matters” herein. the bonds will $3,545,000* · assuming among other matters, the accuracy of...

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PRELIMINARY OFFICIAL STATEMENT DATED AUGUST 7, 2020 SERIAL BONDS REFUNDING

MOODY’S INVESTORS SERVICE: “A1” UNDERLYING “Aa3” ENHANCED See “BOND RATING” Herein

In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”). In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel is also of the opinion that interest on the Bonds is exempt from personal income taxes imposed by the State of New York or any political subdivision thereof (including The City of New York). Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds. See “TAX MATTERS” herein.

The Bonds will NOT be designated "qualified tax-exempt obligations" pursuant to Section 265(b)(3) of the Code.

$3,545,000* PORTVILLE CENTRAL SCHOOL DISTRICT

CATTARAUGUS AND ALLEGANY COUNTIES, NEW YORK GENERAL OBLIGATIONS

CUSIP BASE: 737288

$3,545,000* School District Refunding (Serial) Bonds, 2020 (referred to herein as the “Bonds”)

Dated: Date of Delivery Due: June 15, 2021-2032 MATURITIES*

Year Amount Rate Yield CSP Year Amount Rate Yield CSP Year Amount Rate Yield CSP 2021 $ 570,000 % % 2025 $ 380,000 % % 2029 $ 75,000** % % 2022 550,000 2026 400,000* 2030 75,000** 2023 575,000 2027 235,000* 2031 75,000** 2024 490,000 2028 75,000* 2032 45,000**

** The Bonds maturing in the years 2029-2032 are subject to redemption prior to maturity as described herein under the heading "THE BONDS - Optional Redemption."

The Bonds are general obligations of the Portville Central School District, Cattaraugus and Allegany Counties, New York (the “District”), all the taxable real property within which is subject to the levy of ad valorem taxes to pay the Bonds and interest thereon, without limitation as to rate or amount. (See “THE BONDS – Nature of the Obligation” and “TAX LEVY LIMITATION LAW” herein).

The Bonds will be issued as registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the Bonds. Individual purchases will be made in book-entry form only, in the principal amount of $5,000 each or integral multiples thereof. Purchasers will not receive certificates representing their ownership interest in the Bonds. (See “BOOK-ENTRY-ONLY SYSTEM”).

Interest on the Bonds will be payable on December 15, 2020 and semi-annually thereafter on June 15 and December 15 in each year until maturity. Principal and interest will be paid by the District to DTC, which will in turn remit such principal and interest to its participants, for subsequent distribution to the beneficial owners of the Bonds, as described herein.

The Bonds are offered when, as and if issued and received by the Underwriter and subject to the receipt of the approving legal opinion as to the validity of the Bonds by Orrick, Herrington & Sutcliffe LLP, New York, New York Bond Counsel. Certain legal matters will be passed on for the Underwriter by its counsel, Trespasz & Marquardt, LLP, Syracuse, New York. It is anticipated that the Bonds will be available for delivery through the facilities of DTC located in Jersey City, New Jersey, on or about September 2, 2020.

This Preliminary Official Statement is in a form "deemed final" by the District for the purpose of Securities and Exchange Commission Rule 15c2-12 (the “Rule”). For a description of the District’s agreement to provide continuing disclosure as described in the Rule, see “APPENDIX – C, CONTINUING DISCLOSURE UNDERTAKING” herein.

ROOSEVELT & CROSS INCORPORATED August __, 2020

* Preliminary, subject to change.

PORTVILLE CENTRAL SCHOOL DISTRICTCATTARAUGUS AND ALLEGANY COUNTIES, NEW YORK

SCHOOL DISTRICT OFFICIALS

2020-2021 BOARD OF EDUCATION

DANIEL WENKE President

STEVE ANDRIANOFF CHRIS KLOC 1st Vice President 2nd Vice President

RONALD G. LOTT, II THOMAS ROWE DOUGLAS DOTY

ROBERT COLLIGAN CHERYL WOOD JAMES TKACIK

* * * * * * * * * * *

THOMAS J. SIMON Superintendent

PAMELA SUE ANDERSON Business Executive

ASHLEY HINMAN School District Treasurer

FISCAL ADVISORS & MARKETING, INC. Municipal Advisor

ORRICK, HERRINGTON & SUTCLIFFE LLP Bond Counsel

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&ved=0ahUKEwiWnP_rqtLNAhWH1x4KHUPIAl8QjRwIBw&url=http://www.newyorkschools.com/districts/portville-central-school-district.html&psig=AFQjCNGCtzHAieoqnrcQZi2CFwcG4qAdyw&ust=1467464871682718

No person has been authorized by the Portville Central School District to give any information or to make any representations not contained in this Official Statement, and, if given or made, such information or representations must not be relied upon as having been authorized. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy any of the Bonds in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. The information, estimates and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Portville Central School District.

The Underwriter has provided the following sentence for inclusion in this Official Statement. “The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of its responsibilities under the federal securities law as applied to the facts and circumstances of this transaction, but the Underwriter does not guaranty the accuracy or completeness of such information.”

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKETS. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

TABLE OF CONTENTS Page THE BONDS ............................................................................................ 1

Description of the Bonds ...................................................................... 1 Optional Redemption ............................................................................ 1 Nature of the Obligation ....................................................................... 2

BOOK-ENTRY-ONLY SYSTEM ......................................................... 3 Certificated Bonds ................................................................................ 4

AUTHORIZATION AND PLAN OF REFUNDING .......................... 5 Authorization & Purpose ...................................................................... 5 The Refunding Financial Plan .............................................................. 5 Verification of Mathematical Computations ........................................ 6 Sources and Uses of Bond Proceeds .................................................... 6

THE SCHOOL DISTRICT .................................................................... 7 General Information ............................................................................. 7 District Population ................................................................................ 7 Selected Wealth and Income Indicators ............................................... 7 Major Employers .................................................................................. 8 Unemployment Rate Statistics ............................................................. 8 Form of School Government ................................................................ 8 Budgetary Procedures and Recent Budget Votes................................. 8 Investment Policy ................................................................................. 9 State Aid ............................................................................................. 10 State Aid Revenues ............................................................................. 13 School Facilities ................................................................................. 13 Enrollment Trends .............................................................................. 14 Employees ........................................................................................... 14 Status and Financing of Employee Pension Benefits ......................... 14 Other Post-Employment Benefits ....................................................... 16 Other Information ............................................................................... 17 Financial Statements ........................................................................... 18 New York State Comptroller Report of Examination ........................ 18 The State Comptroller’s Fiscal Stress Monitoring System ................ 19

TAX INFORMATION ......................................................................... 20 Valuations ........................................................................................... 20 Tax Rates Per $1,000 .......................................................................... 20 Tax Collection Procedure ................................................................... 20 Tax Collection Record ........................................................................ 20 Real Property Tax Revenues .............................................................. 21 Larger Taxpayers 2019 Assessment for 2019-2020Tax Roll .......... 21 STAR – School Tax Exemption ......................................................... 21 Additional Tax Information ................................................................ 22

TAX LEVY LIMITATION LAW ....................................................... 22 STATUS OF INDEBTEDNESS .......................................................... 23

Constitutional Requirements .............................................................. 23 Statutory Procedure ............................................................................ 24 Debt Outstanding End of Fiscal Year ................................................ 24 Details of Outstanding Indebtedness .................................................. 24 Debt Statement Summary ................................................................... 25 Bonded Debt Service .......................................................................... 25 Capital Project Plans ........................................................................... 25 Cash Flow Borrowings ....................................................................... 25 Estimated Overlapping Indebtedness ................................................. 26 Debt Ratios ......................................................................................... 26

Page SPECIAL PROVISIONS AFFECTING REMEDIES UPON DEFAULT ..................................................... 26

MARKET AND RISK FACTORS ......................................................... 28

TAX MATTERS ....................................................................................... 29

LEGAL MATTERS ................................................................................. 29

LITIGATION ........................................................................................... 30

CONTINUING DISCLOSURE .............................................................. 30 Historical Compliance ....................................................................... 30

MUNICIPAL ADVISOR ......................................................................... 30

UNDERWRITING ................................................................................... 30

BOND RATING ....................................................................................... 31

MISCELLANEOUS ................................................................................. 31

APPENDIX – A GENERAL FUND - Balance Sheets APPENDIX – A1

GENERAL FUND – Changes in Fund Balance

APPENDIX – A2 GENERAL FUND – Changes in Fund Balance – Budget & Actual APPENDIX – B BONDED DEBT SERVICE APPENDIX – B1 CURRENT BONDS OUTSTANDING APPENDIX – C CONTINUING DISCLOSURE UNDERTAKING APPENDIX – D AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION – JUNE 30, 2019 APPENDIX – E FORM OF BOND COUNSEL’S OPINION

PREPARED WITH THE ASSISTANCE OF

Fiscal Advisors & Marketing, Inc.

250 South Clinton Street, Suite 502 Syracuse, New York 13202

(315) 752-0051 http://www.fiscaladvisors.com

1

OFFICIAL STATEMENT of the

PORTVILLE CENTRAL SCHOOL DISTRICT CATTARAUGUS AND ALLEGANY COUNTIES, NEW YORK

Relating To

$3,545,000* School District Refunding (Serial) Bonds, 2020

This Official Statement, which includes the cover page and appendices, has been prepared by the Portville Central School District, Cattaraugus and Allegany Counties, New York (the "School District" or "District", "County", and "State", respectively) in connection with the sale by the School District of $3,545,000* principal amount of School District Refunding (Serial) Bonds, 2020 (herein referred to as the “Bonds”).

The factors affecting the District’s financial condition and the Bonds are described throughout this Official Statement. Inasmuch as many of these factors, including economic and demographic factors, are complex and may influence the District tax base, revenues, and expenditures, this Official Statement should be read in its entirety, and no one factor should be considered more or less important than any other by reason of its relative position in this Official Statement.

All quotations from and summaries and explanations of provisions of the Constitution and laws of the State and acts and proceedings of the District contained herein do not purport to be complete and are qualified in their entirety by reference to the official compilations thereof, and all references to the Bonds and the proceedings of the District relating thereto are qualified in their entirety by reference to the definitive forms of the Bonds and such proceedings.

This Official Statement should be read with the understanding that the ongoing COVID-19 global pandemic has created prevailing economic conditions (at the global, national, State and local levels) that are highly uncertain, generally negative, and rapidly changing, and these conditions are expected to continue for an indefinite period of time. Accordingly, the District’s overall economic situation and outlook (and all of the specific District-related information contained herein) should be carefully reviewed, evaluated and understood in the full light of this unprecedented world-wide event, the effects of which are extremely difficult to predict and quantify. See “MARKET AND RISK FACTORS - COVID-19” herein.

THE BONDS

Description of the Bonds

The Bonds are general obligations of the District, and will contain a pledge of its faith and credit for the payment of the principal of and interest on the Bonds as required by the Constitution and laws of the State of New York (State Constitution, Art. VIII, Section 2; Local Finance Law, Section 100.00). All the taxable real property within the District is subject to the levy of ad valorem taxes to pay the Bonds and interest thereon, without limitation as to rate or amount. (See “THE BONDS – Nature of the Obligation” and “TAX LEVY LIMITATION LAW” herein.).

The Bonds will be dated the date of delivery and will mature in the principal amounts as set forth on the cover page. The Bonds are not subject to redemption prior to maturity. The “Record Date” of the Bonds will be the last business day of the calendar month preceding each such interest payment date.

The Bonds will be issued as registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee of DTC, which will act as securities depository for the Bonds. Individual purchases will be made in book-entry only form, in the principal amount of $5,000 or integral multiples thereof. Purchasers will not receive certificates representing their ownership interest in the Bonds. Interest on the Bonds will be payable on December 15, 2020 and semi-annually thereafter on June 15 and December 15 in each year until maturity. Principal and interest will be paid by the District to DTC, which will in turn remit such principal and interest to its Participants, for subsequent distribution to the Beneficial Owners of the Bonds, as described herein.

Optional Redemption

The Bonds maturing on or before June 15, 2028 shall not be subject to redemption prior to maturity. The Bonds maturing on or after June 15, 2029 shall be subject to redemption prior to maturity as a whole or in part (and by lot if less than all of a maturity is to be redeemed) at the option of the District on June 15, 2028 or on any date thereafter at par (100.0%), plus accrued interest to the date of redemption.

If less than all of the Bonds of any maturity are to be redeemed, the particular Bonds of such maturity to be redeemed shall be selected by the District by lot in any customary manner of selection as determined by the President of the Board of Education. Notice of such call for redemption shall be given by mailing such notice to the registered holders not more than sixty (60) days nor less than thirty (30) days prior to such date. Notice of redemption having been given as aforesaid, the Bonds so called for redemption shall, on the date for redemption set forth in such call for redemption, become due and payable, together with interest to such redemption date, and interest shall cease to be paid thereon after such redemption date.


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Nature of the Obligation

Each Bond when duly issued and paid for will constitute a contract between the District and the holder thereof.

Holders of any series of notes or bonds of the District may bring an action or commence a proceeding in accordance with the civil practice law and rules to enforce the rights of the holders of such series of notes or bonds.

The Bonds will be general obligations of the District and will contain a pledge of the faith and credit of the District for the payment of the principal thereof and the interest thereon as required by the Constitution and laws of the State. For the payment of such principal and interest, the District has power and statutory authorization to levy ad valorem taxes on all real property within the District subject to such taxation by the District without limitation as to rate or amount.

Although the State Legislature is restricted by Article VIII, Section 12 of the State Constitution from imposing limitations on the power to raise taxes to pay “interest on or principal of indebtedness theretofore contracted” prior to the effective date of any such legislation, the New York State Legislature may from time to time impose additional limitations or requirements on the ability to increase a real property tax levy or on the methodology, exclusions or other restrictions of various aspects of real property taxation (as well as on the ability to issue new indebtedness). Chapter 97 of the New York Laws of 2011, as amended (the “Tax Levy Limitation Law” or “Chapter 97”) applies to local governments and school districts in the State (with certain exceptions) and imposes additional procedural requirements on the ability of municipalities and school districts to levy certain year-to-year increases in real property taxes.

Under the Constitution of the State, the District is required to pledge its faith and credit for the payment of the principal of and interest on the Bonds and is required to raise real estate taxes, and without specification, other revenues, if such levy is necessary to repay such indebtedness. While the Tax Levy Limitation Law imposes a statutory limitation on the District’s power to increase its annual tax levy with the amount of such increase limited by the formulas set forth in the Tax Levy Limitation Law, it also provides the procedural method to surmount that limitation. See (“TAX LEVY LIMITATION LAW,” herein).

The Constitutionally-mandated general obligation pledge of municipalities and school districts in New York State has been interpreted by the Court of Appeals, the State’s highest court, in Flushing National Bank v. Municipal Assistance Corporation for the City of New York, 40 N.Y.2d 731 (1976), as follows:

“A pledge of the City’s faith and credit is both a commitment to pay and a commitment of the City’s revenue generating powers to produce the funds to pay. Hence, an obligation containing a pledge of the City’s “faith and credit” is secured by a promise both to pay and to use in good faith the city’s general revenue powers to produce sufficient funds to pay the principal and interest of the obligation as it becomes due. That is why both words, “faith” and “credit” are used and they are not tautological. That is what the words say and this is what the courts have held they mean…So, too, although the Legislature is given the duty to restrict municipalities in order to prevent abuses in taxation, assessment, and in contracting of indebtedness, it may not constrict the City’s power to levy taxes on real estate for the payment of interest on or principal of indebtedness previously contracted….While phrased in permissive language, these provisions, when read together with the requirement of the pledge and faith and credit, express a constitutional imperative: debt obligations must be paid, even if tax limits be exceeded”.

