 8.74 7.44Federal Funding 8.60 9.33 8.28__________Source: Ohio Department of Education

Expenditures by Category, 2011-2012(Dollars per Pupil)

District Similar Districts State of OhioInstruction $6,729 $5,290 $5,873Building Operations 1,195 1,689 2,030Administration 1,283 1,090 1,219Pupil Support 913 891 1,079Staff Support 684 275 396Total Spending Per Pupil $10,804 $9,235 $10,597__________Source: Ohio Department of Education

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Expenditures by Category, 2012-2013(Dollars per Pupil)

District Similar Districts State of OhioInstruction $6,558 $5,435 $6,130Building Operations 1,530 1,632 2,004Administration 1,177 1,140 1,363Pupil Support 557 454 594Staff Support 177 289 355Total Spending Per Pupil $9,999 $8,948 $10,446__________Source: Ohio Department of Education

FINANCIAL MATTERS

Introduction

The Board of Education’s fiscal year corresponds with the July 1 to June 30 school year.The collection of taxes is made on a calendar year basis.

The responsibilities for the major financial functions of the Board of Education aredivided between the Board of Education and the Treasurer. The Treasurer is the fiscal officer ofthe Board, its chief accounting officer, and serves the Board of Education as financial advisor.The Treasurer keeps the accounts of the Board of Education and is responsible for accuratestatements of all moneys received and expended and of all taxes. At the end of each fiscal year,the Treasurer must examine the accounts of all offices and departments of the Board ofEducation. The Treasurer is not to allow the amount set aside for any appropriation to beoverdrawn, or the amount appropriated for any one item of expense to be drawn upon for anyother purpose, or allow a voucher to be paid unless sufficient funds are in the treasury of theBoard of Education to the credit of the fund upon which such voucher is drawn.

Other important financial functions and the officials responsible for such functionsinclude:

(a) General financial recommendations and planning, and budget and annualappropriation preparation by the Treasurer and the Superintendent;

(b) Express approval of all budgeting and appropriations of moneys by theBoard of Education;

(c) Examinations of accounts by the Department of Audit in the office of theAuditor of the State, which by law is required to inspect and supervise the accounts andreports of the offices of each taxing district or public institution of the State, including theBoard of Education;

(d) Assessment of real property by the County Auditor of Champaign County,who is elected at large within the County, subject to supervision by the Tax

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Commissioner who is appointed by the Governor and confirmed by the Ohio GeneralAssembly;

(e) Assessment of public utility property and tangible personal property by theTax Commissioner; and

(f) Billing and collection of property taxes and assessments by the CountyTreasurer of Champaign County, who is elected at large within the County.

Budgeting, Tax Levy and Appropriations Procedures

Detailed provisions for budgeting by the Board of Education, tax levies andappropriations are made in the Revised Code.

In general, the budgetary process begins six months or more before the start of the fiscalyear for which the budget is to be adopted, and involves review by county officials at severalstages. The following discussion describes the process to be undertaken in Champaign County.Significant steps in the budgetary process are summarized as follows:

1. On or before January 15 of each year, the Board of Education andadministration prepares, and, after a public hearing, the Board of Education adopts, a taxbudget for the succeeding fiscal year. The tax budget must show estimated receipts andexpenditures and indicate the amount of ad valorem property taxes, both inside andoutside the ten-mill limitation, as hereinafter described, that must be levied in such fiscalyear.

2. The proposed tax budget is filed with the County Auditor on or beforeJanuary 20 of each year, who presents it to the County Budget Commission, which iscomprised of the County Auditor, the County Treasurer and the County ProsecutingAttorney. On or before March 1 of each year, the County Budget Commission reviewsthe tax budget, makes any necessary changes in the amount of ad valorem property taxesto be levied, and in particular, ascertains that sufficient ad valorem property taxes are tobe levied, both inside and outside the ten-mill limitation, to pay all debt charges.

3. The County Budget Commission then certifies the results of its review tothe Board of Education. Before April 1 of each year, the Board of Education approvesthe tax levies as determined by the County Budget Commission and certifies them to theappropriate County officials, who bill and collect the ad valorem property taxes asapproved. Real property taxes are payable in two installments, the first usually inJanuary and the second in June.

4. Each year, the Board of Education adopts an annual appropriationresolution for the current fiscal year, which may not contain amounts in excess of thoseapproved by the County Budget Commission. The annual appropriation resolution iscertified to the County Auditor, who must certify that the amounts appropriated do notexceed current estimated receipts. Temporary appropriation measures may be enactedpending adoption of the annual appropriation resolution.

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In addition to the procedure discussed above, Ohio law provides for amendments to theamounts certified by the County Budget Commission, and for supplemental appropriationmeasures by the Board of Education to reflect changes in the amounts of estimated receipts andexpenditures of the Board of Education as the fiscal year progresses.

Financial Reports and Examinations of Accounts

The Board of Education maintains its accounts, appropriations and other fiscal records inaccordance with the procedure established and prescribed by the Auditor of State. The Auditorof State is charged by Ohio law with responsibility for inspecting and supervising the accountsand reports of all taxing districts and public institutions in the State, including the Board ofEducation. The most recent examination of the Board of Education financial statements by DaveYost, Ohio Auditor of State, was completed through June 30, 2014. One material finding wasmade during the period audited with respect to the financial statements. The District addressedthe material filing.

The Board of Education uses a financial statement presentation methodology known as“cash basis.” This form of financial statement reporting is not in accordance with GenerallyAccepted Accounting Principles (“GAAP”) as required for Ohio school districts pursuant toSection 117-2-03(B) of the Ohio Administrative Code. The Schedule of Findings attached to theIndependent Auditor’s Report dated November 17, 2014 states, in part, that:

For fiscal year 2013, the District prepared financial statements that,although formatted similar to financial statements prescribed byGovernmental Accounting Standards Board No. 34, report on thebasis of cash receipts and disbursements, rather than GAAP. Theaccompanying financial statements and notes omit certain assets,liabilities, deferred inflows/outflows of resources, fund equities,and disclosures that, while material, cannot be determined at thistime. Pursuant to Ohio Rev. Code § 117.38, the District may befined and subject to various other administrative remedies for itsfailure to file the required financial report. (See Appendix A-1Schedule of Findings)

As a result of the aforesaid practices, the District’s audited financial statements are notcompliant with GAAP or GASB 34. District personnel considered the cost-benefit of reportingin accordance with GAAP versus reporting on a cash basis methodology, and determined thatreporting on a cash basis of accounting was the more fiscally responsible format at this time.

Other than as directed by the Ohio Auditor of State, the Board of Education does notretain other independent public accountants to audit its financial records and reports, except withrespect to certain federal program requirements.

Appendix A-1 contains copies of the Audited Financial Report of the Board of Educationfor the fiscal year 2013-2014. Appendix A-2 refers to the Audited Financial Report of the Boardof Education for the fiscal year 2012-2013.

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Appendix F contains a summary of the most recent Annual Appropriation Resolutionadopted by the Board of Education.

Financial Condition of the District

The Board of Education has been able to maintain unencumbered balances in the generaloperating fund in each of the last five years as shown:

FiscalYear

Ending

BeginningCash

Balance Receipts Expenditures

EndingCash

Balance

ReservedFor

Encumbrances Unencumbered6/30/2010 4,664,498 23,012,332 23,003,834 4,672,986 766,608 3,906,3886/30/2011 4,672,986 21,977,754 23,580,743 3,070,007 716,608 2,353,3996/30/2012 3,070,007 22,325,057 22,973,330 2,421,734 687,157 1,734,5776/30/2013 2,421,734 21,283,311 21,608,251 2,096,794 1,011,018 1,085,7766/30/2014 2,096,794 23,102,469 21,406,951 3,792,312 366,608 3,425,704______Source: Records of the Treasurer of the District

Current Financial Condition of the District

Recent changes in State tax law have had a minimal impact on the District’s finances.Specifically, the reductions in personal tangible property represented only a small portion of theDistrict’s overall assessed valuation. Personal property as a component of assessed valuationwas essentially phased-out by fiscal year 2010. The decrease in assessed valuation will not be asignificant factor in reducing receipts. State of Ohio estimates of lost revenue have beenprovided to the District and for all operating levies the District will receive reimbursement fromthe state.

Five-Year Projection

School districts are required to prepare a five-year projection of revenues andexpenditures according to Department of Education (the “Department”) rules. Pursuant to suchrules, the Department reviews a school district’s five-year projection to determine if the schooldistrict has projected a deficit during the first three years of the five-year projection period. Ifthe Department determines that further fiscal analysis is needed, the Department must forwardthe projection to the Auditor, who will determine if the school district must be formally notifiedof a pending projected deficit. The school district must then take steps to eliminate any deficit inthe current year and to plan to avoid projected deficits. The District’s five-year projection isattached hereto as Appendix B.

Insurance

The Board of Education maintains comprehensive insurance coverage with privatecarriers for real property, building contents, general liability and vehicles. Vehicle policiesinclude liability coverage for bodily injury and property damage. Real property and contents areinsured by blanket coverage in the amount of $43,113,969. General liability coverage providesfor $1,000,000 per occurrence and $3,000,000 aggregate.

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As a general rule, Ohio law provides that political subdivisions such as the Board ofEducation have an immunity from liability in damages for injury, death, or loss to persons orproperty allegedly caused by an act or omission of such political subdivisions or their employeesin connection with governmental and proprietary functions, as defined in the Ohio statutes. Thislaw has no effect on actions based on contract and any liability imposed by federal law or otherfederal cause of action. Pursuant to Ohio law, there are, however, five areas in which a politicalsubdivision may be held liable for such loss. These include the negligent operation of a motorvehicle on public roads, highways or streets; negligent performance of proprietary functions;failure to keep public roads, highways, streets, sidewalks, bridges or public grounds open, inrepair, and free from nuisance; negligence of employees within or upon the grounds of buildings,excluding jails, juvenile detention workhouses and other detention facilities; and liabilityspecifically imposed by law. Ohio law imposes a two-year statute of limitations, prohibits thegarnishment or judicial sale of assets and funds of political subdivisions, and puts limits on thedamages which may be recovered from such political subdivisions. A political subdivision isalso required to indemnify and defend its officers and employees when an officer or employee isacting in good faith and within the scope of duty. No punitive or exemplary damages can berecovered, and any insurance benefits are deducted from any award against a politicalsubdivision. Although there is no limitation with respect to compensatory damages representinga person’s economic loss, there is a $250,000 per person ceiling on the compensatory damagethat represents a person’s non-economic loss in cases other than wrongful death, in which casethere is no maximum limitation.

Investment Policies of the District

Chapter 135 of the Ohio Revised Code sets forth the requirements and limitations forinvestments of the state’s political subdivisions, including the District. Under Section 135.14 ofthe Ohio Revised Code, the District may invest its funds provided that such investments mustmature or be redeemable within five years from the date of purchase. The only classifications ofobligations which are eligible for such investment by the District are as follows:

(1) United States Treasury bills, notes, bonds, or any other obligation orsecurity issued by the United States Treasury or any other obligation guaranteed as toprincipal and interest by the United States;

(2) Bonds, notes, debentures, or any other obligations or securities issued byany federal government agency or instrumentality, including but not limited to, theFederal National Mortgage Association, Federal Home Loan Bank, Federal Farm CreditBank, Federal Home Loan Mortgage Corporation, Government National MortgageAssociation, and Student Loan Marketing Association. All federal agency securities shallbe direct issuances of federal government agencies or instrumentalities;

(3) Interim deposits in the eligible institutions applying for interim moneys asprovided in Section 135.08 of the Revised Code. The award of interim deposits shall bemade in accordance with Section 135.09 of the Revised Code and the Treasurer or theBoard of Education shall determine the periods for which such interim deposits are to bemade and shall award such interim deposits for such periods, provided that any eligibleinstitution receiving an interim deposit award may, upon notification that the award has

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been made, decline to accept the interim deposit in which event the award shall be madeas though such institution had not applied for such interim deposit;

(4) Bonds and other obligations of this state;

(5) No-load money market mutual funds consisting exclusively of obligationsdescribed in clauses (1) or (2) above and repurchase agreements secured by suchobligations, provided that investments in securities described in this clause are made onlythrough eligible institutions mentioned in Section 135.03 of the Revised Code;

(6) The Ohio Subdivision’s Fund as provided in Section 135.45 of theRevised Code; and

(7) Up to twenty-five percent of interim moneys available for investment ineither of the following:

(a) Commercial paper notes issued by an entity that is defined indivision (D) of section 1705.01 of the Revised Code and that has assets exceedingfive hundred million dollars, to which notes all of the following apply:

(i) The notes are rated at the time of purchase in the highestclassification established by at least two nationally recognized standardrating services.

(ii) The aggregate value of the notes does not exceed ten percent of the aggregate value of the outstanding commercial paper of theissuing corporation.

(iii) The notes mature not later than one hundred eighty daysafter purchase.

(b) Bankers acceptances of banks that are insured by the federaldeposit insurance corporation and to which both of the following apply:

(i) The obligations are eligible for purchase by the federalreserve system.

(ii) The obligations mature not later than one hundred eightydays after purchase.

No investment shall be made pursuant to clause (7) above unless the Treasurer or Boardof Education has completed additional training for marking the investments authorized byclause (7) above. The type and amount of additional training shall be approved by theAuditor of State and may be conducted or provided under the supervision of the auditorof state.

Nothing in the classification of eligible obligations set forth in clause (1) of this sectionor in the classifications of eligible obligations set forth in clauses (2) to (7) of this section shall

39

be construed to authorize any investment in stripped principal or interest obligations of sucheligible obligations.

Nothing in the classification of eligible obligations set forth in (1) above or in theclassifications of eligible obligations set forth in (2) to (7) above shall be construed to authorizeany investment in stripped principal or interest obligations of such eligible obligations or anyinvestment in a derivative. For purposes of this prohibition, a derivative means a financialinstrument or contract or obligation whose value or return is based upon or linked to anotherasset or index, or both, separate from the financial instrument, contract, or obligation itself. Anysecurity, obligation, trust account, or other instrument that is created from an issue of the UnitedStates treasury or is created from an obligation of a federal agency or instrumentality or iscreated from both is considered a derivative instrument. An eligible investment described in thisparagraph with a variable interest rate payment, based upon a single interest payment or singleindex comprised of other eligible investments provided for in clauses (1) or (2) above, is not aderivative, provided that such variable rate investment has a maximum maturity of two years.

The Treasurer or Board of Education may also enter into a written repurchase agreementwith any eligible institution mentioned in Section 135.03 of the Revised Code or any eligibledealer pursuant to Division (M) of Section 135.14 of the Ohio Revised Code, under the terms ofwhich agreement the treasurer or Board purchases, and such institution or dealer agreesunconditionally to repurchase any of the securities listed in clauses (1) or (2) above. Thisinvestment is not required to mature within five years from the date of settlement.

The District has invested in or is eligible, under the above-described legal limitations, toinvest in United States Treasuries and eligible guaranteed obligations of the United States, StateTreasurer’s Asset Reserve (STAR Ohio), certificates of deposit, commercial paper, repurchaseagreements and eligible Treasury Obligation Funds. The District interprets the limits on Federalguaranteed investments, and all other legal investments very conservatively. The District hasnever owned any derivative type investments, interest only investments or reverse repurchaseagreements. All investments are transacted with reputable banks or other financial institutionsoperating in the State of Ohio that are well versed in the statutory restrictions Ohio politicalsubdivisions operate under and also have an understanding of the District’s investmentrequirements.

The Investment Policy of the District, as adopted by the District’s Treasurer’s Office andfiled with the State Auditor’s Office, is attached hereto as Appendix G.

All brokers, dealers, and financial institutions initiating transactions with the investmentauthority by giving advice or executing transactions initiated by the investment authority mustacknowledge their agreement to abide by the investment policies content.

_______Source: Treasurer of the District

Investment Policies of Champaign County

The County is limited by Ohio law, the Uniform Depository Act and Chapter 135 of theOhio Revised Code on its investments. Generally such investments must mature within ten years

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from the date of settlement unless certain conditions found in Section 135.35 are satisfied. TheCounty Treasurer, in accordance with the Ohio law, is permitted to invest or deposit in thefollowing classification of obligations:

1. United States Treasury bills, notes, bonds or any other obligation orsecurity issued by the United States treasury, any other obligation guaranteed as toprincipal or interest by the United States, or any book entry, zero-coupon United Statestreasury security that is a direct obligation of the United States.

2. Bonds, notes, debentures, or other obligations or securities issued by anyfederal government agency or instrumentality. All federal agency securities must bedirect issuances of federal government agencies or instrumentalities.

3. Time certificates of deposit or savings or deposit accounts; including, butnot limited to, passbook accounts, in any eligible institution mentioned in Section 135.32of the Revised Code.

4. Bonds and other obligations of the State or the political subdivisions of theState.

5. No-load money market mutual funds consisting exclusively of obligationsdescribed in clause (1) or (2) above and repurchase agreements secured by suchobligations, provided that investments in securities described in this division are madeonly through eligible institutions mentioned in Section 135.32 of the Revised Code.

6. The Ohio subdivision’s fund as provided in Section 135.45 of the RevisedCode.

7. Securities lending agreements with any eligible institution mentioned inSection 135.32 of the Revised Code that is a member of the federal reserve system orfederal home loan bank or with any recognized United States government securitiesdealer meeting the description in Section 135.35(J) of the Revised Code, under the termsof which the County lends securities and the eligible institution or the dealer agrees tosimultaneously exchange similar securities or cash, equal value for equal value.

The County is also permitted to invest in commercial paper notes, bankers acceptances,notes issued by corporations, no-load money market mutual funds and other securities subject tocertain restrictions found in Section 135.35 of the Revised Code.

The County is not permitted to invest in stripped principal or interest obligations of anyof the securities mentioned above, nor are the County permitted to invest in a derivative asdefined in Section 135.35(B) of the Revised Code.

The County invests in United States Treasury obligations and eligible guaranteedobligations of the United States. The County does not currently own and do not intend to ownany derivative investments.

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AD VALOREM TAX REVENUES

Ad Valorem Tax Base

The laws of the State of Ohio presently require that the County Auditor reassess realproperty at any time it is determined that the true or taxable value thereof has changed, and in thethird calendar year following the year in which a sexennial reappraisal (whereby the true value ofreal property is adjusted to reflect current market values as of January l of the respective years),is completed if ordered by the Tax Commissioner. The tables below sets forth the followinginformation for Champaign County: (a) the tax year in which a sexennial reappraisal was mostrecently performed, (b) the tax year of the last/next triennial reappraisal and (c) the tax year ofthe next sexennial reappraisal. See “AD VALOREM TAX REVENUES – Assessed Valuationof the District.”

Tax Year of LastSexennial

Reappraisal

Tax Year of Last/NextTriennialAppraisal

Tax Year of NextSexennialAppraisal

Champaign County 2014 2011-2017 2020

Existing law requires that taxable real property be assessed at not more than 35% of itstrue value except that taxable real property devoted exclusively to agricultural use is to beassessed at not more than 35% of its current agricultural use value as determined by the CountyAuditor in accordance with rules adopted by the Tax Commissioner for such purpose. Theassessment ratio has been fixed at 35% under existing rules of the Tax Commissioner. TheCounty Auditor is required to adjust (but without individual appraisal of properties except in thesexennial reappraisal) taxable real property values triennially to reflect true values. Any taxablereal property which the owner thereof, under rules and regulations promulgated by the Chief ofthe Ohio Division of Forestry, declares is devoted exclusively to forestry or timber growing istaxed at 50% of the local tax rate upon its true value.

Given the standard assessment base determined under the provisions noted above,legislation effective in 1976 and recent legislation enacted pursuant to a constitutionalamendment approved by the voters of Ohio in November, 1980, have provided for a two phasetax reduction of real property taxes, with respect to taxes other than taxes levied at a rate requiredto produce a specified amount of tax money (i.e. for payment of debt charges), taxes leviedinside the ten mill limitation, or taxes authorized by a municipal charter.

1. The County Auditor must annually classify all real property into twoclasses: (a) residential/agricultural real property, and (b) nonresidential/agricultural realproperty. The Tax Commissioner then determines the amount of carryover property ineach such case for each taxing district, “carryover property” being defined as all realproperty on the current year’s tax list except: (a) land and improvements that were nottaxed by the district in both the preceding year and the current year, and (b) land andimprovements that were not in the same class in both the preceding year and the currentyear. The Tax Commissioner must determine annually by what percent (the “Tax

42

Reduction Factor”), if any, the sums that would otherwise be levied by a tax against thecarryover property in each class would have to be reduced to equal the amount that wouldbe levied if the full rate thereof were imposed against the total taxable value of suchproperty in the preceding tax year. Thereafter, the County Auditor must reduce the sumto be levied by the tax against each parcel of real property in the district by the TaxReduction Factor certified by the Tax Commissioner for its class. However, if saidreduction for either class of property could cause the total taxes charged and payable forcurrent expenses of a school district, other than a joint vocational school district, prior tothe statutory ten percent reduction, discussed hereinafter, to be less than two percent ofthe taxable value of all real property in that class that is subject to taxation, the TaxCommissioner, upon notification thereof by the County Auditor, must adjust the TaxReduction Factor as required by law.

2. The County Auditor must reduce the sums remaining thereafter to belevied against parcels of real property by ten percent; such reduction is reimbursed by theState to the County for distribution to the affected subdivisions after deduction of astatutorily determined fee to be used by the Department of Taxation for administrativepurposes. Since June 26, 2003, only one-half of this reduction has been reimbursed fromState sources. The taxes remaining after such reduction constitute the real and publicutility property tax chargeable and payable on such property.

In addition, Ohio law provides a two and one-half percent (2.5%) real property taxreduction for certain owner-occupied properties. Historically, the two and one-half percentreduction has been reimbursed by the State to the District.

The 2014-15 State Budget eliminates the ten percent reduction and the two and one-halfpercent reduction discussed above for taxes levied under new or replacement levies of theDistrict approved at elections held after October 11, 2013. The State shall continue to reimbursethe District for revenues lost as a result of these rollbacks on existing tax levies, renewal taxlevies, and tax levies within the ten-mill limitation, discussed below, in the same manner as it didbefore the 2014-15 State Budget.

The State also provides a homestead exemption to certain elderly or disabled propertyowners, which enables qualified owners to shield a portion of the value of their home fromproperty taxes. This reduction is reimbursed by the State to the District. The 2014-15 StateBudget placed certain additional restrictions on the availability of the homestead exemption forthose not eligible for the exemption as of tax year 2013.

While the aforesaid tax reductions shall not affect the determination of the principalamount of notes that may be issued in anticipation of any tax levies or the amount of bonds ornotes for any planned improvements, should funds for payment of debt charges on bonds ornotes payable from taxes so reduced be insufficient for such purpose, the reduction of taxes shallbe adjusted to the extent necessary to provide sufficient funds from real property taxes for thepayment of such debt charges.

Failure of the County Auditor to supply to the Tax Commissioner the informationrequired to determine the Tax Reduction Factor may result in substantial withholding of state

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revenues to the local government until such time as the County Auditor supplies suchinformation.

A corporation with taxable property in more than one county must also make, directly tothe Tax Commissioner, a single combined return, listing all taxable property. Distribution of thefunds so generated is normally made by the Tax Commissioner to the respective county auditorsduring the last quarter of each calendar year.

Recent changes to the assessment of tangible personal property enacted by the OhioGeneral Assembly include:

(a) Beginning in 2006, taxation affecting three classes of tangible personalproperty used in business changed. Tangible personal property taxes on (i)manufacturing equipment, (ii) furniture and fixtures and (iii) inventory was phased-outover a four year period, ending in 2009. Tangible personal property taxes on a fourthclass, telephone, telegraph and interexchange communication companies, were phased-out from 2007-2011. A portion of the commercial activities tax (the “CAT tax”),implemented in 2005, replaced the tax on business tangible personal property. Prior tothe passage of Am. Sub. HB 153, effective June 30, 2011 (“HB 153”), as part of the CATtax, gross rents and royalties from tangible personal property, as well as gross receiptsfrom the sale of tangible personal property (among several other categories of receipts)were credited to the State’s general revenue fund and used to reimburse school districtsand other local taxing units for the phase-out of taxes on business tangible personalproperty. These payments are commonly referred to as “replacement payments.”

The application of the CAT tax to certain types of business receipts has been thesubject of litigation. On September 17, 2009, the Ohio Supreme Court held that the CATtax is not an excise tax “upon the sale or purchase of food” and does not violate theState’s constitutional prohibitions against such a tax. On July 26, 2011, an Ohioappellate court held that the CAT tax “is not a tax upon motor vehicle fuel” and, thus,upheld the constitutionality of the application of the CAT tax to gross receipts from thesales of motor fuels. The Ohio Supreme Court reversed the appellate court and declaredthat the allocation to non-highway purposes of revenue derived from the application ofOhio’s CAT tax to gross receipts from the sale of motor vehicle fuel violates the OhioConstitution. The Court determined the decision would be prospective and that suchrevenue would be held until properly appropriated by the General Assembly.

The division of CAT tax revenue among these sources was scheduled to bephased-out in 2018, with the State’s general fund receiving 100% of the CAT taxrevenues thereafter. HB 153 has generally accelerated the phase-out and reduces thereimbursement payments, depending on the type of levy and the financial resources ofeach particular school district or other taxing unit.

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Generally, HB 153 accelerates the phase-down of the reimbursement amounts forfixed-rate levies by means of a formula based on a school district’s or taxing unit’sreliance on such reimbursements as a percentage of its total budget (or “total resources”),rather than by a fixed fractional reduction of reimbursement amounts through 2019, asprovided under prior law. For example, under this recently implemented formula forreimbursement, certain thresholds for fixed-rate levy loss reimbursement (which, in somecases, apply to current expense fixed-rate levies) have been established for schooldistricts (2% for fiscal year 2012 and 4% for fiscal year 2013 and thereafter) and for othertaxing units (4% for fiscal year 2012 and 6% for fiscal year 2013 and thereafter). If aschool district or other taxing unit does not receive reimbursement (also referred to as an“allocation”) for fixed-rate levy loss in an amount equal to these respective minimumthresholds, then the school district or other taxing unit receives no reimbursement. Bythe end of fiscal year 2013, fixed-rate levy loss reimbursements were either reduced orterminated. Reimbursement for fixed-rate levies other than current expense levies werereduced by 50% for school districts by 2013 and 75% for municipalities by 2013.Reimbursement will continue to be paid for fixed-sum and unvoted debt levy lossesalthough the phase-out period has generally been accelerated. Fixed-sum levy losses andlosses on unvoted debt levies are calculated in a manner similar to the manner in whichlosses for fixed-rate levies are calculated.