In addition, the Court of Appeals in the Flushing National Bank (1976) case has held that the payment of debt service on

outstanding general obligation bonds and notes takes precedence over fiscal emergencies and the police power of political subdivisions in New York State.

The pledge has generally been understood as a promise to levy property taxes without limitation as to rate or amount to the

extent necessary to cover debt service due to language in Article VIII Section 10 of the Constitution which provides an exclusion for debt service from Constitutional limitations on the amount of a real property tax levy, insuring the availability of the levy of property tax revenues to pay debt service. As the Flushing National Bank (1976) Court noted, the term “faith and credit” in its context is “not qualified in any way”. Indeed, in Flushing National Bank v. Municipal Assistance Corp., 40 N.Y.2d 1088 (1977) the Court of Appeals described the pledge as a direct constitutional mandate. In Quirk v. Municipal Assistance Corp., 41 N.Y.2d 644 (1977), the Court of Appeals stated that, while holders of general obligation debt did not have a right to particular revenues such as sales tax, “with respect to traditional real estate tax levies, the bondholders are constitutionally protected against an attempt by the State to deprive the city of those revenues to meet its obligations.” According to the Court in Quirk, the State Constitution “requires the city to raise real estate taxes, and without specification other revenues, if such a levy be necessary to repay indebtedness.”

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In addition, the Constitution of the State requires that every county, city, town, village, and school district in the State provide annually by appropriation for the payment of all interest and principal on its serial bonds and certain other obligations, and that, if at any time the respective appropriating authorities shall fail to make such appropriation, a sufficient sum shall be set apart from the first revenues thereafter received and shall be applied to such purposes. In the event that an appropriating authority were to make an appropriation for debt service and then decline to expend it for that purpose, this provision would not apply. However, the Constitution of the State does also provide that the fiscal officer of any county, city, town, village, or school district may be required to set apart and apply such first revenues at the suit of any holder of any such obligations.

In Quirk v. Municipal Assistance Corp., the Court of Appeals described this as a “first lien” on revenues, but one that does not

give holders a right to any particular revenues. It should thus be noted that the pledge of the faith and credit of a political subdivision in New York State is a pledge of an issuer of a general obligation bond or note to use its general revenue powers, including, but not limited to, its property tax levy to pay debt service on such obligations, but that such pledge may not be interpreted by a court of competent jurisdiction to include a constitutional or statutory lien upon any particular revenues. While the courts in New York State have historically been protective of the rights of holders of general obligation debt of political subdivisions, it is not possible to predict what a future court might hold.

BOOK-ENTRY-ONLY SYSTEM The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond certificate will be issued for each maturity and amount and will be deposited with DTC. DTC, a limited-purpose trust company organized under the New York Banking Law, is a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

http://www.dtcc.com/

http://www.dtc.org/

4

Principal and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District. Under such circumstances, in the event that a successor depository is not obtained, note certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, note certificates will be printed and delivered. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the accuracy thereof. Source: The Depository Trust Company. THE DISTRICT CANNOT AND DOES NOT GIVE ANY ASSURANCES THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE BONDS (1) PAYMENTS OF PRINCIPAL OF OR INTEREST ON THE BONDS; (2) CONFIRMATIONS OF THEIR OWNERSHIP INTERESTS IN THE BONDS; OR (3) OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS PARTNERSHIP NOMINEE, AS THE REGISTERED OWNER OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE DISTRICT WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO DTC, THE DIRECT PARTICIPANTS, THE INDIRECT PARTICIPANTS OF DTC OR THE BENEFICIAL OWNERS WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC; (2) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OF OR INTEREST ON THE BONDS; (3) THE DELIVERY BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC OF ANY NOTICE TO ANY BENEFICIAL OWNER; OR (4) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS THE REGISTERED HOLDER OF THE BONDS. THE INFORMATION CONTAINED HEREIN CONCERNING DTC AND ITS BOOK-ENTRY SYSTEM HAS BEEN OBTAINED FROM DTC AND THE DISTRICT MAKES NO REPRESENTATION AS TO THE COMPLETENESS OR THE ACCURACY OF SUCH INFORMATION OR AS TO THE ABSENCE OF MATERIAL ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF. Certificated Bonds DTC may discontinue providing its services with respect to the Bonds at any time by giving notice to the District and discharging its responsibilities with respect thereto under applicable law, or the District may terminate its participation in the system of book-entry-only transfers through DTC at any time. In the event that such book-entry-only system is discontinued, the following provisions will apply: the Bonds will be issued in fully registered form in denominations of $5,000 each or any integral multiple thereof. Principal of the Bonds when due will be payable upon presentation at the office of a bank or trust company located and authorized to do business in the State as a fiscal agent bank to be named by the District upon termination of the book-entry-only system. Interest on the Bonds will continue to be payable on December 15, 2020 and semi-annually thereafter on June 15 and December 15 in each year until maturity. Such interest will be payable by check drawn on the fiscal agent and mailed to the registered owner on each interest payment date at the address as shown on the registration books of the fiscal agent as of the last business day of the calendar month preceding each such interest payment date. Bonds may be transferred or exchanged at no cost to the registered owner at any time prior to maturity at the office of the fiscal agent for Bonds of the same or any other authorized denomination or denominations in the same aggregate principal amount upon the terms set forth in the Refunding Bond Certificate of the President of the Board of Education authorizing the sale of the Bonds and fixing the details thereof and in accordance with the Local Finance Law. The fiscal agent shall not be obligated to make any such transfer or exchange of Bonds between the last business day of the calendar month preceding an interest payment date and such interest payment date.

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AUTHORIZATION AND PLAN OF REFUNDING Authorization and Purpose The Bonds are being issued pursuant to the Constitution and statutes of the State, including particularly section 90.10 of the Local Finance Law, a refunding bond resolution adopted by the Board of Education on July 13, 2020 (the “Refunding Bond Resolution”) and other proceedings and determinations related thereto. The Refunding Bond Resolution authorizes the refunding of all or a portion of (i) the outstanding principal balance of the School District (Serial) Bonds, 2009 (the “2009 Refunded Bonds”), dated June 15, 2009, originally issued by the School District in the aggregate principal amount of $2,755,000 maturing in the years 2021 and thereafter and (ii) the School District (Serial) Bonds, 2012 (the “2012 Refunded Bonds” and together with the 2009 Refunded Bonds the “Refunded Bonds”), dated June 27, 2012, originally issued by the School District in the aggregate principal amount of $5,660,000 maturing in the years 2021 and thereafter and authorizes issuance of the Bonds in the principal amount not to exceed $5,600,000 to provide the funds necessary to effect the refunding of the Refunded Bonds. The 2009 Refunded Bonds and 2012 Refunded Bonds were authorized by the Board of Education pursuant to bond resolutions adopted on November 21, 2006 and September 29, 2009 respectively to provide funds for the following purposes and amounts: $2,755,000 School District (Serial) Bonds, 2009 – Dated June 15, 2009 Purpose Amount Originally Issued

School Facilities Capital Improvement Project $ 2,755,000 $5,600,000 School District (Serial) Bonds, 2012 – Dated June 27, 2012 Purpose Amount Originally Issued

School Facilities Capital Improvement Project $ 5,600,000 The Refunding Financial Plan The Bonds are being issued to effect the refunding of the Refunded Bonds pursuant to the District’s refunding financial plan (the “Refunding Financial Plan”). The Refunding Financial Plan provides that the proceeds of the Bonds (after payment of the underwriting fee and other costs of issuance related to the Bonds) are to be applied to purchase a portfolio of U.S. Treasury securities (the “Government Obligations”) with any remaining amount to be held un-invested in cash. The Government Obligations and un-invested cash are to be placed in an irrevocable escrow fund (the “Escrow Deposit Fund”) with Manufacturers and Traders Trust Company, (the “Escrow Holder”), pursuant to the terms of an escrow contract (the “Escrow Contract”) by and between the District and the Escrow Holder. The Refunding Financial Plan further provides that the Government Obligations will mature in amounts and bear interest sufficient, together with any un-invested cash, to pay the accrued interest on, and the redemption price of the Refunded Bonds (being equal to 100% of the principal amount thereof) on October 5, 2020 (the “Redemption Date”). The Refunding Financial Plan calls for the Escrow Holder, pursuant to the Refunding Bond Resolution and the Escrow Contract, to call the Refunded Bonds for redemption on the Redemption Date. The owners of the Refunded Bonds will have a first lien on all of the cash and Government Obligations necessary for the refunding in the Escrow Deposit Fund into which are required to be deposited all investment income on and maturing principal of the Government Obligations, together with the un-invested cash deposit, until the Refunded Bonds have been paid, whereupon the Escrow Contract, given certain conditions precedent, shall terminate. The District is expected to realize, as a result of the issuance of the Bonds, and in accordance with the Refunding Financial Plan, cumulative dollar and present value debt service savings. Under the Refunding Financial Plan, the Refunded Bonds will continue to be general obligations of the District and will continue to be payable from District sources legally available therefore until they are redeemed on October 5, 2020. However, inasmuch as the Government Obligations and cash held in the Escrow Deposit Fund will have been verified to be sufficient to meet all scheduled payments of interest on, and the redemption price of, the Refunded Bonds, it is not anticipated that such District sources of payment will be used. (See “Verification of Mathematical Computations” herein.)

THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK

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The list of Refunded Bond maturities herein set forth below, may be changed by the District in its sole discretion due to market or other factors considered relevant by the District at the time of pricing of the Bonds and no assurance can be given that any particular maturity thereof will be refunded. $2,755,000 School District (Serial) Bonds, 2009 – Dated June 15, 2009 CUSIP BASE: 737288

Redemption Redemption Due June 15th Principal Amount Interest Rate Date Price CSP

2021 $ 220,000 4.125% 10/05/2020 100.00% FN5 2022 230,000 4.125 10/05/2020 100.00 FP0 2023 240,000 4.125 10/05/2020 100.00 FQ8 2024 130,000 4.125 10/05/2020 100.00 FR6 $ 820,000 $5,600,000 School District (Serial) Bonds, 2012 – Dated June 27, 2012 CUSIP BASE: 737288

Redemption Redemption Due June 15th Principal Amount Interest Rate Date Price CSP

2021 $ 365,000 3.000% 10/05/2020 100.00% GK0 2022 375,000 3.000 10/05/2020 100.00 GL8 2023 385,000 3.000 10/05/2020 100.00 GM6 2024 400,000 3.000 10/05/2020 100.00 GN4 2025 410,000 3.000 10/05/2020 100.00 GP9 2026 425,000 3.000 10/05/2020 100.00 GQ7 2027 250,000 3.000 10/05/2020 100.00 GR5 2028 85,000 3.375 10/05/2020 100.00 GS3 2029 85,000 3.375 10/05/2020 100.00 GT1 2030 90,000 3.500 10/05/2020 100.00 GU8 2031 90,000 3.625 10/05/2020 100.00 GV6 2032 60,000 3.750 10/05/2020 100.00 GW4 $ 3,020,000

The proceeds of the Refunded Bonds have been expended.

Verification of Mathematical Computations

Causey Demgen & Moore PC, a firm of independent public accountants, will deliver to the District, on or before the date of delivery of the Bonds, its report indicating that it has verified, in accordance with standards established by the American Institute of Certified Public Accountants, the information and assertions provided by the District and its representatives. Included in the scope of its engagement will be a verification of the mathematical accuracy of (a) the mathematical computations of the adequacy of the cash and the maturing principal of and interest on, the Government Obligations used to fund the Escrow Deposit Fund to be established by the Escrow Holder to pay, when due, the interest on, and the redemption price of, the Refunded Bonds; and (b) the mathematical computations supporting the conclusion of Bond Counsel that the Bonds are not “arbitrage bonds” under the Code and the regulations promulgated thereunder. The verification performed by Causey Demgen & Moore PC will be solely based upon data, information and documents provided to Causey Demgen & Moore PC by the District and its representatives. Causey Demgen & Moore PC reports of its verification will state Causey Demgen & Moore PC has no obligation to update the report because of events occurring, or data or information coming to their attention, subsequent to the date of the report.

Sources and Uses of Bond Proceeds

Proceeds of the Bonds are to be applied as follows:

Sources: Par Amount of the Bonds $ Original Issue Premium/(Discount) Total $ Uses: Deposit to Escrow Fund $ Underwriter's Discount Costs of Issuance and Contingency Total $

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THE SCHOOL DISTRICT General Information The District encompasses approximately 100 square miles within the Towns of Hinsdale, Olean and Portville in Cattaraugus County, and the Towns of Clarksville and Genesee in Allegany County. The District is located in the southwestern corner of New York State. The City of Jamestown lies approximately forty miles to the west of the District. The District is served by a road network which includes New York State Route #17, #417, #305 and a variety of local roadways. National Fuel and National Grid provide electricity and gas service to residential, commercial and industrial users. Fire protection is furnished throughout the District by volunteer fire companies and through fire protection districts. Police protection is provided by local police departments. Commercial banks located within or in close proximity to the District include Community Bank, N.A. and Five Star Bank. Source: District officials. District Population The current estimated population of the District is 4,691. (Source: 2018 U.S. Census Bureau estimate) Selected Wealth and Income Indicators Per capita income statistics are not available for the District as such. The smallest areas for which such statistics are available, which includes the District, are the Towns and the Counties listed below. The figures set below with respect to such Towns and Counties is included for information only. It should not be inferred from the inclusion of such data in the Official Statement that the Towns or the Counties are necessarily representative of the District, or vice versa.

Per Capita Income Median Family Income 2000 2006-2010 2014-2018 2000 2006-2010 2014-2018

Towns of: Olean $ 19,265 $ 22,601 $ 29,919 $ 47,232 $ 50,042 $ 69,267 Portville 18,043 24,343 29,757 41,270 55,240 70,947 Clarksville 13,931 19,168 21,521 35,000 39,375 52,250 Genesee 16,169 21,489 24,319 44,100 52,629 49,444 Counties of: Cattaraugus 15,959 20,824 24,628 39,318 51,227 59,547 Allegany 14,975 20,058 23,030 38,580 49,864 57,761 State of: New York 23,389 30,948 37,470 51,691 67,405 80,419 Note: 2015-2019 American Community Survey estimates are not available as of the date of this Official Statement. Source: U.S. Census Bureau, 2000 census, 2006-2010 and 2014-2018 American Community Survey data.

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Major Employers The larger employers located within the area in and around the District include:

Name Type Employees

Portville Central School District Public Education 223 Sprague’s Restaurant/Farm Market 100 Keystone Tool & Dye Tool and Dye Work 60 Portville Truck & Auto repair Truck & Auto Repair, Retail 52

Source: District officials.

Note: The employment figures listed above predate the COVID-19 pandemic.

Unemployment Rate Statistics Unemployment statistics are not available for the District as such. The smallest area for which such statistics are available (which includes the District) are the Counties of Cattaraugus and Allegany and the State of New York. The information set forth below with respect to the Counties and State is included for informational purposes only. It should not be implied from the inclusion of such data in this Official Statement that the Counties or State, are necessarily representative of the District, or vice versa.