For additional information regarding expected changes to such reimbursementamounts, please reference the following website:

http://education.ohio.gov/Topics/Finance-and-Funding/State-Funding-For-Schools/Traditional-Public-School-Funding/Phase-out-and-Loss-Reimbursement-of-Tangible-Perso

(b) Beginning with tax year 2006, the percentages used to determine theassessed value of electric company personal property used in the production of electricitywere reduced to 24% of true value; taxable transmission and distribution property areassessed at 85% of true value (50% of true value for rural electric companies). The Stateis to reimburse school districts and other local taxing districts for a portion of therevenues lost due to this reduction in tax valuation with proceeds of a kilowatt-hourexcise tax imposed on electricity consumers as well as natural gas distribution taxrevenue (the “Utility Taxes”). The reimbursement paid to school districts and othertaxing units as a result of the lower Utility Taxes are commonly referred to as“replacement payments.” Prior to the passage of HB 153, qualifying levyreimbursements to school districts were scheduled to be distributed, in full, through 2016(or, for fixed-rate levies, the reimbursement period could end prior to 2016 if increases ina school district’s state aid exceeded its fixed-rate reimbursement measured against 2002levels) with no further reimbursements thereafter for losses resulting from the reductionin tax valuation against utility property. Reimbursements for such losses to other taxingunits were scheduled to be made through 2017 on a declining basis after 2006. HB 153changed the manner in which replacement payments are made to school districts andlocal taxing units

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Generally, reimbursement for fixed-rate levy loss is calculated by determining thedifference between personal property taxes due using the higher assessed rates under apre-determined prior year (which prior year varies depending on whether the property iselectric or gas) and taxes due using lower rates under the new law. Similar todetermining reimbursement amounts for business tangible personal property losses, HB153 provides a methodology for determining reimbursement amounts for fixed-rate leviesby means of a formula based on a school district’s or taxing unit’s reliance on suchreimbursements as a percentage of its total budget (or “total resources”). For example,under this recently implemented formula for reimbursement, certain thresholds for fixed-rate levy loss reimbursement (which, in some cases, apply to current expense fixed-ratelevies) have been established for school districts (2% for fiscal year 2012 and 4% forfiscal year 2013 and thereafter) and for other taxing units (4% for fiscal year 2012 and6% for fiscal year 2013 and thereafter). If a school district or other taxing unit does notreceive reimbursement (also referred to as an “allocation”) for fixed-rate levy loss in anamount equal to these respective minimum thresholds, then the school district or othertaxing unit receives no reimbursement. By the end of fiscal year 2013, fixed-rate levyloss reimbursements were either reduced or terminated. Reimbursement for fixed-ratelevies other than current expense levies were reduced by 50% for school districts by 2013and 75% for municipalities by 2013. Reimbursement will continue to be paid for fixed-sum and unvoted debt levy losses with reimbursement for all but ¼ of a mill per dollar.Fixed-sum levy losses and losses on unvoted debt levies are calculated in a mannersimilar to the manner in which losses for fixed-rate levies are calculated.

For additional information regarding expected changes to such reimbursementamounts, please reference the following website:

http://www.tax.ohio.gov/tax_analysis/tax_data_series/publications_tds_property/PD18FY13.aspx

The Ohio General Assembly has exercised from time to time its power to revise the Ohiostatutes applicable to the determination of assessed valuation of property subject to ad valoremtaxation and the amount of tax proceeds produced by ad valorem taxation against such property.It is anticipated that the General Assembly will continue to make similar revisions.


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Assessed Valuation of the District

The assessed valuation of property within the District subject to levy of ad valorem taxesover the last five years is indicated in the following table:

Assessed Valuation

TaxYear

CollectionYear Real(a)

TangiblePersonal(b)

PublicUtility(c)

TotalA/V

% Increase/DecreaseOver Prev. Year

2010 2011 244,479,680 0 9,147,880 253,627,560 --2011 2012 245,546,590 0 9,548,730 255,095,320 0.58%2012 2013 246,921,470 0 8,664,370 255,585,840 0.192013 2014 252,117,650 0 11,379,400 263,497,050 3.102014 2015 251,400,950 0 11,731,400 263,132,350 (0.14)_______(a) Excluding manufactured home(b) Tangible personal only(c) PUCO personal onlySource:, Champaign County Auditor

Largest Taxpayers

The largest taxpayers within the District based upon the assessed valuation of thetaxpayer’s real and personal property for tax collection year 2015 (tax year 2014) are shown inthe following table:

Taxpayer*

TotalAssessed Valuation

Real, Personal Property

% of TotalAssessed

Valuation1. Dayton Power & Light Company $8,298,200 3.15%2. City of Urbana 3,865,090 1.473. Franklin University Urbana LLC 3,857,560 1.474. Damewood Enterprises Limited 3,226,570 1.235. Wal-Mart Real Estate Business 3,211,290 1.226. Champaign County Ohio Board of Commissioners 2,225,010 0.857. Michael Farms Inc. 1,992,030 0.768. Rittal Corp. A Delaware Corp. 1,803,360 0.699. Willow Run Realty LLC 1,747,100 0.66

10. Columbia Gas of Ohio Inc. 1,732,030 0.66

TOTAL $31,958,240 12.15%_______* Chapter 5709 of the Revised Code provides that certain political subdivisions and school districts may not have to pay advalorem taxes on some or all of their property.Source: Champaign County Auditor

Collections and Delinquencies of Ad Valorem Taxes

Real property taxes which remain unpaid for a period of one year after they are due arecertified delinquent. Foreclosure proceedings to enforce collection are required to be instituted ifdelinquent taxes have not been paid within the year following the certification of delinquent

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taxes. In addition to foreclosure proceedings, delinquent real property taxes may be collected bythe appointment of a receiver or by forfeiture of the property. Another law provides for noticeby publication and mass foreclosure proceedings and sales after three years’ delinquency andmay facilitate the County Auditor’s method of collecting delinquencies under the circumstancescovered by the law. Taxes other than those in real estate are, in general, certified delinquent ifthey remain unpaid for one year. In addition to the remedies of foreclosure, receivership andforfeiture, such delinquent taxes may be collected through civil action in the local courts. Thedelinquent taxes that are collected become part of the current collection and are distributed ascurrent collections to the respective subdivisions. Special assessments levied by the varioussubdivisions are collected with the real property taxes; upon collection, delinquent specialassessments are remitted to the levying subdivisions. The preceding is a general description ofsuch procedures, which may vary in practice among Ohio counties.

The following table sets forth the amounts billed and collected for ad valorem real estateand public utility taxes and tangible personal property taxes for the District on the tax duplicatefor the last five years:

Real Estate, Public Utility and Tangible Personal Property Tax Collection Percentages

CollectionYear

CurrentTaxesLevied

CurrentTaxes

CollectedPercentageCollected

DelinquentTaxes

Collected2010 $9,965,500.00 $9,273,010.79 93.05% $498,017.802011 9,840,043.74 9,309,842.80 94.61 440,417.232012 9,867,385.00 9,325,014.11 94.50 383,771.492013 9,851,900.00 9,527,824.46 96.71 356,888.612014 9,766,300.00 9,502,398.47 97.30 560,861.25

Source: Records of the Treasurer of the District

Unvoted and Voted Taxes for Local Purposes

To meet current expenses of subdivisions, the laws of Ohio authorize two types of advalorem tax levies - unvoted and voted.

Unvoted ad valorem tax levies are permitted by the State Constitution and the RevisedCode so long as all such unvoted taxes do not exceed one per cent (ten mills) of any property’sassessed valuation. This limitation is known as the “ten-mill limitation” and such unvoted taxesare referred to as the “inside millage.” (See “BOARD OF EDUCATION DEBT AND OTHERLONG-TERM OBLIGATIONS - Indirect Debt Limitation” herein) for a discussion of the effectof the ten-mill limitation on borrowings by subdivisions.

Ohio law permits voted ad valorem tax levies outside the one-percent limitation whenapproved by a majority of the electors of a taxing district voting on the proposition. A voted taxlevy for a board of education is generally initiated by a resolution of the board of education toplace such a levy on the ballot at a general, primary or special election.

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Rates of Taxation

The following chart lists the rates of taxation for the General Fund and the Bond Retirement Fund of the Board of Educationfor the last five years:

Rates of Taxation

FULL RESIDENTIAL / AGRICULTURAL COMMERCIAL / INDUSTRIAL

Year Inside Outside

BondRetirement

Fund Total Inside Outside

BondRetirement

Fund Total Inside Outside

BondRetirement

Fund Total2009

Valuation2010

Collection

3.90 64.15 0.00 68.05 3.90 29.394888 0.00 33.294888 3.90 42.331258 0.00 46.231258

2010Valuation

2011Collection

3.90 64.15 0.00 68.05 3.90 30.503897 0.00 34.403897 3.90 43.314924 0.00 47.214924

2011Valuation

2012Collection

3.90 64.15 0.00 68.05 3.90 30.510657 0.00 34.410657 3.90 42.722474 0.00 46.622474

2012Valuation

2013Collection

3.90 64.15 0.00 68.05 3.90 30.578753 0.00 34.478753 3.90 42.620391 0.00 46.520391

2013Valuation

2014Collection

3.90 64.15 0.00 68.05 3.90 29.3887208 0.00 33.787208 3.90 43.930064 0.00 47.830064

Source: Ohio Municipal Advisory Council

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Sources of Income

The following chart shows the sources of income for the General Fund of the Board ofEducation for the last five fiscal years:

2009 2010 2011 2012 2013LOCAL

Real Estate $6,566,740 $8,090,128 $7,352,826 $7,925,035 $7,649,575Personal Property Tax 1,081,429 618,458 314,559 738,344 646,001Other 1,036,339 921,791 944,831 1,306,227 1,400,069Other Financing Sources 392,213 433,616 402,513 224,733 163,591

STATEFoundation* 9,646,141 9,043,617 8,966,036 8,936,460 9,325,110Homestead & Rollback 2,098,928 3,352,135 3,305,204 2,724,752 2,340,626Other

FEDERALOther (SFSF & Ed Jobs) 552,587 691,785 469,506

TOTAL $20,821,790 $23,012,332 $21,977,754 $22,325,057 $21,347,560______*Gross Foundation paymentsSource: Records of the Treasurer of the District

Voting Records

The following tables show the history of elections for the District for the past 28 years,during which time the voters of the District have approved 20% of the proposed bond issues,66.66% of the proposed levies and 0% of the proposed income tax levies on which residentsvoted.

History of Bond Issue Elections

_______*Issues passed by voters of the DistrictSource: Ohio Municipal Advisory Council


DateBond Issue

Amt. For Against % For Purpose11/04/2014* $31,355,000 2,374 1,949 54.92% Constructing/Improving School Facilities11/07/2006 28,085,277 2,486 2,614 48.75 Constructing/Improving School Facilities11/08/2005 38,765,101 1,749 2,158 44.77 Constructing/Improving School Facilities11/02/2004 36,395,256 3,013 3,649 45.23 Constructing/Improving School Facilities11/07/1995 15,000,000 1,280 2,514 33.74 Constructing/Improving School Facilities

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History of Levies

Date Millage For Against % For Purpose Years11/05/13* 3.50 1,689 1,053 61.60% Permanent Improvement Continuing05/07/13* 9.75 1,754 552 76.06 Current Expense 511/06/12 5.50 2,746 3,611 43.20 Current Expense 511/02/10* 14.80 2,593 2,117 55.05 Current Expense 505/04/10* 5.90 1,274 863 59.62 Current Expense 511/04/08* 3.50 3,797 2,836 57.24 Permanent Improvement 503/04/08* 9.75 2,547 2,521 50.26 Current Expense 511/06/07 9.50 1,818 1,894 48.98 Current Expense 505/02/06* 14.80 1,713 871 66.29 Current Expense 505/03/05* 5.90 1,481 827 64.17 Current Expense 511/04/03* 3.50 2,215 1,287 63.25 Permanent Improvement 508/07/01* 14.80 1,375 1,078 56.05 Current Expense 505/08/01 14.80 1,042 1,263 45.21 Current Expense Continuing03/07/00* 5.90 2,003 1,941 50.79 Current Expense 511/02/99 5.50 1,475 1,970 42.82 Current Expense 505/04/99 5.50 838 1,184 41.44 Current Expense 511/03/98* 3.50 2,543 1,783 58.78 Permanent Improvement 503/19/96* 7.20 1,535 1,372 52.80 Current Expense 503/19/96* 7.60 1,479 1,360 52.10 Current Expense 511/08/94* 3.50 2,243 2,054 52.20 Permanent Improvement 508/03/93* 7.20 2,040 1,828 52.74 Current Expense 305/04/93 6.90 1,642 1,923 46.06 Current Expense 505/04/93* 7.60 2,262 1,292 63.65 Current Expense 308/08/90* 7.60 1,406 871 61.75 Current Expense 311/07/89* 3.50 1,687 1,050 61.64 Permanent Improvement 502/03/87* 7.60 2,031 1,871 52.05 Current Expense 311/04/86 6.40 2,278 2,447 48.21 Current Expense 308/31/86 5.90 N/A N/A N/A Current Expense Continuing08/05/86 5.90 864 1,570 35.50 Current Expense Continuing05/06/86 5.90 1,204 1,488 44.73 Current Expense Continuing

_______*Issues passed by voters of the DistrictSource: Ohio Municipal Advisory Council

History of School Income Tax Issue Elections

Date For Against % For Purpose Years05/08/2007 932 1722 35.12% Current Expense 5

____*Issues passed by voters of the DistrictSource: Ohio Municipal Advisory Council

State Funding for Public Schools

Public schools in Ohio receive financial assistance from the State. There are certainrequirements for receipt of state funding; for example, the District must levy at least 20 mills foroperating purposes, certain reporting and accounting requirements must be met, schools in thedistrict must be open for a minimum number of days or hours for instructional purposes, and

51

teachers’ salaries must meet certain criteria. Failure to comply with these requirements mayresult in the elimination or reduction of benefits received by a school district.

The Board of Education currently participates in the State Funding Program. As shownin the following table, in fiscal year 2013, the Board of Education relied on the State FundingProgram for approximately 44% of its operating revenues:

FiscalYear

General FundRevenues

Total Funds receivedfrom State

Funding Programs*

Percentage of GeneralFund Revenues

Attributable to Fundsfrom State Funding

Programs*2008-2009 $20,821,790 $9,646,141 46%2009-2010 $23,012,332 $9,596,204 42%2010-2011 $21,977,754 $9,657,821 44%2011-2012 $22,325,057 $9,405,966 42%2012-2013 $21,347,560 $9,325,110 44%

______*The State Funding Program reduced payments in the fiscal years FY10, FY11, and FY12 to public school districts.District funds were supplemented by federal funds through the State Fiscal Stabilization Fund for FY10 and FY11and also by the Education Jobs Bill in FY12. These funds were intended to supplement the District general fund andare thus included in the table above as a part of the general fund revenue.Source: Records of the Treasurer of the District

Since the funding for the State Funding Program must be appropriated by the GeneralAssembly for each biennium, there can be no assurance that current funding levels will becontinued. From time to time there may be an increase, a stabilization or a reduction of the levelof State assistance to school districts.

The 2014-15 State Budget enacted a new funding formula for the distribution of Statefunding to local school districts based on a per pupil amount. This per pupil formula is similar tothe “Building Blocks” school funding formula in place through Fiscal Year 2009 until itsreplacement with the “Evidenced Based Model” for the 2010-11 biennium. The EvidencedBased Model was repealed in July 2011 and a temporary formula was put in place for the 2012-13 biennium that allocated funding to each school district based on the per pupil funding itreceived for Fiscal Year 2011, adjusted by its share of a statewide per pupil adjustment amountthat was indexed by the districts relative tax valuation per pupil.

Under the new formula, the State Department of Education will compute and pay to eachschool district education aid based on the per pupil funding it received for Fiscal Year 2009(calculated to be $5,745 in Fiscal Year 2014 and $5,800 in Fiscal Year 2015) multiplied by eachschool district’s “state share index” which uses a three year average of adjusted propertyvaluation per pupil and median income of that school district to calculate the percentage of theper-pupil amount that is to be paid by the State and the amount assumed to be contributed by theschool district through local sources. Additional funds are provided for students with exceptionalneeds, including those with special needs and the disabled, and limited English proficiency, andfor economically disadvantaged and gifted students. Funding is also provided based on thenumber of K-3 students at each school district to be used to help school districts comply withOhio’s 3rd grade reading guarantee.

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BOARD OF EDUCATION DEBTAND OTHER LONG-TERM OBLIGATIONS

The following describes the security for the Board’s general obligation debt such as theBonds, applicable statutory and constitutional debt limitations, and outstanding and projectedbond and note indebtedness and certain other long-term financial obligations of the Board. Asfurther discussed and described below, the Bonds are voted general obligations of the Board andare subject to the direct debt limitations. The Board is not and has never been in default in thepayment of debt service on any of its general obligation bonds or notes.

Security for and Sources of Payment of General Obligation Debt

Unvoted Debt. The basic security for unvoted Board general obligation debt is theBoard’s ability to levy, and its levy, pursuant to constitutional and statutory requirements, of advalorem taxes on all real and tangible personal property subject to ad valorem taxation by theBoard, within the ten-mill limitation imposed by Ohio law (See “Indirect Debt Limitation”within this section). This tax must be in sufficient amount to pay (to the extent not paid fromother sources) as it becomes due the debt service on unvoted Board general obligation bonds,both outstanding and in anticipation of which notes are outstanding. The law provides that thelevy necessary for debt service has priority over any levy for current expenses within the ten-milllimitation; however, that priority may be subject to the provisions of federal bankruptcy law andother laws affecting creditors’ rights. See the discussion in this Section, under “Indirect DebtLimitation,” of the ten-mill limitation, and the priority of claim thereon for debt service onunvoted general obligation debt of the Board and all overlapping taxing subdivisions. The Boardhas no unvoted general obligation debt outstanding.

Voted Debt. The basic security for voted Board general obligation debt is theauthorization by the electors for the District to levy ad valorem taxes without limitation as to rateor amount on all real and tangible personal property subject to ad valorem taxation by the Board.This tax is outside of the tax limitations referred to above under “Unvoted Debt,” and iscalculated to be in sufficient amount to pay (to the extent not paid from other sources) as itbecomes due the debt service on voted Board general obligation bonds, both outstanding and inanticipation of which notes are outstanding, subject to the provisions of federal bankruptcy lawand other laws affecting creditors’ rights.

Notes in Anticipation of Bonds. While general obligation bond anticipation notes areoutstanding, Ohio law requires the Board to levy ad valorem property taxes in an amount not lessthan that which would have been levied if bonds had been issued without the prior issuance ofthe notes, provided that such levy need not actually be collected if payment of debt service onsuch notes is, in fact, to be provided from other sources, such as proceeds from the sale ofrenewal notes or bonds.

In general, such notes, including renewals of such notes, may be issued and outstandingfrom time to time up to a maximum period of twenty years from the date of issuance of theoriginal notes. Any period in excess of five years must be deducted from the permittedmaximum maturity of the bonds anticipated, and portions of the principal amount of notesoutstanding for more than five years must be retired in amounts at least equal to, and payable not

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later than, those principal maturities that would have been required if the bonds had been issuedat the expiration of the initial five year period.

Bond anticipation notes may be retired at maturity from the proceeds of the sale ofrenewal notes or of the bonds anticipated by the notes. The ability of the Board to retire itsoutstanding bond anticipation notes, from the proceeds of the sale of either bonds or renewalnotes will be dependent upon the marketability of those obligations under market conditionsprevailing at the time of such sale.

Direct Debt Limitations

The Revised Code provides that the aggregate principal amount of voted and unvoted“net indebtedness” of a board of education may not exceed nine percent of the total value of allproperty in such board’s school district as listed and assessed for taxation, and that the aggregateprincipal amount of unvoted “net indebtedness” of such board of education may not exceed one-tenth of one percent of such value.

Within the same nine percent limitation, a bond issue may not be submitted to a vote ofthe electorate in an amount which will make a board of education’s “net indebtedness” (afterissuance of the bonds) exceed four percent of its assessed valuation, unless the TaxCommissioner and the State Superintendent of Public Instruction, acting under policies adoptedby the State Board of Education, consent thereto. The Board received ballot consent to exceedthe four percent debt limitation prior to submitting the Bonds for approval by the electors.

In calculating “net indebtedness,” the Revised Code exempts self-supporting, revenueand special assessment obligations.

Other infrequently-issued types of obligations are also excluded from the calculation ofnet indebtedness. The Board has no outstanding leases which are subject to annual appropriationwhich are excluded from the calculation of net indebtedness (See “Outstanding LeaseObligations Subject to Annual Appropriation” within this section). Notes issued in anticipationof bonds excluded from the calculation of net indebtedness are also excluded from suchcalculation. In calculating net indebtedness, amounts in a board of education’s bond retirementfund allocable to the principal amount of bonds otherwise included in the amount of netindebtedness are deducted from the total net indebtedness of such board of education.

Under Section 133.06(E) of the Revised Code, if a board of education determines that itsstudents are not being adequately serviced by existing facilities, and that sufficient funds toprovide such facilities cannot be obtained when needed by the issuance of bonds within the ninepercent limitation, may, upon certain showings as to projected growth in its assessed valuation,qualify as a “special needs district,” and thereby be permitted to incur net indebtedness,calculated as described above, in an amount that does not exceed an amount equal to the greaterof the following: (a) twelve percent of the sum of its assessed valuation plus an amount that isthe product of multiplying its assessed valuation by the percentage by which its assessedvaluation has increased over its assessed valuation on the first day of the sixtieth monthpreceding the month in which the board of education determines to submit to the electors thequestion of the issuance of the indebtedness proposed to be issued or (b) twelve percent of sum

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of its assessed valuation plus an amount that is the product of multiplying its assessed valuationby the percentage, determined by the superintendent of public instruction, by which its assessedvaluation is projected to increase during the next ten years. The Board of Education has notneeded to obtain consent to issue debt beyond the four percent or the nine percent debt limitationand to qualify as a “special needs” district since they met the exception under 133.06(I) (theDistrict is only funding its local share and required locally funded initiatives of a project underthe Ohio Classroom Facilities Assistance Program).

Appendix D of this Official Statement is a Financial Statement for the Board, certified bythe Treasurer, indicating the amount of the outstanding obligations of the Board (including theBonds) and that portion which is subject to the nine percent and one-tenth of one percent limits,respectively, described above. The total principal amount of voted and unvoted generalobligation debt that could be issued by the Board, subject to the nine percent total direct debtlimitation is $23,714,734.50 and the Board of Education’s net debt subject to such nine percentlimitation presently outstanding, including the Bonds, is $31,355,000, leaving $0.00 borrowingcapacity issuable within the nine percent limitation.

The total unvoted Board general obligation debt that could be issued subject to the one-tenth of one percent unvoted direct debt limitation is $263,497.05. The net Board debt subject tosuch one-tenth of one per cent limitation presently outstanding, as indicated by Appendix D is$0.00 leaving a balance of approximately $263,497.05 of additional unvoted non-exempt debtthat could be issued by the Board under such one-tenth of one percent limitation. However, asdescribed below, the Board’s ability to incur unvoted debt in this amount is restricted by theindirect debt limitation. In the case of unvoted general obligation debt issued within the one-tenth of one percent limitation, both the direct and the indirect debt limitations must be met.

Pursuant to Section 133.06(G) of the Ohio Revised Code, a school district may issue upto nine-tenths of one percent of its tax valuation for purposes of acquiring and installing energyconservation measures. Nine-tenths of one percent of the District’s tax valuation is equal to$2,371,473.45. The District has not issued any debt for this purpose, leaving leeway of$2,371,473.45.

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Principal Amounts of Outstanding Debt;Leeway for Additional Debt Within Direct Debt Limitations

Tax Valuation1 $263,497,050.00

Total Debt2 $31,355,000.00Exempt Debt 0.00Total non-exempt debt $31,355,000.00

1/10th of 1% of tax valuation (unvoted debt limitation) $263,497.05Total limited tax non-exempt bonds outstanding 0.00Debt leeway within the 1/10th of 1% unvoted debt limitationbut subject to indirect debt limitation

$263,497.05

9/10th of 1% of tax valuation (unvoted debt limitation) $2,371,473.45Total limited tax non-exempt bonds outstanding 0.00Debt leeway within the 9/10th of 1% unvoted debt limitationbut subject to indirect debt limitation $2,371,473.45

9% of tax valuation (voted and unvoted debt limitation) $23,714,734.50Total non-exempt bonds outstanding $31,355,000.00Balance in Bond Retirement Fund (06/01/2014) 0.00Net non-exempt debt 31,355,000.00Debt leeway within debt limitation3 0.00

______1Source: Ohio Municipal Advisory Council2The total debt amount includes the Bonds.3Pursuant to ORC 133.06(I), the District was able to exceed 9% of their tax valuation without receiving specialneeds approval from the State since the District is only funding its local share and required locally funded initiativesof an Ohio Classroom Facilities Assistance Program project.

Indirect Debt Limitation

Ohio boards of education may issue voted general obligation debt within the direct debtlimitation described above. Ad valorem taxes, without limitation as to rate or amount, to paydebt service on such voted bonds, are authorized by the electors at the same time the bonds areauthorized. Certain other subdivisions may also issue voted debt.

The Ohio Constitution and the Revised Code, by limiting the amount of ad valorem taxeswhich may be levied without a vote to one percent (or ten mills) of the valuation of the propertyto be taxed, while requiring that an ad valorem tax sufficient to pay debt service be leviedwhenever general obligation indebtedness is incurred, operate to indirectly limit the amount ofunvoted bonds that may be issued. This indirect limitation on the amount of unvoted generalobligation indebtedness is commonly known as the “ten-mill limitation.”

Typically, the various taxing subdivisions levy the full ten mills of unvoted taxespermitted by Ohio law (which is sometimes referred to as the “inside millage”), regardless ofwhether such millage is needed for debt service, and this inside millage is allocated by theCounty Budget Commission among the overlapping subdivisions pursuant to a formula

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contained in the Revised Code. The current allocation of the inside millage is shown under “ADVALOREM TAX REVENUES – Unvoted and Voted Taxes for Local Purposes.”

The inside millage allocated to a taxing subdivision is required by Ohio law to be usedfirst for the payment of debt service on unvoted general obligation debt of the subdivision, unlessprovision has been made for its payment from other sources, and the balance may be used forgeneral fund purposes of the subdivision. To the extent that this inside millage is required fordebt service of a taxing subdivision (which may exceed the formula allocation for thatsubdivision), the amount that would otherwise be available to that subdivision for general fundpurposes is reduced. Since the inside millage that may actually be required to pay debt serviceon unvoted general obligation debt of a subdivision may exceed the formula allocation of insidemillage to such subdivision, such excess reduces the amount of inside millage available tooverlapping subdivisions.

In determining whether additional unvoted bonds may be issued within this indirect debtlimitation, the outstanding unvoted general obligation indebtedness of the issuing board ofeducation and all overlapping political subdivisions must be considered, including generalobligation indebtedness which is expected to be paid from sources other than ad valorem taxes.Since the indirect debt limit results from tax limitations and the requirement to levy taxes to paybonds, it has application only to bonds that are payable from taxes either initially or in the eventother non-tax revenues pledged to pay such bonds prove to be insufficient.

Unlike the direct debt limitations, the test for applying the indirect debt limitation maynot be expressed in terms of a percentage of tax valuation. The amount of bonds that may beissued under this indirect debt limitation is determined by whether the amount required for debtservice on the proposed bonds in a given year is greater than the number of dollars that will beproduced by a tax levy equal to the inside millage available. The inside millage available isdetermined by subtracting from ten mills the number of mills required for unvoted outstandinggeneral obligation bonds of the issuing board of education and all other political subdivisionsthat overlap such board of education. In arriving at the available inside millage, the insidemillage that is actually being used by the overlapping subdivision at the time to pay debt serviceon unvoted general obligation debt is not considered; instead, it is the inside millage that couldbe required to pay all such debt and the inside millage that could be required to retire theproposed issue, if no funds were available from other sources, that is considered.

A constitutional amendment designed to remove this indirect debt limitation was defeatedby the voters of Ohio at an election held on June 8, 1976.


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Outstanding Obligations

Other than the Bonds, as of the date of issuance of the Bonds, the District has no othergeneral obligation bonds or notes, or outstanding lease obligations subject to annualappropriation.

Future Financings

The District is contemplating entering into a lease purchase financing to procure betweenthree and five school buses to meet current District needs. Such a lease purchase financingwould be subject to annual appropriation by the Board and would likely be in a principal amountof four hundred and fifty thousand dollars ($450,000), or less, depending on the number ofschool buses financed. If the District chooses to pursue such a financing, it would likely do soduring the current school year. Further details are unknown at this time. The District has nocurrent plans for future financings other than as described in this section.

Pension Obligations

The tables below show the employee and employer contributions to the retirementprograms of certificated and classified employees of the District for the last five years:

Retirement Programs

State Teachers’ Retirement - Certificated Employees

Member Contribution Employer ContributionYear Percent Amount Percent Amount

2008-2009 10% $ 972,888 14% $1,356,7802009-2010 10 1,012,100 14 1,402,3682010-2011 10 1,001,065 14 1,470,1082011-2012 10 1,002,227 14 1,466,7362012-2013 10 944,819 14 1,391,448

School Employee Retirement - Classified Employees

Member Contribution Employer ContributionYear Percent Amount Percent Amount

2008-2009 10% $198,413 14% $313,7882009-2010 10 204,322 14 314,3522010-2011 10 213,811 14 392,4722011-2012 10 202,534 14 399,0982012-2013 10 192,682 14 416,280

_______Source: Records of the Treasurer of the District and Records of State Teachers’ Retirement System and School

Employee Retirement System

The Board’s annual contributions to STRS and SERS are treated as a current expense andare paid primarily from its General Fund. SERS and STRS payments are deducted by the Statefrom each monthly State Foundation payment. Current law establishes maximum contribution

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rates to STRS and SERS of 10.0% for the employees’ portion and 14% for the employer’sportion. Beginning 2013-2014, certain employees’ maximum contribution rates to STRS arescheduled to increase as described below.

STRS and SERS are not now subject to the funding and vesting requirements of thefederal Employee Retirement Income Security Act of 1974.

On September 12, 2012, the General Assembly passed SB 341 and SB 342 modifyingSERS and STRS respectively. The Governor signed both bills on September 26, 2012. Each billbecame effective January 7, 2013.

SB 341 changes multiple aspects of SERS in ways expected to enhance its ability toamortize its unfunded actuarial accrued liabilities within thirty years. Some of the changes madeby SB 341 include: (1) an increase in minimum age and service requirements with respect tocertain employees and (2) a reduction in disability benefits with respect to certain employees.The SERS Board is permitted to modify minimum age and service requirements if an actuarydetermines such adjustments are necessary to amortize its unfunded actuarial accrued liabilitieswithin thirty years.

SB 342 changes numerous aspects of STRS in ways expected to enhance its ability toamortize its unfunded actuarial accrued liabilities within thirty years. Some of the changes madeby SB 342 include: (1) an increase in the minimum age and service requirements with respect tocertain employees, (2) an increase in the STRS employee contribution rate from 10% to 14%, inannual increments of 1% a year, starting July 1, 2013, (3) a change in the method by whichbenefits for certain employees are calculated that is expected to result in a reduction of suchbenefits, (4) a reduction in the annual cost of living adjustment applied to benefits with atemporary freeze in cost of living adjustments and (5) a reduction in disability benefits to certainemployees. Beginning on July 1, 2017, the STRS Board may reduce the employee contributionrate to less than 14% if an actuary determines that such reduction does not materially impair thefiscal integrity of STRS. The STRS Board is also permitted to increase or decrease minimumage and service requirements and cost of living adjustments if an actuary determines that suchincrease does not materially impair the fiscal integrity of STRS or if such decrease is necessaryto preserve the fiscal integrity of STRS.

Both STRS and SERS were created by and operate pursuant to Ohio law. The GeneralAssembly could determine to amend the format of either system and could revise rates ormethods of contribution to be made by the Board into the pension funds and revise benefits orbenefit levels.

Accrued Fringe Benefits

All certificated and classified employees working 17.5 or more hours per week mayenroll in the group medical and life insurance programs.

Medical/Prescription Drug Insurance. The District provides medical/surgical benefitsthrough a self-insurance program. The District maintains a self-insurance internal service fund toaccount for and finance its required claims/fee payments and reserves for this program to itsemployees. Monthly premiums are paid from the fund from which each employee is paid. This

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plan provides two types of medical insurance plans for its employees. The traditional PPO planhas a $500 family and $250 single deductible. The board also offers a high deductible health planwith a family deductible of $5,000 and a single deductible of $2,500. A third partyadministrator, Anthem., reviews all claims, which are then paid by the District. The Districtpurchases stop-loss coverage of $75,000 per employee per year, and $1.0 million groupaggregate for fiscal year 2014. The premiums are paid by the District at a rate of 90% for allteaching employees and at a rate of either 85%, 65%, or 60% for classified staff. Administrators’premiums are paid 85% by the District.

On January 1, 2013, the District began offering a High Deductible Health Care Plan(HDHP) and a Health Savings Account (HSA) in addition to the traditional preferred providerorganization insurance option to qualifying administrative and non-bargaining employees. TheDistrict’s contributions to the HSA for administrators are $1,500 for individuals and $3,000 forfamilies, and the District’s contributions to the HSA for all other staff are $1,250 for individualsand $2,500 for families.

Life Insurance. The Board pays 100% for all employees. The life insurance policyamount is the value of the salary rounded to the nearest thousand.

Any employee contracted to work 17.5 or more hours per week is eligible for thesebenefits. These benefits are not offered to those part time employees working less than 17.5hours per week.

Certificated and classified employees receive 1¼ days of sick leave per month. Themaximum paid to each employee at retirement is as follows:

Certificated– 1/3 of unused sick leave days up to a maximum payout of 100 days.

Classified – 1/3 of accumulated balance of unused sick leave days up to amaximum payout of 70 days.

LITIGATION

General

There is no proceeding or litigation of any kind now pending or, to the best of theBoard’s knowledge, threatened, to restrain or enjoin the issuance, sale, execution or delivery ofthe Bonds or any way contesting or affecting the validity of the Bonds, the proceedings of theBoard taken with respect to the issuance and sale of the Bonds, the pledge or application of themoneys for security provided for the payment of the Bonds, the existence or powers of the Boardor the District, or the title or capacity of any officers of the Board. The Board and the District,from time to time, are parties to various legal proceedings seeking damages for injunctive orother relief generally related to their respective operations but unrelated to the Bonds or thesecurity for the Bonds. Though the ultimate disposition of any such proceedings is not presentlydeterminable, to the knowledge of the Board, no litigation or administrative action or proceedingis pending or threatened directly affecting the Bond issue, the security for the Bonds, or theimprovements being financed from the proceeds of the Bonds. A no-litigation certificate to such

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effect will be delivered to the purchaser at the time of the delivery of the Bonds to suchpurchaser.

School Funding

Between 1997 and 2003, the Ohio Supreme Court released several decisions in the caseDeRolph v. State of Ohio, in which the Plaintiffs challenged the constitutionality of the way theState funds public schools. The original decision from the Ohio Supreme Court on May 24,1997 held that the State’s school funding system was unconstitutional and that property taxesmay not be the primary means for providing the finances for a thorough and efficient system ofschools. The decision was stayed for twelve months to give the State Legislature time to developa revised system. The Supreme Court remanded the case to the trial court to retain jurisdictionuntil legislation was passed that provided adequate school funding in conformity with the OhioConstitution and the decision of the Supreme Court.

In response to the case, the State Legislature enacted laws that changed the basic Statefunding of Ohio school districts and established an increased minimum base cost per pupil for anadequate education, with the funding to be provided from State and local sources. However, in adecision released in May of 2000, the Ohio Supreme Court held that the State’s revised methodof funding public schools was still unconstitutional. Despite attempts to reach a settlement, thecase again reached the Ohio Supreme Court in 2001 and 2002. In its opinion released December11, 2002, the Ohio Supreme Court ruled that the State’s current school funding system wasunconstitutional and directed the State to enact a school-funding scheme that was thorough andefficient. However, in 2003, the Ohio Supreme Court prohibited the lower court fromproceeding further in the case, effectively ending the litigation. Plaintiffs petitioned the UnitedStates Supreme Court for a Writ of Certiorari, but the Petition was denied, thereby ending theDeRolph case.

LEGAL MATTERS

Legal matters incident to the issuance of the Bonds and with regard to the tax statusthereof are subject to the approving legal opinion of Dinsmore & Shohl LLP, Bond Counsel.Upon delivery of the Bonds to the purchaser thereof, each series of Bonds will be accompaniedby an approving opinion dated the date of such delivery, rendered by Dinsmore & Shohl LLP, asto the legality of the authorization of the respective Bonds. Such opinion will state, in part, that,in the opinion of Dinsmore & Shohl LLP, interest on the Bonds is excludable from gross incomefor federal income tax purposes upon the conditions and subject to the limitations set forth hereinunder “TAX EXEMPTION.” A draft of such legal opinion for the Bonds is attached hereto asAppendix E.

While Bond Counsel has participated in the preparation of portions of this OfficialStatement, it has not been engaged to confirm or verify, and expresses and will express noopinion as to, the accuracy, completeness or fairness of, any statements in this OfficialStatement, including the appendices, or in any other reports, financial information, offering ordisclosure documents or other information pertaining to the Board of Education or the Bonds thatmay be prepared or made available by the Board of Education or others to the purchasers orholders of the Bonds, or others.

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In addition to rendering the approving legal opinion, Bond Counsel will assist in thepreparation of and advise the Board of Education concerning documents for the bond transcript.

Dinsmore & Shohl LLP, also serves and has served in a bond counsel capacity for one ormore of the political subdivisions that territorially overlap the District.

TRANSCRIPT AND CLOSING DOCUMENTS

A complete transcript of proceedings, including a certificate relating to litigation(described above under “LITIGATION”) and other appropriate closing documents, will bedelivered by the Board when the Bonds are delivered to the underwriter for the Bonds. TheBoard at that time will also provide to the underwriter for the Bonds a certificate of the Boardaddressed to such underwriter relating to the accuracy and completeness of this OfficialStatement.

TAX EXEMPTION

General

In the opinion of Bond Counsel for the Bonds, based upon an analysis of existing laws,regulations, rulings and court decisions, interest on the Bonds is excludible from gross incomefor Federal income tax purposes. Bond Counsel for the Bonds is also of the opinion that intereston the Bonds is not a specific item of tax preference under Section 57 of the Internal RevenueCode of 1986, as amended (the “Code”) for purposes of the Federal individual or corporatealternative minimum taxes. Furthermore, Bond Counsel for the Bonds is of the opinion thatinterest on and any profit made on the sale, exchange, or other disposition of the Bonds areexempt from the Ohio personal income tax, the net income base of the Ohio corporate franchisetax, the Ohio commercial activity tax, and municipal, school district and joint economicdevelopment district income taxes in Ohio.

A complete copy of the opinion of Bond Counsel for the Bonds is set forth inAppendix E, attached hereto.

The Code imposes various restrictions, conditions, and requirements relating to theexclusion from gross income for Federal income tax purposes of interest on obligations such asthe Bonds. The Board has covenanted to comply with certain restrictions designed to ensure thatinterest on the Bonds will not be includable in gross income for Federal income tax purposes.Failure to comply with these covenants could result in interest on the Bonds being includable inincome for Federal income tax purposes and such inclusion could be required retroactively to thedate of issuance of the Bonds. The opinion of Bond Counsel assumes compliance with thesecovenants. Bond Counsel has not undertaken to determine (or to inform any person) whetherany actions taken (or not taken) or events occurring (or not occurring) after the date of issuanceof the Bonds may adversely affect the tax status of the interest on the Bonds.

Certain requirements and procedures contained or referred to in the Bond Legislation andother relevant documents may be changed and certain actions may be taken or omitted under thecircumstances and subject to the terms and conditions set forth in such documents. BondCounsel expresses no opinion as to any Bonds or the interest thereon if any such change occurs

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or action is taken or omitted upon the advice or approval of bond counsel other than Dinsmore &Shohl LLP.

Although Bond Counsel has rendered an opinion that interest on the Bonds is excludiblefrom gross income for Federal income tax purposes and Ohio income tax purposes, theownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwiseaffect a Bondholder’s Federal, state or local tax liabilities. The nature and extent of these othertax consequences may depend upon the particular tax status of the Bondholder or theBondholder’s other items of income or deduction. Bond Counsel expresses no opinion regardingany tax consequences other than what is set forth in its opinion and each Bondholder or potentialBondholder is urged to consult with tax counsel with respect to the effects of purchasing, holdingor disposing of the Bonds on the tax liabilities of the individual or entity.

For example, corporations are required to include all tax-exempt interest in determining“adjusted current earnings” under Section 56(c) of the Code, which may increase the amount ofany alternative minimum tax owed. Receipt of tax-exempt interest, ownership or disposition ofthe Bond may result in other collateral federal, state or local tax consequence for certaintaxpayers. Such effects include, without limitation, increasing the federal tax liability of certainforeign corporations subject to the branch profits tax imposed by Section 884 of the Code,increasing the federal tax liability of certain insurance companies, under Section 832 of theCode, increasing the federal tax liability and affecting the status of certain S Corporations subjectto Sections 1362 and 1375 of the Code, increasing the federal tax liability of certain individualrecipients of Social Security or Railroad Retirement benefits, under Section 86 of the Code andlimiting the use of the Earned Income Credit under Section 32 of the Code that might otherwisebe available. Ownership of any Bond may also result in the limitation of interest and certainother deductions for financial institutions and certain other taxpayers, pursuant to Section 265 ofthe Code. Finally, residence of the holder of Bond in a state other than Ohio or being subject totax in a state other than Ohio may result in income or other tax liabilities being imposed by suchstates or their political subdivisions based on the interest or other income from the Bond.

Legislation affecting tax-exempt obligations is regularly considered by the United StatesCongress and may also be considered by the State legislature. Court proceedings may also befiled the outcome of which could modify the tax treatment of obligations such as the Bonds.There can be no assurance that legislation enacted or proposed, or actions by a court, after thedate of issuance of the Bonds will not have an adverse effect on the tax status of interest or otherincome on the Bonds or the market value of the Bonds.

In addition, there are or may be pending in the U.S. Congress legislative proposals,including some that carry retroactive effective dates, that, if enacted, could alter or amend thefederal tax matters with respect to the Bonds or affect the market value of the Bonds. It cannotbe predicted whether or in what form any such proposal might be enacted or whether, if enacted,it would apply to bonds issued prior to enactment. Bond Counsel expresses no opinion regardingany pending or proposed federal tax legislation.

Prospective purchasers of the Bonds should consult their own tax advisors regardingpending or proposed federal and state tax legislation and court proceedings, and prospectivepurchasers of the Bonds at other than their original issuance at the respective prices indicated on

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the inside cover page of this Official Statement should also consult their own tax advisorsregarding other tax considerations such as the consequences of market discount, as to all ofwhich Bond Counsel expresses no opinion.

ORIGINAL ISSUE DISCOUNT AND PREMIUM BONDS

Discount

The Bonds that mature December 1, 2032 through and including December 1, 2034 andon December 1, 2042 (collectively, the “Discount Bonds”) are being offered and sold to thepublic at an original issue discount (“OID”) from the amounts payable at maturity thereon. OIDis the excess of the stated redemption price of a bond at maturity (the face amount) over the“issue price” of such bond. The issue price is the initial offering price to the public (other than tobond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) atwhich a substantial amount of bonds of the same maturity are sold pursuant to that initialoffering. For federal income tax purposes, OID on each bond will accrue over the term of thebond, and for the Discount Bonds, the amount of accretion will be based on a single rate ofinterest, compounded semiannually (the “yield to maturity”). The amount of OID that accruesduring each semi-annual period will do so ratably over that period on a daily basis. With respectto an initial purchaser of a Discount Bond at its issue price, the portion of OID that accruesduring the period that such purchaser owns the Discount Bond is added to such purchaser’s taxbasis for purposes of determining gain or loss at the maturity, redemption, sale or otherdisposition of that Discount Bond and thus, in practical effect, is treated as stated interest, whichis excludable from gross income for federal income tax purposes.

Premium

“Acquisition Premium” is the excess of the cost of a bond over the stated redemptionprice of such bond at maturity or, for bonds that have one or more earlier call dates, the amountpayable at the next earliest call date. The Bonds that mature on December 1, 2015 through andincluding December 1, 2031 and on December 1, 2035 (for purposes of this section, the“Premium Bonds”) are being initially offered and sold to the public at an Acquisition Premium.A portion of the Premium Bonds are callable prior to their maturity date. For federal income taxpurposes, the amount of Acquisition Premium on each bond the interest on which is excludiblefrom gross income for federal income tax purposes (“tax-exempt bonds”) must be amortized andwill reduce the bondholder’s adjusted basis in that bond. However, no amount of amortizedAcquisition Premium on tax-exempt bonds may be deducted in determining bondholder’staxable income for federal income tax purposes. The amount of any Acquisition Premium paidon the Premium Bonds, or on any of the Bonds, that must be amortized during any period will bebased on the “constant yield” method, using the original bondholder’s basis in such bonds andcompounding semiannually. This amount is amortized ratably over that semiannual period on adaily basis.

Please note that because the Premium Bonds that mature on December 1, 2025 throughand including December 1, 2031 and on December 1, 2035 are callable prior to their statedmaturity, the required amortization period for the Acquisition Premium will depend on whichcall dates produce the greater diminution in the yield to the holder. The Premium Bonds that

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mature on December 1, 2015 through and including, December 1, 2024, are not callable prior totheir stated maturity date, which will determine the amortization period.

Holders of the Bonds, both original purchasers and any subsequent purchasers, shouldconsult their own tax advisors as to the effect of such Acquisition Premium with respect to theirown tax situation and as to the treatment of the Acquisition Premium for state tax purposes.

RATINGS

The Bonds received an “AA” rating from Standard & Poor’s Rating Service (“S&P”)based on the credit support provided by the Ohio School District Credit Enhancement Program.(See “OHIO SCHOOL DISTRICT CREDIT ENHANCEMENT PROGRAM” herein.) TheDistrict has received an underlying rating of “A+” from S&P. No application for a rating hasbeen made to any other rating agency.

These ratings reflect only the view of said organization. Any explanation of thesignificance of such ratings may only be obtained from S&P.

The District furnished to the rating agencies certain information and materials, some ofwhich may not have been included in this Official Statement, relating to the Bonds and theDistrict. Generally, rating agencies base their ratings on such information and materials andinvestigation, studies and assumptions of their own. There can be no assurance that a ratingwhen assigned will continue for any given period of time or that it will not be revised downwardor withdrawn entirely by the rating agencies if in their judgment circumstances so warrant. Anysuch downward change in or withdrawal of a rating may have an adverse effect on themarketability and/or market price of the Bonds.

The District expects to furnish the rating agency with information and material that itmay request. However, the District assumes no obligation to furnish requested information andmaterial, and may issue debt for which a rating is not requested. Failure to furnish requestedinformation and materials, or the issuance of debt for which a rating is not requested, may resultin the suspension or withdrawal of a rating on the Bonds.

UNDERWRITING

Fifth Third Securities, Inc. (the “Underwriter”) has agreed to purchase the Bonds at apurchase price of $31,552,390.65 for the aggregate principal amount of the Bonds, plus accruedinterest (if any), pursuant to a purchase contract between the District and the Underwriter. Theinitial public offering price of the Bonds is $31,709,165.65, plus accrued interest to the date ofdelivery (if any), which includes the Underwriter’s spread in addition to certain fees andexpenses related to the issuance of the Bonds to be paid by the Underwriter. The Underwriterreserves the right to join with dealers and other underwriters in offering the Bonds. TheUnderwriter may offer and sell the Bonds to certain dealers (including dealer banks and dealersdepositing the Bonds into investments trusts) and others at prices lower than the respectivepublic offering prices stated on the cover page. Those initial public offering prices may bechanged from time to time by the Underwriter.

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The obligation of the Underwriter to accept delivery of the Bonds is subject to variousconditions of the purchase contract. The Underwriter is obligated to purchase all of the Bonds ifany of the Bonds are purchased.

The Underwriter has reviewed the information in this Official Statement pursuant to itsresponsibilities to investors under the federal securities laws, but the Underwriter does notguarantee the accuracy or completeness of such information.

CONTINUING DISCLOSURE

In accordance with the Securities and Exchange Commission Rule 15c2-12 (the “Rule”)and so long as the Bonds are outstanding, the District (the “Obligated Person”) will agreepursuant to a Continuing Disclosure Certificate to be dated on or about March 25, 2015, to bedelivered on the date of delivery of the Bonds, to cause the following information to be provided:

(a) to the MSRB certain annual financial information and operating data,including audited financial statements when available, generally consistent with theinformation contained under the heading(s) “FINANCIAL MATTERS—FinancialCondition of the District,” “AD VALOREM TAX REVENUES—Assessed Valuation ofthe District,” “—Largest Taxpayers,” “—Collections and Delinquencies of Ad ValoremTaxes,” “—Unvoted and Voted Taxes for Local Purposes—Rates of Taxation,” “—Sources of Income,” “BOARD OF EDUCATION DEBT AND OTHER LONG-TERMOBLIGATIONS—Outstanding Obligations,” “—Future Financings,” “—PensionObligations” and Appendices A and B of this Official Statement (“annual financialinformation”); such information shall be provided on or before March 1 following theend of each fiscal year ending on June 30, with the fiscal year ending June 30, 2015;

(b) to the MSRB, in a timely manner, not in excess of ten business days afterthe occurrence of the event, notice of the occurrence of the following events with respectto the Bonds:

(i) Principal and interest payment delinquencies;

(ii) Non-payment related defaults, if material;

(iii) Unscheduled draws on debt service reserves reflecting financialdifficulties;

(iv) Unscheduled draws on credit enhancements reflecting financialdifficulties;

(v) Substitution of credit or liquidity providers, or their failure toperform;

(vi) Adverse tax opinions, the issuance by the Internal Revenue Serviceof proposed or final determinations of taxability, Notices of Proposed Issue (IRSForm 5701-TEB) or other material notices or determinations with respect to the

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tax status of the security, or other material events affecting the tax-exempt statusof the security;

(vii) Modifications to rights of security holders, if material;

(viii) Bond calls, if material, and tender offers (except for mandatoryscheduled redemptions not otherwise contingent upon the occurrence of an event);

(ix) Defeasances;

(x) Release, substitution or sale of property securing repayment of thesecurities, if material;

(xi) Rating changes;

(xii) Bankruptcy, insolvency, receivership or similar event of theDistrict (Note: For the purposes of this event, the event is considered to occurwhen any of the following occur: The appointment of a receiver, fiscal agent orsimilar officer for the District in a proceeding under the U.S. Bankruptcy Code orin any other proceeding under state or federal law in which a court orgovernmental authority has assumed jurisdiction over substantially all of theassets or business of the District, or if such jurisdiction has been assumed byleaving the existing governing body and officials or officers in possession butsubject to the supervision and orders of a court or governmental authority, or theentry of an order confirming a plan of reorganization, arrangement or liquidationby a court or governmental authority having supervision or jurisdiction oversubstantially all of the assets or business of the District);

(xiii) The consummation of a merger, consolidation, or acquisitioninvolving the District or the sale of all or substantially all of the assets of theDistrict, other than in the ordinary course of business, the entry into a definitiveagreement to undertake such an action or the termination of a definitiveagreement relating to any such actions, other than pursuant to its terms, ifmaterial; and

(xiv) Appointment of a successor or additional trustee or the change ofname of a trustee, if material; and

The SEC requires the listing of events (i) through (xiv) although some of suchevents may not be applicable to the Bonds; and

(c) to the MSRB, notice of a failure (of which the District has knowledge) ofthe District to provide the required annual financial information on or before the datespecified in its written continuing disclosure undertaking.

As required by the Rule, the Continuing Disclosure Certificate provides that theinformation to be filed with the MSRB described in the preceding paragraph is to be filed in anelectronic format as prescribed by the MSRB, accompanied by identifying information as

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prescribed by the MSRB. An MSRB rule change approved by the Securities and ExchangeCommission established a continuing disclosure service of the MSRB’s Electronic MunicipalMarket Access system (“EMMA”) for the receipt of, and for making available to the public,continuing disclosure documents and related information to be submitted pursuant to continuingdisclosure undertakings (such as the Continuing Disclosure Certificate) entered into on or afterJuly 1, 2009, consistent with the Rule. In general, all continuing disclosure documents andrelated information are to be submitted to the MSRB’s continuing disclosure service through anInternet-based electronic submitter interface (EMMA Dataport) or electronic computer-to-computer data connection, accompanied by certain identification information, in portabledocument format (PDF) files configured to permit document to be saved, viewed, printed andretransmitted by electronic means and must be word-searchable.

The Continuing Disclosure Certificate provides bondholders with certain enforcementrights in the event of a failure by the District to comply with the terms thereof; however, adefault under the Continuing Disclosure Certificate does not constitute a default under theAuthorizing Legislation. The Continuing Disclosure Certificate may be amended or terminatedunder certain circumstances in accordance with the Rule as more fully described therein.Holders of the Bonds are advised that the Continuing Disclosure Certificate, copies of which areavailable at the office of the District, should be read in its entirety for more complete informationregarding its contents.

For purposes of this transaction with respect to events as set forth in the Rule:

(a) there are no debt service reserve funds applicable to the Bonds;

(b) the Bonds are enhanced pursuant to the Ohio School District CreditEnhancement Program; see “OHIO SCHOOL DISTRICT CREDIT ENHANCEMENTPROGRAM”;

(c) there are no liquidity providers applicable to the Bonds; and

(d) there is no property securing the repayment of the Bonds.

During the past five year period, the District has not been obligated under the Rule to fileany annual financial information or operating data.

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This Official Statement has been duly authorized and prepared by, and executed anddelivered for and on behalf of, the Board of Education by its President and Treasurer.

BOARD OF EDUCATIONURBANA CITY SCHOOL DISTRICT

By: /s/ Alyssa DunhamPresident

By: /s/ Mandy HildebrandTreasurer

Dated: March 4, 2015

APPENDIX A-1AUDITED FINANCIAL REPORTS

FOR THE PERIOD JULY 1, 2013 - JUNE 30, 2014

[SEE ATTACHED]

URBANA CITY SCHOOL DISTRICT CHAMPAIGN COUNTY

SINGLE AUDIT

FOR THE YEAR ENDED JUNE 30, 2014

This page intentionally left blank.