Annual Average 2013 2014 2015 2016 2017 2018 2019

Cattaraugus County 8.5% 7.0% 6.3% 6.0% 6.2% 5.3% 5.1% Allegany County 7.5 6.2 6.5 6.3 6.6 5.6 5.5 New York State 7.7 6.3 5.3 4.9 4.7 4.1 4.0

2020 Monthly Figures

Jan Feb Mar Apr May June July

Cattaraugus County 6.5% 6.1% 6.3% 17.6% 13.3% 12.9% N/A Allegany County 6.7 6.2 6.3 13.2 10.2 10.6 N/A New York State 4.1 3.9 4.2 15.1 14.2 15.6 N/A

Note: Figures in this section are historical and do not speak as to current or projected employment rates. Unemployment has drastically increased since mid-March due to the COVID-19 global pandemic. See “COVID-19” herein. Note: Unemployment rates for the month of July of 2020 are unavailable as of the date of this Official Statement. Source: Department of Labor, State of New York. (Note: Figures not seasonally adjusted).

Form of School Government

The Board of Education, which is the policy-making body of the District, consists of nine members with overlapping five-year terms. Each Board member must be a qualified voter of the District and no Board member may hold certain other District offices or positions while serving on the Board of Education. The President and the Vice President are selected by the Board members. The President of the Board is the chief fiscal officer of the District.

Budgetary Procedures and Recent Budget Votes Pursuant to the Education Law, the Board of Education annually prepares or causes to be prepared a tentative budget of the District for the ensuing fiscal year. This tentative budget must be completed at least fourteen days before the annual District meeting at which it is to be presented. Copies are available upon request to taxpayers within the District, fourteen days preceding such meeting and at each such meeting. The Board must also give notice that a copy of the tentative budget may be obtained at each schoolhouse within the District. The Board of Education causes a notice to be published stating the time, date, place and purpose of the annual or district meeting. At least forty-five days must elapse between the first publication of such notice and the date specified for such meeting. The meeting must be held at the time and place specified but it may be adjourned to permit voting on the following day. If the qualified voters at the annual or School District meeting approve the tentative budget, the Board of Education, by resolution adopts the tentative budget as the budget of the District for the ensuing year.

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If by majority vote the budget is rejected, the Board of Education may make any change, alteration or revision to the budget and may hold a second public hearing and referendum. If no budget is approved, the Board of Education, must, pursuant to law, adopt by resolution an austerity budget for the ensuing fiscal year. The Board of Education may then levy a tax for ordinary contingent expenses of the School District, which includes debt service.

Pursuant to Chapter 97 of the Laws of 2011 (“Chapter 97”), beginning with the 2012 – 2013 fiscal year, if the proposed budget requires a tax levy increase that does not exceed the lesser of 2% or the rate of inflation (the “School District Tax Cap”), then a majority vote is required for approval. If the proposed budget requires a tax levy that exceeds the School District Tax Cap, the budget proposition must include special language and a 60% vote is required for approval. Any separate proposition that would cause the District to exceed the School District Tax Cap to be exceeded also must receive at least 60% voter approval.

If the proposed budget is not approved by the required margin, the Board of Education may resubmit the original budget or a revised budget to the voters on the third Tuesday in June, or adopt a contingency budget (which would provide for ordinary contingent expenses, including debt service) that levies a tax levy no greater than that of the prior fiscal year (i.e. a 0% increase in the tax levy).

If the resubmitted and/or revised budget is not approved by the required margin, the Board of Education must adopt a budget that requires a tax levy no greater than that of the prior fiscal year (i.e. a 0% increase in the tax levy). For a complete discussion of Chapter 97, see “TAX LEVY LIMITATION LAW” herein.

Recent Budget Vote Results

The budget for the 2019-20 fiscal year was approved by qualified voters on May 21, 2019 by a vote of 250 to 47. The District’s adopted budget for the 2019-20 fiscal year remained within the Tax Cap imposed by Chapter 97 of the Laws of 2011. The budget called for a total tax levy increase of 2.50%, which was below the District’s tax levy limit of 3.06%.

The budget for the 2020-21 fiscal year was approved by qualified voters on June 16, 2020 by a vote of 648 to 235. The District’s adopted budget for the 2020-21 fiscal year remained within the Tax Cap imposed by Chapter 97 of the Laws of 2011. The budget called for a total tax levy increase of 2.50%, which was below the District’s tax levy limit of 2.89%.

Investment Policy

Pursuant to the statutes of the State of New York, the District is permitted to invest only in the following investments: (1) special time deposits or certificates of deposits in a bank or trust company located and authorized to do business in the State of New York; (2) obligations of the United States of America; (3) obligations guaranteed by agencies of the United States of America where the payment of principal and interest is guaranteed by the United States of America; (4) obligations of the State of New York; (5) with the approval of the New York State Comptroller, tax anticipation notes and revenue anticipation notes issued by any New York municipality or district corporation, other than the District; (6) obligations of a New York public corporation which are made lawful investments by the District pursuant to another provision of law; (7) certain certificates of participation issued on behalf of political subdivisions of the State of New York; and, (8) in the case of District moneys held in certain reserve funds established pursuant to law, obligations issued by the District. These statutes further require that all bank deposits, in excess of the amount insured under the Federal Deposit Insurance Act be secured by a pledge of eligible notes as that term is defined in the law.

Consistent with the above statutory limitations, it is the District's current policy to invest in: (1) certificates of deposit or time deposit accounts that are fully secured as required by statute, (2) obligations of the United States of America or (3) obligations guaranteed by agencies of the United States of America where the payment of principal and interest is guaranteed by the United States of America or (4) obligations of the State of New York. In the case of obligations of the United States government, the District may purchase such obligations pursuant to a written repurchase agreement that requires the purchased securities to be delivered to a third-party custodian.

General Municipal Law and the District policy does not permit the District to enter into reverse repurchase agreements or make other derivative type investments.

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State Aid The District receives financial assistance from the State. In its adopted budget for the 2020-21 fiscal year, approximately 67.74% of the revenues of the District are estimated to be received in the form of State aid. If the State should not adopt its budget in a timely manner, in any year, municipalities and school districts in the State, including the District, may be affected by a delay in the payment of State aid.

COVID-19

The amount of State aid to school districts is dependent in part upon the financial condition of the State. Currently, due the outbreak of COVID-19 the State has declared a state of emergency and the Governor has taken steps designed to mitigate the spread and impacts of COVID-19, including closing schools and non-essential businesses. The outbreak of COVID-19 and the dramatic steps taken by the State to address it have and are expected to continue to negatively impact the State’s economy and financial condition. The full impact of COVID-19 upon the State is not expected to be known for some time; however, it is anticipated that the State will be required to take certain gap-closing actions. Such actions may include, but are not limited to: reductions in State agency operations and/or delays or reductions in payments to local governments or other recipients of State aid including school districts in the State. If this were to occur, reductions in the payment of State aid could adversely affect the financial condition of school districts in the State, including the District.

The State’s 2020-2021 Adopted Budget authorizes the State’s Budget Director to make periodic adjustments to nearly all State spending, including State Aid, in the event that actual State revenues come in below 99% percent of estimates or if actual disbursements exceed 101% of estimates. Specifically, the legislation provides that the State Budget Director will determine whether the State’s 2020-2021 budget is balanced during three “measurement periods”: April 1 to April 30, May 1 to June 30, and July 1 to Dec. 31. According to the legislation, if “a General Fund imbalance has occurred during any Measurement Period,” the State’s Budget Director will be empowered to “adjust or reduce any general fund and/or state special revenue fund appropriation … and related cash disbursement by any amount needed to maintain a balanced budget,” and “such adjustments or reductions shall be done uniformly across the board to the extent practicably or by specific appropriations as needed.” The legislation further provides that prior to making any adjustments or reductions, the State’s Budget Director must notify the Legislature in writing and the Legislature has 10 days following receipt of such notice to prepare and approve its own plan. If the Legislature fails to approve its own plan, the Budget Director’s reductions take effect automatically. (See “State Aid History” herein).

It is anticipated that the State Budget Director’s powers discussed herein will be activated and across-the-board and targeted reductions to local aid programs will be taken to close a substantial portion of the State fiscal year 2021 budget gap caused by the receipts shortfall. On April 25, 2020 the New York State Division of the Budget announced that the State fiscal year 2021 Enacted State Budget Financial Plan (the “Financial Plan”), projects a $13.3 billion shortfall as a direct consequence of the COVID-19 pandemic. As a result, in the absence of Federal assistance, initial budget control actions are expected to significantly reduce State spending in several areas, including “aid-to-localities,” a broad spending category that includes funding for health care, K-12 schools, and higher education as well as support for local governments, public transit systems, and not-for-profits. Reduced receipts are expected to carry through each subsequent year of the four year Financial Plan through State fiscal year 2024. Reductions or delays in the payment of State aid could adversely affect the financial condition of school districts in the State. (See “State Aid History” herein). The availability of State aid and the timeliness of payment of State aid to school districts could be affected by a delay in the adoption of the State budget. No assurance can be given that the State will not experience delays in the adoption of the budget in future fiscal years. Significant delays in the adoption of the State budget could result in delayed payment of State aid to school districts in the State which could adversely affect the financial condition of school districts in the State. There can be no assurance that the State appropriation for building aid and other State aid to school districts will be continued in future years, either pursuant to existing formulas or in any form whatsoever. State aid, including building aid appropriated and apportioned to the School District, can be paid only if the State has such monies available therefor. The availability of such monies and the timeliness of such payment could be affected by a delay in the adoption of the State budget or their elimination therefrom. There can be no assurance that the State’s financial position will not change materially and adversely from current projections. If this were to occur, the State would be required to take additional gap-closing actions. Such actions may include but are not limited to; reductions in State agency operations; delays or reductions in payments to local governments or other recipients of State aid including school districts in the State. Reductions in the payment of State aid could adversely affect the financial condition of school districts in the State. The State is not constitutionally obligated to maintain or continue State aid to the District. No assurance can be given that present State aid levels will be maintained in the future. State budgetary restrictions which could eliminate or substantially reduce State aid could have a material adverse effect upon the District, requiring either a counterbalancing increase in revenues from other sources to the extent available, or a curtailment of expenditures (See also “MARKET AND RISK FACTORS”).

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Should the District fail to receive State aid expected from the State in the amounts and at the times expected, occasioned by a delay in the payment of such monies, the District is authorized by the Local Finance Law to provide operating funds by borrowing in anticipation of the receipt of uncollected State aid. In the event a mid-year reduction in State aid, a deficiency note may be issued in a restricted amount. Potential reductions in Federal aid received by the State. The State receives a substantial amount of federal aid for health care, education, transportation and other governmental purposes, as well as federal funding to respond to, and recover from, severe weather events and other disasters. Many of the policies that drive this federal aid may be subject to change under the federal administration and Congress. Current federal aid projections, and the assumptions on which they rely, are subject to revision in the future as a result of changes in federal policy, the general condition of the global and national economies and other circumstances, including the diversion of federal resources to address the current COVID-19 outbreak. Reductions in Federal funding levels could have a materially adverse impact on the State budget. In addition to the potential fiscal impact of policies that may be proposed and adopted by the new administration and Congress, the State budget may be adversely affected by other actions taken by the Federal government, including audits, disallowances, and changes to Federal participation rates or other Medicaid rules. The State 2020-2021 Enacted Budget continues to allow the Governor to reduce aid to school districts mid-year if receipts from the Federal government are less than what was expected. If federal support is reduced by $850 million or more, the New York State Director of the Budget will develop a plan to make uniform spending reductions by the State. Such plan would take effect automatically unless the State Legislature passes its own plan within 90 days.

Building Aid A portion of the District’s State aid consists of building aid which is related to outstanding indebtedness for capital project purposes. In order to receive building aid, the District must have building plans and specifications approved by the Facilities Planning Unit of the State Education Department. A maximum construction and incidental cost allowance is computed for each building project that takes into account a pupil construction cost allowance and assigned pupil capacity. For each project financed with debt obligations, a bond percentage is computed. The bond percentage is derived from the ratio of total approved cost allowances to the total principal borrowed. Approved cost allowances are estimated until a project final cost report is completed. Aid on debt service is generally paid in the current fiscal year provided such debt service is reported to the Commissioner of Education by November 15 of that year. Any debt service in excess of amounts reported by November 15 will not be aided until the following fiscal year. The building aid received is equal to the approved building expense, or bond percent, times the building aid ratio that is assigned to the District. The building aid ratio is calculated based on a formula that involves the full valuation per pupil in the District compared to a State-wide average. Pursuant to the provisions of Chapter 760 of the Laws of 1963, the District is eligible to receive a Building Aid Estimate from the New York State Department of Education. Since the gross indebtedness of the District is within the debt limit, the District is not required to apply for a Building Aid Estimate. Based on 2020-21 preliminary building aid ratios, the District State Building aid of approximately 85.3% for debt service on State Education Department approved expenditures from July 1, 2004 to the present. The State building aid ratio is calculated each year based upon a formula which reflects Resident Weighted Average Daily Attendance (RWADA) and the full value per pupil compared with the State average. Consequently, the estimated aid will vary over the life of each issue. State building aid is further dependent upon the continued apportionment of funds by the State Legislature. State aid history Following a State budgetary crisis in 2009, State aid to school districts in the State decreased for a number of years with increases established in more recent years. However, as discussed below the COVID-19 outbreak has affected and is expected to continue to affect State aid to the District.

School district fiscal year (2016-2017): The 2016-17 State budget included a school aid increase of $991 million over 2015-16, $863 million of which consists of traditional operating aid. In addition to full-funding of expense based aids ($408 million), the budget also includes a $266 million increase in Foundation Aid and an $189 million restoration to the Gap Elimination Adjustment. The bulk of the remaining increase included $100 million in Community Schools Aid, an aid category, to support school districts that wish to create community schools. The funds may only be used for certain purposes such as providing health, mental health and nutritional services to students and their families. The District not a part of the Community Schools Grant Initiative (CSGI).

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School district fiscal year (2017-2018): The State 2017-18 Enacted Budget increased State aid to education by $1.1 billion, including a $700 million increase in Foundation Aid, bringing the total amount of State aid to education to $25.8 billion or an increase of 4.4%. Expense-based aids to support school construction, pupil transportation, BOCES and special education were continued in full, as is the State’s usual practice. Transportation aid increased by 5.5% and building aid increased by 4.8%. The State 2017-18 Enacted Budget continued to link school aid increases for 2017-18 and 2018-19 to teacher and principal evaluation plans approved by September 1 of the current year in compliance with Education Law Section 3012-d. The State 2017-18 Enacted Budget allows the Governor to reduce aid to school districts mid-year if receipts from the federal government are less than what was expected. The Legislature then will have 90 days to approve the Governor’s plan.

School district fiscal year (2018-2019): The State 2018-19 Enacted Budget included nearly $1 billion in additional education funding, representing a 3.9% increase over 2017-18. Approximately $859 million of that increase is comprised of traditional public school aid, including increased Foundation Aid and full-funding of expense-based aids. Formula-based school aid now stands at $26.03 billion statewide, a 3.4% increase over the last year. The State 2018-19 Enacted Budget included an increase of $618 million in Foundation Aid for school districts. Foundation Aid totaled nearly $17.8 billion statewide. For the seventh consecutive year, the Foundation Aid increase was distributed using a one year, off formula methodology. The State 2018-19 Enacted Budget guaranteed that all school districts received an increase in Foundation Aid over their 2017-18 levels. $50 million of the Foundation Aid increase was “set aside” for certain school districts to fund community schools. The State 2018-19 Enacted Budget fully funded all expense-based aid for 2018-19, including building, transportation, BOCES and special education aid. These categories serve as State reimbursements for school district expenses made in the prior year, based on school district-specific aid ratios. A total of $240 million was approved for increases in all expense-based aids in 2018-19. The State 2018-19 Enacted Budget allows the Governor to reduce aid to school districts mid-year if receipts from the federal government were less than what was expected.