TABLE OF CONTENTS

TITLE PAGE

Independent Auditor’s Report ....................................................................................................................... 1

Management’s Discussion and Analysis ....................................................................................................... 5

Basic Financial Statements:

Government-Wide Financial Statements

Statement of Net Position-Cash Basis – June 30, 2014 ........................................................................... 15

Statement of Activities-Cash Basis – For the Fiscal Year Ended June 30, 2014 ..................................... 16

Fund Financial Statements

Statement of Assets and Fund Balances – Cash Basis – Governmental Funds – June 30, 2014.......... 17

Reconciliation of Total Governmental Fund Balances to Net Position Of Governmental Activities – Cash Basis – June 30, 2014 .................................................................. 18

Statement of Receipts, Disbursements, and Changes in Fund Balances – Cash Basis – Governmental Funds – For the Fiscal Year Ended June 30, 2014 ................................ 19

Reconciliation of the Statement of Receipts, Disbursements, and Changes in Fund Balances of Governmental Funds-Cash Basis to the Statement of Activities – Cash Basis - For the Fiscal Year Ended June 30, 2014 ...................................................................... 20

Statement of Receipts, Disbursements and Changes in Fund Balance – Budget and Actual (Budgetary Basis) – General Fund – For the Fiscal Year Ended June 30, 2014 ........................................................................................... 21

Statement of Net Position – Cash Basis – Proprietary Fund – June 30, 2014 ......................................... 22

Statement of Receipts, Disbursements and Change in Net Position – Cash Basis - Proprietary Fund – For the Fiscal Year Ended June 30, 2014 ............................................................ 23

Statement of Fiduciary Net Position – Cash Basis – Fiduciary Funds – June 30, 2014 .......................... 24 Statement of Change in Fiduciary Net Position- Cash Basis – Fiduciary Fund - For the Fiscal Year Ended June 30, 2014 ............................................................................................ 25

Notes to the Basic Financial Statements .................................................................................................... 27

Schedule of Federal Awards Receipts and Expenditures – For the Fiscal Year Ended June 30, 2014 .............................................................................................. 53

Notes to the Schedule of Federal Awards Receipts and Expenditures ...................................................... 54


TABLE OF CONTENTS

TITLE PAGE

Independent Auditor’s Report on Internal Control Over Financial Reporting and On Compliance and Other Matters Required By Government Auditing Standards .......................................................................................... 55

Independent Auditor’s Report on Compliance with Requirements Applicable to the Major Federal Program and on Internal Control Over Compliance in Accordance With OMB Circular A-133 .............................................................................. 57

Schedule of Findings ................................................................................................................................... 59

Schedule of Prior Audit Findings ................................................................................................................. 61

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INDEPENDENT AUDITOR’S REPORT

Urbana City School District Champaign County 711 Wood Street Urbana, Ohio 43078

To the Board of Education:

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, each major fund, and the discretely presented component unit and remaining fund information of Urbana City School District, Champaign County, Ohio (the District), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for preparing and fairly presenting these financial statements in accordance with the cash accounting basis Note 2 describes. This responsibility includes determining that the cash accounting basis is acceptable for the circumstances. Management is also responsible for designing, implementing and maintaining internal control relevant to preparing and fairly presenting financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to opine on these financial statements based on our audit. We audited in accordance with auditing standards generally accepted in the United States of America and the financial audit standards in the Comptroller General of the United States’ Government Auditing Standards. Those standards require us to plan and perform the audit to reasonably assure the financial statements are free from material misstatement.

An audit requires obtaining evidence about financial statement amounts and disclosures. The procedures selected depend on our judgment, including assessing the risks of material financial statement misstatement, whether due to fraud or error. In assessing those risks, we consider internal control relevant to the District's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not to the extent needed to opine on the effectiveness of the District's internal control. Accordingly, we express no opinion. An audit also includes evaluating the appropriateness of management’s accounting policies and the reasonableness of their significant accounting estimates, as well as our evaluation of the overall financial statement presentation.

We believe the audit evidence we obtained is sufficient and appropriate to support our audit opinions.

Urbana City School District Champaign County Independent Auditor’s Report Page 2

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Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective cash financial position of the governmental activities, each major fund, and the discretely presented component unit and remaining fund information of Urbana City School District, Champaign County, Ohio, as of June 30, 2014, and the respective changes in cash financial position and the budgetary comparison for the General fund thereof for the year then ended in accordance with the accounting basis described in Note 2.

Accounting Basis

Ohio Administrative Code § 117-2-03(B) requires the District to prepare its annual financial report in accordance with accounting principles generally accepted in the United States of America. We draw attention to Note 2 of the financial statements, which describes the basis applied to these statements, which is a basis other than generally accepted accounting principles. We did not modify our opinion regarding this matter.

Other Matters

Supplemental and Other Information

We audited to opine on the District’s financial statements that collectively comprise its basic financial statements.

Management’s Discussion & Analysis includes tables of net position-cash basis, change in net position-cash basis, governmental activities, fund balances, general fund financial activities and outstanding debt year-end. This information provides additional analysis and is not a required part of the basic financial statements.

The Schedule of Federal Award Receipts and Expenditures also presents additional analysis as required by the 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 financial statements.

These tables and the Schedule are management’s responsibility, and derive from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. We subjected these tables and the Schedule to the auditing procedures we applied to the basic financial statements. We also applied certain additional procedures, including comparing and reconciling these tables and the Schedule directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and in accordance with auditing standards generally accepted in the United States of America. In our opinion, these tables and the Schedule are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

Other than the aforementioned procedures applied to the tables, we applied no procedures to any other information in Management’s Discussion & Analysis, and we express no opinion or any other assurance on it.

Urbana City School District Champaign County Independent Auditor’s Report Page 3

3

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2014, on our consideration of the District’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report describes the scope of our internal control testing over financial reporting and compliance, and the results of that testing, and does not opine on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.

Dave Yost Auditor of State

Columbus, Ohio

November 17, 2014

4



MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

(UNAUDITED)

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The discussion and analysis of the Urbana City School District’s (the “District”) financial performance provides an overall review of the District’s financial activities for the fiscal year ended June 30, 2014. The intent of this discussion and analysis is to look at the District’s financial performance as a whole. Readers should also review the basic financial statements and the notes to the basic financial statements to enhance their understanding of the District’s financial performance.

Financial Highlights

Key financial highlights for 2014 are as follows:

� In total, the net position of governmental activities increased $1,939,350, which represents a 26.25% increase from 2013.

� General receipts accounted for $20,877,764 in receipts or 79.06% of all receipts. Program specific receipts in the form of charges for services and sales, grants and contributions accounted for $5,530,252 or 20.94% of all receipts.

� The District had $24,468,666 in cash disbursements related to governmental activities; $5,530,252 of these disbursements were offset by program specific charges for services, grants or contributions. General receipts supporting governmental activities (primarily taxes and unrestricted grants and entitlements) of $20,877,764 were adequate to provide for these programs.

� The District’s major governmental funds are the general fund and the permanent improvement fund. The general fund had $23,088,087 in receipts and other financing sources and $21,386,481 in disbursements and other financing uses. During fiscal 2014, the general fund’s fund balance increased $1,701,606 from a balance of $2,651,062 to a balance of $4,352,668.

� The permanent improvement fund had $573,281 in receipts and $420,886 in disbursements. During fiscal 2014, the permanent improvement fund’s fund balance increased $152,395 from a balance of $748,686 to a balance of $901,081.

Using the Cash Basis Basic Financial Statements

This annual report is presented in a format consistent with the presentation requirements of the Governmental Accounting Standards Board (GASB) Statement No. 34, as applicable to the District’s cash basis of accounting.

The statement of net position – cash basis and statement of activities – cash basis provide information about the activities of the District as a whole, presenting an aggregate view of the District’s cash-basis finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the District’s most significant funds with all other non-major funds presented in total in one column. In the case of the District, there are two major funds. The general fund is the largest major fund.



(UNAUDITED) (Continued)

6

Reporting the District as a Whole

Statement of Net Position – Cash Basis and the Statement of Activities – Cash Basis

The statement of net position – cash basis and the statement of activities – cash basis answer the question, “How did the District perform financially during 2014?” These statements include only the District’s net position using the cash basis of accounting, which is a financial reporting framework other than accounting principles generally accepted in the United States of America. This basis of accounting takes into account only the current year’s receipts and disbursements if the cash is actually received or paid.

These two statements report the District’s net position and changes in net position on a cash basis. This change in net cash position is important because it tells the reader that, for the District as a whole, the cash basis financial position of the District has improved or diminished. The causes of this change may be the result of many factors, some financial, some not. Non-financial factors include the District’s property tax base, current property tax laws in Ohio restricting revenue growth, facility conditions, required educational programs and other factors.

As a result of the use of this cash basis of accounting, certain assets and deferred outflows of resources, liabilities and deferred inflows of resources, and the effects of these items on revenues and expenses are not recorded in these financial statements. Therefore, when reviewing the financial information and discussion within this annual report, the reader should keep in mind the limitations resulting from the use of the cash basis of accounting.

In the statement of net position – cash basis and statement of activities – cash basis, the governmental activities include the District’s programs and services, including instruction, support services, operation and maintenance of plant, pupil transportation, extracurricular activities, and food service operations.

The District’s statement of net position – cash basis and statement of activities – cash basis can be found on pages 15-16 of this report.

Reporting the District’s Most Significant Funds

Fund Financial Statements

The analysis of the District’s major governmental funds begins on page 10. Fund financial reports provide detailed information about the District’s major funds. The District uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the District’ most significant funds. The District’s major governmental funds are the general fund and the permanent improvement fund.

Governmental Funds

Most of the District’s activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using the cash basis of accounting, which is a financial reporting framework other than accounting principles generally accepted in the United States of America. The governmental fund statements provide a detailed view of the District’s operations and the basic services it provides. Governmental fund information helps to determine whether there are more or fewer cash basis financial resources that can be readily spent to finance various District programs. The relationship (or differences) between governmental activities (reported in the statement of net position – cash basis and statement of activities – cash basis) and governmental funds is reconciled in the basic financial statements. The basic governmental fund financial statements can be found on pages 17-21 of this report.




7

Proprietary Funds

The District maintains a proprietary fund. Internal service funds are an accounting device used to accumulate and allocate costs internally among the District’s various functions. The District’s internal service fund accounts for medical/surgical benefits self-insurance. The basic proprietary fund financial statements can be found on pages 22-23 of this report.

Reporting the District’s Fiduciary Responsibilities

The District is the trustee, or fiduciary, for its scholarship programs. This activity is presented as a private-purpose trust fund. The District also acts in a trustee capacity as an agent for individuals or other entities. These activities are reported in agency funds. All of the District’s fiduciary activities are reported in separate statements of fiduciary net position – cash basis and changes in fiduciary net position – cash basis on pages 24-25. These activities are excluded from the District’s other financial statements because the assets cannot be utilized by the District to finance its operations.

Notes to the Basic 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. These notes to the basic financial statements can be found on pages 27-52 of this report.

The District as a Whole

The table below provides a summary of the District’s net position – cash basis at June 30, 2014 and June 30, 2013.

Net Position - Cash Basis Governmental Governmental

Activities Activities 2014 2013

Assets: Equity in pooled cash and investments $9,327,568 $7,388,218 Net Cash Position: Restricted 1,215,285 1,109,002 Unrestricted 8,112,283 6,279,216 Total net cash position $9,327,568 $7,388,218

Total net position of the District increased $1,939,350, which represents a 26.25% increase from the District’s net position at June 30, 2013. A portion of the District’s net position, $1,215,285, represents resources that are subject to external restriction on how they may be used. The remaining balance of unrestricted net position of $8,112,283 may be used to meet the District’s ongoing obligations to the students and creditors.




8

The table below shows the change in cash basis net position for fiscal years 2014 and 2013.

Change in Net Position - Cash Basis Governmental Governmental


Receipts: Program revenues: Charges for services and sales $1,654,699 $1,414,221 Operating grants and contributions 3,875,553 3,731,155 General revenues: Property taxes 8,794,911 8,759,584 Payment in lieu of taxes 1,279 45,885 Grants and entitlements 11,984,212 10,706,104 Investment earnings 25,421 7,519 Other 71,941 60,696 Total receipts 26,408,016 24,725,164 Disbursements: Program disbursements: Instruction: Regular 10,514,801 10,740,395 Special 4,661,458 4,789,509 Vocational 356,099 362,721 Other 14,079 18,413 Support services: Pupil 1,546,542 1,140,001 Instructional staff 492,169 504,111 Board of education 23,120 22,602 Administration 1,369,655 1,726,151 Fiscal 469,285 247,840 Business 358,455 348,422 Operations and maintenance 1,426,083 1,326,321 Pupil transportation 640,312 741,869 Central 64,786 98,508 Operations of non-instructional services: Food service operations 1,019,889 1,080,917 Other non-instructional services 123,737 61,513 Extracurricular activities 630,724 701,635 Facilities acquisition and construction 346,123 375,539 Debt service: Principal retirement 394,609 386,973 Interest and fiscal charges 16,740 39,275 Total disbursements 24,468,666 24,712,715 Change in net position 1,939,350 12,449 Net cash position at beginning of year 7,388,218 7,375,769 Net cash position at end of year $9,327,568 $7,388,218




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Governmental Activities

The net position of the District’s governmental activities increased $1,939,350. Total governmental disbursements of $24,468,666 were offset by program receipts of $5,530,252 and general receipts of $20,877,764. Program receipts supported 22.60% of the total governmental disbursements.

The primary sources of receipts for governmental activities are derived from property taxes and unrestricted grants and entitlements. These receipts represent 78.68% of total governmental receipts.

The largest category of the District’s disbursements is for instructional programs. Instruction disbursements totaled $15,546,437 or 63.54% of total governmental disbursements for fiscal 2014.

The graph below presents the District’s governmental activities receipts and disbursements for fiscal years 2014 and 2013.

$24,468,666

$26,408,016$24,712,715

$24,725,164

$20,000,000$21,000,000$22,000,000$23,000,000$24,000,000$25,000,000$26,000,000$27,000,000

Fiscal Year 2014 Fiscal Year 2013

Governmental Activities - Receipts and Disbursements

DisbursementsReceipts

The graph below presents the District’s governmental activities receipts for fiscal years 2014 and 2013.

$5,530,252

$20,877,764

$5,145,376

$19,579,788

$-$5,000,000

$10,000,000$15,000,000$20,000,000$25,000,000$30,000,000

Fiscal Year 2014 Fiscal Year 2013

Governmental Activities - General and Program Receipts

General ReceiptsProgram Receipts

The statement of activities – cash basis shows the cost of program services and the charges for services and grants offsetting those services. The following table shows, for governmental activities, the total cost of services and the net cost of services. That is, it identifies the cost of these services supported by tax receipts and unrestricted State grants and entitlements.




10

Governmental Activities Total Cost of Net Cost of Total Cost of Net Cost of

Services Services Services Services 2014 2014 2013 2013

Program disbursements: Instruction:

Regular $10,514,801 $9,424,209 $10,740,395 $9,769,077 Special 4,661,458 1,990,218 4,789,509 2,407,461 Vocational 356,099 276,381 362,721 262,482 Other 14,079 14,079 18,413 18,413 Support services:

Pupil 1,546,542 1,512,228 1,140,001 1,138,259 Instructional staff 492,169 469,262 504,111 485,658 Board of education 23,120 23,120 22,602 22,602 Administration 1,369,655 1,337,266 1,726,151 1,693,406 Fiscal 469,285 469,285 247,840 247,840 Business 358,455 232,131 348,422 214,337 Operations and maintenance 1,426,083 1,411,166 1,326,321 1,310,884 Pupil transportation 640,312 517,451 741,869 584,903 Central 64,786 64,786 98,508 87,708 Operations of non-instructional services:

Food service operations 1,019,889 (3,753) 1,080,917 42,573 Other non-instructional services 123,737 123,086 61,513 56,803 Extracurricular activities 630,724 320,027 701,635 423,146 Facilities acquisition and construction 346,123 346,123 375,539 375,539 Debt service: Principal retirement 394,609 394,609 386,973 386,973 Interest and fiscal charges 16,740 16,740 39,275 39,275 Total disbursements $24,468,666 $18,938,414 $24,712,715 $19,567,339

The dependence upon tax and other general receipts for governmental activities is apparent, 75.29% of instruction activities are supported through taxes and other general receipts. For all governmental activities, general receipt support is 77.40%.

The District’s Funds

The District’s governmental funds reported a combined fund balance of $5,567,205, which is higher than last year’s total of $3,759,316.

The schedule below indicates the fund balance and the total change in fund balance as of June 30, 2014 and 2013.

Fund Balance Fund Balance Increase/ Percentage June 30, 2014 June 30, 2013 (Decrease) Change

General $4,352,668 $2,651,062 $1,701,606 64.19 %Permanent improvement 901,081 748,686 152,395 20.35 %Other Governmental 313,456 359,568 (46,112) (12.82) % Total $5,567,205 $3,759,316 $1,807,889 48.09 %

An analysis of the receipts and disbursements of the general fund is provided in the section below.




11

General Fund

The District’s general fund balance increased $1,701,606. Tax receipts increased 0.41% or $33,945 during 2014. The District received an $18,056 increase in interest payments during 2014 compared to 2013. A 5.59% increase in tuition receipts during 2014 resulted from increases in tuition payments received for regular day school programs, open enrollment, and services provided by the District to the Urbana Community School, a component unit of the District.

During fiscal year 2014, a $386,713 decrease in disbursements for instruction resulted from lower wages and benefits paid from the general fund during the year and a decrease in purchases of materials and supplies for regular instruction. Support services disbursements increased 4.06% due primarily to higher disbursements for administration, pupil transportation, and central support services. Disbursements for administration support services decreased due to lower salaries and benefits in addition to lower miscellaneous disbursements, including lower fees paid for the collection of property taxes and for state exams. Further, central support services disbursements fell 26.13% from the prior year. Disbursements for extracurricular activities fell 17.89% during the year primarily resulting from decreases in disbursements for sport oriented activities, including the District’s track and field, wrestling, football, and basketball programs. Debt service payments made by the general fund decreased 3.55% due to lower interest on the District’s tax anticipation note paid during 2014.

The table that follows assists in illustrating the financial activities and fund balance of the general fund.

2014 2013 Increase/ Percentage Amount Amount (Decrease) Change

Receipts: Taxes $8,352,887 $8,318,942 $33,945 0.41 % Tuition 850,765 805,703 45,062 5.59 % Earnings on investments 25,281 7,225 18,056 249.91 % Other revenues 308,465 318,834 (10,369) (3.25) % Intergovernmental 13,311,125 11,861,969 1,449,156 12.22 %Total 22,848,523 21,312,673 1,535,850 7.21 %Disbursements: Instruction 14,164,889 14,551,602 (386,713) (2.66) % Support services 6,311,400 6,065,156 246,244 4.06 % Non-instructional services 124,110 58,409 65,701 112.48 % Extracurricular activities 370,132 450,766 (80,634) (17.89) % Debt service 349,916 362,786 (12,870) (3.55) %Total $21,320,447 $21,488,719 ($168,272) (0.78) %

Permanent Improvement Fund

The permanent improvement fund, a major capital projects fund of the District, had cash receipts of $573,281 and cash disbursements of $420,886 during fiscal year 2014. The balance of the permanent improvement fund increased $152,395, from a cash fund balance of $748,686 to a balance of $901,081 at June 30, 2014.




12

General Fund Budgeting Highlights

The District’s budget is prepared according to Ohio law and is based on accounting for certain transactions on a basis of cash receipts, disbursements and encumbrances. The most significant budgeted fund is the general fund.

For the general fund, original and final budgeted receipts and other financing sources were $21,472,000 and $21,872,000, respectively. Actual revenues and other financing sources for fiscal year 2014 totaled $23,102,577. This represents a $1,230,577 increase from final budgeted revenues for 2014.

General fund original appropriations and final appropriations (appropriated disbursements including other financing uses) totaled $23,132,280 and $23,597,280, respectively. The actual budget basis disbursements and other financing uses for fiscal year 2014 totaled $21,649,932, which represents a $1,947,348 decrease from the final budget.

Capital Assets and Debt Administration

Capital Assets

The District does not report capital assets in the accompanying cash basis financial statements, but records payments for capital assets as disbursements when purchased. The District had facilities acquisition and construction disbursements of $346,123 during the fiscal year.

Debt Administration

At June 30, 2014, the District had no debt obligations outstanding. The following table summarizes the notes and leases outstanding at 2014 and 2013.

Outstanding Debt, Year-End Governmental Governmental


Energy conservation notes $0 $30,000 Capital lease obligation 0 104,609 Total $0 $134,609

At June 30, 2014, the District’s overall legal debt margin was $23,872,264 and an un-voted debt margin of $265,247. See Note 9 to the basic financial statements for detail on the District’s debt administration.

Current Related Financial Activities

The District placed a 5.5 mill operating levy on the ballot in November of 2012 for new money in response to the projected deficit looming in fiscal year 2014. Unfortunately, the levy did not pass and the district began the process of making budget reductions in the amount of $1,000,000. Through the winter and spring of 2013, the board and administration, with staff and community input, compiled a district cut list to be effective for the 2013 – 2014 school year. The budget reduction plan included the closure of the building that housed fifth and sixth grades and a realignment of the other building grade levels in order to accommodate the two grade levels. Also cut were head teacher positions, several supplemental contract positions, and extended days were reduced. The district also implemented a transportation fee for extracurricular activities, effective for the 2013 – 2014 school year.




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The District passed an operating levy in March of 2008 for 9.75 mills, providing approximately $2.6 million per year, which began in January of 2009. This levy was renewed in March of 2013, preventing more severe cuts from being made. In November of 2013, the district renewed a 3.5 mill permanent improvement levy for a continuing period of time. This alleviated some pressure on the levy cycle of the district, dropping the number of time-limited levies from four to three. The three remaining time-limited levies are all for operating funds.

A new funding formula was passed into legislation for fiscal year 2014. According to the projections, the district will see a 6.25% increase in funding, based on the fiscal year 2013 enrollment figures. In addition, previous budgets called for the elimination of the tangible personal property tax reimbursement, which would have resulted in an approximately $400,000 loss for our district in fiscal year 2014 and again in fiscal year 2015. The continuance of the reimbursement is a huge gain for the district.

Another challenge facing the District is the need to update its facilities to streamline operations and to enhance learning space design for students. The Board of Education and administration have been working with the Ohio School Facilities Commission (OSFC) to develop a master facilities plan. In September of 2013, the district learned OSFC funding would comprise approximately 61% of approved project costs. It is important to capture this revenue source to relieve some of the financial burden from local taxpayers while continuing to meet the needs of students. In 2004, the Board proceeded to put its local share of the project on the ballot through the Expedited Local Partnership Program. Phase I of the project consists of a new PK-5 building and a building for grades 6 through 8. The high school is intended to comprise Phase II, to be built with State funds. Phase I failed to receive a favorable response from taxpayers in 2004 and in 2006. With the tax rate increasing because of deflating property values (complete loss of $60,000,000 in tangible personal valuation) and community concerns, the Board decided to split Phase I and build a PK-5 building with Phase I, build a 6-8 middle school with Phase II and delay the high school OSFC project to Phase III. Phase I failed again in November of 2006, with less millage. The District estimates costs related to the proposed project will continue to increase as costs associated with new construction become higher over time. Additionally, the local share to be funded by the District will continue to increase as the tax base decreases, thus making a levy more difficult to pass. HB119 passed in June of 2007, with Governor Strickland’s emphasis on speeding up the pace of these projects. As a result of the State refinancing other projects, the District was offered its State allocation in the spring of 2008, which the District deferred, recognizing the need to pass an operating levy and has declined in subsequent years for similar reasons. As a result of the 61% figure shown in September of 2013, the board voted to move forward with a community engagement process to determine the need and desire for new facilities. A Facility Steering Committee was convened and met over several months and present a Master Plan to build PK – 8 building and a new 9 – 12 building. The Board approved this master plan in June of 2014 and in July of 2014, voted to place a 7.15 mill bond issue on the ballot for November of 2014.

The District formed a community school during fiscal year 2003. Urbana Community School was formed in the hopes of providing assistance to students who do not function or achieve academic success in the regular school system. The Urbana Community School opened its doors July 1, 2004. It remains a conversion community school as a separate autonomy with a Board of Directors, but under the wings of Urbana City Schools’ administration and governance. It is our hope that these students will achieve academic success through the Community School.

The District has committed itself to educational and financial excellence for many years. The District has received an Excellent Rating from the Ohio Department of Education in both fiscal years 2009 and 2010 and once again in 2012 and unmodified opinions on its financial statement audits. Each challenge identified in this section is viewed as an opportunity for the District to continue its commitment to excellence. The District is committed to living within its financial means and working with the community it serves in order to maintain adequate resources to support its educational programs.




14

It is very important that the Board and Administration continue to carefully and prudently plan in order to provide the resources necessary to meet the needs of the students in the future.

Contacting the District’s Financial Management

This financial report is designed to provide our citizens, taxpayers, and investors and creditors with a general overview of the District’s finances and to show the District’s accountability for the money it receives. If you have questions about this report or need additional financial information contact Ms. Mandy Hildebrand, Treasurer, Urbana City School District, 711 Wood St., Urbana, Ohio 43088.

Primary ComponentGovernment Unit

UrbanaGovernmental Community

Activities SchoolAssets: Equity in pooled cash and investments $9,327,568 $790,857Total assets 9,327,568 790,857

Net cash position: Restricted for: Capital projects 901,081 State funded programs 122,144 8,000 Federally funded programs 16,917 Student activities 132,891 Other purposes 42,252 Unrestricted 8,112,283 782,857 Total net cash position $9,327,568 $790,857

See accompanying notes to the basic financial statements.