School district fiscal year (2019-2020): The State 2019-2020 Enacted Budget included a total of $27.69 billion for School Aid, a year-to-year funding increase of $956 million or 3.6 percent and will provide additional funding for Foundation Aid of $338.0 million and $409.65 million in reimbursements for expense-based aids. In addition, the 2019-2020 Enacted Budget increases the Community Schools set-aside funding amount by $49.99 million to a total of $250.0 million. This increased funding is targeted to districts with failing schools and/or districts experiencing significant growth in English language learners. The State 2019-2020 Enacted Budget increases the minimum community schools funding amount from $75,000 to $100,000. This ensures all high-need districts across the State can apply the funds to a wide-range of activities.

School district fiscal year (2020-2021): Due to the anticipated impact of the COVID-19 pandemic on State revenues, State aid in the State’s 2020-2021 Enacted Budget is 3.7 percent lower than in the State’s 2019-2020 Enacted Budget but is offset in part with increased Federal support. This reduction in State Operating Funds support will be offset by approximately $1.1 billion in funding provided to the State through the Federal CARES Act, including the Elementary and Secondary School Emergency Education Relief Fund and the Governor’s Emergency Education Relief Fund. With these Federal funds, State aid in the school district fiscal year 2020-2021 is expected to total $27.9 billion, an annual increase of approximately $100 million or 0.4 percent. The State’s 2020-2021 Enacted Budget continues prior year funding levels for existing programs, including Foundation Aid, Community Schools and Universal Prekindergarten. The 2020-2021 Enacted Budget also provides over $200 million in support for competitive grant programs, including $1 million for development of a new Civics Education curriculum and $10 million for a Student Mental Health program. Funding for expense-based aids, such as Building Aid, Transportation Aid, and Boards of Cooperative Educational Services (BOCES) Aid is continued under existing aid formulas. Out-year growth in School Aid reflects current projections of the ten-year average growth in State personal income. The State’s 2020-2021 Enacted Budget authorizes the State’s Budget Director to make periodic adjustments to State Aid, in the event that actual State revenues come in below 99% percent of estimates or if actual disbursements exceed 101% of estimates. See “State Aid” herein for a discussion of this provision set forth in the State’s 2020-2021 Enacted Budget and recent releases by the State regarding the projected revenue shortfalls in such budget.

State Aid Litigation

In January 2001, the State Supreme Court issued a decision in Campaign for Fiscal Equity v. New York mandating that the system of apportionment of State aid to school districts within the State be restructured by the Governor and the State Legislature. On June 25, 2002, the Appellate Division of the State Supreme Court reversed that decision. On June 26, 2003, the State Court of Appeals, the highest court in the State, reversed the Appellate Division, holding that the State must, by July 30, 2004, ascertain the actual cost of providing a sound basic education, enact reforms to the system of school funding and ensure a system of accountability for such reforms. The Court of Appeals further modified the decision of the Appellate Division by deciding against a Statewide remedy and instead limited its ruling solely to the New York City school system.

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After further litigation, on appeal in 2006, the Court of Appeals held that $1.93 billion of additional funds for the New York City schools – as initially proposed by the Governor and presented to the Legislature as an amount sufficient to provide a sound basic education – was reasonably determined. State legislative reforms in the wake of The Campaign for Fiscal Equity decision included increased accountability for expenditure of State funds and collapsing over 30 categories of school aid for school districts in the State into one classroom operating formula referred to as foundation aid. The stated purpose of foundation aid is to prioritize funding distribution based upon student need. As a result of the Court of Appeals ruling schools were to receive $5.5 billion increase in foundation aid over a four fiscal year phase-in covering 2007 to 2011. In school district fiscal year 2009-2010, foundation aid funding was frozen by the State Legislature to the prior fiscal year level, and in the fiscal year thereafter foundation aid funding was reduced through a “gap elimination adjustment” as described above, and other aid adjustments. The final phase-in of foundation aid as originally projected has not occurred as of this date. A case related to the Campaign for Fiscal Equity, Inc. v. State of New York was heard on appeal on May 30, 2017 in New Yorkers for Students’ Educational Rights v. State of New York (“NYSER”) and a consolidated case on the right to a sound basic education. The NYSER lawsuit asserts that the State has failed to comply with the original decision in the Court of Appeals in the Campaign for Fiscal Equity case, and asks the Court of Appeals to require the State to develop new methodologies, formulas and mechanisms for determining State aid, to fully fund the foundation aid formula, to eliminate the supermajority requirement for voter approval of budgets which increase school district property tax levies above the property tax cap limitation, and related matters. On June 27, 2017, the Court of Appeals held that the plaintiffs’ causes of action were properly dismissed by the earlier Appellate Division decision except insofar as two causes of action regarding accountability mechanisms and sufficient State funding for a “sound basic education” as applicable solely to the school districts in New York City and Syracuse. The Court emphasized its previous ruling in the CFE case that absent “gross education inadequacies”, claims regarding State funding for a “sound basic education” must be made on a district-by-district basis based on the specific facts therein. State Aid Revenues The following table illustrates the percentage of total revenues of the District for each of the below completed fiscal years and budgeted new figures comprised of State aid. Percentage of Total Revenues Fiscal Year Total Revenues (1) (2) Total State Aid (1) Consisting of State Aid

2014-2015 $ 15,728,936 $ 10,315,868 65.59% 2015-2016 16,045,842 10,841,582 67.57 2016-2017 16,742,351 11,306,970 67.54 2017-2018 16,906,526 11,264,649 66.63 2018-2019 17,585,641 11,627,184 66.12 2019-2020 (Unaudited) 17,991,949 12,031,026 66.87 2020-2021 (Budgeted) 19,046,090 12,281,586 67.74 (1) General Fund only. (2) Does not include interfund transfers. Source: Audited financial statements for the 2014-2015 fiscal year through and including the 2018-2019 fiscal year, Unaudited

results of the District for the 2019-2020 fiscal year, and the adopted budget for the 2020-2021 fiscal year. The 2019-2020 unaudited figures are projected estimates and audited results may vary therefrom. This table is not audited.

School Facilities

The District currently operates the following facilities:

Name Grades Year(s) Built/Additions Capacity

Portville Central School K-12 1950, ’99 2,500 Source: District officials.

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Enrollment Trends

Actual Projected School Year Enrollment School Year Enrollment 2015-2016 961 2020-2021 999 2016-2017 968 2021-2022 994 2017-2018 973 2022-2023 992 2018-2019 981 2023-2024 991 2019-2020 998 2024-2025 986


Employees

The number of persons employed by the School District, the collective bargaining agents, if any, which represent them and the dates of expiration of the collective bargaining agreements are as follows:

# of Employees (1) Union Contract Expiration Date

86 Portville Faculty Association August 31, 2021 137 Regular full and part-time non-union employees N/A

(1) To offset any New York State Aid reductions due to the COVID-19 pandemic the District has prepared plans for potentialpersonnel reductions to offset potential decreases in Aid received from the State.


Status and Financing of Employee Pension Benefits

Substantially all employees of the District are members of either the New York State and Local Employees' Retirement System ("ERS") (for non-teaching and non-certified administrative employees) or the New York State Teachers' Retirement System ("TRS") (for teachers and certified administrators). (Both Systems are referred to together hereinafter as the "Retirement Systems" where appropriate.) These Retirement Systems are cost-sharing multiple public employer retirement systems. The obligation of employers and employees to contribute and the benefits to employees are governed by the New York State Retirement and Social Security Law (the "Retirement System Law"). The Retirement Systems offer a wide range of plans and benefits which are related to years of service and final average salary, vesting of retirement benefits, death and disability benefits and optional methods of benefit payments. All benefits generally vest after ten years of credited service. The Retirement System Law generally provides that all participating employers in each retirement system are jointly and severally liable for any unfunded amounts. Such amounts are collected through annual billings to all participating employers. Generally, all employees, except certain part-time employees, participate in the Retirement Systems. The Retirement Systems are non-contributory with respect to members hired prior to July 27, 1976. All members working less than ten years must contribute 3% (ERS) or 3.5% (TRS) of gross annual salary towards the cost of retirement programs.

On December 12, 2009, a new Tier V was signed into law. The legislation created a new Tier V pension level, the most significant reform of the State’s pension system in more than a quarter-century. Key components of Tier V include:

• Raising the minimum age at which most civilians can retire without penalty from 55 to 62 and imposing a penaltyof up to 38% for any civilian who retires prior to age 62.

• Requiring ERS employees to continue contributing 3% of their salaries and TRS employees to continuecontributing 3.5% toward pension costs so long as they accumulate additional pension credits.

• Increasing the minimum years of service required to draw a pension from 5 years to 10 years.• Capping the amount of overtime that can be considered in the calculation of pension benefits for civilians at

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

On March 16, 2012, the Governor signed into law the new Tier VI pension program, effective for new ERS and TRS employees hired after April 1, 2012. The Tier VI legislation provides for increased employee contribution rates of between 3% and 6% and contributions at such rates continue so long as such employee continues to accumulate pension credits, an increase in the retirement age from 62 years to 63 years, a readjustment of the pension multiplier, and a change in the time period for the final average salary calculation from 3 years to 5 years. Tier VI employees will vest in the system after ten years of employment and will continue to make employee contribution throughout employment.

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The District is required to contribute at an actuarially determined rate. The actual contributions for the last five fiscal years, unaudited results for the 2019-2020 fiscal year and the budgeted figures for the current fiscal year are as follows: Fiscal Year ERS TRS 2014-2015 $ 279,294 $ 873,549 2015-2016 273,033 693,545 2016-2017 260,955 630,929 2017-2018 248,720 537,558 2018-2019 298,227 602,254 2019-2020 (Unaudited) 320,040 518,096 2020-2021 (Budgeted) 363,230 599,395 Source: District officials. Pursuant to various laws enacted between 1991 and 2002, the State Legislature authorized local governments to make available certain early retirement incentive programs to its employees. Pursuant to various laws enacted between 1991 and 2002, the State Legislature authorized local governments to make available certain early retirement incentive programs to its employees. The District had a retirement incentive for the Teachers Union members for retirement at the end of the 2016-17 fiscal year. One employee took the options at a cost of $26,352, with savings of $33,000 in the 2017-2018 budget. The District currently offers a contractual incentive to employees who retire in the first year of eligibility. Two support staff member has accepted the incentive. Annual savings for the support staff position is estimated to be $25,000. The cost of the incentive is $65,000. Historical Trends and Contribution Rates. Historically there has been a State mandate requiring full (100%) funding of the annual actuarially required local governmental contribution out of current budgetary appropriations. With the strong performance of the Retirement System in the 1990s, the locally required annual contribution declined to zero. However, with the subsequent decline in the equity markets, the pension system became underfunded. As a result, required contributions increased substantially to 15% to 20% of payroll for the employees' and the police and fire retirement systems, respectively. Wide swings in the contribution rate resulted in budgetary planning problems for many participating local governments. A chart of average ERS and TRS rates as a percent of payroll (2017 to 2021) is shown below: Fiscal Year ERS TRS 2015-16 18.2% 13.26% 2016-17 15.5 11.72 2017-18 15.3 9.80 2018-19 14.9 10.62 2019-20 14.6 8.86 2020-21 14.6 9.53* * Estimated. The final rate is expected to be adopted by the New York State Teachers’ Retirement System Board at its

July 29, 2020 meeting. In 2003, Chapter 49 of the Laws of 2003 amended the Retirement and Social Security Law and the Local Finance Law. The amendments empowered the State Comptroller to implement a comprehensive structural reform program for ERS. The reform program established a minimum contribution for any local governmental employer equal to 4.5% of pensionable salaries for bills which were due December 15, 2003 and for all fiscal years thereafter, as a minimum annual contribution where the actual rate would otherwise be 4.5% or less due to the investment performance of the fund. In addition, the reform program instituted a billing system to match the budget cycle of municipalities and school districts that will advise such employers over one year in advance concerning actual pension contribution rates for the next annual billing cycle. Under the previous method, the requisite ERS contributions for a fiscal year could not be determined until after the local budget adoption process was complete. Under the new system, a contribution for a given fiscal year is based on the valuation of the pension fund on the prior April 1 of the calendar year preceding the contribution due date instead of the following April 1 in the year of contribution so that the exact amount may now be included in a budget.

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Chapter 57 of the Laws of 2010 (Part TT) amended the Retirement and Social Security Law to authorize participating employers, if they so elect, to amortize an eligible portion of their annual required contributions to ERS when employer contribution rates rise above certain levels. The option to amortize the eligible portion began with the annual contribution due February 1, 2011. The amortizable portion of an annual required contribution is based on a “graded” rate by the State Comptroller in accordance with formulas provided in Chapter 57. Amortized contributions are to be paid in equal annual installments over a ten-year period, but may be prepaid at any time. Interest is to be charged on the unpaid amortized portion at a rate to be determined by the State Comptroller, which approximates a market rate of return on taxable fixed rate securities of a comparable duration issued by comparable issuers. The interest rate is established annually for that year’s amortized amount and then applies to the entire ten years of the amortization cycle of that amount. When in any fiscal year, the participating employer’s graded payment eliminates all balances owed on prior amortized amounts, any remaining graded payments are to be paid into an employer contribution reserve fund established by the State Comptroller for the employer, to the extent that amortizing employer has no currently unpaid prior amortized amounts, for future such use.

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

Stable Rate Pension Contribution Option. The 2013-14 State Budget included a provision that provides local governments and school districts, including the District, with the option to “lock-in” long-term, stable rate pension contributions for a period of years determined by the State Comptroller and ERS and TRS. The stable rates would be 12% for ERS and 14% for TRS. The pension contribution rates under this program would reduce near-term payments for employers, but will require higher than normal contributions in later years. The District did not participate in the Stable Rate Pension Contribution Option, nor does it intend to do so in the foreseeable future. The investment of monies, and assumptions underlying same, of the Retirement Systems covering the District’s employees is not subject to the direction of the District. Thus, it is not possible to predict, control or prepare for future unfunded accrued actuarial liabilities of the Retirement Systems (“UAALs”). The UAAL is the difference between total actuarially accrued liabilities and actuarially calculated assets available for the payment of such benefits. The UAAL is based on assumptions as to retirement age, mortality, projected salary increases attributed to inflation, across-the-board raises and merit raises, increases in retirement benefits, cost-of-living adjustments, valuation of current assets, investment return and other matters. Such UAALs could be substantial in the future, requiring significantly increased contributions from the District which could affect other budgetary matters. Concerned investors should contact the Retirement Systems administrative staff for further information on the latest actuarial valuations of the Retirement Systems. The State’s 2019-2020 Enacted Budget, which was signed into law as Chapter 59 of the Laws of 2019, includes a provision that will allow school districts in the State to establish a reserve fund for the purpose of funding the cost of TRS contributions, as a sub-fund of retirement contribution reserve funds presently authorized for amounts payable to the ERS by a school district. School districts will be permitted to pay into such reserve fund during any particular fiscal year, an amount not to exceed two percent of the total compensation or salaries of all district-employed teachers who are members of the TRS paid during the immediately preceding fiscal year; provided that the balance of such fund may not exceed ten percent of the total compensation or salaries of all district-employed teachers who are members of the TRS paid during the immediately preceding fiscal year. The District has established such a fund. Other Post-Employment Benefits Healthcare Benefits. It should also be noted that the District provides employment healthcare benefits to various categories of former employees. These costs may be expected to rise substantially in the future. There is now an accounting rule that requires governmental entities, such as the District, to account for employment healthcare benefits as it accounts for vested pension benefits. School districts and Boards of Cooperative Educational Services, unlike other municipal units of government in the State, have been prohibited from reducing health benefits received by or increasing health care contributions paid by retirees below the level of benefits or contributions afforded to or required from active employees since the implementation of Chapter 729 of the Laws of 1994. Legislative attempts to provide similar protection to retirees of other local units of government in the State have not succeeded as of this date. Nevertheless, many such retirees of all varieties of municipal units in the State do presently receive such benefits. OPEB. OPEB refers to "other post-employment benefits," meaning other than pension benefits, disability benefits and OPEB consist primarily of health care benefits, and may include other benefits such as disability benefits and life insurance. Until now, these benefits have generally been administered on a pay-as-you-go basis and have not been reported as a liability on governmental financial statements.