URBANA CITY SCHOOL DISTRICTCHAMPAIGN COUNTY

STATEMENT OF NET POSITION - CASH BASISJUNE 30, 2014

15

Primary ComponentGovernment Unit

Charges for Operating UrbanaServices Grants and Governmental Community

Disbursements and Sales Contributions Activities SchoolGovernmental Activities: Instruction: Regular $10,514,801 $751,665 $338,927 ($9,424,209) Special 4,661,458 150,198 2,521,042 (1,990,218) Vocational 356,099 79,718 (276,381) Other 14,079 (14,079) Support services: Pupil 1,546,542 34,314 (1,512,228) Instructional staff 492,169 22,907 (469,262) Board of education 23,120 (23,120) Administration 1,369,655 32,389 (1,337,266) Fiscal 469,285 (469,285) Business 358,455 121,609 4,715 (232,131) Operations and maintenance 1,426,083 14,917 (1,411,166) Pupil transportation 640,312 9,711 113,150 (517,451) Central 64,786 (64,786) Operation of non-instructional services: Food service operations 1,019,889 306,189 717,453 3,753 Other non-instructional services 123,737 651 (123,086) Extracurricular activities 630,724 300,410 10,287 (320,027) Facilities acquisition and construction 346,123 (346,123) Debt service: Principal retirement 394,609 (394,609)

Interest and fiscal charges 16,740 (16,740) Total governmental activities $24,468,666 $1,654,699 $3,875,553 (18,938,414)

Component Unit: Urbana Community School $323,541 $0 $0 ($323,541)

General receipts:Property taxes levied for: General purposes 8,352,887 Capital projects 442,024 Payment in lieu of taxes 1,279 Grants and entitlements not restricted to specific programs 11,984,212 263,720 Investment earnings 25,421 636 Miscellaneous 71,941

Total general receipts 20,877,764 264,356

Change in net position 1,939,350 (59,185)

Net cash position at beginning of year 7,388,218 850,042

Net cash position at end of year $9,327,568 $790,857



STATEMENT OF ACTIVITIES - CASH BASISFOR THE FISCAL YEAR ENDED JUNE 30, 2014

Net (Disbursements) Receiptsand Changes in Net PositionProgram Receipts

16

Non-major TotalPermanent Governmental Governmental

General Improvement Funds FundsAssets: Equity in pooled cash and investments $4,351,920 $901,081 $313,456 $5,566,457 Restricted assets: Equity in pooled cash and investments 748 748 Total assets 4,352,668 901,081 313,456 5,567,205

Fund balances: Non-spendable: Unclaimed monies 8,214 8,214 Restricted: Capital improvements 901,081 901,081 School bus purchase 748 748 Food service operations 41,504 41,504 Non-public schools 120 120 Special education 113 113 Targeted academic assistance 5,068 5,068 Extracurricular 132,891 132,891 Other purposes 133,760 133,760 Committed: Termination benefits 458,845 458,845 Assigned: Student instruction 66,865 66,865 Student and staff support 252,405 252,405 School supplies 3,172 3,172 Other purposes 13,574 13,574 Unassigned 3,548,845 3,548,845 Total fund balances $4,352,668 $901,081 $313,456 $5,567,205


STATEMENT OF ASSETS AND FUND BALANCES - CASH BASISGOVERNMENTAL FUNDS

JUNE 30, 2014


17

Total governmental fund balances $5,567,205

Amounts reported for governmental activities on the statement of net position are different because:

An internal service fund is used by management to charge the costs of insurance to individual funds. The assets of the internal service fund are included in governmental activities on the statement of net position - cash basis. 3,760,363

Net cash position of governmental activities $9,327,568


JUNE 30, 2014

CHAMPAIGN COUNTYURBANA CITY SCHOOL DISTRICT

RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES TONET POSITION OF GOVERNMENTAL ACTIVITIES - CASH BASIS

18

Non-major TotalPermanent Governmental Governmental

General Improvement Funds FundsReceipts: From local sources: Property taxes $8,352,887 $442,024 $8,794,911 Payment in lieu of taxes 1,279 1,279 Tuition 850,765 850,765 Transportation fees 9,711 9,711 Earnings on investments 25,281 $605 25,886 Charges for services 306,189 306,189 Extracurricular 168,013 262,500 430,513 Classroom materials and fees 42,604 42,604 Rental income 14,917 14,917 Contributions and donations 18,485 10,287 28,772 Other local revenues 53,456 53,456 Intergovernmental - intermediate 366,722 366,722 Intergovernmental - state 12,944,403 131,257 154,208 13,229,868 Intergovernmental - federal 2,252,283 2,252,283 Total receipts 22,848,523 573,281 2,986,072 26,407,876

Disbursements: Current: Instruction: Regular 10,251,092 2,899 338,301 10,592,292 Special 3,552,978 1,122,770 4,675,748 Vocational 346,740 12,347 359,087 Other 14,079 14,079 Support services: Pupil 1,520,808 35,049 1,555,857 Instructional staff 474,510 19,281 493,791 Board of education 23,120 23,120 Administration 1,344,416 32,021 1,376,437 Fiscal 460,701 10,431 471,132 Business 356,872 3,486 360,358 Operations and maintenance 1,436,973 1,436,973 Pupil transportation 629,214 13,100 642,314 Central 64,786 64,786 Operation of non-instructional services:

Food service operations 1,019,889 1,019,889 Other operation of non-instructional 124,110 656 124,766

Extracurricular activities 370,132 261,754 631,886 Facilities acquisition and construction 346,123 346,123 Debt service: Principal retirement 335,609 59,000 394,609 Interest and fiscal charges 14,307 2,433 16,740 Total disbursements 21,320,447 420,886 2,858,654 24,599,987

Excess of receipts over disbursements 1,528,076 152,395 127,418 1,807,889

Other financing sources (uses): Advances in 239,564 66,034 305,598 Advances (out) (66,034) (239,564) (305,598) Total other financing sources (uses) 173,530 (173,530)

Net change in fund balances 1,701,606 152,395 (46,112) 1,807,889

Fund balances at beginning of year 2,651,062 748,686 359,568 3,759,316 Fund balances at end of year $4,352,668 $901,081 $313,456 $5,567,205

FOR THE FISCAL YEAR ENDED JUNE 30, 2014



STATEMENT OF RECEIPTS, DISBURSEMENTS, AND CHANGES IN FUND BALANCES - CASH BASISGOVERNMENTAL FUNDS

19

Net change in fund balances - total governmental funds $1,807,889

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

An internal service fund used by management to charge the costs of insurance to individual funds is not reported in the district-wide statement of activities. Governmental fund disbursements and the related internal service fund receipts are eliminated. The net receipts (disbursements) of the internal service fund is allocated among the governmental activities. 131,461

Change in net cash position of governmental activities $1,939,350


CASH BASIS TO THE STATEMENT OF ACTIVITIES - CASH BASISFOR THE FISCAL YEAR ENDED JUNE 30, 2014


RECONCILIATION OF THE STATEMENT OF RECEIPTS, DISBURSEMENTS,AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS -

20

Variance withFinal Budget

PositiveOriginal Final Actual (Negative)

Receipts: From local sources: Property taxes $7,763,377 $7,908,000 $8,352,887 $444,887 Payment in lieu of taxes 1,279 1,279 1,279 Tuition 803,485 815,084 850,765 35,681 Transportation fees 9,026 9,194 9,711 517 Earnings on investments 23,398 23,834 25,281 1,447 Extracurricular 33,361 33,982 35,894 1,912 Rental income 13,864 14,122 14,917 795 Other local revenues 25,548 29,393 41,221 11,828 Intergovernmental - intermediate 340,750 347,122 366,722 19,600 Intergovernmental - state 12,030,844 12,254,967 12,944,403 689,436Total receipts 21,044,932 21,436,977 22,643,080 1,206,103

Disbursements: Current: Instruction: Regular 11,062,392 11,155,677 10,301,189 854,488 Special 3,724,458 3,810,430 3,565,295 245,135 Vocational 450,759 407,406 379,963 27,443 Other 21,252 40,348 31,760 8,588 Support services: Pupil 1,133,444 1,664,384 1,537,115 127,269 Instructional staff 466,066 528,664 488,812 39,852 Board of education 28,881 31,271 29,190 2,081 Administration 1,499,196 1,457,956 1,369,352 88,604 Fiscal 569,834 604,589 542,205 62,384 Business 228,834 252,460 234,163 18,297 Operations and maintenance 1,654,914 1,646,511 1,563,636 82,875 Pupil transportation 915,484 742,317 681,015 61,302 Central 237,511 106,012 65,826 40,186 Other non-instructional services 116,385 146,385 130,022 16,363 Extracurricular activities 475,000 455,000 379,285 75,715 Debt service: Principal 260,000 260,000 260,000 Interest and fiscal charges 12,870 12,870 12,870Total disbursements 22,857,280 23,322,280 21,571,698 1,750,582

Excess disbursements over receipts (1,812,348) (1,885,303) 1,071,382 2,956,685

Other financing sources (uses): Refund of prior year's expenditures 204,411 208,219 219,933 11,714 Transfers (out) (20,994) (20,994) (12,200) 8,794 Advances in 222,657 226,804 239,564 12,760 Advances (out) (254,006) (254,006) (66,034) 187,972Total other financing sources (uses) 152,068 160,023 381,263 221,240

Net change in fund balance (1,660,280) (1,725,280) 1,452,645 3,177,925

Fund balance at beginning of year 1,452,538 1,452,538 1,452,538Prior year encumbrances appropriated 644,410 644,410 644,410Fund balance at end of year $436,668 $371,668 $3,549,593 $3,177,925

FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Budgeted Amounts



STATEMENT OF RECEIPTS, DISBURSEMENTS, AND CHANGES INFUND BALANCE - BUDGET AND ACTUAL (BUDGETARY BASIS)

GENERAL FUND

21

Governmental Activities - Internal Service Fund

Assets: Equity in pooled cash and investments $3,760,363

Net cash position: Unrestricted $3,760,363



STATEMENT OF NET POSITION - CASH BASISPROPRIETARY FUND

JUNE 30, 2014

22

Governmental Activities - Internal Service Fund

Operating receipts: Charges for services $2,531,411Total operating receipts 2,531,411

Operating disbursements: Claims and administrative services 2,400,090 Total operating disbursements 2,400,090

Operating income 131,321

Non-operating receipts: Interest receipts 140 Total nonoperating receipts 140

Change in net cash position 131,461

Net cash position at beginning of year 3,628,902

Net cash position at end of year $3,760,363


STATEMENT OF RECEIPTS, DISBURSEMENTS ANDCHANGE IN NET POSITION - CASH BASIS

PROPRIETARY FUNDFOR THE FISCAL YEAR ENDED JUNE 30, 2014

23

Private-Purpose Trust

Scholarship AgencyAssets: Equity in pooled cash and investments $120,484 $56,478

Net cash position: Held in trust for scholarships 120,484 Held for student activities 56,478 Total net cash position $120,484 $56,478



FIDUCIARY FUNDSJUNE 30, 2014

STATEMENT OF FIDUCIARY NET POSITION - CASH BASIS

24

Private-Purpose Trust

ScholarshipAdditions: Interest $599

Deductions: Scholarships awarded 2,000

Change in net cash position (1,401)

Net cash position at beginning of year 121,885

Net cash position at end of year $120,484



FIDUCIARY FUNDFOR THE FISCAL YEAR ENDED JUNE 30, 2014

STATEMENT OF CHANGE IN FIDUCIARY NET POSITION - CASH BASIS

25

26



NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

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1. DESCRIPTION OF THE SCHOOL DISTRICT

Urbana City School District (the "District") is a political body incorporated and established for the purpose of exercising the rights and privileges conveyed to it by the constitution and laws of the State of Ohio.

The District is a city district as defined by Ohio Rev. Code Section 3311.02. The District operates under an elected Board of Education of five members and is responsible for the provision of public education to residents of the District.

The District currently operates 3 elementary schools (grades K – 5), 1 junior high (grades 6 – 8) and 1 high school (grades 9 – 12). The District is staffed by 78 non-certified and 155 certified personnel to provide services to approximately 2,198 students and other community members.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As discussed in Note 2.D, these financial statements are presented on the cash basis of accounting. The cash basis of accounting differs from accounting principles generally accepted in the United States of America (GAAP). GAAP includes all relevant Governmental Accounting Standards Board (GASB) pronouncements, which have been applied to the extent they are applicable to the cash basis of accounting. Following are the more significant of the District’s accounting policies.

A. Reporting Entity

The reporting entity has been defined in accordance with GASB Statement No. 14, “The Financial Reporting Entity” as amended by GASB Statement No. 39, “Determining Whether Certain Organizations Are Component Units”, and GASB Statement No. 61, “The Financial Reporting Entity: Omnibus”. The reporting entity is composed of the primary government and component units. The primary government consists of all funds, departments, boards and agencies that are not legally separate from the District. For the District, this includes general operations, food service, and student related activities of the District.

Component units are legally separate organizations for which the District is financially accountable. The District is financially accountable for an organization if the District appoints a voting majority of the organization’s governing board and (1) the District is able to significantly influence the programs or services performed or provided by the organization; or (2) the District is legally entitled to or can otherwise access the organization’s resources; or (3) the District is legally obligated or has otherwise assumed the responsibility to finance the deficits of, or provide financial support to, the organization; or (4) the District is obligated for the debt of the organization. Component units may also include organizations that are fiscally dependent on the District in that the District approves the budget, the issuance of debt or the levying of taxes when the District’s relationship with the organization further results in a financial benefit or burden of the District. Certain organizations are also included as component units if the nature and significance of the relationship between the primary government and the organization is such that exclusion by the primary government would render the primary governments financial statements incomplete or misleading. Based upon the application of these criteria, the District has one component unit.



(Continued)

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The following organizations are described due to their relationship to the District:

1. Discretely Presented Component Unit

The Urbana Community School

The Urbana Community School (the “School”) is a legally separate, conversion community school, served by a Board of Directors. The School provides students within the District with curriculum and instruction via distance learning technology. The Board of Directors is comprised of five members. The Urbana City School District is the sponsoring District of the School under Ohio Revised Code Chapter 3314. The superintendent of the District serves as the Chief Administrative Officer of the School and the Treasurer serves as the Chief Financial Officer. Based on the significant services provided by the District to the School, the School’s purpose of servicing the students within the District, and the relationship between the Board of Education of the District and the Board of Directors of the School, the School is a component unit of the District. See Note 18 for detail on the School.

Separately issued financial statements can be obtained from the Treasurer of the School at 711 Wood Street, Urbana, Ohio 43078.

2. Jointly Governed Organizations

Western Ohio Computer Organization

The District is a participant in the Western Ohio Computer Organization (WOCO), which is a computer consortium. WOCO is an association of public school districts within the boundaries of Auglaize, Champaign, Hardin, Logan and Shelby counties. WOCO was formed for the purpose of applying modern technology (with the aid of computers and other electronic equipment) to administrative and instructional functions among member districts.

The superintendent of each member district is seated in the assembly, which elects a Board of Directors for the Consortium, and approves major items proposed by the Board of Directors, such as the annual budget, fees schedule, and new cooperative ventures. The Board of Directors is comprised of 14 members, including two superintendents from member districts in each county and the superintendent of the entity serving as its fiscal agent (currently the Shelby County Educational Service Center). Financial information is available from Keith Thomas, Treasurer and Chief Financial Officer, 129 East Court Street, Sidney, Ohio 45265.

Metropolitan Educational Council

The Metropolitan Educational Council (MEC) is a purchasing cooperative made up of nearly 124 districts in 22 counties. The purpose of the cooperative is to obtain prices for quality merchandise and services commonly used by schools. All member districts are obligated to pay all fees, charges, or other assessments as established by MEC. The Governing Board of MEC consists of one voting representative from each member district. The District paid $1,340 to MEC during fiscal year 2014. Financial information is available from James Grube, Director, 2100 Citygate Dr., Columbus, Ohio 43219.



(Continued)

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Ohio Hi-Point Joint Vocational School District

The Ohio Hi-Point Joint Vocational School District (JVS) is a distinct political subdivision of the State of Ohio. The JVS is operated under the direction of a Board consisting of one representative from each of the participating school districts’ elected boards. The Board possesses its own budgeting and taxing authority. Financial information is available from Eric Adelsberger, Treasurer, of the Ohio Hi-Point Joint Vocational School District, 2280 State Route 540, Suite A, Bellefontaine, Ohio 43311.

3. Insurance Purchasing Pool

Workers’ Compensation Group Rating Plan

The District participates in the Better Business Bureau of Central Ohio group rating plan for workers’ compensation as established under Section 4123.29 of the Ohio Revised Code. The Better Business Bureau of Central Ohio is governed by a Board of Directors, consisting of four officers and twenty-three directors from area businesses and organizations.

B. Fund Accounting

The District uses funds to maintain its financial records during the year. A fund is defined as a fiscal and accounting entity with a self balancing set of accounts. There are three categories of funds: governmental, proprietary and fiduciary.

1. Governmental Funds

Governmental funds are those through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used. The following are the District’s major governmental funds:

General fund -The general fund is used to account for and report all financial resources not accounted for and reported in another fund. The general fund balance is available for any purpose provided it is expended or transferred according to the general laws of Ohio.

Permanent improvement fund - The permanent improvement fund is used to account for financial resources that are restricted to expenditures for the acquisition or construction of capital facilities and other capital assets.

Other governmental funds of the District are used to account for specific revenue sources that are restricted or committed to an expenditure for specified purposes other than debt service or capital projects.

2. Proprietary Fund

Proprietary funds are used to account for the District’s ongoing activities which are similar to those often found in the private sector. The District has no enterprise funds. The following is a description of the District’s internal service fund:



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Internal service fund - The internal service fund is used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the district, or to other governments, on a cost-reimbursement basis. The only internal service fund of the District accounts for a self-insurance program which provides medical/surgical benefits to employees.

3. Fiduciary Funds

Fiduciary fund reporting focuses on net cash assets and changes in net position. The fiduciary fund category is split into four classifications: pension trust funds, investment trust funds, private-purpose trust funds and agency funds. Trust funds are used to account for assets held by the District under a trust agreement for individuals, private organizations, or other governments and are therefore not available to support the District’s own programs. The District’s only trust fund is a private-purpose trust which accounts for scholarship programs for students. Agency funds are custodial in nature and do not involve measurement of results of operations. The District’s agency funds account for student activities.

C. Basis of Presentation

1. Government-wide Financial Statements

The statement of net position and the statement of activities display information about the District as a whole. These statements include the financial activities of the primary government, except for fiduciary funds. Internal service fund operating activity is eliminated to avoid overstatement of receipts and disbursements.

The government-wide statement of activities presents a comparison between direct disbursements and program receipts for each function or program of the governmental activities of the District. Direct disbursements are those that are specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Program receipts include amounts paid by the recipient of goods or services offered by the program and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Receipts not classified as program receipts are presented as general receipts of the District.

All assets and net position associated with the operation of the District are included on the statement of net position.

2. Fund Financial Statements

Fund financial statements report detailed information about the District. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column, and all nonmajor funds are aggregated into one column. The internal service fund is presented in a single column on the face of the proprietary fund statements. Fiduciary funds are reported by fund type.



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D. Basis of Accounting

Although Ohio Administrative Code §117-2-03(B) requires the District’s financial report to follow generally accepted accounting principles, the District chooses to prepare its financial statements and notes in accordance with the cash basis of accounting, which is a financial reporting framework other than generally accepted accounting principles in the United States of America. The District recognizes receipts when received in cash rather than when earned and recognizes disbursements when paid rather than when a liability is incurred.

Budgetary presentations report budgetary cash disbursements when a commitment is made (i.e. when an encumbrance is approved). The difference between disbursements reported in the fund and entity wide statements and disbursements reported in the budgetary statements are due to current year encumbrances being added to disbursements reported on the budgetary statements.

These statements include adequate disclosure of material matters, in accordance with the basis of accounting described in the preceding paragraph.

E. Budgets

The budgetary process is prescribed by provisions of the Ohio Revised Code and entails the preparation of budgetary documents within an established timetable. The major documents prepared are the tax budget, the certificate of estimated resources and the appropriation resolution, all of which are prepared on the budgetary basis of accounting. The certificate of estimated resources and the appropriation resolution are subject to amendment throughout the year with the legal restriction that appropriations cannot exceed estimated resources, as certified. The specific timetable for fiscal year 2014 is as follows:

1. Prior to January 15, the Superintendent and Treasurer submit to the Board of Education a proposed operating budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing for all funds. Public hearings are publicized and conducted to obtain taxpayers’ comments. The purpose of this budget document is to reflect the need for existing (or increased) tax rates.

2. By no later than January 20, the Board-adopted budget is filed with the Champaign County Budget Commission for tax rate determination.

3. Prior to April 1, the Board of Education accepts, by formal resolution, the tax rates as determined by the Budget Commission and receives the Commission’s certificate of estimated resources which states the projected revenue of each fund. Prior to July 1, the District must revise its budget so that total contemplated expenditures from any fund during the ensuing year will not exceed the amount stated in the certificate of estimated resources. The revised budget then serves as a basis for the appropriation measure. On or about July 1, the certificate of estimated resources is amended to include any unencumbered balances from the preceding year as reported by the District Treasurer. The certificate of estimated resources may be further amended during the year if projected increases or decreases in revenue are identified by the District Treasurer. The budget figures, as shown in the accompanying budgetary statement, reflect the amounts set forth in the original and final certificate of estimated resources issued for fiscal year 2014.



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4. By July 1, the annual appropriation resolution is legally enacted by the Board of Education at the fund and function level of expenditures for the general fund and the permanent improvement funds, and the fund level for all other funds, which are the legal levels of budgetary control. (State statute permits a temporary appropriation to be effective until no later than October 1 of each year.) Resolution appropriations by fund must be within the estimated resources as certified by the County Budget Commission and the total of expenditures and encumbrances may not exceed the appropriation totals.

5. All funds, other than agency funds, are legally required to be budgeted and appropriated. Short-term interfund loans are not required to be budgeted since they represent a temporary cash flow resource, and are intended to be repaid.

6. Any revisions that alter the total of any fund appropriation for all funds or alter total function appropriations within the general fund or permanent improvement fund must be approved by the Board of Education.

7. Formal budgetary integration is employed as a management control device during the year for all funds consistent with the general obligation bond indenture and other statutory provisions. All departments/functions and funds completed the year within the amount of their legally authorized cash basis appropriation.

8. Appropriations amounts are as originally adopted, or as amended by the Board of Education through the year by supplemental appropriations, which either reallocated or increased the original appropriated amounts. All supplemental appropriations were legally enacted by the Board.

9. Unencumbered appropriations lapse at year-end. Encumbered appropriations are carried forward to the succeeding fiscal year and need not be reappropriated. Expenditures plus encumbrances may not legally exceed budgeted appropriations at the fund and/or function level.

F. Cash and Investments

To improve cash management, cash received by the District is pooled. Monies for all funds, including proprietary funds, are maintained in this pool. Individual fund integrity is maintained through the District’s records. Each fund’s interest in the pool is presented as “equity in pooled cash and investments” on the basic financial statements.

During fiscal year 2014, investments were limited to the State Treasury Asset Reserve of Ohio (STAR Ohio), negotiable and non-negotiable certificates of deposit and U.S. government money market mutual funds. With the exception of STAR Ohio, investments are reported at cost.

STAR Ohio is an investment pool managed by the State Treasurer’s Office, which allows governments within the state to pool their funds for investment purposes. STAR Ohio is not registered with the SEC as an investment company, but does operate in a manner consistent with Rule 2a7 of the Investment Company Act of 1940. Investments in STAR Ohio are valued at STAR Ohio’s shares price which is the price at which the investment could be sold on June 30, 2014.



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Under existing Ohio statutes all investment earnings are assigned to the general fund unless statutorily required to be credited to a specific fund. Interest revenue credited to the general fund during fiscal year 2014 amounted to $25,281, which includes $14,676 assigned from other funds.

For presentation on the basic financial statements, investments of the cash management pool and investments with original maturities of three months or less at the time they are purchased by the District are considered to be cash equivalents. Investments with an initial maturity of more than three months are reported as investments.

An analysis of the District’s investment account at year end is provided in Note 4.

G. Inventory and Prepaid Items

The District reports disbursements for inventory and prepaid items when paid. These items are not reflected as assets in the accompanying financial statements.

H. Capital Assets

Acquisitions of property, plant, and equipment purchased are recorded as disbursements when paid. These items are not reflected as assets on the accompanying financial statements.

I. Interfund Balances

On fund financial statements, the District reports advances in and advances out for interfund loans. These items are not reflected as assets and liabilities in the accompanying fund financial statements under the cash basis of accounting. Advances are eliminated in the governmental activities column on the statement of net position.

J. Compensated Absences

Compensated absences of the District consist of vacation leave and sick leave. Employees are entitled to cash payments for unused vacation and sick leave in certain circumstances, such as upon leaving employment. Unpaid vacation and sick leave are not reflected as liabilities under the cash basis of accounting.

K. Employer Contributions to Cost-Sharing Pension Plans

The District recognizes the disbursements for employer contributions to cost-sharing pension plans when they are paid. As described in Notes 12 and 13, the employer contributions include portions for pension benefits and for post-employment health care benefits.

L. Long-Term Obligations

Loans and other long-term obligations are not recognized as a liability in the financial statements under the cash basis of accounting. These statements report proceeds of debt when cash is received, and debt service disbursements for debt principal payments.



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M. Fund Balance

Fund balance is divided into five classifications based primarily on the extent to which the District is bound to observe constraints imposed upon the use of the resources in the governmental funds. The classifications are as follows:

Non-spendable - The non-spendable fund balance classification includes amounts that cannot be spent because they are not in spendable form or legally required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash.

Restricted - Fund balance is reported as restricted when constraints are placed on the use of resources that are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments, or imposed by law through constitutional provisions or enabling legislation.

Committed - The committed fund balance classification includes amounts that can be used only for the specific purposes imposed by a formal action (resolution) of the District Board of Education (the highest level of decision making authority). Those committed amounts cannot be used for any other purpose unless the District Board of Education removes or changes the specified use by taking the same type of action (resolution) it employed to previously commit those amounts. Committed fund balance also incorporates contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.

Assigned - Amounts in the assigned fund balance classification are intended to be used by the District for specific purposes but do not meet the criteria to be classified as restricted nor committed. In governmental funds other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed. In the general fund, assigned amounts represent intended uses established by policies of the District Board of Education, which includes giving the Treasurer the authority to constrain monies for intended purposes.

Unassigned - Unassigned fund balance is the residual classification for the general fund and includes all spendable amounts not contained in the other classifications. In other governmental funds, the unassigned classification is only used to report a deficit fund balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned.

The District applies restricted resources first when disbursements are incurred for purposes for which restricted and unrestricted (committed, assigned, and unassigned) fund balance is available. Similarly, within unrestricted fund balance, committed amounts are reduced first followed by assigned, and then unassigned amounts when disbursements are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used.



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N. Net Cash Position

Net cash position is reported as restricted when there are limitations imposed on its use either through the enabling legislation or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Net cash position restricted for other purposes includes monies restricted by State statute for school bus purchases and food service operations.

The District applies restricted resources first when an expense is incurred for purposes for which both restricted and unrestricted net position is available.

O. Restricted Assets

Restricted assets in the general fund represent cash and cash equivalents received from the State and are restricted for school bus purchases. A schedule of statutory set-asides is presented in Note 16.

P. Interfund Activity

Exchange transactions between funds are reported as receipts in the seller funds and as disbursements in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds and after non-operating receipts/disbursements in the proprietary fund. Repayments from funds responsible for particular expenditures to the funds that initially paid for them are not presented on the basic financial statements.

Q. Budget Stabilization Arrangement

The District has established a budget stabilization reserve in accordance with authority established by State law. Additions to the budget stabilization reserve can only be made by formal resolution of the Board of Education. Expenditures out of the budget stabilization reserve can only be made to offset future budget deficits. At June 30, 2014, the balance in the budget stabilization reserve was $366,608. This amount is included in unassigned fund balance of the general fund and in unrestricted net cash position on the statement of net position.

R. Extraordinary and Special Items

Extraordinary items are transactions or events that are both unusual in nature and infrequent in occurrence. Special items are transactions or events that are within the control of the Board of Education and that are either unusual in nature or infrequent in occurrence. Neither type of transaction occurred during fiscal year 2014.



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3. ACCOUNTABILITY AND COMPLIANCE

A. Change in Accounting Principles

For fiscal year 2014, the District has implemented GASB Statement No. 67, “Financial Reporting for Pension Plans - an amendment of GASB Statement No. 25”, and GASB Statement No. 70, “Accounting and Financial Reporting for Non-exchange Financial Guarantees”.

GASB Statement No. 67 improves the usefulness of pension information included in the general purpose external financial reports of state and local governmental pension plans for making decisions and assessing accountability. The implementation of GASB Statement No. 67 did not have an effect on the financial statements of the District.

GASB Statement No. 70 improves the recognition, measurement, and disclosures for state and local governments that have extended or received financial guarantees that are non-exchange transactions. The implementation of GASB Statement No. 70 did not have an effect on the financial statements of the District.

B. Compliance

Ohio Administrative Code, §117-2-03(B), requires that the District prepare its annual financial report in accordance with generally accepted accounting principles. However, the District prepared its financial statements on a cash basis, which is a financial reporting framework other than accounting principles generally accepted in the United States of America. The accompanying financial statements omit assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position/fund balances, and disclosures that, while material, cannot be determined at this time. The District can be fined and various other administrative remedies may be taken against the District.

4. DEPOSITS AND INVESTMENTS

State statutes classify monies held by the District into three categories.

Active deposits are public deposits necessary to meet current demands on the treasury. Such monies must be maintained either as cash in the District treasury, in commercial accounts payable or withdrawable on demand, including negotiable order of withdrawal (NOW) accounts, or in money market deposit accounts.

Inactive deposits are public deposits that the Board of Education has identified as not required for use within the current five year period of designation of depositories. Inactive deposits must either be evidenced by certificates of deposit maturing not later than the end of the current period of designation of depositories, or by savings or deposit accounts including, but not limited to, passbook accounts.

Interim deposits are deposits of interim monies. Interim monies are those monies which are not needed for immediate use, but which will be needed before the end of the current period of designation of depositories.

Interim deposits must be evidenced by time certificates of deposit maturing not more than one year from the date of deposit or by savings or deposit accounts including passbook accounts.



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4. DEPOSITS AND INVESTMENTS (Continued)

Interim monies may be deposited or invested in the following securities:

1. United States Treasury Notes, Bills, Bonds, or any other obligation or security issued by the United States Treasury or any other obligation guaranteed as to principal and interest by the United States;

2. Bonds, notes, debentures, or any other obligations or securities issued by any federal government agency or instrumentality, including, but not limited to, the Federal National Mortgage Association, Federal Home Loan Bank, Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation, Government National Mortgage Association, and Student Loan Marketing Association. All federal agency securities shall be direct issuances of federal government agencies or instrumentalities;

3. Written repurchase agreements in the securities listed above provided that the market value of the securities subject to the repurchase agreement must exceed the principal value of the agreement by at least two percent and be marked to market daily, and that the term of the agreement must not exceed thirty days;

4. Bonds and other obligations of the State of Ohio;

5. No-load money market mutual funds consisting exclusively of obligations described in items (1) and (2) above and repurchase agreements secured by such obligations, provided that investments in securities described in this division are made only through eligible institutions;

6. The State Treasurer's investment pool (STAR Ohio);

7. Certain banker’s acceptance and commercial paper notes for a period not to exceed one hundred eighty days from the purchase date in an amount not to exceed twenty-five percent of the interim monies available for investment at any one time; and,

8. Under limited circumstances, corporate debt interests rated in either of the two highest classifications by at least two nationally recognized rating agencies.

Protection of the District's deposits is provided by the Federal Deposit Insurance Corporation (FDIC), by eligible securities pledged by the financial institution as security for repayment, by surety company bonds deposited with the Treasurer by the financial institution or by a single collateral pool established by the financial institution to secure the repayment of all public monies deposited with the institution.

Investments in stripped principal or interest obligations, reverse repurchase agreements and derivatives are prohibited. The issuance of taxable notes for the purpose of arbitrage, the use of leverage and short selling are also prohibited. An investment must mature within five years from the date of purchase unless matched to a specific obligation or debt of the District, and must be purchased with the expectation that it will be held to maturity. Investments may only be made through specified dealers and institutions. Payment for investments may be made only upon delivery of the securities representing the investments to the Treasurer or, if the securities are not represented by a certificate, upon receipt of confirmation of transfer from the custodian.



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A. Cash on Hand

At fiscal year end, the District had $2,100 in un-deposited cash on hand which is included on the financial statements of the District as part of “equity in pooled cash, cash equivalents and investments.”

B. Deposits with Financial Institutions

At June 30, 2014, the carrying amount of all District deposits was $6,784,799. Based on the criteria described in GASB Statement No. 40, “Deposits and Investment Risk Disclosures”, as of June 30, 2014, $6,297,593 of the District’s bank balance of $6,926,213 was exposed to custodial risk as discussed below, while $628,620 was covered by the FDIC.

Custodial credit risk is the risk that, in the event of bank failure, the District’s deposits may not be returned. All deposits are collateralized with eligible securities in amounts equal to at least 105% of the carrying value of the deposits. Such collateral, as permitted by the Ohio Revised Code, is held in single financial institution collateral pools at Federal Reserve Banks, or at member banks of the federal reserve system, in the name of the respective depository bank and pledged as a pool of collateral against all of the public deposits it holds or as specific collateral held at the Federal Reserve Bank in the name of the District. The District has no deposit policy for custodial credit risk beyond the requirements of State statute. Although the securities were held by the pledging institutions’ trust department and all statutory requirements for the deposit of money had been followed, noncompliance with federal requirements could potentially subject the District to a successful claim by the FDIC.

C. Investments

As of June 30, 2014, the District had the following investments and maturities:

Investment Maturities At Fair Value

Carrying Fair 6 Months or 7 to 12 Investment Type Value Value Less Months Negotiable certificates of deposit $999,378 $999,378 $499,810 $499,568 U.S. Government money market mutual fund 1,693,253 1,693,253 1,693,253 STAR Ohio 25,000 25,000 25,000 Total $2,717,631 $2,717,631 $2,218,063 $499,568

The weighted average maturity of investments is 0.17 years.

Interest Rate Risk: As a means of limiting its exposure to fair value losses arising from rising interest rates and according to State law, the District’s investment policy limits investment portfolio maturities to five years or less.

Credit Risk: STAR Ohio and U.S. Government money market mutual funds carry a rating of AAAm by Standard & Poor’s. Ohio law requires that STAR Ohio maintain the highest rating provided by at least one nationally recognized standard rating service. The District’s investment policy does not specifically address credit risk beyond requiring the District to only invest in securities authorized by State statute.



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Custodial Credit Risk: For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The federal agency securities are exposed to custodial credit risk in that they are uninsured, unregistered and held by the counterparty’s trust department or agent, but not in the District’s name. The District has no investment policy dealing with investment custodial risk beyond the requirement in State statute that prohibits payment for investments prior to the delivery of the securities representing such investments to the Treasurer or qualified trustee.

Concentration of Credit Risk: The District places no limit on the amount that may be invested in any one issuer. The following table includes the percentage of each investment type held by the District at June 30, 2014:

Investment Type Carrying Value % of Total Negotiable certificates of deposit $999,378 36.77 U.S. Government money market mutual fund 1,693,253 62.31 STAR Ohio 25,000 0.92 Total $2,717,631 100.00

D. Reconciliation of Cash and Investments to the Statement of Net Position

The following is a reconciliation of cash and investments as reported in the note above to cash and investments as reported on the statement of net position as of June 30, 2014:

Cash and investments per note: Carrying amount of deposits $6,784,799 Investments 2,717,631 Cash on hand 2,100 Total $9,504,530

Cash per statement of net position: Governmental activities $9,327,568 Private-purpose trust 120,484 Agency fund 56,478 Total $9,504,530

5. INTERFUND TRANSACTIONS

Advances for the fiscal year ended June 30, 2014, as reported on the fund statements, consist of the following:

Advances to the general fund from: Non-major governmental funds $239,564

Advances to non-major governmental funds from: General fund 66,034

Total $305,598

These advances will be repaid once the anticipated funds are received. Interfund advances between governmental funds are eliminated on the government-wide financial statements.



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6. PROPERTY TAXES

Property taxes are levied and assessed on a calendar year basis while the District fiscal year runs from July through June. First half tax collections are received by the District in the second half of the fiscal year. Second half tax distributions occur in the first half of the following fiscal year.

Property taxes include amounts levied against all real property and public utility property. Real property tax revenues received in calendar year 2014 represent the collection of calendar year 2013 taxes. Real property taxes received in calendar year 2014 were levied after April 1, 2013, on the assessed values as of January 1, 2013, the lien date. Assessed values for real property taxes are established by State statute at 35 percent of appraised market value. Real property taxes are payable annually or semiannually. If paid annually, payment is due December 31; if paid semiannually, the first payment is due December 31, with the remainder payable by June 20. Under certain circumstances, State statute permits alternate payment dates to be established. Public utility property tax revenues received in calendar year 2014 represent the collection of calendar year 2013 taxes. Public utility real and personal property taxes received in calendar year 2014 became a lien on December 31, 2012, were levied after April 1, 2013, and are collected with real property taxes. Public utility real property is assessed at 35 percent of true value; public utility tangible personal property is currently assessed at varying percentages of true value.

The District receives property taxes from Champaign County. The County Auditor periodically advances to the District its portion of the taxes collected. Second-half real property tax payments collected by the County by June 30, 2014, are available to finance fiscal year 2014 operations. The amount of second-half real property taxes available for advance at fiscal year-end can vary based on the date the tax bills are sent.

The assessed values upon which the fiscal year 2014 taxes were collected are:

2013 Second 2014 First Half Collections Half Collections

Amount Percent Amount PercentAgricultural/residential and other real estate $246,921,470 95.43 $253,867,980 95.71Public utility personal 11,826,960 4.57 11,379,400 4.29 Total $258,748,430 100.00 $265,247,380 100.00Tax rate per $1,000 of assessed valuation $68.05 $68.05

7. PAYMENT IN LIEU OF TAXES

The District has entered into tax incremental financing agreements with local companies. These companies were granted reductions or exemptions from property tax obligations to encourage economic development in the area; however, as part of these agreements, the companies make payments in lieu of taxes to the District to compensate the District for its portion of the reduction in property tax receipts. On the governmental fund financial statements, payment in lieu of taxes receipts totaled $1,279 in the general fund during fiscal year 2014.

8. CAPITALIZED LEASES - LESSEE DISCLOSURE

The District has entered into capitalized leases for modular classrooms, land, and computer equipment. Capital lease payments have been reclassified and are reflected as debt service expenditures in the financial statements for the governmental funds. These expenditures are reported as function expenditures on the budgetary statements. Principal payments in fiscal year 2014 totaled $75,609 paid by the general fund and $29,000 paid by the permanent improvement fund.



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9. LONG-TERM OBLIGATIONS

A. During the fiscal year 2014, the following activity occurred in governmental activities long-term obligations:

Balance BalanceOutstanding Outstanding

June 30, 2013 Additions Reductions June 30, 2014Governmental activities: Energy conservation notes 30,000$ -$ (30,000)$ -$ Capital lease obligation 104,609 - (104,609) - Total long-term obligations, governmental activities 134,609$ -$ (134,609)$ -$

B. On December 1, 1999, the District issued energy conservation notes at an interest rate of 5.60%. The energy conservation notes matured on June 1, 2014.

Energy conservation notes outstanding are general obligations of the District, for which the District’s full faith and credit are pledged for repayment. Payments of principal and interest relating to these notes are recorded as expenditures in the debt service fund; however, unlike general obligation bonds, Ohio statute allows for the issuance of energy conservation notes without voter approval, and the subsequent repayment of the notes from operating revenues.

C. Legal Debt Margin

The Ohio Revised Code provides that voted net general obligation debt of the District shall never exceed 9% of the total assessed valuation of the District. The code further provides that unvoted indebtedness shall not exceed 1/10 of 1% of the property valuation of the District. The code additionally states that unvoted indebtedness related to energy conservation debt shall not exceed 9/10 of 1% of the property valuation of the District. The assessed valuation used in determining the District’s legal debt margin has been modified by House Bill 530 which became effective March 30, 2006. In accordance with House Bill 530, the assessed valuation used in the District’s legal debt margin calculation excluded tangible personal property used in business, telephone or telegraph property, interexchange telecommunications company property, and personal property owned or leased by a railroad company and used in railroad operations. The effects of these debt limitations at June 30, 2014, are a voted debt margin of $23,872,264 and an un-voted debt margin of $265,247.

10. NOTES PAYABLE

During fiscal year 2008, the District issued $1,300,000 in tax anticipation notes to fund operations. The proceeds were deposited in the general fund. These notes carry an interest rate of 4.95% and matured on November 1, 2013. Activity during the fiscal year was as follows:

Balance Balance 6/30/2013 Additions Reductions 6/30/2014

Tax anticipation notes $260,000 $0 ($260,000) $0

Debt service payments to repay the tax anticipation notes were made from the general fund.



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11. RISK MANAGEMENT

A. Comprehensive and Employee Health

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 has obtained risk management by traditional means of insuring through a commercial company.

With the exception of a deductible, the risk of loss transfers entirely from the District to the commercial company. The District has obtained commercial insurance for the following risks:

� Education Liability Policy � Business Auto Coverage � Commercial Property Coverage � Commercial Crime Coverage � Inland Marine Coverage

The District provides medical/surgical benefits through a self-insurance program. The District maintains a self-insurance internal service fund to account for and finance its required claims/fee payments and reserves for this program to its employees. Monthly premiums are paid from the fund from which each employee is paid. This plan provides two types of medical insurance plans for its employees. The traditional PPO plan has a $500 family and $250 single deductible. The board also offers a high deductible health plan with a family deductible of $5,000 and a single deductible of $2,500. A third party administrator, Mutual Health Services, Inc., reviews all claims, which are then paid by the District. The District purchases stop-loss coverage of $75,000 per employee per year, and $1.0 million group aggregate for fiscal year 2014. The premiums are paid by the District at a rate of 90% for all teaching employees and at a rate of either 85%, 65%, or 60% for classified staff. Administrators’ premiums are paid 85% by the District. The premium is paid by the fund that paid the salary for the employee and is based on historical cost information.

On January 1, 2013, the District began offering a High Deductible Health Care Plan (HDHP) and a Health Savings Account (HSA) in addition to the traditional preferred provider organization insurance option to qualifying administrative and non-bargaining employees. The District’s contributions to the HAS for administrators were $1,500 for individuals and $3,000 for families, and the District’s contributions to the HAS for all other staff enrolled were $1,250 for individuals and $2,500 for families.

Claims of $363,686 are due to be paid from the internal service fund at June 30, 2014. The claims liability is based on an estimate supplied by the District’s third party administrator, and includes estimates of costs relating to incurred but not reported claims.

Changes in claims due for the current and prior fiscal year are as follows:

Balance at Current Year Claims & Claim Balance at Beginning of Year Changes in Estimates Payments End of Year

2014 $407,053 $2,356,723 ($2,400,090) $363,686 2013 197,310 2,377,113 (2,167,370) 407,053

The District continues to carry commercial insurance for all others risks of loss. Settled claims resulting from these risks have not exceeded commercial insurance in any of the past three fiscal years. There has been no significant reduction in amounts of insurance coverage from fiscal year 2012.



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11. RISK MANAGEMENT (Continued)

Post-employment health care is provided to plan participants or their beneficiaries through the respective retirement systems discussed in Note 13. As such, no funding provisions are required by the District.

B. Workers’ Compensation

For fiscal year 2014, the District participated in the Better Business Bureau of Central Ohio Group Retrospective Rating Plan (the “GRP”) through Sheakley. The intent of the GRP is to achieve the benefit of a reduced premium for the District by virtue of its grouping and representation with other participants in the GRP. The workers’ compensation experience of the participating entities is calculated as one experience and a common premium rate is applied to all school districts in the GRP. Each participant pays its workers’ compensation premium to the State based on the rate for the GRP rather than its individual rate. The firm of Sheakley Uniservice provides administrative, cost control and actuarial services to the GRP. The retrospective plan provides the possibility of increased refund amounts based on look-back performance of the group.

12. PENSION PLANS

A. School Employees Retirement System

Plan Description - The District contributes to the School Employees Retirement System (SERS), a cost-sharing, multiple-employer defined benefit pension plan. SERS provides retirement, disability, survivor benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Authority to establish and amend benefits is provided by Chapter 3309 of the Ohio Revised Code. SERS issues a publicly available, stand-alone financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the School Employees Retirement System, 300 East Broad Street, Suite 100, Columbus, Ohio 43215-3746. It is also posted on the SERS’ Ohio website, www.ohsers.org, under “Employers/Audit Resources”.

Funding Policy - Plan members are required to contribute 10 percent of their annual covered salary and the District is required to contribute at an actuarially determined rate. The current District rate is 14 percent of annual covered payroll. A portion of the District’s contribution is used to fund pension obligations with the remainder being used to fund health care benefits. For fiscal year 2014, 13.05 percent and 0.05 percent of annual covered salary was the portion used to fund pension obligations and death benefits, respectively. The contribution requirements of plan members and employers are established and may be amended by the SERS’ Retirement Board up to a statutory maximum amount of 14 percent for plan members and 14 percent for employers. Chapter 3309 of the Ohio Revised Code provides statutory authority for member and employer contributions. The District’s required contributions for pension obligations and death benefits to SERS for the fiscal years ended June 30, 2014, 2013 and 2012 were $241,643, $258,120 and $261,204, respectively; 79.35 percent has been contributed for fiscal year 2014 and 100 percent for fiscal years 2013 and 2012.



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12. PENSION PLANS (Continued)

B. State Teachers Retirement System of Ohio

Plan Description - The District participates in the State Teachers Retirement System of Ohio (STRS Ohio), a cost-sharing, multiple-employer public employee retirement plan. STRS Ohio provides retirement and disability benefits to members and death and survivor benefits to beneficiaries. STRS Ohio issues a stand-alone financial report that may be obtained by writing to STRS Ohio, 275 E. Broad St., Columbus, OH 43215-3771, by calling (888) 227-7877, or by visiting the STRS Ohio website at www.strsoh.org, under “Publications”.

New members have a choice of three retirement plans, a Defined Benefit (DB) Plan, a Defined Contribution (DC) Plan and a Combined Plan. The DB plan offers an annual retirement allowance based on final average salary times a percentage that varies based on years of service, or an allowance based on a member’s lifetime contributions and earned interest matched by STRS Ohio funds divided by an actuarially determined annuity factor. The DC Plan allows members to place all their member contributions and employer contributions equal to 10.5 percent of earned compensation into an investment account. Investment decisions are made by the member. A member is eligible to receive a retirement benefit at age 50 and termination of employment. The member may elect to receive a lifetime monthly annuity or a lump sum withdrawal. The Combined Plan offers features of both the DC Plan and the DB Plan. In the Combined Plan, member contributions are invested by the member, and employer contributions are used to fund the defined benefit payment at a reduced level from the regular DB Plan. The DB portion of the Combined Plan payment is payable to a member on or after age 60; the DC portion of the account may be taken as a lump sum or converted to a lifetime monthly annuity at age 50. Benefits are established by Chapter 3307 of the Ohio Revised Code.

A DB or Combined Plan member with five or more years credited service who becomes disabled may qualify for a disability benefit. Eligible spouses and dependents of these active members who die before retirement may qualify for survivor benefits. Members in the DC Plan who become disabled are entitled only to their account balance. If a member of the DC Plan dies before retirement benefits begin, the member’s designated beneficiary is entitled to receive the member’s account balance.

Funding Policy - For fiscal year 2014, plan members were required to contribute 11 percent of their annual covered salaries. The District was required to contribute 14 percent; 13 percent was the portion used to fund pension obligations. Contribution rates are established by the State Teachers Retirement Board, upon recommendations of its consulting actuary, not to exceed statutory maximum rates of 14 percent for members and 14 percent for employers. Chapter 3307 of the Ohio Revised Code provides statutory authority for member and employer contributions.

The District’s required contributions for pension obligations to STRS Ohio for the fiscal years ended June 30, 2014, 2013 and 2012 were $1,214,974, $1,217,314 and $1,303,090, respectively; 86.22 percent has been contributed for fiscal year 2014 and 100 percent for fiscal years 2013 and 2012.

C. Social Security System

Effective July 1, 1991, all employees not otherwise covered by the SERS/STRS Ohio have an option to choose Social Security or the SERS/STRS Ohio. As of June 30, 2014 certain members of the Board of Education have elected Social Security. The District’s liability is 6.2 percent of wages paid.



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13. POST-EMPLOYMENT BENEFITS

A. School Employees Retirement System

Plan Description - The District participates in two cost-sharing, multiple employer postemployment benefit plans administered by the School Employees Retirement System (SERS) for non-certificated retirees and their beneficiaries, a Health Care Plan and a Medicare Part B Plan. The Health Care Plan includes hospitalization and physicians' fees through several types of plans including HMO’s, PPO’s, Medicare Advantage, and traditional indemnity plans. A prescription drug program is also available to those who elect health coverage. SERS employs two third-party administrators and a pharmacy benefit manager to manage the self-insurance and prescription drug plans, respectively. The Medicare Part B Plan reimburses Medicare Part B premiums paid by eligible retirees and beneficiaries as set forth in Section 3309.69 of the Ohio Revised Code. Qualified benefit recipients who pay Medicare Part B premiums may apply for and receive a monthly reimbursement from SERS. The reimbursement amount is limited by statute to the lesser of the January 1, 1999 Medicare Part B premium or the current premium. The Medicare Part B monthly premium for calendar year 2014 was $104.90 for most participants, but could be as high as $335.70 per month depending on their income and the SERS’ reimbursement to retirees was $45.50. Benefit provisions and the obligations to contribute are established by the System based on authority granted by State statute. The financial reports of both Plans are included in the SERS Comprehensive Annual Financial Report which is available by contacting SERS at 300 East Broad St., Suite 100, Columbus, Ohio 43215-3746. It is also posted on the SERS’ Ohio website, www.ohsers.org,under “Employers/Audit Resources”.

Funding Policy - State statute permits SERS to fund the health care benefits through employer contributions. Each year, after the allocation for statutorily required benefits, the Retirement Board allocates the remainder of the employer contribution of 14 percent of covered payroll to the Health Care Fund. The Health Care Fund was established and is administered in accordance with Internal Revenue Code Section 105(e). For 2014, 0.14 percent of covered payroll was allocated to health care. An additional health care surcharge on employers is collected for employees earning less than an actuarially determined minimum compensation amount, pro-rated according to service credit earned. Statutes provide that no employer shall pay a health care surcharge greater than 2.0 percent of that employer’s SERS-covered payroll; nor may SERS collect in aggregate more than 1.5 percent of the statewide SERS-covered payroll for the health care surcharge. For fiscal year 2014, the actuarially determined amount was $20,250.

Active members do not contribute to the postemployment benefit plans. The Retirement Board establishes the rules for the premiums paid by the retirees for health care coverage for themselves and their dependents or for their surviving beneficiaries. Premiums vary depending on the plan selected, qualified years of service, Medicare eligibility and retirement status.

The District’s contributions for health care (including surcharge) for the fiscal years ended June 30, 2014, 2013 and 2012 were $40,412, $37,274 and $46,911, respectively; 79.35 percent has been contributed for fiscal year 2014 and 100 percent for fiscal years 2013 and 2012.

The Retirement Board, acting with advice of the actuary, allocates a portion of the employer contribution to the Medicare B Fund. For fiscal year 2014, this actuarially required allocation was 0.76 percent of covered payroll. The District’s contributions for Medicare Part B for the fiscal years ended June 30, 2014, 2013, and 2012 were $14,019, $14,581 and $15,425, respectively; 79.35 percent has been contributed for fiscal year 2014 and 100 percent for fiscal years 2013 and 2012.



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13. POST-EMPLOYMENT BENEFITS (Continued)

B. State Teachers Retirement System of Ohio

Plan Description - The District contributes to the cost sharing, multiple employer defined benefit Health Plan (the “Plan”) administered by the State Teachers Retirement System of Ohio (STRS Ohio) for eligible retirees who participated in the defined benefit or combined pension plans offered by STRS Ohio. Benefits include hospitalization, physicians’ fees, prescription drugs and reimbursement of monthly Medicare Part B premiums. The Plan is included in the report of STRS Ohio which may be obtained by visiting www.strsoh.org, under “Publications” or by calling (888) 227-7877.

Funding Policy - Ohio law authorizes STRS Ohio to offer the Plan and gives the Retirement Board authority over how much, if any, of the health care costs will be absorbed by STRS Ohio. Active employee members do not contribute to the Plan. All benefit recipients pay a monthly premium. Under Ohio law, funding for post-employment health care may be deducted from employer contributions. For 2014, STRS Ohio allocated employer contributions equal to 1 percent of covered payroll to the Health Care Stabilization Fund. The District’s contributions for health care for the fiscal years ended June 30, 2014, 2013 and 2012 were $93,460, $93,640 and $100,238, respectively; 86.22 percent has been contributed for fiscal year 2014 and 100 percent for fiscal years 2013 and 2012.

14. BUDGETARY BASIS OF ACCOUNTING

While reporting financial position, results of operations, and changes in fund balance on the cash basis, the budgetary basis as provided by law is based upon accounting for certain transactions on a basis of cash receipts, disbursements and encumbrances.

The statement of receipts, disbursements and changes in fund balance - budget and actual (budgetary basis) presented for the general fund is presented on the budgetary basis to provide a meaningful comparison of actual results with the budget. The major differences between the budget basis and the cash basis are that:

(a) In order to determine compliance with Ohio law, and to reserve that portion of the applicable appropriation, total outstanding encumbrances (budget basis) are recorded as the equivalent of an expenditure, as opposed to assigned or committed fund balance for that portion of outstanding encumbrances (cash basis); and,

(b) Some funds are included in the general fund (cash basis), but have separate legally adopted budgets (budget basis).

The adjustments necessary to convert the results of operations for the year on the budget basis to the cash basis for the general fund is as follows:

Net Change in Fund Balance General fund

Budget basis $1,452,645 Funds budgeted elsewhere 5,978 Adjustment for encumbrances 242,983 Cash basis $1,701,606



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14. BUDGETARY BASIS OF ACCOUNTING (Continued)

Certain funds that are legally budgeted in separate special revenue funds are considered part of the general fund on a cash basis. This includes the uniform school supplies fund, the unclaimed monies fund, the public school support fund, the other grants fund and the termination benefits fund.

15. CONTINGENCIES

A. Grants

The District receives significant financial assistance from numerous federal, State and local agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the District. However, in the opinion of management, any such disallowed claims will not have a material effect on the financial position of the District.

B. Litigation

The District is not party to legal proceedings that would have a material effect, if any, on the financial condition of the District.

16. SET-ASIDES

The District is required by State law to annually set-aside certain general fund revenue amounts, as defined by statutory formula, for the acquisition and construction of capital improvements. Amounts not spent by the end of the fiscal year or offset by similarly restricted resources received during the year must be held in cash at fiscal year-end. This amount must be carried forward to be used for the same purpose in future years. Expenditures exceeding the set-aside requirement may not be carried forward to the next fiscal year.

The following cash-basis information describes the change in the fiscal year-end set-aside amount for capital improvements. Disclosure of this information is required by State statute.

Capital Improvements

Set-aside balance June 30, 2013 Current year set-aside requirement $353,295 Current year offsets (573,281) Total ($219,986) Balance carried forward to fiscal year 2015 $0 Set-aside balance June 30, 2014 $0

Although the District had qualifying disbursements and offsets during the fiscal year that reduced the set-aside amount to below zero for the capital improvements set-aside, this amount may not be used to reduce the set-aside requirement for future fiscal years. The negative balance is therefore not presented as being carried forward to future fiscal years.

In addition to the above statutory set-aside, the District also has $748 in monies restricted for school bus purchases. This amount is shown as a restricted asset and restricted fund balance in the general fund since allowable expenditures are restricted by State statute.



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17. OTHER COMMITMENTS

The District utilizes encumbrance accounting as part of its budgetary controls. Encumbrances outstanding at year end may be reported as part of restricted, committed, or assigned classifications of fund balance. At year end, the District’s commitments for encumbrances in the governmental funds were as follows:

Year-End Fund EncumbrancesGeneral fund $247,747 Permanent improvement fund 327,050 Non-major governmental funds 55,167 Total $629,964

18. URBANA COMMUNITY SCHOOL

Urbana Community School (the “School”) is a school as provided for by Ohio Revised Code Chapters 3314 and 1702 within the Urbana City School District (the “Sponsor”). The School’s objective is to use technology to reach a diverse student population. The School is designed for students who have a desire for, and whose education can be optimized by, a program of online instruction in an independent environment that does not include most ancillary components of a more traditional education. Because the focus is on distance learning, the ability of students to learn independently in their own homes using an online educational program is an essential element of the School’s program. This population may include, but will not be limited to, home schoolers, children with special physical and mental needs, students removed from the regular classroom for discipline concerns, students who need an alternative to the traditional classroom for various reasons, including religious reasons, transient students, and students within the Sponsor school district that desire a specific course not currently offered but available through online instruction. The program will permit the use of a “blended” approach to the delivery of educational services designed to provide the optimum balance between online and traditional instruction for each individual student. The School, which is part of the state’s education program, is independent of any school district and is nonsectarian in its programs, admission policies, employment practices and all other operations. The School may sue and be sued in its own name, acquire facilities as needed and contract for services necessary for the operation of the School. The School is considered a component unit of the Urbana City School District for reporting purposes, in accordance with Governmental Accounting Standards Board (GASB) Statement No. 14 as amended by GASB Statements No. 39 and GASB Statement No. 61.

The School was initially approved under contract with the Sponsor for the period of five years commencing July 1, 2003. The current three year contract, previously due to expire on June 30, 2012, was extended through June 30, 2013. A new five-year agreement was approved in September of 2013 to run through June 30, 2017. The School began operations on July 1, 2004.

The School operates under the direction of a Board of Directors of which a majority shall be elected or appointed public officials or employees, or shall be other community leaders as set forth in the School’s code of regulations. The Board may also include one or more parents of students enrolled in the School or civic leaders, also as set forth in the School’s code of regulations.



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18. URBANA COMMUNITY SCHOOL (Continued)

A. Summary of Significant Accounting Policies

As discussed in Note 18.B, these financial statements are presented on the cash basis of accounting. The cash basis of accounting differs from accounting principles generally accepted in the United States of America (GAAP). Generally accepted accounting principles include all relevant Governmental Accounting Standards Board (GASB) pronouncements, which have been applied to the extent they are applicable to the cash basis of accounting. Following are the more significant of the School’s accounting policies.