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The District contracted with NyHart, an actuarial firm, to calculate its actuarial valuation under GASB 75 for the fiscal years ending June 30, 2019 and 2020.

The following outlines the changes to the Total OPEB Liability during the past two fiscal years, by source.

Note: The above table is not audited. For additional information see “APPENDIX – D” attached hereto.

There is no authority in current State law to establish a trust account or reserve fund for this liability. The District has reserved $0 towards its OPEB liability. The District funds this liability on a pay-as-you-go basis.

The District’s unfunded actuarial accrued OPEB liability could have a material adverse impact upon the District’s finances and could force the District to reduce services, raise taxes or both.

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

In April 2015, the State Comptroller announced legislation to create an optional investment pool to help the State and local governments fund retiree health insurance and other post-employment benefits. The proposed legislation would allow the following:

• Authorize the creation of irrevocable OPEB trusts, not part of the New York State Common Retirement Fund, so thatNew York state and its local governments can, at their option, help fund their OPEB liabilities;

• Establish an OPEB investment fund in the sole custody of the State Comptroller for the investment of OPEB assets of thestate and participating eligible local governments;

• Designate the president of the Civil Service Commission as the trustee of the state’s OPEB trust and the governing boardsas trustee for local governments; and

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

Under the State Comptroller’s proposal, there are no restrictions on the amount a government can deposit into the trust. The proposed legislation was not enacted. It is not possible to predict whether the Comptroller’s proposed legislation will be reintroduced or enacted if introduced.

Other Information

The statutory authority for the power to spend money for the object or purpose, or to accomplish the object or purpose, for which the Bonds are to be issued is the Education Law and the Local Finance Law.

The District is in compliance with the procedure for the publication of the estoppel notice with respect to the Bonds as provided in Title 6 of Article 2 of the Local Finance Law.

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

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

Except for as shown under “STATUS OF INDEBTEDNESS – Estimated Overlapping Indebtedness” this Official Statement does not include the financial data of any political subdivision having power to levy taxes within the District.

2017 2018Balance Beginning June 30: 8,490,059$ 7,646,091$

Changes for the year: Service cost 162,238 140,206 Interest 245,886 268,830 Differences between expected and actual experience (339,417) (1,240,067) Changes in assumptions (446,226) (440,636) Benefit payments (466,449) (473,893)

Net Changes (843,968)$ (1,745,560)$

2018 2019Balance Ending June 30: 7,646,091$ 5,900,531$

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Financial Statements

The School District retains independent certified public accountants. The last audit report covers the period ending June 30, 2019 and may be found attached hereto as “APPENDIX-D” to this Official Statement. Certain summary financial information of the School District can also be found attached as Appendices to this Official Statement.

The District complies with the Uniform System of Accounts as prescribed for school districts in New York State by the State. This system differs from generally accepted accounting principles as prescribed by the American Institute of Certified Public Accountants' Industry Audit Guide, "Audits of State and Local Governmental Units", and codified in Government Accounting, Auditing and Financial Reporting (GAAFR), published by the Governmental Accounting Standards Board (GASB).

Beginning with the fiscal year ending June 30, 2003, the District issues its financial statements in accordance with GASB Statement No. 34. This statement includes reporting of all assets including infrastructure and depreciation in the Government Wide Statement of Activities, as well as the Management’s Discussion and Analysis.

Unaudited Results for Fiscal Year Ending June 30, 2020

The District expects to end the fiscal year ending June 30, 2020 with an unappropriated unreserved fund balance of $1,083,108. Summary unaudited information for the General Fund for the period ending June 30, 2020 is as follows:

Revenues: $ 17,991,949 Expenditures: 17,482,305

Excess (Deficit) Revenues Over Expenditures: $ 509,644

Total Fund Balance at June 30, 2019: $ 3,995,885

Total Fund Balance at June 30, 2020: $ 4,505,529

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


New York State Comptroller Reports of Examination

The State Comptroller's office, i.e., the Department of Audit and Control, periodically performs a compliance review to ascertain whether the District has complied with the requirements of various State and Federal statutes. These audits can be found by visiting the Audits of Local Governments section of the Office of the State Comptroller website.

The State Comptroller’s office released an audit report of the District on March 29, 2019. The purpose of the audit was to determine whether the Board of Education and District officials properly managed fund balance and reserves for the period July 1, 2015 through September 28, 2018.

Key Findings: • The Board of Education annually appropriated fund balance that was not used to finance operations and overestimated

appropriations by $3.3 million (6 percent annual average) from the 2015-16 through 2017-18 fiscal years.• As of June 30, 2018, unappropriated, unrestricted fund balance totaled $1.4 million and was almost 8 percent of fiscal year

2018-19 appropriations, exceeding the 4 percent statutory limit by approximately $660,000 or 4 percentage points.• Three reserve funds with combined balances of approximately $1.6 million as of June 30, 2018 were not being used as

intended and were overfunded.

Key Recommendations: • Adopt budgets that include reasonable estimates for appropriations and the amount of fund balance that will be used to fund

operations.• Reduce unrestricted fund balance to within the statutory limit and use the excess funds in a manner more beneficial to

taxpayers.• Review and fund reserve balances to reasonable levels and use reserves in accordance with applicable statutes.

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The District provided a response on March 20, 2019. A copy of the complete report and the District’s response can be found by visiting the Audits of Local Governments section of the Office of the State Comptroller website.

The State Comptroller’s office released an audit report of the District on March 29, 2019. The purpose of the audit was to determine whether cafeteria collections were properly collected, recorded and deposited for the period July 1, 2015 through September 28, 2018.

Key Findings: • The Board of Education did not adopt written cafeteria cash receipt policies, cash receipt duties were not properly segregated

and the Cafeteria Manager did not adequately oversee the cash receipt function.• Cafeteria collections totaling $7,200 were not properly recorded by cafeteria staff.

Key Recommendations: • Adopt written policies and develop procedure for the collection and accounting of cafeteria cash receipts.• Ensure all cafeteria collections are properly recorded in the point of sales (POS) system and properly secured until deposited.

The District provided a response on March 20, 2019. A copy of the complete report and the District’s response, and prior audit reports of the District, can be found by visiting the Audits of Local Governments section of the Office of the State Comptroller website.

There are no other recent State Comptroller’s audits of the District, nor any that are currently in progress or pending release.

Source: Website of the Office of the New York State Comptroller. Reference to website implies no warranty of accuracy of information therein, nor inclusion herein by reference.

The State Comptroller’s Fiscal Stress Monitoring System

The State Comptroller has reported that New York State’s school districts and municipalities are facing significant fiscal challenges. As a result, the Office of the State Comptroller has developed a Fiscal Stress Monitoring System (“FSMS”) to provide independent, objectively measured and quantifiable information to school district and municipal officials, taxpayers and policy makers regarding the various levels of fiscal stress under which the State’s school districts and municipalities are operating.

The fiscal stress scores are based on financial information submitted as part of each school district’s ST-3 report filed with the State Education Department annually, and each municipality’s annual report filed with the State Comptroller. Using financial indicators that include year-end fund balance, cash position and patterns of operating deficits, the system creates an overall fiscal stress score which classifies whether a school district or municipality is in “Significant Fiscal Stress”, in “Moderate Fiscal Stress,” as “Susceptible Fiscal Stress” or “No Designation”. Entities that do not accumulate the number of points that would place them in a stress category will receive a financial score but will be classified in a category of “No Designation.” This classification should not be interpreted to imply that the entity is completely free of fiscal stress conditions. Rather, the entity’s financial information, when objectively scored according to the FSMS criteria, did not generate sufficient points to place them in one of the three established stress categories.

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

Fiscal Year Ending Stress Designation Fiscal Score 2019 No Designation 0.0 2018 No Designation 0.0 2017 No Designation 0.0 2016 No Designation 6.7 2015 No Designation 6.7

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

Note: Reference to website implies no warranty of accuracy of information therein. Reference to website implies no warranty of accuracy of information therein, nor inclusion herein by reference.

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TAX INFORMATION

Valuations

Taxable Assessed Valuations

Tax Rate Per $1,000 (Assessed)

Tax Collection Procedure

Tax payments are due on September 1st with no penalties for the first 30 days. The District receives its full levies before the end of their fiscal year. Uncollected amounts are not segregated by the Town tax receivers, and any deficiency in tax collection is the Counties’ liability.

Tax Collection Record

(1) See “Tax Collection Procedure” herein.

Fiscal Year Ending June 30: 2015-16 2016-17 2017-18 2018-19 2019-20Towns of:

Olean 10,424,515$ 8,659,077$ 7,957,623$ 8,071,942$ 8,118,227$ Portville 139,549,414 138,174,992 137,351,824 137,711,950 138,091,599 Clarksville 10,759,918 10,906,590 10,787,234 10,776,471 10,790,259 Genesee 31,165,286 31,245,000 31,247,140 31,555,594 31,640,776

Total Assessed Values 191,899,133$ 188,985,659$ 187,343,821$ 188,115,957$ 188,640,861$

State Equalization Rates

Towns of:Olean 78.00% 78.00% 77.00% 73.00% 72.00%Portville 100.00% 98.00% 95.00% 93.00% 94.00%Clarksville 90.00% 90.00% 86.00% 84.00% 75.00%Genesee 95.00% 90.00% 88.00% 92.00% 80.00%

Total Taxable Full Valuation 197,675,205$ 198,931,371$ 202,966,852$ 206,263,511$ 212,119,254$

Fiscal Year Ending June 30: 2015-16 2016-17 2017-18 2018-19 2019-20Towns of:

Olean 28.43 28.72 29.08 30.79 31.12 Portville 22.17 22.86 23.57 24.17 23.83 Clarksville 24.64 24.89 26.04 26.76 29.87 Genesee 23.34 24.89 25.45 24.43 28.01

Fiscal Year Ending June 30: 2015-16 2016-17 2017-18 2018-19 2019-20Amount of Tax Levy $ 4,383,288 $ 4,456,367 $ 4,545,494 $ 4,636,404 $ 4,752,314Amount Uncollected (1) 376,571 381,155 392,715 361,139 368,259 % Uncollected 8.59% 8.55% 8.64% 7.79% 7.75%

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Real Property Tax Revenues

The following table illustrates the percentage of total revenues of the District for each of the below completed fiscal years, unaudited results for the 2019-2020 fiscal year and budgeted figures for the 2020-2021 fiscal year comprised of Real Property Taxes and Tax Items.

Percentage of Total Total Real Property Taxes and Revenues Consisting of

Fiscal Year Total Revenues (1)(2) Real Property Tax Items Real Property Tax

2014-2015 $ 15,728,936 $ 4,388,814 27.90% 2015-2016 16,045,842 4,389,423 27.36 2016-2017 16,742,357 4,460,217 26.64 2017-2018 16,906,526 4,559,096 26.97 2018-2019 17,585,641 4,648,496 26.43 2019-2020 (Unaudited) 17,991,949 4,764,314 26.48 2020-2021 (Budgeted) 19,046,090 4,871,122 25.58

(1) General Fund only.(2) Does not include interfund transfers.

Source: Audited financial statements for the 2014-2015 fiscal year through and including the 2018-2019 fiscal year, Unaudited results of the District for the 2019-2020 fiscal year, and the adopted budget for the 2020-2021 fiscal year. The 2019-2020 unaudited figures are projected estimates and audited results may vary therefrom. This table is not audited. The collection of Real Property Revenues for the foreseeable future are likely to decrease over prior periods as a result of the COVID-19 pandemic. (See “MARKET AND RISK FACTORS - COVID-19” herein).

Larger Taxpayers 2019 Assessment Roll for 2019-20 Tax Roll

Name Type Assessed Valuation Olean Wholesale Cold Storage $ 5,264,216 National Grid Utility 4,588,060 National Fuel Gas Utility 4,525,822 New York State Electric & Gas Utility 1,428,395 Rochester Gas & Electric Utility 1,160,296 Verizon Utility 1,096,863 CFK Associates, LLC (Keystone Tool & Die) Manufacturer 845,500 Sprague’s Pancake House Restaurant 580,500 Fibercel Manufacturer 558,100 Patton, Michael & Judith Residential 545,600

The ten larger taxpayers listed have a total estimated assessed valuation of $20,593,352, which represents 10.92% of the tax base of the District.

The District does not have any pending or outstanding tax certioraris that are known or believed could have a material impact on the finances of the District. There is, however, a pending PILOT agreement for a solar farm located within the District, with the potential for PILOT agreements for additional solar farms in the foreseeable future.

Source: District Tax Rolls.

STAR – School Tax Exemption

The STAR (School Tax Relief) program provides State-funded exemptions from school property taxes to homeowners for their primary residences. School Districts are reimbursed by the State for real property taxes exempted pursuant to the STAR Program.

Homeowners over 65 years of age with household adjusted gross incomes, less the taxable amount of total distributions from individual retirement accounts and undisclosed retirement annuities (“STAR Adjusted Gross Income”) of $86,300 or less for 2019 benefits and $88,050 or less for 2020 benefits, increased annually according to a Cost-of-Living adjustment, are eligible for an “enhanced” exemption. Other homeowners with household STAR Adjusted Gross income not in excess of $250,000 ($500,000 in the case of a STAR credit, as discussed below) are eligible for a $30,000 “full value” exemption on their primary residence.

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Part A of Chapter 60 of the Laws of 2016 of the State of New York (“Chapter 60”) gradually converts the STAR program from a real property tax exemption to a personal income tax credit. Chapter 60 prohibits new STAR exemptions from being granted unless at least one of the applicants held title to the property on the taxable status date of the assessment roll that was used to levy school district taxes for the 2015-2016 school year (generally, March 1, 2015), and the property was granted a STAR exemption on that assessment roll. A new homeowner may receive a new personal income tax credit in the form of a check. A taxpayer who is eligible for the new credit will receive a check from the State equal to the amount by which the STAR exemption would have reduced his or her school tax bill. A homeowner who owned his or her home on the taxable status date for the assessment roll used to levy taxes for the 2015-2016 school year, and who received a STAR exemption on that roll, may continue to receive a STAR exemption on that home as long as he or she still owns and primarily resides in it. No further action is required (unless the homeowner has been receiving Basic STAR and wants to apply for Enhanced STAR, which is permissible).

The 2019-20 Enacted State Budget makes several changes to the STAR program, which went into effect immediately. The changes are intended to encourage homeowners to switch from the STAR exemption to the STAR credit. The income limit for the exemption has been lowered to $250,000, compared with a $500,000 limit for the credit. The amount received for the STAR exemption will remain the same each year, while the amount of the STAR credit can increase up to two percent annually. Homeowners with STAR Adjusted Gross Income of $250,000 or less have the option to select the credit or the exemption.

The 2020-21 Enacted State Budget requires that STAR benefits be withheld from taxpayers who are delinquent in the payment of their school taxes and lowers the income limit for the exemption to $200,000, compared with a $500,000 limit for the credit.

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

Towns of: Enhanced Exemption Basic Exemption Date Certified Hinsdale $ 63,520 $ 27,300 4/10/20 Olean 65,610 28,200 4/10/20 Portville 65,610 28,200 4/10/20 Clarksville 52,350 22,500 4/10/20 Genesee 56,250 24,560 4/10/20

$1,096,478 of the District’s $4,752,314 school tax levy for the 2019-2020 fiscal year was exempt by the STAR Program. The District received full reimbursement of such exempt taxes from the State in January 2020.

Approximately $1,120,258 of the District’s $4,871,122 school tax levy for the 2020-2021 fiscal year is expected to be exempt by the STAR Program. The District anticipates receiving full reimbursement of such exempt taxes from the State by January 2021.

Additional Tax Information

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

Senior citizens' exemptions are offered to those who qualify.

The estimated total annual property tax bill of a $100,000 market value residential property located in the District is approximately $4,451 including County, Town, School District and Fire District taxes. (2019-2020 rates)

TAX LEVY LIMITATION LAW

On June 24, 2011, Chapter 97 of the Laws of 2011 was signed into law by the Governor (“Chapter 97” or the “Tax Levy Limitation Law”). The Tax Levy Limitation Law applies to all local governments, including school districts (with the exception of New York City, and the counties comprising New York City and school districts in New York City, Buffalo, Rochester, Syracuse, and Yonkers, the latter four of which are indirectly affected by applicability to their respective City.)

Prior to the enactment of the Tax Levy Limitation Law, there was no statutory limitation on the amount of real property taxes that a school district could levy as part of its budget if its budget had been approved by a simple majority of its voters. In the event the budget had been defeated by the voters, the school district was required to adopt a contingency budget. Under a contingency budget, school budget increases were limited to the lesser of four percent (4%) of the prior year’s budget or one hundred twenty percent (120%) of the consumer price index (“CPI”).

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

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Chapter 97 restricts, among other things, the amount of real property taxes that may be levied by or on behalf of a school district in a particular year. It was set to expire on June 15, 2020; however, recent legislation has made it permanent. Pursuant to the Tax Levy Limitation Law, the tax levy of a school district cannot increase by more than the lesser of (i) two percent (2%) or (ii) the annual increase in the CPI, over the amount of the prior year’s tax levy. Certain adjustments are permitted for taxable real property full valuation increases due to changes in physical or quantity growth in the real property base as defined in Section 1220 of the Real Property Tax Law. A school district can exceed the tax levy limitation for the coming fiscal year only if the voters of such school district first approve a tax levy by at least 60% affirmative vote of those voting to override such limitation for such coming fiscal year only. Tax levies that do not exceed the limitation will only require approval by at least 50% of those voting. In the event that the voters reject a tax levy and the district does not go out for a second vote, or if a second vote is likewise defeated, Chapter 97 provides that the tax levy for the new fiscal year may not exceed the tax levy for the prior fiscal year. A school district’s calculation of each fiscal year’s tax levy limit is subject to review by the Commissioner of Education and the Commissioner of Taxation and Finance prior to adoption of each fiscal year budget. There are exceptions for school districts to the tax levy limitation provided in Chapter 97, including expenditures made on account of certain tort settlements and certain increases in the average actuarial contribution rates of the New York State and Local Employees’ Retirement System and the Teachers’ Retirement System. School districts are also permitted to carry forward a certain portion of their unused levy limitation from a prior year. There is also an exception for school districts for “Capital Local Expenditures” subject to voter approval where required by law. This term is defined in a manner that does not include certain items for which a school district may issue debt, including the payment of judgments or settled claims, including tax certiorari payments, and cashflow borrowings, including tax anticipation notes, revenue anticipation notes, budget notes and deficiency notes. “Capital Local Expenditures”, are defined as “the taxes associated with budgeted expenditures resulting from the financing, refinancing, acquisition, design, construction, reconstruction, rehabilitation, improvement, furnishing and equipping of or otherwise providing for school district capital facilities or school district capital equipment, including debt service and lease expenditures, and transportation capital debt service, subject to the approval of the qualified voters where required by law”. The portion of the tax levy necessary to support “Capital Local Expenditures” is defined as the “Capital Tax Levy”, and is an exclusion from the tax levy limitation, applicable to the Bonds. See “State Aid” for a discussion of the New Yorkers for Students’ Educational Rights v. State of New York case which includes a challenge to the supermajority requirements regarding school district property tax increases.

An additional real property tax rebate program applicable solely to school districts was enacted by Chapter 20 of the Laws of 2015, signed into law by the Governor on June 26, 2015. The program applied beginning in the year 2016 and was fully phased in 2019 and includes continued tax cap compliance. See “THE SCHOOL DISTRICT – Budgetary Procedures and Recent Budget Votes” herein for additional information regarding the District’s Tax Levy.

STATUS OF INDEBTEDNESS Constitutional Requirements The New York State Constitution limits the power of the School District (and other municipalities and certain school districts of the State) to issue obligations and to contract indebtedness. Such constitutional limitations in summary form and as generally applicable to the District include the following: Purpose and Pledge. The School District shall not give or loan any money or property to or in aid of any individual or private undertaking or give or loan its credit to or in aid of any of the foregoing or any public corporation. The School District may contract indebtedness only for a School District purpose and shall pledge its faith and credit for the payment of principal of and interest thereon. Payment and Maturity. Except for certain short-term indebtedness contracted in anticipation of taxes or to be paid within three fiscal year periods, indebtedness shall be paid in annual installments commencing no later than two years after the date such indebtedness shall have been contracted and ending no later than the expiration of the period of probable usefulness of the object or purpose as determined by statute; unless substantially level or declining annual debt service is utilized, no installment may be more than fifty percent in excess of the smallest prior installment. The School District is required to provide an annual appropriation for the payment of interest due during the year on its indebtedness and for the amounts required in such year for amortization and redemption of its serial bonds and such required annual installments on its notes.

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Statutory Procedure In general, the State Legislature has, by the enactment of the Local Finance Law, authorized the powers and procedure for the School District to borrow and incur indebtedness subject, of course, to the constitutional provisions set forth above. The power to spend money, however, generally derives from other law, including the Education Law.

Debt Limit. The School District has the power to contract indebtedness for any School District purpose authorized by the Legislature of the State provided the aggregate principal amount thereof shall not exceed ten per centum of the full valuation of the taxable real estate of the School District and subject to certain enumerated deductions such as State aid for building purposes. The statutory method for determining full valuation is by taking assessed valuation of taxable real estate for the last completed assessment roll and applying thereto the ratio (equalization rate) which such assessed valuation bears to the full valuation; such ratio is determined by the State Office of Real Property Services. The Legislature prescribes the manner by which such ratio shall be determined. The School District is generally required by such laws to submit propositions for the expenditure of money for capital purposes to the qualified electors of the District. Upon approval thereby, the Board of Education may adopt a bond resolution authorizing the issuance of bonds, and notes in anticipation of the bonds. No down payment is required in connection with the issuance of District obligations. Each bond resolution usually authorizes the construction, acquisition or installation of the object or purpose to be financed, sets forth the plan of financing and specifies the maximum maturity of the bonds subject to the legal (Constitution, Local Finance Law and case law) restrictions relating to the period of probable usefulness with respect thereto. The Local Finance Law also provides that where a bond resolution is published with a statutory form of notice, the validity of the bonds authorized thereby, including bond anticipation notes issued in anticipation of the sale thereof, may be contested only if: (1) Such obligations are authorized for a purpose for which the District is not authorized to expend money, or (2) There has not been substantial compliance with the provisions of law which should have been complied within the

authorization of such obligations and an action contesting such validity, is commenced within twenty days after the date of such publication or,

(3) Such obligations are authorized in violation of the provisions of the Constitution. The School District has complied with this estoppel procedure in connection with the Bonds. Debt Outstanding End of Fiscal Year Fiscal Years Ending June 30th: 2016 2017 2018 2019 2020 Bonds $ 6,780,000 $ 5,485,000 $ 10,270,000 $ 9,535,000 $ 8,690,000 Bond Anticipation Notes 3,112,739 5,143,341 646,360 650,962 680,961

Total Debt Outstanding $ 9,892,739 $ 10,628,341 $ 10,919,360 $ 10,185,962 $ 9,370,961

Details of Outstanding Indebtedness The following table sets forth the indebtedness of the District as of August 7, 2020: Type of Indebtedness Maturity Amount Bonds 2020-2033 $ 8,690,000 (1)

Bond Anticipation Notes Purchase of Buses September 11, 2020 680,961 (2)

Capital Project July 30, 2020 8,000,000 (2)

Total $ 17,370,961 (1) The total listed above include $3,840,000 outstanding principal of the Districts 2009 and 2012 serial bonds expected to be

refunded by the proceeds of the Bonds. (2) To be redeemed and renewed with available funds of the District and bond anticipation notes.

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Debt Statement Summary Summary of Indebtedness, Debt Limit and Net Debt-Contracting Margin as of August 7, 2020: Full Valuation of Taxable Real Property .......................................................................................... $ 212,119,254 Debt Limit 10% thereof .................................................................................................................... 21,211,925 Inclusions: Bonds .............................................................. $ 8,690,000 (1)

Bond Anticipation Notes ................................ 8,680,961 Total Inclusions ................................ $ 17,370,961 Exclusions: Building Aid (2) ............................................... $ 0 Total Exclusions ............................... $ 0 Total Net Indebtedness ..................................................................................................................... $ 17,370,961

Net Debt-Contracting Margin ........................................................................................................... $ 3,840,964

The percent of debt contracting power exhausted is ......................................................................... 81.89% (1) The total listed above include $3,840,000 outstanding principal of the Districts 2009 and 2012 serial bonds expected to be

refunded by the proceeds of the Bonds. (2) Based on preliminary 2020-21 building aid estimates, the District anticipates State Building aid of 85.3% for debt service on

State Education Department approved expenditures from July 1, 2004 to the present. The District has no reason to believe that it will not ultimately receive all of the building aid it anticipates, however, no assurance can be given as to when and how much building aid the District will receive in relation to the outstanding bonds. (See , :THE SCHOOL DISTRICT – State Aid “ herein.)

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

of the net indebtedness of the District. Bonded Debt Service A schedule of bonded debt service may be found in “APPENDIX – B” to this Official Statement. Capital Project Plans The District annually issues bond anticipation notes for the purchase of buses. On June 16, 2020 the qualified voters of the District authorized the purchase of 2 school buses at a cost not to exceed $260,765. The District anticipates issuing bond anticipation notes in the fall of 2020 to finance the above mentioned purpose of school buses. The District received voter approval in May 21, 2019 for a $13,800,000 capital project to be financed with the issuance of up to $12,800,000 serial bonds and the use of $1,000,000 capital reserve fund monies. On June 18, 2019 the District’s Board of Education approved a bond resolution authorizing $12,800,000 bonds for the above mentioned project. On July 30, 2020 the District issued $8,000,000 bond anticipation notes as the first borrowing against the above mentioned authorization. Future borrowings will occur as the project’s cash flow needs warrant. The District has no other authorized and unissued indebtedness for capital or other purposes. Cash Flow Borrowing The District, historically, does not issue tax anticipation notes, revenue anticipation notes nor budget or deficiency notes. Although the degree of the impact of COVID-19 on the operations and finances of the District is extremely difficult to predict due to the dynamic nature of the COVID-19 outbreak, the District may consider the issuance of additional obligations in the coming fiscal year to address cash flow needs.

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Estimated Overlapping Indebtedness In addition to the School District, the following political subdivisions have the power to issue bonds and to levy taxes or cause taxes to be levied on taxable real property in the School District. The estimated outstanding indebtedness of such political subdivisions is as follows:

Notes: (1) Bonds and bond anticipation notes are as of the close of the respective fiscal years, and are not adjusted to include subsequent

bond or note sales, if any. (2) Water and sewer debt and appropriations. Pursuant to the Local Finance Law, this indebtedness is excluded from the

constitutional debt limit. Source: Comptroller’s Special Report on Municipal Affairs for Local Finance Years Ended in 2018. Debt Ratios The following table sets forth certain ratios relating to the District's indebtedness as of August 7, 2020: Percentage of Amount Per Capita (a) Full Value (b)

Net Indebtedness (c) ..................................................................... $ 17,370,961 $ 3,732.48 8.19% Net Indebtedness Plus Net Overlapping Indebtedness (d) ............ 19,812,673 4,257.13 9.34% (a) The 2018 estimated population of the District is 4,654. (See “THE SCHOOL DISTRICT – Population” herein.) (b) The District's full value of taxable real estate for the 2019-20 fiscal year is $212,119,254. (See “TAX INFORMATION –

Taxable Assessed Valuations” herein.) (c) See "Debt Statement Summary" herein for the calculation of Net Indebtedness. (d) Estimated net overlapping indebtedness is $2,441,712. (See "Estimated Overlapping Indebtedness" herein.) Note: The above ratios do not take into account State building aid the District will receive for past and current construction building

projects.

SPECIAL PROVISIONS AFFECTING REMEDIES UPON DEFAULT State Aid Intercept for School Districts. In the event of a default in the payment of the principal of and/or interest on the Bonds, the State Comptroller is required to withhold, under certain conditions prescribed by Section 99-b of the State Finance Law, state aid and assistance to the District and to apply the amount thereof so withheld to the payment of such defaulted principal and/or interest, which requirement constitutes a covenant by the State with the holders from time to time of the Bonds. The covenant between the State of New York and the purchasers and the holders and owners from time to time of the notes and bonds issued by the school districts in the State for school purposes provides that it will not repeal, revoke or rescind the provisions of Section 99-b, or amend or modify the same so as to limit, impair or impede the rights and remedies granted thereby.

Status of Gross Net District ApplicableMunicipality Debt as of Indebtedness (1) Exclusions (2) Indebtedness Share IndebtednessCounty of:

Cattaraugus 12/31/2018 45,842,738$ 766,138$ 45,076,600$ 3.54% 1,595,712$ Allegany 12/31/2018 23,330,000 - 23,330,000 2.35% 548,255

Town of:Olean 12/31/2018 653,704 - 653,704 1.56% 10,198 Portville 12/31/2018 234,584 30,195 204,389 99.69% 203,755 Clarksville 12/31/2018 - - - 22.12% - Genesee 12/31/2018 160,000 - 160,000 52.37% 83,792

Total: 2,441,712$

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Said section provides that in the event a holder or owner of any bond issued by a school district for school purposes shall file with the State Comptroller a verified statement describing such bond and alleging default in the payment thereof or the interest thereon or both, it shall be the duty of the State Comptroller to immediately investigate the circumstances of the alleged default and prepare and file in his office a certificate setting forth his determinations with respect thereto and to serve a copy thereof by registered mail upon the chief fiscal officer of the school district which issued the bond. Such investigation by the State Comptroller shall cover the current status with respect to the payment of principal of and interest on all outstanding bonds of such school district issued for school purposes and the statement prepared and filed by the State Comptroller shall set forth a description of all such bonds of the school district found to be in default and the amount of principal and interest thereon past due.