Basis of Presentation - Enterprise fund accounting is used to account for operations that are financed and operated in a manner similar to private business enterprises where the intent is that the costs (disbursements) related to providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges or where it has been decided that periodic determination of receipts, disbursements, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes.

Basis of Accounting - Although Ohio Administrative Code §117-2-03 (B) requires the School’s financial report to follow generally accepted accounting principles, the School chooses to prepare its financial statements and notes in accordance with the cash basis of accounting, which is a financial reporting framework other than generally accepted accounting principles in the United States of America. The School recognizes receipts when received in cash rather than when earned and recognizes disbursements when paid rather than when a liability is incurred.

These statements include adequate disclosure of material matters, in accordance with the basis of accounting described in the preceding paragraph.

Budgetary Process - Unlike other public schools located in the State of Ohio, community schools are not required to follow budgetary provisions set forth in Ohio Revised Code Section 5705, unless specifically provided in the School’s contract with its Sponsor. The contract between the School and its Sponsor requires the School to prepare a five-year annual budget detailing revenues and expenses. The five-year projection is also required by Ohio Revised Code Section 5705.391.

Cash and Investments - The School maintains an interest bearing depository account. All funds of the School are maintained in this account. This interest bearing depository account is presented on the Statement of Net Position – Cash Basis as “equity in pooled cash and investments”.

Capital Assets and Depreciation - Acquisitions of property, plant, and equipment purchased are recorded as disbursements when paid. These items are not reflected as assets on the accompanying financial statements. Depreciation has not been reported for any capital assets.

Operating Receipts and Disbursements - Operating receipts are those receipts that are generated directly from the primary activity of the School. Operating disbursements are necessary costs incurred to provide the service that is the primary activity of the School. All receipts and disbursements not meeting this definition are reported as non-operating.



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Intergovernmental Receipts - The School currently participates in the State Foundation Program through the Ohio Department of Education. Receipts from this program are recognized as operating receipts in the accounting period in which payment is received by the School. Foundation program receipts for the fiscal year 2014 amounted to $260,614.

Grants and entitlements are recognized as non-operating receipts in the accounting period in which they are received. During 2014, the School received $3,106 in unrestricted grants from the State of Ohio.

Net Position – Net position is reported as restricted when there are limitations imposed on the use either through enabling legislation or through external restrictions imposed by creditors, grantors, or laws or regulations of other government. The School’s policy is to first apply restricted resources when a cash disbursement is incurred for purposes for which both restricted and unrestricted net position is available.

B. Accountability and Compliance

1. Change in Accounting Principles

For fiscal year 2014, the School has implemented GASB Statement No. 67, “Financial Reporting for Pension Plans - an amendment of GASB Statement No. 25”, and GASB Statement No. 70, “Accounting and Financial Reporting for Nonexchange Financial Guarantees”.

GASB Statement No. 67 improves the usefulness of pension information included in the general purpose external financial reports of state and local governmental pension plans for making decisions and assessing accountability. The implementation of GASB Statement No. 67 did not have an effect on the financial statements of the School.

GASB Statement No. 70 improves the recognition, measurement, and disclosures for state and local governments that have extended or received financial guarantees that are non-exchange transactions. The implementation of GASB Statement No. 70 did not have an effect on the financial statements of the School.

2. Compliance

Ohio Administrative Code, §117-2-03(B), requires that the School prepare its annual financial report in accordance with generally accepted accounting principles. However, the School prepared its financial statements on a cash basis, which is a financial reporting framework other than accounting principles generally accepted in the United States of America. The accompanying financial statements omit assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position/fundbalances, and disclosures that, while material, cannot be determined at this time. The School can be fined and various other administrative remedies may be taken against the School.



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C. Equity in Pooled Cash and Investments

At June 30, 2014, the carrying amount of the School’s deposits was $790,857. Based on the criteria described in GASB Statement No. 40, “Deposits and Investment Risk Disclosures”, as of June 30, 2014, $540,857 of the School’s bank balance of $790,857 exposed to custodial risk as discussed below, while $250,000 was covered by the Federal Deposit Insurance Corporation.

Custodial credit risk is the risk that, in the event of bank failure, the School’s deposits may not be returned. All deposits are collateralized with eligible securities in amounts equal to at least 105% of the carrying value of the deposits. Such collateral, as permitted by the Ohio Revised Code, is held in single financial institution collateral pools at Federal Reserve Banks, or at member banks of the federal reserve system, in the name of the respective depository bank and pledged as a pool of collateral against all of the public deposits it holds or as specific collateral held at the Federal Reserve Bank in the name of the School. The School has no deposit policy for custodial credit risk beyond the requirements of State statute. Although the securities were held by the pledging institutions’ trust department and all statutory requirements for the deposit of money had been followed, noncompliance with federal requirements could potentially subject the School to a successful claim by the FDIC.

D. Comprehensive Services Agreement with TRECA

The School contracted with Tri-Rivers Education Computer Association (TRECA) for the period July 1, 2013 through June 30, 2014. Under the contract, the following terms were agreed upon:

1. TRECA shall provide the School with instructional, supervisory/administrative, and technical services sufficient to effectively implement the School’s educational plan and the School’s assessment and accountability plan.

2. All personnel providing services to the School on behalf of TRECA under the agreement shall be employees of TRECA and TRECA shall be solely responsible for all payroll functions, including retirement system contributions and all other legal withholding and/or payroll taxes, with respect to such personnel. All shall possess any certification or licensure which may be required by law.

3. The School shall secure the services of an Executive Director, who shall be the chief operating officer of the school, with primary responsibility for day-to-day operations of the School.

4. Curricular services provided by TRECA shall be limited to the standardized curriculum developed by TRECA.

5. The School shall pay to TRECA $3,000 per full-time student enrolled in the School per year for comprehensive services. Additional service packages may be provided on such terms as are agreed to by the parties.

During fiscal year 2014, the School paid $135,090 to TRECA for services.

To obtain TRECA’s audited June 30, 2014 financial statements, please contact Scott Armstrong at [email protected].



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E. Risk Management

The School is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to contracted personnel; and natural disasters. For fiscal year 2014, the School was named on the Sponsor’s policy for property and general liability insurance.

F. Contingencies

Grants - The School received financial assistance from federal and State agencies in the form of grants. The expenditure of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability; however, in the opinion of management, any such disallowed claims will not have a material adverse effect on the overall financial position of the School at June 30, 2014.

State Foundation Funding - The Ohio Department of Education conducts reviews of enrollment data and full-time equivalency (FTE) calculations made by the schools. These reviews are conducted to ensure the schools are reporting accurate student enrollment data to the State, upon which State foundation funding is calculated. The School has not been reviewed as of June 30, 2014. The School does not anticipate any significant adjustments to State funding for fiscal year 2015 as a result of the reviews which have yet to be completed.

Litigation - The School is not involved in any litigation that, in the opinion of management, would have a material effect on the financial statements.

G. Fiscal Agent

The School utilizes the services of the Urbana City School District Treasurer as their fiscal officer. The School does not directly pay the Treasurer; however, it does reimburse the District for services provided.

19. SUBSEQUENT EVENT

On November 4, 2014, the District voters approved 7.15 mills property tax levy, effective for 2014 and due in 2015, for the purpose of issuing $31,355,000 bonds for participation in the Ohio School Facilities Assistance Program.

Federal Grantor/ Federal Pass Through Grantor CFDA Non-Cash Non-Cash Program Title Number Receipts Receipts Expenditures Expenditures

U.S. Department of AgriculturePassed through Ohio Department of Education

Child Nutrition Cluster: School Breakfast Program 10.553 $184,558 $184,558

National School Lunch Program 10.555 470,828 470,828 Non-Cash Assistance (Food Distribution) National School Lunch Program $63,691 $63,691Total National School Lunch Program 470,828 63,691 470,828 63,691

Summer Food Service Program for Children 10.559 48,064 48,064

Total Child Nutrition Cluster - United States Department of Agriculture 703,450 63,691 703,450 63,691

U.S. Department of EducationPassed through Ohio Department of Education

Title I Grants to Local Educational Agencies 84.010 792,099 719,532

Special Education Grants to States 84.027 456,888 466,680

Rural Education 84.358 38,928 26,158

Improving Teacher Quality State Grants 84.367 94,294 95,857

ARRA - State Fiscal Stabilization Fund (SFSF) Race to the Top, Incentive Grants, Recovery Act 84.395 166,625 123,183

Total U. S. Department of Education 1,548,834 1,431,410

Total Federal Financial Assistance $2,252,284 $63,691 $2,134,860 $63,691

See accompanying notes to the Schedule of Federal Awards Receipts and Expenditures.


SCHEDULE OF FEDERAL AWARDS RECEIPTS AND EXPENDITURES FOR THE FISCAL YEAR ENDED JUNE 30, 2014

53


NOTES TO THE SCHEDULE OF FEDERAL AWARDS RECEIPTS AND EXPENDITURES FISCAL YEAR ENDED JUNE 30, 2014

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NOTE A – SIGNIFICANT ACCOUNTING POLICIES

The accompanying Schedule of Federal Awards Receipts and Expenditures (the Schedule) reports the Urbana City School District’s (the District) federal award programs’ receipts and disbursements. The schedule has been prepared on the cash basis of accounting.

NOTE B – CHILD NUTRITION CLUSTER

The District commingles cash receipts from the U.S. Department of Agriculture with similar State grants. When reporting expenditures on this Schedule, the District assumes it expends federal monies first.

NOTE C – FOOD DONATION PROGRAM

The District reports commodities consumed on the Schedule at the entitlement value. The District allocated donated food commodities to the respective programs that benefited from the use of those donated food commodities.

NOTE D – MATCHING REQUIREMENTS

Certain Federal programs require that the District contribute non-Federal funds (matching funds) to support the Federally-funded programs. The expenditure of non-Federal matching funds is not included on the Schedule.

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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

REQUIRED BY GOVERNMENT AUDITING STANDARDS



We have audited, in accordance with auditing standards generally accepted in the United States and the Comptroller General of the United States Government Auditing Standards, the financial statements of the governmental activities, each major fund, and the discretely presented component unit and remaining fund information of Urbana City School District, Champaign County, (the District) as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements and have issued our report thereon dated November 17, 2014, wherein we noted the District uses a special purpose framework other than generally accepted accounting principles.

Internal Control Over Financial Reporting

As part of our financial statement audit, we considered the District’s internal control over financial reporting (internal control) to determine the audit procedures appropriate in the circumstances to the extent necessary to support our opinions on the financial statements, but not to the extent necessary to opine on the effectiveness of the District’s internal control. Accordingly, we have not opined on it.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, when performing their assigned functions, to prevent, or detect and timely correct misstatements. A material weakness is a deficiency, or combination of internal control deficiencies resulting in a reasonable possibility that internal control will not prevent or detect and timely correct a material misstatement of the District’s financial statements. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all internal control deficiencies that might be material weaknesses or significant deficiencies. Given these limitations, we did not identify any deficiencies in internal control that we consider material weaknesses. However, unidentified material weaknesses may exist.

Urbana City School District Champaign County Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Required by Government Auditing StandardsPage 2

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Compliance and Other Matters

As part of reasonably assuring whether the District’s financial statements are free of material misstatement, we tested its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could directly and materially affect the determination of financial statement amounts. However, opining on compliance with those provisions was not an objective of our audit and accordingly, we do not express an opinion. The results of our tests disclosed an instance of noncompliance or other matter we must report under Government Auditing Standards which is described in the accompanying schedule of findings as item 2014-001.

Entity’s Response to Finding

The District’s response to the finding identified in our audit is described in the accompanying schedule of findings. We did not audit the District’s response and, accordingly, we express no opinion on it.

Purpose of this Report

This report only describes the scope of our internal control and compliance testing and our testing results, and does not opine on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed under Government Auditing Standards in considering the District’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Dave YostAuditor of State

Columbus, Ohio

November 17, 2014

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INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO THE MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER

COMPLIANCE REQUIRED BY OMB CIRCULAR A-133



Report on Compliance for the Major Federal Program

We have audited the Urbana City School District’s (the District) compliance with the applicable requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133, Compliance Supplement that could directly and materially affect the Urbana City School District’s major federal program for the year ended June 30, 2014. The Summary of Auditor’s Results in the accompanying schedule of findings identifies the District’s major federal program.

Management’s Responsibility

The District’s Management is responsible for complying with the requirements of laws, regulations, contracts, and grants applicable to its federal program.

Auditor’s Responsibility

Our responsibility is to opine on the District’s compliance for the District’s major federal program based on our audit of the applicable compliance requirements referred to above. Our compliance audit followed auditing standards generally accepted in the United States of America; the standards for financial audits included in the Comptroller General of the United States’ Government Auditing Standards; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. These standards and OMB Circular A-133 require us to plan and perform the audit to reasonably assure whether noncompliance with the applicable compliance requirements referred to above that could directly and materially affect a major federal program occurred. An audit includes examining, on a test basis, evidence about the District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe our audit provides a reasonable basis for our compliance opinion on the District’s major program. However, our audit does not provide a legal determination of the District’s compliance.

Opinion on the Major Federal Program

In our opinion, the Urbana City School District complied, in all material respects with the compliance requirements referred to above that could directly and materially affect its major federal program for the year ended June 30, 2014.

Urbana City School District Champaign County Independent Auditor’s Report on Compliance with Requirements Applicable to the Major Federal Program and on Internal Control Over Compliance Required by OMB Circular A-133 Page 2

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Report on Internal Control Over Compliance

The District’s management is responsible for establishing and maintaining effective internal control over compliance with the applicable compliance requirements referred to above. In planning and performing our compliance audit, we considered the District’s internal control over compliance with the applicable requirements that could directly and materially affect a major federal program, to determine our auditing procedures appropriate for opining on each major federal program’s compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not to the extent needed to opine on the effectiveness of internal control over compliance. Accordingly, we have not opined on the effectiveness of the District’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, when performing their assigned functions, to prevent, or to timely detect and correct, noncompliance with a federal program’s applicable compliance requirement. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a federal program compliance requirement will not be prevented, or timely detected and corrected. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with federal program’s applicable compliance requirement that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

This report only describes the scope of our internal control compliance tests and the results of this testing based on OMB Circular A-133 requirements. Accordingly, this report is not suitable for any other purpose.

Dave Yost Auditor of State

Columbus, Ohio

November 17, 2014

59


SCHEDULE OF FINDINGSOMB CIRCULAR A -133 § .505

JUNE 30, 2014

1. SUMMARY OF AUDITOR’S RESULTS

(d)(1)(i) Type of Financial Statement Opinion Unmodified

(d)(1)(ii) Were there any material control weaknesses reported at the financial statement level (GAGAS)?

No

(d)(1)(ii) Were there any significant deficiencies in internal control reported at the financial statement level (GAGAS)?

No

(d)(1)(iii) Was there any reported material noncompliance at the financial statement level (GAGAS)?

Yes

(d)(1)(iv) Were there any material internal control weaknesses reported for major federal programs?

No

(d)(1)(iv) Were there any significant deficiencies in internal control reported for major federal programs?

No

(d)(1)(v) Type of Major Programs’ Compliance Opinion Unmodified

(d)(1)(vi) Are there any reportable findings under § .510(a)?

No

(d)(1)(vii) Major Programs (list): CFDA 84.010 – Title I Grants to Local Educational Agencies

(d)(1)(viii) Dollar Threshold: Type A\B Programs Type A: > $ 300,000 Type B: all others

(d)(1)(ix) Low Risk Auditee? Yes

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Urbana City School District Champaign County Schedule of Findings Page 2

2. FINDINGS RELATED TO THE FINANCIAL STATEMENTS REQUIRED TO BE REPORTED IN ACCORDANCE WITH GAGAS

FINDING NUMBER 2014-001

Noncompliance

Ohio Rev. Code § 117.38 provides that each public office shall file a financial report for each fiscal year. The Auditor of State may prescribe forms by rule or may issue guidelines, or both, for such reports. If the Auditor of State has not prescribed a rule regarding the form for the report, the public office shall submit its report on the form utilized by the public office. Ohio Administrative Code § 117-2-03 further clarifies the requirements of Ohio Rev. Code § 117.38.

Ohio Admin. Code § 117-2-03(B) requires the District to file annual financial reports which are prepared using generally accepted accounting principles (GAAP). For fiscal year 2014, the District prepared financial statements that, although formatted similar to financial statements prescribed by Governmental Accounting Standards Board No. 34, report on the basis of cash receipts and disbursements, rather than GAAP. The accompanying financial statements and notes omit certain assets, liabilities, deferred inflows/outflows of resources, fund equities, and disclosures that, while material, cannot be determined at this time. Pursuant to Ohio Rev. Code § 117.38, the District may be fined and subject to various other administrative remedies for its failure to file the required financial report.

The District should prepare the annual financial statements according to generally accepted accounting principles to provide users with more meaningful financial statements.

Officials Response:

In response to Finding Number 2014-001 Noncompliance Citation ORC 117.38; the Urbana City School District Board of Education understands that the Ohio Revised Code requires the District’s financial statements to be prepared in accordance with GAAP; however, an exception has been implemented by the State Auditor for issuance of an unmodified opinion if GAAP look-alike financial statements have been prepared by the District. Due to cost of the conversion, increased audit cost, and cost of employee resources, the Board feels money that would otherwise be spent on conversion to GAAP is better used to educate the students of Urbana City School District. In addition, federal security laws do not require GAAP financial statements, and specifically, SEC Rule 15c2-12 relating to continuing disclosure on outstanding debt (which applies to the District) does not require GAAP financial statements.

3. FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS

None

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SCHEDULE OF PRIOR AUDIT FINDINGS OMB CIRCULAR A -133 § .315 (b)

JUNE 30, 2014

Finding Number

Finding Summary

FullyCorrected?

Not Corrected, Partially Corrected; Significantly Different Corrective Action Taken; or Finding No Longer Valid; Explain

2013-001 Ohio Rev. Code § 117.38 and Ohio Admin. Code § 117-2-03(B) – Failure to report on GAAP basis

No Repeated as Finding 2014-001

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88 East Broad Street, Fourth Floor, Columbus, Ohio 43215-3506

Phone: 614-466-4514 or 800-282-0370 Fax: 614-466-4490

www.ohioauditor.gov

URBANA CITY SCHOOL DISTRICT

CHAMPAIGN COUNTY

CLERK’S CERTIFICATIONThis is a true and correct copy of the report which is required to be filed in the Office of the Auditor of State pursuant to Section 117.26, Revised Code, and which is filed in Columbus, Ohio.

CLERK OF THE BUREAU

CERTIFIEDDECEMBER 18, 2014

APPENDIX A-2AUDITED FINANCIAL REPORTS

FOR THE PERIOD JULY 1, 2012 - JUNE 30, 2013

The audited financials for the year ended June 30, 2013 are available on the Ohio StateAuditor’s web site at www.auditor.state.oh.us. The reference to this web site is for the purposeof accessing the audited financials of the District only; neither the District nor the Underwritermakes any representation as to the accuracy of the information appearing on such web site.Neither the District nor the Underwriter undertakes any obligation to maintain or update suchweb site or such information contained on such web site.

APPENDIX BFIVE YEAR FORECAST FOR THE DISTRICT

[SEE ATTACHED]

District Type: CityIRN: 044941County: ChampaignDate Submitted: 10/23/2014 Date Processed: 5/23/2014

Line 2012 2013 2014 2015 2016 2017 2018 20191.010 General Property (Real Estate) 7,925,035 7,649,575 7,590,124 7,494,773 6,961,409 5,559,067 4,758,563 4,292,5741.020 Tangible Personal Property Tax 738,344 646,001 708,379 616,371 588,202 489,372 418,712 372,1621.035 Unrestricted Grants-in-Aid 8,852,929 9,345,898 10,190,086 11,023,980 11,131,548 11,240,193 11,349,922 11,349,9221.040 Restricted Grants-in-Aid 553,037 111,632 418,323 416,357 416,357 416,357 416,357 416,3571.050 Property Tax Allocation 2,724,752 2,340,626 2,335,992 2,345,527 2,202,314 1,762,047 1,464,993 1,464,8921.060 All Other Operating Revenue 1,306,227 1,025,988 1,400,069 1,195,069 1,195,069 1,195,069 1,195,069 1,195,0691.070 Total Revenue 22,100,324 21,119,720 22,642,973 23,092,077 22,494,899 20,662,105 19,603,616 19,090,9762.050 Advances-In 192,319 89,018 239,5642.060 All Other Financial Sources 32,414 74,573 219,9322.070 Total Other Financing Sources 224,733 163,591 459,4962.080 Total Revenues and Other Financing 22,325,057 21,283,311 23,102,469 23,092,077 22,494,899 20,662,105 19,603,616 19,090,9763.010 Personnel Services 11,395,322 10,725,079 10,531,721 10,625,906 11,031,847 11,378,318 11,697,004 12,024,6163.020 Employees' Retirement/Insurance Be 4,822,612 4,276,778 3,971,532 3,932,543 4,121,553 4,300,453 4,474,630 4,650,3243.030 Purchased Services 3,513,272 3,639,340 5,808,520 6,065,861 6,162,178 6,285,422 6,411,130 6,539,3533.040 Supplies and Materials 932,467 390,286 375,041 882,542 900,193 718,197 732,560 1,047,2123.050 Capital Outlay 80,561 89,063 165,704 263,989 271,909 280,066 285,667 291,3814.010 Debt Service: All Principal (Historical 260,000 260,000 260,0004.060 Debt Service: Interest and Fiscal Cha 38,610 25,740 12,8704.300 Other Objects 1,841,468 1,941,274 203,330 207,397 211,545 215,775 220,091 224,4934.500 Total Expenditures 22,884,312 21,347,560 21,328,718 21,978,238 22,699,225 23,178,231 23,821,082 24,777,3795.010 Operational Transfers - Out 20,994 12,2005.020 Advances - Out 89,018 239,564 66,0335.030 All Other Financing Uses 1335.040 Total Other Financing Uses 89,018 260,691 78,2335.050 Total Expenditure and Other Financin22,973,330 21,608,251 21,406,951 21,978,238 22,699,225 23,178,231 23,821,082 24,777,3796.010 Excess Rev & Oth Financing Source -648,273 -324,940 1,695,518 1,113,839 -204,326 -2,516,126 -4,217,466 -5,686,403

7.010 Beginning Cash Balance 3,070,007 2,421,734 2,096,794 3,792,312 4,906,151 4,701,825 2,185,699 -2,031,7677.020 Ending Cash Balance 2,421,734 2,096,794 3,792,312 4,906,151 4,701,825 2,185,699 -2,031,767 -7,718,1708.010 Outstanding Encumbrances 320,549 644,4109.030 Budget Reserve 366,608 366,608 366,608 366,608 366,608 366,608 366,608 366,6089.080 Total Reservations 366,608 366,608 366,608 366,608 366,608 366,608 366,608 366,60810.010 Fund Balance June 30 for Certificati 1,734,577 1,085,776 3,425,704 4,539,543 4,335,217 1,819,091 -2,398,375 -8,084,77811.020 Property Tax - Renewal or Replacement 661,807 2,570,598 3,817,581 4,044,49711.300 Cumulative Balance of Replacement/Renewal Levies 661,807 3,232,405 7,049,986 11,094,48312.010 Fund Bal June 30 for Cert of Contrac 1,734,577 1,085,776 3,425,704 4,539,543 4,997,024 5,051,496 4,651,611 3,009,70515.010 Unreserved Fund Balance June 30 1,734,577 1,085,776 3,425,704 4,539,543 4,997,024 5,051,496 4,651,611 3,009,705

Notes to the Five Year Forecast

Urbana Five Year Forecast for Fiscal Year 2015

Actual Forecasted

Please visit the Ohio Department of Education website atftp://ftp.ode.state.oh.us/geodoc/5-yrForecast/

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URBANA CITY SCHOOL DISTRICT – CHAMPAIGN COUNTY FIVE YEAR PROJECTIONS – SIGNIFICANT ASSUMPTIONS

5 Year Forecast Notes October 2014 Revenue Real Estate Tax – The assessed valuation for the Urbana City School District from the county auditor is $265,247,380. Based on slow economic growth and a high number of foreclosures in the area, growth is slower than projected, as compared to the last decade. Agricultural values increased by an average of 70% across the county, while residential values decreased slightly during the reevaluation period. The district passed the renewal of the 9.75 mill levy first passed in 2008. Passage of all renewal levies will be critical to maintaining the operations of the district. The district will have a 5.9 mill operating levy to renew by the end of calendar year 2015 and a 14.8 mill operating levy to renew by the end of calendar year 2017, based on the current levy calendar. Though not directly reflected on the forecast, the district has a 3.5 mill Permanent Improvement levy, which was renewed for a continuing period of time in November of 2013. The PI levy allows the district to make capital purchases outside of the general operating fund dollars. Tangible Personal – Tangible Personal Property tax is no longer collected. The values represented in this line item reflect public utility tangible tax that is collected in our district. Prior to the tangible personal property tax phase-out, this was a significant area of revenue for Urbana City Schools and the elimination of the tax has been a drain on the district’s resources. The state has developed a formula for the reimbursement for the loss of the TPP; those amounts are reflected in the property tax allocation line. Unrestricted Grants in Aide – The district is projected to receive a 10.5% increase in funding in fiscal year 2015. These increase projections are based on the FY2013 ADM and may vary according to enrollment. This represents an increase of over $500,000 from FY 2013 to FY 2014 and an increase of over $1,000,000 from FY 2014 to FY 2015. However, caution must be taken as a portion of the increase for FY 2014 is dedicated to the preschool funding, which previously flowed directly to the ESC. Expenses have been increased to reflect this restriction. Restricted Grants in Aide – This line item represents career-technical funding and economically disadvantaged funding. Expenses have been increased to account for the economically disadvantaged funds that must be spent. Property Tax Allocation – This line includes rollback and homestead taxes, as well as reimbursement for the homestead exemption for senior citizens. It includes the state reimbursements for tangible personal property taxes, which underwent a major revision with the budget bill. The reimbursement for the loss of TPP is now based on the relationship between the loss of revenue from the elimination of the TPP and the amount of operating revenue received in FY 2010. Because the district relied heavily on the TPP, Urbana City Schools will not see an immediate phase-out of the reimbursement that is occurring in some districts. The reimbursement is expected to continue as detailed in the biennial budget passed for FY 2012. Previous forecasts reflected the continuing decline of the reimbursement, but the budget passed for FY 2014 and 2015 kept the TPP reimbursement at the FY 2013 levels. Other Revenue - Other revenues include interest, tuition, certain fees and rents, revenue from the Medicaid school program, open enrollment, and other miscellaneous. As a part of a budget reduction plan, the board of education approved the implementation of a $100 transportation fee for athletics for the 2013 – 2014 school year. Transfers and Advance in - Returns of money advanced to state and federal grants at the end of the fiscal year to close out those grants and await final allocations from the state.