Upon the filing of such a certificate in the office of the State Comptroller, he shall thereafter deduct and withhold from the next succeeding allotment, apportionment or payment of such State aid or assistance due to such school district such amount thereof as may be required to pay (a) the school district’s contribution to the State teachers retirement system, and (b) the principal of and interest on such bonds of such school district then in default. In the event such State aid or assistance initially so withheld shall be insufficient to pay said amounts in full, the State Comptroller shall similarly deduct and withhold from each succeeding allotment, apportionment or payment of such State aid or assistance due such school district such amount or amounts thereof as may be required to cure such default. Allotments, apportionments and payments of such State aid so deducted or withheld by the State Comptroller for the payment of principal and interest on bonds shall be forwarded promptly to the paying agent or agents for the bonds in default of such school district for the sole purpose of the payment of defaulted principal of and interest on such bonds. If any of such successive allotments, apportionments or payments of such State Aid so deducted or withheld shall be less than the amount of all principal and interest on the bonds in default with respect to which the same was so deducted or withheld, then the State Comptroller shall promptly forward to each paying agent an amount in the proportion that the amount of such bonds in default payable to such paying agent bears to the total amount of the principal and interest then in default on such bonds of such school district. The State Comptroller shall promptly notify the chief fiscal officer of such school district of any payment or payments made to any paying agent or agents of defaulted bonds pursuant to said Section 99-b.

General Municipal Law Contract Creditors’ Provision. Each Bond when duly issued and paid for will constitute a contract between the District and the holder thereof. Under current law, provision is made for contract creditors of the District to enforce payments upon such contracts, if necessary, through court action. Section 3-a of the General Municipal Law provides, subject to exceptions not pertinent, that the rate of interest to be paid by the District upon any judgment or accrued claim against it on an amount adjudged due to a creditor shall not exceed nine per centum per annum from the date due to the date of payment. This provision might be construed to have application to the holders of the Bonds in the event of a default in the payment of the principal of and interest on the Bonds.

Execution/Attachment of Municipal Property. As a general rule, property and funds of a municipal corporation serving the public welfare and interest have not been judicially subjected to execution or attachment to satisfy a judgment, although judicial mandates have been issued to officials to appropriate and pay judgments out of certain funds or the proceeds of a tax levy. In accordance with the general rule with respect to municipalities, judgments against the District may not be enforced by levy and execution against property owned by the District.

Authority to File for Municipal Bankruptcy. The Federal Bankruptcy Code allows public bodies, such as municipalities, recourse to the protection of a Federal Court for the purpose of adjusting outstanding indebtedness. Section 85.80 of the Local Finance Law contains specific authorization for any municipality in the State or its emergency control board to file a petition under any provision of Federal bankruptcy law for the composition or adjustment of municipal indebtedness. While this Local Finance Law provision does not apply to school districts, there can be no assurance that it will not be made so applicable in the future.

Constitutional Non-Appropriation Provision. There is in the Constitution of the State, Article VIII, Section 2, the following

provision relating to the annual appropriation of monies for the payment of due principal of and interest on indebtedness of every county, city, town, village and school district in the State: “If at any time the respective appropriating authorities shall fail to make such appropriations, a sufficient sum shall be set apart from the first revenues thereafter received and shall be applied to such purposes. The fiscal officer of any county, city, town, village or school district may be required to set aside and apply such revenues as aforesaid at the suit of any holder of obligations issued for any such indebtedness.” This constitutes a specific non-exclusive constitutional remedy against a defaulting municipality or school district; however, it does not apply in a context in which monies have been appropriated for debt service but the appropriating authorities decline to use such monies to pay debt service. However, Article VIII, Section 2 of the Constitution of the State also provides that the fiscal officer of any county, city, town, village or school district may be required to set apart and apply such revenues at the suit of any holder of any obligations of indebtedness issued with the pledge of the faith of the credit of such political subdivision. See “General Municipal Law Contract Creditors’ Provision” herein.

The Constitutional provision providing for first revenue set asides does not apply to tax anticipation notes, revenue anticipation notes or bond anticipation notes.

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Default Litigation. In prior years, certain events and legislation affecting a holder’s remedies upon default have resulted in litigation. While courts of final jurisdiction have upheld and sustained the rights of bondholders, such courts might hold that future events including financial crises as they may occur in the State and in political subdivisions of the State require the exercise by the State or its political subdivisions of emergency and police powers to assure the continuation of essential public services prior to the payment of debt service. See “THE BONDS – Nature of the Obligation” herein.

No Past Due Debt. No principal of or interest on District indebtedness is past due. The District has never defaulted in the payment of the principal of and interest on any indebtedness.

MARKET AND RISK FACTORS

There are various forms of risk associated with investing in the Bonds. The following is a discussion of certain events that could affect the risk of investing in the Bonds. In addition to the events cited herein, there are other potential risk factors that an investor must consider. In order to make an informed investment decision, an investor should be thoroughly familiar with the entire Official Statement, including its appendices, as well as all areas of potential risk.

The financial condition of the District as well as the market for the Bonds could be affected by a variety of factors, some of which are beyond the District's control. There can be no assurance that adverse events in the State or in other jurisdictions in the country, including, for example, the seeking by a municipality or large taxable property owner of remedies pursuant to the Federal Bankruptcy Code or otherwise, will not occur which might affect the market price of and the market for the Bonds. If a significant default or other financial crisis should occur in the affairs of the State or any of its agencies or political subdivisions thereby further impairing the acceptability of obligations issued by borrowers within the State, both the ability of the District to arrange for additional borrowings, and the market for and market value of outstanding debt obligations, including the Bonds, could be adversely affected.

The District relies in part on State aid to fund its operations. There can be no assurance that the State appropriation for State aid to school districts will be continued in future years, either pursuant to existing formulas or in any form whatsoever. State aid appropriated and apportioned to the District can be paid only if the State has such monies available therefore. The availability of such monies and the timeliness of such payment may also be affected by a delay in the adoption of the State budget, the State’s ability to borrow funds in anticipation of the receipt of State taxes in order to pay State aid to municipalities and school districts in the State, including the District, in any year, the impact to the State’s economy and financial condition due to the novel coronavirus (“COVID-19”) outbreak and other circumstances, including State fiscal stress. In several recent years, the District has received delayed payments of State aid which resulted from the State's delay in adopting its budget and appropriating State aid to municipalities and school districts, and consequent delay in State borrowing to finance such appropriations. In any event, State aid appropriated and apportioned to the District can be paid only if the State has such monies available therefore. Should the District fail to receive State aid expected from the State in the amounts or at the times expected, occasioned by a delay in the payment of such monies or by a reduction in State aid, the District is authorized by the Local Finance Law to provide operating funds by borrowing on account of the uncollected State aid. (See also "THE SCHOOL DISTRICT - State Aid").

The enactment of the Tax Levy Limitation Law, which imposes a tax levy limitation upon municipalities, school districts and fire districts in the State, including the District could have an impact upon the market price of the Bonds. See “Tax Levy Limitation Law” herein.

Future legislative proposals, if enacted into law, or clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent the beneficial owners of the Bonds from realizing the full current benefit of the tax status of such interest. No assurance can be given that pending or future legislation or amendments to the Code, if enacted into law, or any proposed legislation or amendments to the Code, will not adversely affect the value of the Bonds, or the tax status of interest on the Bonds. See “TAX MATTERS” herein. COVID 19. An outbreak of disease or similar public health threat, such as the COVID-19 outbreak, or fear of such an event, could have an adverse impact on the District’s financial condition and operating results by potentially delaying the receipt of real property taxes or resulting in a delay or reduction by the State in the payment of State aid. Currently, the spread of COVID-19, a respiratory disease caused by a new strain of coronavirus, has spread globally, including to the United States, and has been declared a pandemic by the World Health Organization. The outbreak of the disease has affected travel, commerce and financial markets globally and is widely expected to affect economic growth worldwide. The current outbreak has caused the Federal government to declare a national state of emergency. The State has also declared a state of emergency and the Governor has taken steps designed to mitigate the spread and impacts of COVID-19, including closing schools and non-essential businesses. The outbreak of COVID-19 and the dramatic steps taken by the State to address it are expected to negatively impact the State’s economy and financial condition. The full impact of COVID-19 upon the State is not expected to be known for some time. Similarly, the degree of the impact to the District’s operations and finances is extremely difficult to predict due to the dynamic nature of the COVID-19 outbreak, including uncertainties relating to its (i) duration, and (ii) severity, as well as with regard to what actions may be taken by governmental and other health care authorities, including the State, to contain or mitigate its impact. The continued spread of the outbreak could have a material adverse effect on the State and municipalities and school districts located in the State, including the District. The District is monitoring the situation and intends to take such proactive measures as may be required to maintain its operations and meet its obligations. (See “THE SCHOOL DISTRICT - State Aid” herein).

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Cybersecurity. The District, like many other public and private entities, relies on a large and complex technology environment to conduct its operations. As such, it may face multiple cybersecurity threats including, but not limited to, hacking, viruses, malware and other attacks on computer or other sensitive digital systems and networks. There can be no assurances that any security and operational control measures implemented by the District will be completely successful to guard against and prevent cyber threats and attacks. The result of any such attacks could impact business operations and/or digital networks and systems and the costs of remedying any such damage could be significant.

TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP (“Bond Counsel”), based upon an analysis of existing laws, regulations, rulings, and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and is exempt from personal income taxes imposed by the State of New York or any political subdivision thereof (including The City of New York). Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. A complete copy of the proposed form of opinion of Bond Counsel are set forth in “APPENDIX – E”. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The District has covenanted to comply with certain restrictions designed to insure that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Further, no assurance can be given that pending or future legislation or amendments to the Code, if enacted into law, or any proposed legislation or amendments to the Code, will not adversely affect the value of, or the tax status of interest on, the Bonds. Certain requirements and procedures contained or referred to the in the Arbitrage Certificate, and other relevant documents may be changed and certain actions (including, without limitation, economic defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Bonds or the interest thereon if any such change occurs or action is taken or omitted. Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from personal income taxes imposed by the State of New York or any political subdivision thereof (including The City of New York), the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds may otherwise affect an owner’s federal or state tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the owner or the owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent owners from realizing the full current benefit of the tax status of such interest. Legislative proposals have been made which would limit the exclusion from gross income of interest on obligations like the Bonds to some extent for taxpayers who are individuals and whose income is subject to higher marginal income tax rates. Other proposals have been made that could significantly reduce the benefit of, or otherwise affect, the exclusion from gross income of interest on obligations like the Bonds. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion

LEGAL MATTERS

Legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approving legal opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel. Bond Counsel’s opinion will be in substantially the form attached hereto as “APPENDIX – E”.

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LITIGATION

In August 2019, a claim was brought by a former student of the District under the New York State Child Victims Act. The scope of damages, if any, cannot presently be assessed as the claim is in its early stages. The District intends to vigorously defend against the claim.

Additionally, the District received notification of a second claim under the New York State Child Victims Act in February of 2020. The claim dates back to 1973 to 1975. The claim has not yet been placed into a formal lawsuit. The scope of damages, if any, cannot presently be assessed as the claim is in its early stages. The District intends to vigorously defend against the claim.

The District is subject to a number of lawsuits in the ordinary conduct of its affairs. Apart from as noted above, the District does not believe, however, that such suits, individually or in the aggregate, are likely to have a material adverse effect on the financial condition of the District.

There is no action, suit, proceedings or investigation, at law or in equity, before or by any court, public board or body pending or, to the best knowledge of the School District, threatened against or affecting the School District to restrain or enjoin the issuance, sale or delivery of the Bonds or the levy and collection of taxes or assessments to pay same, or in any way contesting or affecting the validity of the Bonds or any proceedings or authority of the School District taken with respect to the authorization, issuance or sale of the Bonds or contesting the corporate existence or boundaries of the School District.

CONTINUING DISCLOSURE

In order to assist the purchasers in complying with Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”), the District will enter into a Continuing Disclosure Undertaking, the description of which is attached hereto as “APPENDIX – C”.

Historical Compliance

The District has in the previous five years complied, in all material respects, with any previous undertakings pursuant to Securities Exchange Commission Rule 15c2-12.

MUNICIPAL ADVISOR

Fiscal Advisors & Marketing, Inc. (the "Municipal Advisor"), is a Municipal Advisor, registered with the Securities and Exchange Commission and the Municipal Securities Rulemaking Board. The Municipal Advisor serves as independent municipal advisor to the District on matters relating to debt management. The Municipal Advisor is a municipal advisory and consulting organization and is not engaged in the business of underwriting, marketing, or trading municipal securities or any other negotiated instruments. The Municipal Advisor has provided advice as to the plan of financing and the structuring of the Bonds. The advice on the plan of financing and the structuring of the Bonds was based on materials provided by the District and other sources of information believed to be reliable. The Municipal Advisor has not audited, authenticated, or otherwise verified the information provided by the District or the information set forth in this Official Statement or any other information available to the District with respect to the appropriateness, accuracy, or completeness of disclosure of such information and no guarantee, warranty, or other representation is made by the Municipal Advisor respecting the accuracy and completeness of or any other matter related to such information and this Official Statement The fees to be paid by the District to the Municipal Advisor are partially contingent on the successful closing of the Bonds.

UNDERWRITING

The Bonds are being purchased by Roosevelt & Cross Incorporated (the “Underwriter”) for reoffering to the public. The purchase contract for the Bonds provides that the Underwriter will purchase all of the Bonds, if any are purchased, at a purchase price equal to $___________ (being the par amount of the Bonds plus a net original issue premium of $__________, less an underwriter’s discount for the transaction of $___________). The Underwriter is initially offering the Bonds to the public at the public offering yields indicated on the cover page but the Underwriter may offer and sell the Bonds to certain dealers, institutional investors and others (including sales for deposit into investment trusts, certain of which may be sponsored or managed by the Underwriter) at yields higher than the public offering yields stated on the cover page and the public offering yields may be changed from time to time by the Underwriter.

31

BOND RATING

Moody’s Investors Service, Inc. (“Moody’s”) has assigned its underlying rating of “A1” and enhanced ration of “Aa3” to the Bonds. The rating reflects only the view of Moody’s, and any desired explanation of the significance of such rating should be obtained from Moody’s Investors Service, Inc., World Trade Center, 250 Greenwich St., New York, New York 10007. Phone: (212) 553-0038, Fax: (212) 553-1390.

Generally, rating agencies base their ratings on the information and materials furnished to it and on investigations, studies andassumptions by the respective rating agency. There is no assurance that a particular rating will apply for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing the rating, circumstances so warrant. Any downward revision or withdrawal of the rating of the outstanding bonds may have an adverse effect on the market price of the outstanding bonds.

MISCELLANEOUS

So far as any statements made in this Official Statement involve matters of opinion or estimates whether or not expressly stated, they are set forth as such and not as representations of fact, and no representation is made that any of the statements will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the holders of the Bonds.

Statements in the Official Statement, and the documents included by specific reference, that are not historical facts are “forward-looking statements”, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995, which involve a number of risks and uncertainties, and which are based on the District management’s beliefs as well as assumptions made by, and information currently available to, the District’s management and staff. Because the statements are based on expectations about future events and economic performance and are not statements of fact, actual results may differ materially from those projected. Important factors that could cause future results to differ include legislative and regulatory changes; changes in the economy, and other factors discussed in this and other documents that the District’s files with the repositories. When used in District documents or oral presentation, the words “anticipate”, “believe”, “intend”, “plan”, “foresee”, “likely”, “estimate”, “expect”, “objective”, “projection”, “forecast”, “goal”, “will”, or “should”, or similar words or phrases are intended to identify forward-looking statements.