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Expenditures Personnel Services – The district completed negotiations with the certificated staff and approved a 2% base increase for staff with no step increase for fiscal year 2015. Steps resume in fiscal year 2016 with another 2% increase on the base salary. The contract is valid through May of 2017. For fiscal year 2017, there is a re-opener on the salary article. The district also completed negotiations with the classified union and signed a two year agreement. The classified staff will receive a 1% base increase both years, as well as step increases.. Through attrition from FY 12 to FY 13, the district saved approximately $300,000 in salary costs. As part of an overall cost reduction plan, the board of education authorized reductions in supplemental contracts, including some coaching contracts, head teacher contracts, and activity positions. Through the closure of a building, one administrator will be eliminated in fiscal year 2014, as well as a secretarial position. A reduction in hours of classified staff was also approved by the board. Unexpected mid-year retirements caused the severance payments for fiscal year 2013 to be higher than expected from October’s forecast. Retirements are expected to increase over the next two fiscal years; therefore, expected severance costs have increased. In addition, at least three positions are expected to go unfilled due to attrition. A reorganization of grade levels due to a building closure will allow staff to be allocated more efficiently across the grade bands. Through staff attrition and replacement, the district reduced wages by $400,000 from FY 2013 to FY 2014. From fiscal year 2014 to fiscal year 2015, personnel costs were reduced by approximately $165,000 due to attrition and staff replacement savings. Both administration and staff will have to continue to evaluate the sustainability of the wage increases, based on the levels of state funding. Personnel costs were increased slightly to account for additional expenditures necessary due to the economically disadvantaged revenue stream from the state. Benefits – Through the negotiations process with both unions, the district was able to move to a PPO health care plan, which is projected to save the district between 5 and 8% in claims costs. The district is self-insured and held monthly premiums to 09-10 levels, which did not result in an increase in cost to the general fund. Teachers currently pay 10% of their monthly premium, while classified staff pay from 15 – 40% based on the weekly hours worked. Beginning with calendar year 2016, certified staff will pay 12.5% of the individual health insurance premium. In calendar year 2017, certified staff will pay 15% of the individual health premium. With the assistance of a health insurance consultant, the district was able to reduce fixed costs to the third party administrator of the plan for the 11 – 12 plan year. The district has also included the option for an HSA insurance structure available to non-unionized employees, administrators, and OAPSE bargaining unit members. If an individual would select this option, the projected savings on that individual plan will be approximately 25%.. In addition, administrators began paying 15% of the insurance premium in January 2013. A 5% increase for health insurance costs has been built into the forecast beginning with fiscal year 2016. Beginning January 1, 2014, certificated staff also had the option to move to the HDHP. Other expenses in benefits include Medicare, worker’s compensation, and retirement; all of which are driven by salary levels. Purchased Services - This line item represents a variety of professional services rendered directly to students, supervisor contracts, building and equipment repairs and maintenance contracts, all utilities, professional meetings and mileage for staff, and professional services provided as assistance to staff. Contracted technology services were reduced by fifty percent for the 2013 – 2014 school year. Tuition to community schools and open enrollment costs out to other districts are also included. In anticipation of budget deficits, the amount allocated for professional development through the general fund was reduced by $60,000. The closure of a building for the 2013 – 2014 school year is expected to generate savings through the reduced usage of utilities for that building, unless the facility is rented to an outside entity. Instructional services provided by the ESC will now be coded to the purchased services line, per coding changes put into effect through ODE. Previously, these charges were shown on the other objects line as unit funding flowed directly to the ESC through foundation payments. Natural gas costs were increased due to the harsh winter in fiscal year 2014 and the expectation of a true-up payment for gas used the previous winter. Supplies and Materials – Supplies and materials include all building, custodial, instructional, office, and textbook supplies and materials. The requirement for the set aside for instructional supplies and materials was

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eliminated with the budget bill. The end of FY 2011 and the beginning of FY 2012 saw the purchase of supplies and textbooks for the major ELA adoption that had been postponed for two years, so expenditures will look high in comparison with previous years. Maintenance costs for the older buildings continue to climb as more work is required to maintain the structures. Diesel fuel for buses was held static as prices are not expected to increase significantly over last year.. Building budgets were reduced by 25% for fiscal year 2014. Dollars for textbook adoptions were allocated beginning in FY 2015 after a two-year hold due to the financial situation. Expenses were also increased due to the anticipation of increased technology costs to fall under the economically disadvantaged category in the state funding formula. Textbook adoptions, which were put on hold, have been added back into the forecast beginning in fiscal year 2015 and each year thereafter. Capital Outlay – Capital outlay costs were higher in FY 2011 due to the influx of the state fiscal stabilization funds. With the elimination of this funding source, costs are projected to return to pre-SFSF levels. The major expenditure in this category is for copiers and related equipment. Because the district has a dedicated revenue stream with the permanent improvement levy, the general fund does not bear all of the capital outlay costs. Expenses were also increased due to the anticipation of increased upgrades to safety and security to fall under the economically disadvantaged category in the state funding formula. In addition, there were increases in FY 2014 in capital outlay costs due to the building reorganization. Furthermore, as technology continues to age, replacement will be necessary and costs have been increased to account for those replacement costs. Other Objects - This includes auditor and treasurer fees, state audit charges of over $25,000, and, in the past, a large portion for contracted services with the Madison-Champaign County Educational Service Center for students attending county SBH, MH and HH programs; as well as MRDD services, which are now being billed through the ESC. While cuts were made to other portions of the budget, there will be some increases to the services procured from the ESC, due to increased numbers of students. The final budget bill may determine the cost for these ESC services. ODE has issued new guidance on the categorization of services provided by the ESC. The majority of the ESC costs have been moved to the purchased services category. Debt service includes payment for the Apple Computer Lease as well as payment on the tax anticipation note of $1.3 million. This note was taken out when the 9.75 mill operating levy passed in March of 2008. The final payment on the tax anticipation note was made in FY 2014. Transfers out represent advances out and the money is returned the next fiscal year. Regular transfers are for transfers to cover debt or transfers from the general fund to the supply set-aside fund to comply with mandates. Otherwise, money is advanced out to state and federal projects and is repaid when money is received from the state. Set-asides – We have a permanent improvement levy that brings in more than what would be required to set-aside. We keep a budget reserve fund for one payroll in case of emergency. The set-aside for instructional textbooks and materials was eliminated in the budget bill. Other considerations –With the reliance on services provided by the ESC, it is important to consider what effect the new funding formula will have on the ESC. The Board of Education approved $1 million in budget reductions for the 2013 – 2014 fiscal year through a combination of increased revenues and expenditure reduction. The Board, Superintendent, and Treasurer will continue to use the information available to make the best possible decisions for the district.

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APPENDIX CCHAMPAIGN COUNTY TAX RATES

[SEE ATTACHED]

2014 CHAMPAIGN COUNTY, OHIORATES OF TAXATION for 2014 COLLECTED in 2015

2014

ADAMS TOWNSHIP 1. Graham L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 1.25 1.50 2.55 .50 34.40 2.00 54.30 0.227834 0.127885 41.93 47.36 CONCORD TOWNSHIP 4. Graham L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .90 1.50 3.40 1.70 34.40 2.00 56.00 0.214599 0.116444 43.98 49.48 5. West Liberty-Salem L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .90 1.50 3.40 1.20 38.16 2.00 59.26 0.304687 0.238406 41.20 45.13 GOSHEN TOWNSHIP 6. Mechanicsburg-E.V.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .70 4.00 1.40 1.00 1.00 1.00 38.92 2.00 62.12 0.242103 0.094803 47.08 56.23 7. Mechanicsburg Corp.-Mech. E.V.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .70 1.00 1.00 1.00 38.92 2.00 7.20 63.92 0.232242 0.105489 49.08 57.18 HARRISON TOWNSHIP 8.Graham L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 1.55 1.54 .25 1.70 34.40 2.00 53.54 0.221473 0.121568 41.68 47.03 10. West Liberty-Salem L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 1.55 1.54 .25 1.20 38.16 2.00 56.80 0.315069 0.248517 38.90 42.68 JACKSON TOWNSHIP 11. Graham L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .90 2.50 3.65 .50 34.40 2.00 56.05 0.218875 0.112928 43.78 49.72 13. Miami East-L.S.D.-Miami Co. 2.60 .40 1.00 5.50 1.50 .40 .70 .90 2.50 3.65 45.03 2.58 66.76 0.339844 0.188327 44.07 54.19 14. Christiansburg Corp.-Graham L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .90 .50 34.40 2.00 11.87 61.77 0.216866 0.123668 48.37 54.13 15 St. Paris Corp.-Graham L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .90 4.75 .50 34.40 2.00 4.00 58.65 0.202255 0.109629 46.79 52.22 JOHNSON TOWNSHIP 16. Graham L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .30 4.75 3.50 .50 34.40 2.00 57.55 0.217425 0.113183 45.04 51.04 20. St. Paris Corp.-Graham L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .30 4.75 .50 34.40 2.00 4.00 58.05 0.204345 0.110763 46.19 51.62 MAD RIVER TOWNSHIP 21.Graham L.S.D.-St. Paris Library 2.60 .40 1.00 5.50 1.50 .40 .70 .90 1.50 3.40 .50 34.40 2.00 54.80 0.228876 0.128896 42.26 47.74 22. Mad River-Graham L.S.D.-Champ Co Library 2.60 .40 1.00 5.50 1.50 .40 .70 .90 1.50 3.40 1.70 34.40 2.00 56.00 0.229874 0.128687 43.13 48.79 24. Mad River-N.W. L.S.D.-Clark 2.60 .40 1.00 5.50 1.50 .40 .70 .90 1.50 3.40 1.20 38.48 3.00 60.58 0.148689 0.035102 51.57 58.45 25. Mad River-Urbana C.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .90 1.50 3.40 1.20 75.20 2.00 96.30 0.406122 0.230089 57.19 74.14 RUSH TOWNSHIP 26. Triad L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .60 5.50 5.70 .50 1.20 27.85 2.00 55.45 0.233141 0.032701 42.52 53.64 28. N. Lewisburg Corp.-Triad L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .60 5.50 .50 1.20 27.85 2.00 1.20 50.95 0.206556 0.022086 40.43 49.82 29. Woodstock Corp.-Triad L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .60 5.50 .50 1.20 27.85 2.00 1.20 50.95 0.206556 0.022086 40.43 49.82 SALEM TOWNSHIP 30. Congresslands-W.L. Salem L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .80 3.00 1.80 .10 1.20 38.16 2.00 59.16 0.316015 0.250250 40.46 44.36 34. Congresslands-Graham L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .80 3.00 1.80 .10 .50 34.40 2.00 54.70 0.225351 0.128973 42.37 47.65 49. Urbana Corp.-Urbana C.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .80 .10 1.20 75.20 2.00 2.60 94.00 0.401569 0.227911 56.25 72.58 50. Urbana Corp.-W.L. Salem 2.60 .40 1.00 5.50 1.50 .40 .70 .80 .10 1.20 38.16 2.00 2.40 56.76 0.309181 0.248055 39.21 42.68 UNION TOWNSHIP 35. Un.-Mechanicsburg-Mech. E.V.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 1.30 4.00 2.50 1.00 38.92 2.00 61.82 0.224960 0.089012 47.91 56.32 36. Un.-N.E.-L.S.D. Clark Co. 2.60 .40 1.00 5.50 1.50 .40 .70 1.30 4.00 2.50 1.20 46.79 3.00 70.89 0.357717 0.199734 45.53 56.73 37. Un.-Triad-L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 1.30 4.00 2.50 1.20 27.85 2.00 50.95 0.201260 0.018394 40.70 50.01 38. Un.-W.L. Salem L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 1.30 4.00 2.50 1.20 38.16 2.00 61.26 0.301749 0.229834 42.77 47.18 39. Un.-Urbana C.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 1.30 4.00 2.50 1.20 75.20 2.00 98.30 0.393525 0.217941 59.62 76.88 40. Mutual-Mech. E.V.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 1.30 1.00 38.92 2.00 2.75 58.07 0.237776 0.098297 44.26 52.36 URBANA TOWNSHIP 41. Urbana-Urbana C.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .20 4.10 1.40 1.20 75.20 2.00 96.20 0.397394 0.222699 57.97 74.78 42. Urbana-N.W.-L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .20 4.10 1.40 1.20 38.48 3.00 60.48 0.134380 0.023025 52.35 59.09 48. Urbana Corporation-Urbana C.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 .20 1.20 75.20 2.00 3.30 94.00 0.401569 0.227911 56.25 72.58 WAYNE TOWNSHIP 43. Triad L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 1.00 5.50 6.70 .10 1.20 27.85 2.00 56.45 0.230527 0.021014 43.44 55.26 47. Wayne Salem-W.L. Salem L.S.D. 2.60 .40 1.00 5.50 1.50 .40 .70 1.00 5.50 6.70 .10 1.20 38.16 2.00 66.76 0.318217 0.214630 45.52 52.43

Effective Rate

OtherSchool JVS Corp. Total

Reduction Factor

Ag/Res

Reduction Factor OtherLibrary

District Number, Township, School District and Corporation

Pursuant to law, I Robin K. Edwards, Treasurer of Champaign County, Ohio do hereby publish notice of the rate of taxation for the year 2014 as provided by Section 323.08 O.R.C. Rate is expressed in Dollars and Cents for each One Thousand Dollars of Assessed Value.

Co Gen Fund

Senior Citizen

Children Services D. D. 911

Health District

Mental Health

Twp Gen Fund

Fire EMS Roads Cemetery Park

Effective Rate

Ag/Res

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APPENDIX DFINANCIAL STATEMENT

FINANCIAL STATEMENT FOR BOARD OF EDUCATIONOhio Revised Code Sections 133.04, 133.06 and 133.33

I, Mandy Hildebrand, Treasurer of the Board of Education of the Urbana City School District in Champaign County,Ohio, do hereby certify that the following statements concerning the finances of such Board of Education and School District aretrue and correct:

1. Tax valuation of the School District as shown by the tax lists and duplicates for the calendar year 2014, the year mostrecently certified for collection:............................................................................................................................................ $ 263,497,050.00

2. Total principal amount of all outstanding securities of the Board of Education, including the present issue of$31,355,000 ...........................................................................................................................................................................$ 31,355,000.00

3. Exempt securities included in item 2:

0(a) Notes issued in anticipation of the collection of current revenues under Section 133.10

O.R.C.: ........................................................................................................................................ $(b) Notes issued in anticipation of the collection of taxes under Sections 133.10 or 133.301

O.R.C.: ........................................................................................................................................ $ 0(c) Notes with maturities over one year and issued in anticipation of the collection of the

proceeds from a specifically identified voter-approved tax levy under Section 5705.194 orSection 5705.21 O.R.C.:.............................................................................................................. $ 0

(d) Securities issued under Sections 139.01 to 139.04 O.R.C. to participate in Federal aidprograms: .................................................................................................................................... $ 0

(e) Securities issued prior to August 19, 1994 to finance energy conservation measures underSection 3313.372 O.R.C.:............................................................................................................ $ 0

(f) Securities evidencing loans received under Sections 3313.483, 3317.0211 and 3317.64O.R.C.: ........................................................................................................................................ $ 0

(g) Securities issued for school buses and other equipment used in transporting pupils underSection 133.06(D) O.R.C.: .......................................................................................................... $ 0

(h) Securities issued to establish a self-insurance program for health care benefits under Section9.833 O.R.C.: .............................................................................................................................. $ 0

(i) Other exempt securities:............................................................................................................... $ 0Total of items 3(a) to 3(i), inclusive: ..................................................................................................................... $ 0

4. (a) Total securities subject to 9% limitation [item 2 minus item 3]: ................................................................................ $ 31,355,000.00(b) Bond retirement fund applicable to principal of such securities:................................................................................ $ 0(c) Net amount subject to 9% limitation:......................................................................................................................... $ 31,355,000.00

5. Securities included in item 4(a), but issued without authority of an election:........................................................................ $ 0

6. (a) Securities included in item 5 issued for energy conservation measures under Section 3313.372O.R.C. after August 19, 1994 and Section 133.06(G) O.R.C.:................................................................................... $ 0

(b) Bond retirement fund applicable to principal of such securities:................................................................................ $ 0(c) Net amount subject to 9/10 of 1% limitation of Section 133.06(G) O.R.C.: .............................................................. $ 0

7. (a) Unvoted securities issued for other purposes [item 5 minus item 6(a)]:..................................................................... $ 0(b) Bond retirement fund applicable to principal of such securities:................................................................................ $ 0(c) Net amount subject to 1/10 of 1% limitation of Section 133.06(A) O.R.C.: .............................................................. $ 0

8. Bonds or notes issued for the purchase of classroom facilities from the State under Chapter 3318 O.R.C.,included in item 4(a):............................................................................................................................................................. $ 31,355,000.00

9. Bonds or notes included in item 4(a) but issued beyond 9% limitation pursuant to ORC 133.06(I)..................................... $ 7,640,265.50

IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of March, 2015.

/s/ Mandy HildebrandTreasurer

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APPENDIX ESPECIMEN OPINION OF BOND COUNSEL

The form of the legal approving opinion of Dinsmore & Shohl LLP, Bond Counsel, is setforth below. The actual opinion will be delivered on the date of delivery of the bonds referred totherein and may vary from the form set forth to reflect circumstances both factual and legal atthe time of such delivery. Recirculation of the Final Official Statement shall create noimplication that Dinsmore & Shohl LLP has reviewed any of the matters set forth in such opinionsubsequent to the date of such opinion.

[Closing Date]

Fifth Third Securities, Inc.Columbus, Ohio

Urbana City School DistrictUrbana Ohio

Ladies and Gentlemen:

We have examined the transcript of proceedings submitted relating to the issuance of$31,355,000 School Improvement General Obligation Bonds, Series 2015 (the “Bonds”) of theBoard of Education of the Urbana City School District (the “Issuer”), County of Champaign,Ohio, dated March 25, 2015, numbered R-1 upward and of the denominations of $5,000 and anyintegral multiple thereof. The Bonds mature, bear interest and are subject to redemption uponthe terms set forth therein. We have also examined an executed an authenticated Bond.

Based on this examination, we are of the opinion, based upon laws, regulations, rulingsand decisions in effect on the date hereof, that:

1. The Bonds constitute valid obligations of the Issuer in accordance withtheir terms, which unless paid from other sources, are payable from an ad valorem tax tobe levied upon all the taxable property in the Issuer, without limitation as to rate oramount.

2. Under the laws, regulations, rulings and judicial decisions in effect as ofthe date hereof, interest on the Bonds is excludible from gross income for federal incometax purposes, pursuant to the Internal Revenue Code of 1986, as amended (the “Code”).Furthermore, interest on the Bonds will not be treated as a specific item of tax preference,under Section 57(a)(5) of the Code, in computing the alternative minimum tax forindividuals and corporations. In rendering the opinions in this paragraph, we haveassumed continuing compliance with certain covenants designed to meet therequirements of Section 103 of the Code. Interest on and any profit made on the sale,exchange, or other disposition of the Bonds, are exempt from the Ohio personal incometax, the net income base of the Ohio corporate franchise tax, the Ohio commercialactivity tax, and municipal, school district, and joint economic development districtincome taxes in Ohio. We express no other opinion as to the federal or state taxconsequences of purchasing, holding or disposing of the Bonds.

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In giving this opinion, we have relied upon covenants and certifications of facts,estimates and expectations made by officials of the Issuer and others contained in the transcriptwhich we have not independently verified. It is to be understood that the enforceability of theBonds may be subject to bankruptcy, insolvency, reorganization, moratorium and other laws ineffect from time to time affecting creditors’ rights, and to the exercise of judicial discretion.

This opinion is not intended or provided to be used and cannot be used by an owner ofthe Bonds for the purpose of avoiding penalties that may be imposed on the owner of suchBonds. Each owner of the Bonds should seek advice based on its particular circumstances froman independent tax advisor.

Very truly yours,

DINSMORE & SHOHL LLP

APPENDIX FSUMMARY OF ANNUAL APPROPRIATION RESOLUTION

[SEE ATTACHED]

BE IT RESOLVED by the Board of Education of the URBANA CITY School District,CHAMPAIGN COUNTY, Ohio that to provide for the current expenses and otherexpenditures of said Board of Education, during the fiscal year ending June 30, 2015the following sums be and the same are hereby set aside and appropriated for the severalpurposes for which expenditures are to be made and during said fiscal year, as follows, viz:

Fund Class/Name Fund # SCC Function Total Appropriation**Governmental Fund Types**

GENERAL CLASSGeneral Fund 001

Instructional 0000 1000 15,700,000.00$Supporting Services 0000 2000 7,300,000.00Operation of Non-Ins. Services 0000 3000 250,000.00Extracurricular Activities 0000 4000 500,000.00Other Uses of Funds 0000 7000 275,000.00

Subtotal 24,025,000.00$Debt Service Retirement 0000 6000 -School Bus Fund 9194 2000 .00Other Uses of Funds 9194 7000 .00Inst. Supply/Textbook Set Aside 9991 1000 10,000.00Spending Reserve Set Aside 9994 7000 .00

Total General Fund Class 24,035,000.00

SPECIAL REVENUE CLASSPublic School Support 018 200,000.00$Other Grant 019 5,000.00Severance Payment Fund 035 200,000.00District Managed Activity 300 320,000.00Teacher Development 416 397.99Management Information System 432 -Early Childhood Education 439 120,000.00Schoolnet Data Connectivity 451 9,000.00Intervention Program 460 50,000.00State Vocational Funds 461 15,894.30Misc. State Grant Fund 499 15,000.00Title VI-B Sp Ed Asst. 516 528,437.69Title II-D 533 -Title I School Improvement 536 53,682.58Title I Assist-Disadv. Child 572 650,000.00Title III LEP 551 -Title II-A High Qualified Teacher 590 137,168.44Race to the Top 506 74,013.41Miscellaneous Federal Grants 599 74,605.99

Total Special Revenue Class 2,453,200.40$

11/18/2014

FY 2015 PERMANENT APPROPRIATION RESOLUTION

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Fund Class/Name Fund # SCC Function Total Appropriation

**CAPITAL PROJECTS FUNDS**

Permanent Improvements 003Instruction 0000 1000 7,000.00$Supporting Services 0000 2000 38,000.00Facilities Acquisition/Construction 0000 5000 595,000.00Repay Boiler Bonds/HB 264 0000 6000 100,000.00

Subtotal 740,000.00$HB 264 9999 .00

Vocational Education Equipment 420 .00Schoolnet Equip/Infrastructure 450 .00Total Capital Projects Funds 740,000.00$

**PROPRIETARY FUND TYPES**

ENTERPRISE FUNDS CLASS

Food Service 006 1,025,000.00$Uniform School Supplies 009 61,000.00Special Enterprise Fund 020 .00Total Enterprise Funds Class 1,086,000.00$

INTERNAL SERVICE FUND CLASS

Employee Benefits Self Insurance 024 3,000,000.00$TOTAL INTERNAL SERVICE FUNDS CLASS 3,000,000.00$

**FIDUCIARY FUND TYPES**

TRUST FUND CLASSScholarships 007 5,000.00$Endowment Scholarships 008 5,000.00TOTAL TRUST FUND CLASS 10,000.00$

AGENCY FUND CLASSDistrict Agency 022 30,000.00$Student Managed Activity 200 145,000.00TOTAL AGENCY FUND CLASS 175,000.00$

TOTAL APPROPRIATIONS - ALL FUND TYPES 31,499,200.40$

11/18/2014

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APPENDIX GINVESTMENT POLICY OF THE DISTRICT

[SEE ATTACHED]

6144 - INVESTMENTS

http://www.neola.com/urbana-oh/search/policies/po6144.htm[1/30/15 8:07:54 AM]

Urbana City School DistrictBylaws & Policies

6144 - INVESTMENTS

The Board of Education authorizes the Treasurer to make investments of available monies from the funds of the District in securitiesauthorized by State law. These shall include:

A. bonds, notes, or other obligations of or guaranteed by the United States, or those for which the faith of the United States is pledged for payment of principal and interest thereon but does not include stripped principal or interest obligations of such obligations;

B. bonds, notes, debentures, or any other obligations or securities directly issued by a Federal government agency or instrumentality;

C. interim deposits in Board-approved depositories;

D. bonds and other obligations of the State;

E. no-load money market mutual funds consisting exclusively of obligations described in A. and B. above or repurchase agreements secured by such obligations, provided such investments are made only through banks and savings and loan institutions authorized by R.C. 135.03;

F. the Ohio Subdivision Fund (STAR Ohio).

Under no circumstances may the Treasurer invest in a derivative as defined by the Revised Code, reverse repurchase agreements, or other funds prohibited by law. The Treasurer shall also not make investments which s/he does not reasonably believe can be held until the maturity date or leverage any investment.

Provided the Treasurer has completed additional training that has been approved under the supervision of the Auditor of State, the Treasurer is authorized to invest to a maximum of twenty-five percent (25%) of the District's interim funds in either or a combined total of:

A. commercial paper notes issued by a for-profit corporation, business trust or association, real estate investment trust, common-law trust, unincorporated business, or general or limited partnership which has assets exceeding $500,000,000. Such notes must:

1. be rated at the time of purchase in the highest classification established by at least two (2) rating services;

2. have an aggregate value that does not exceed ten percent (10%) of the outstanding commercial paper of the issuing entity;

3. mature within 180 days after purchase.

B. Bankers acceptances of banks that are members of the FDIC and whose obligations:

1. are eligible for purchase by the Federal Reserve System;

2. mature no later than 180 days after purchase.

Investments made by the Treasurer must mature within five (5) years, unless they are matched to a specific obligation or debt of the

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6144 - INVESTMENTS

http://www.neola.com/urbana-oh/search/policies/po6144.htm[1/30/15 8:07:54 AM]

District.

The Treasurer is also authorized to enter into written repurchase agreements in accordance with 135.14(E) of the Revised Code. Such agreements may be either overnight or within a time not to exceed thirty (30) days and may only involve securities listed in A-E above.

The purpose of the investments is to maximize the returns on the District's excess cash balances consistent with safety of those monies and with the desired liquidity of the investments.

In making investments authorized by Section 135.14 of the Revised Code, the Treasurer may retain the services of an investment advisor, provided the advisor is licensed by the Division of Securities under Section 1707.141 of the Revised Code, or is registered with the Securities and Exchange Commission, or is an eligible institution.

Unless the District’s annual portfolio of investments is $100,000 or less, the Treasurer must place on file with the Auditor of State a written investment policy that has been approved by the Board of Education and signed by all entities conducting investment businesswith the Board. Earnings on an investment may become a part of the fund from which the investment was made, unless otherwise specified by law.

The Treasurer, acting in accord with the law, may withdraw funds from approved public depositories or sell negotiable instruments prior to maturity.

R.C. 133.23, 135.01-.21, 135.22, 45, 135.142, 3317.06, 3315.01, 3315.40, 5705.10

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APPENDIX HFORM OF RULE 15c2-12 CERTIFICATE

(WITH RESPECT TO THE PRELIMINARY OFFICIAL STATEMENT)

Re: $31,355,000 Urbana City School District (County of Champaign, Ohio) SchoolImprovement General Obligation Bonds, Series 2015

The undersigned hereby certifies and represents that he is the duly elected or appointedand acting officer of the Board of Education of the Urbana City School District, County ofChampaign, Ohio (the “Issuer”) authorized to execute and deliver this Certificate and furthercertify as follows:

1. This Certificate is delivered to enable the Underwriter to comply withRule 15c2-12(b)(1) under the Securities Exchange Act of 1934 (the “Rule”) in connectionwith the offering and sale of the referenced bonds (the “Obligations”).

2. In connection with the offering and sale of the Obligations, there has beenprepared a Preliminary Official Statement dated February 25, 2015 (the “PreliminaryOfficial Statement”), setting forth certain information concerning the Issuer, theObligations, and a certain construction project.

3. The information included in the Preliminary Official Statement is deemedfinal within the meaning of the Rule and is accurate and complete, except for certaininformation which has been omitted in accordance with the Rule and which will beprovided in the final Official Statement.

IN WITNESS WHEREOF, we have hereunto set our hands this 25th day of February,2015.

BOARD OF EDUCATION OF THEURBANA CITY SCHOOL DISTRICT(COUNTY OF CHAMPAIGN, OHIO)

By: /s/ Mandy HildebrandTitle: Treasurer

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