To the extent any statements made in this Official Statement involve matters of opinion or estimates, whether or not expressly stated, they are set forth as such and not as representations of fact, and no representation is made that any of the statements will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the holder of the Bonds.

Neither Orrick, Herrington & Sutcliffe LLP, New York, New York, Bond Counsel to the District, nor Trespasz & Marquardt LLP, Syracuse, New York,, Counsel to the Underwriter, expresses no opinions as to the accuracy or completeness of information in any documents prepared by or on behalf of the District for use in connection with the offer and sale of the Bonds, including but not limited to, the financial or statistical information in this Official Statement.

References herein to the Constitution of the State and various State and federal laws are only brief outlines of certain provisions thereof and do not purport to summarize or describe all of such provisions.

Concurrently with the delivery of the Bonds, the District will furnish a certificate to the effect that as of the date of the Official Statement, the Official Statement did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein, in the light of the circumstances under which they were made, not misleading, subject to limitation as to information in the Official Statement obtained from sources other than the District, as to which no representation can be made.

The Official Statement is submitted only in connection with the sale of the Bonds by the District and may not be reproduced or used in whole or in part for any other purpose.

The District hereby disclaims any obligation to update developments of the various risk factors or to announce publicly any revision to any of the forward-looking statements contained herein or to make corrections to reflect future events or developments, except to the extent required by Rule 15c2-12 promulgated by the Securities and Exchange Commission.

32

Fiscal Advisors & Marketing, Inc. may place a copy of this Official Statement on its website at www.fiscaladvisors.com. Unless this Official Statement specifically indicates otherwise, no statement on such website is included by specific reference or constitutes a part of this Official Statement. Fiscal Advisors & Marketing, Inc. has prepared such website information for convenience, but no decisions should be made in reliance upon that information. Typographical or other errors may have occurred in converting original source documents to digital format, and neither the School District nor Fiscal Advisors & Marketing, Inc. assumes any liability or responsibility for errors or omissions on such website. Further, Fiscal Advisors & Marketing, Inc. and the School District disclaim any duty or obligation either to update or to maintain that information or any responsibility or liability for any damages caused by viruses in the electronic files on the website. Fiscal Advisors & Marketing, Inc. and the School District also assumes no liability or responsibility for any errors or omissions or for any updates to dated website information. The District contact information is as follows: Ms. Pamela Sue Anderson, Business Manager, Portville Central School District, 500 Elm Street, P.O. Box 790, Portville, New York 14770, Phone (716) 933-6705, Fax (716) 933-7124, email: [email protected] This Official Statement has been duly executed and delivered by the President of the Board of Education of the Portville Central School District. PORTVILLE CENTRAL SCHOOL DISTRICT Dated: August ___, 2020 DANIEL WENKE PRESIDENT OF THE BOARD OF EDUCATION AND CHIEF FISCAL OFFICER

mailto:[email protected]

APPENDIX - APortville CSD

Fiscal Years Ending June 30: 2015 2016 2017 2018 2019

ASSETS Unrestricted Cash 2,063,920$ 1,982,549$ 2,003,694$ 2,077,945$ 2,188,062$ Restricted Cash 1,843,789 2,126,472 2,399,198 2,645,009 2,145,009 Due from Other Funds 466,815 197,496 151,573 203,557 282,888 Accounts Receivable - - - - - State and Federal Aid Receivable 96,751 219,965 149,628 122,787 123,918 Due from Other Governments 10,006 9,839 10,643 28,196 28,043 Other Receivables 232,247 165,662 217,427 226,132 310,632 Investments - - - - - TOTAL ASSETS 4,713,528$ 4,701,983$ 4,932,163$ 5,303,626$ 5,078,552$

LIABILITIES AND FUND EQUITY Accounts Payable 102,534$ 64,114$ 77,882$ 70,981$ 69,676$ Notes Payable - - - - - Accrued Liabilities 60,541 104,129 107,691 107,512 290,430 Due to Other Funds 2,598 20,712 16,480 27,657 52 Due to Other Governments - - - - - Due to Teachers' Retirement System 908,147 729,048 666,966 575,998 640,483 Due to Employees' Retirement System 76,208 66,522 71,362 69,763 82,026 Overpayments - - - - - Deferred Revenue - - - - - TOTAL LIABILITIES 1,150,028$ 984,525$ 940,381$ 851,911$ 1,082,667$

FUND EQUITY Nonspendable -$ -$ -$ -$ -$ Restricted 1,843,789 2,126,472 2,399,198 2,645,009 2,145,009 Assigned 439,297 410,808 417,683 417,467 417,768 Unassigned 1,280,414 1,180,178 1,174,901 1,389,239 1,433,108 TOTAL FUND EQUITY 3,563,500$ 3,717,458$ 3,991,782$ 4,451,715$ 3,995,885$

TOTAL LIABILITIES and FUND EQUITY 4,713,528$ 4,701,983$ 4,932,163$ 5,303,626$ 5,078,552$

Source: Audited financial reports of the District. This Appendix is not itself audited.

GENERAL FUND

Balance Sheets

APPENDIX - A1Portville CSD

Fiscal Years Ending June 30: 2014 2015 2016 2017 2018

REVENUES Real Property Taxes 4,382,192$ 4,375,908$ 4,377,277$ 4,448,303$ 4,546,188$ Real Property Tax Items 12,095 12,906 12,146 11,914 12,908 Charges for Services 559,551 621,979 570,350 673,753 746,187 Use of Money & Property 169,310 166,219 5,042 5,450 8,762 Sale of Property and Compensation for Loss 295 3,520 9,770 2,564 4,640 Miscellaneous 199,097 201,235 175,873 257,236 282,893 Revenues from State Sources 9,840,196 10,315,868 10,841,582 11,306,970 11,264,649 Revenues from Federal Sources 50,999 31,301 53,802 36,161 40,299

Total Revenues 15,213,735$ 15,728,936$ 16,045,842$ 16,742,351$ 16,906,526$

Other Sources: Interfund Transfers 100,000 96,746 97,971 67,855 85,875 Total Revenues and Other Sources 15,313,735$ 15,825,682$ 16,143,813$ 16,810,206$ 16,992,401$

EXPENDITURES General Support 2,167,831$ 2,173,673$ 2,191,850$ 2,209,718$ 2,185,416$ Instruction 7,295,815 7,357,271 7,628,496 7,996,308 8,109,516 Pupil Transportation 973,175 1,053,970 1,031,975 1,110,771 1,162,659 Community Services - - - - - Employee Benefits 3,492,912 3,490,630 3,403,601 3,454,241 3,392,662 Debt Service 1,700,888 1,705,862 1,715,855 1,740,268 1,319,047

Total Expenditures 15,630,621$ 15,781,406$ 15,971,777$ 16,511,306$ 16,169,300$

Other Uses: Interfund Transfers 72,815 34,133 18,078 24,576 363,168 Total Expenditures and Other Uses 15,703,436$ 15,815,539$ 15,989,855$ 16,535,882$ 16,532,468$

Excess (Deficit) Revenues Over Expenditures (389,701) 10,142 153,958 274,324 459,933

FUND BALANCE Fund Balance - Beginning of Year 3,943,059 3,553,358 3,563,500 3,717,458 3,991,782 Prior Period Adjustments (net) - - - - -

Fund Balance - End of Year 3,553,358$ 3,563,500$ 3,717,458$ 3,991,782$ 4,451,715$

Source: Audited financial reports of the District. This Appendix is not itself audited.

GENERAL FUND

Revenues, Expenditures and Changes in Fund Balance

APPENDIX - A2Portville CSD

Fiscal Years Ending June 30: 2020 2021Adopted Final Adopted AdoptedBudget Budget Actual Budget Budget

REVENUES Real Property Taxes 4,636,404$ 4,636,404$ 4,648,496$ 4,752,314$ 4,871,122$ Real Property Tax Items 12,000 12,000 - - 12,000 Charges for Services 644,290 644,290 799,200 730,017 746,133 Use of Money & Property 7,000 7,000 11,428 7,000 7,000 Sale of Property and Compensation for Loss 17,500 17,500 7,403 17,500 12,500 Miscellaneous 145,000 145,000 300,817 145,000 150,000 Revenues from State Sources 12,078,026 12,078,026 11,627,184 12,389,832 12,281,586 Revenues from Federal Sources 40,000 40,000 191,113 100,000 100,000

Total Revenues 17,580,220$ 17,580,220$ 17,585,641$ 18,141,663$ 18,180,341$

Other Sources: Interfund Transfers 239,000 239,000 92,847 124,381 115,749 Total Revenues and Other Sources 17,819,220$ 17,819,220$ 17,678,488$ 18,266,044$ 18,296,090$

EXPENDITURES General Support 2,366,808$ 2,515,982$ 2,293,722$ 2,398,967$ 2,011,126$ Instruction 9,004,920 8,955,671 8,501,052 9,243,616 9,819,357 Pupil Transportation 1,306,464 1,309,639 1,238,287 1,399,775 1,436,648 Community Services - - - - - Employee Benefits 4,035,203 3,942,246 3,599,230 4,011,819 4,196,240 Debt Service 1,475,825 1,475,825 1,468,189 1,481,867 1,482,719 Total Expenditures 18,189,220$ 18,199,363$ 17,100,480$ 18,536,044$ 18,946,090$

Other Uses: Interfund Transfers 30,000 1,054,401 1,033,838 130,000 100,000 Total Expenditures and Other Uses 18,219,220$ 19,253,764$ 18,134,318$ 18,666,044$ 19,046,090$

Excess (Deficit) Revenues Over Expenditures (400,000) (1,434,544) (455,830) (400,000) (750,000)

FUND BALANCE Fund Balance - Beginning of Year 400,000 1,434,544 4,451,715 400,000 750,000 Prior Period Adjustments (net) - - - - - Fund Balance - End of Year -$ -$ 3,995,885$ -$ -$

Source: Audited financial report and budgets of the District. This Appendix is not itself audited.

GENERAL FUND

Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

2019

APPENDIX - BPortville CSD

Fiscal YearEnding REFUNDED BONDS TOTAL NEW

June 30th Principal Interest Total DEBT SERVICE Principal Interest Total DEBT SERVICE

2021 880,000 369,025.00 1,249,025.00 -$ -$ -$ -$ -$ 2022 915,000 334,250.00 1,249,250.00 - - - - - 2023 950,000 298,012.50 1,248,012.50 - - - - - 2024 870,000 260,312.50 1,130,312.50 - - - - - 2025 770,000 225,950.00 995,950.00 - - - - - 2026 805,000 195,650.00 1,000,650.00 - - - - - 2027 640,000 163,900.00 803,900.00 - - - - - 2028 500,000 136,900.00 636,900.00 - - - - - 2029 520,000 113,281.25 633,281.25 - - - - - 2030 545,000 88,662.50 633,662.50 - - - - - 2031 565,000 62,762.50 627,762.50 - - - - - 2032 525,000 35,750.00 560,750.00 - - - - - 2033 205,000 10,250.00 215,250.00

TOTALS 8,690,000$ 2,294,706.25$ 10,984,706.25$ -$ -$ -$ -$ -$

BONDED DEBT SERVICE

PRIOR TO REFUNDING REFUNDING BONDS

APPENDIX - B1Portville CSD

Fiscal YearEnding

June 30th Principal Interest Total Principal Interest Total 2021 220,000$ 33,825.00$ 253,825.00$ 365,000$ 92,700.00$ 457,700.00$ 2022 230,000 24,750.00 254,750.00 375,000 81,750.00 456,750.00 2023 240,000 15,262.50 255,262.50 385,000 70,500.00 455,500.00 2024 130,000 5,362.50 135,362.50 400,000 58,950.00 458,950.00 2025 - - - 410,000 46,950.00 456,950.00 2026 - - - 425,000 34,650.00 459,650.00 2027 - - - 250,000 21,900.00 271,900.00 2028 - - - 85,000 14,400.00 99,400.00 2029 - - - 85,000 11,531.25 96,531.25 2030 - - - 90,000 8,662.50 98,662.50 2031 - - - 90,000 5,512.50 95,512.50 2032 - - - 60,000 2,250.00 62,250.00

TOTALS 820,000$ 79,200.00$ 899,200.00$ 3,020,000$ 449,756.25$ 3,469,756.25$

Fiscal YearEnding

June 30th Principal Interest Total 2021 295,000$ 242,500.00$ 537,500.00$ 2022 310,000 227,750.00 537,750.00 2023 325,000 212,250.00 537,250.00 2024 340,000 196,000.00 536,000.00 2025 360,000 179,000 539,000 2026 380,000 161,000 541,000 2027 390,000 142,000 532,000 2028 415,000 122,500 537,500 2029 435,000 101,750 536,750 2030 455,000 80,000 535,000 2031 475,000 57,250 532,250 2032 465,000 33,500 498,500 2033 205,000 10,250 215,250

TOTALS 4,850,000$ 1,765,750.00$ 6,615,750.00$

2018ADASNY

CURRENT BONDS OUTSTANDING

2009 2012

School District Improvements Construction

APPENDIX – C

CONTINUING DISCLOSURE UNDERTAKING In accordance with the requirements of Rule 15c2-12 as the same may be amended or officially interpreted from time to time (the "Rule"), promulgated by the Securities and Exchange Commission (the "Commission"), the District has agreed to provide, or cause to be provided, (i) In accordance with the requirements of Rule 15c2-12, as the same may be amended or officially interpreted from

time to time (the “Rule”), promulgated by the Securities and Exchange Commission (the “Commission”), the District has agreed to provide, or cause to be provided, to the Electronic Municipal Market Access (“EMMA”) system of the Municipal Securities Rulemaking Board (“MSRB”) or any other entity designated or authorized by the Commission to receive reports pursuant to the Rule, during each fiscal year in which the Bonds are outstanding, (i) certain annual financial information and operating data for the preceding fiscal year in a form generally consistent with the information contained or cross-referenced in the Official Statement dated August ___, 2020 of the District relating to the Bonds under the headings “THE SCHOOL DISTRICT”, “TAX INFORMATION”, “STATUS OF INDEBTEDNESS”, “LITIGATION” and all Appendices (other than Appendix D & E and other than any Appendix related to bond insurance), and (ii) a copy of the audited financial statements, if any, (prepared in accordance with accounting principles generally accepted in the United States of America in effect at the time of the audit) for the preceding fiscal year, commencing with the fiscal year ending June 30, 2020; such information, data, and audit will be so provided on or prior to the later of either the end of the sixth month of each such succeeding fiscal year or, if the audited financial statements are not available at that time, within sixty days following receipt by the District of its audited financial statements for the preceding fiscal year, but, in any event, not later than the last business day of each such succeeding fiscal year;

(ii) in a timely manner not in excess of ten (10) business days after the occurrence of the event, notice of the occurrence

of any of the following events with respect to the Bonds, to EMMA or any other entity designated or authorized by the Commission to receive reports pursuant to the Rule:

(a) principal and interest payment delinquencies

(b) non-payment related defaults, if material

(c) unscheduled draws on debt service reserves reflecting financial difficulties

(d) in the case of credit enhancement, if any, provided in connection with the issuance of the Bonds, unscheduled draws on credit enhancements reflecting financial difficulties

(e) substitution of credit or liquidity providers, or their failure to perform

(f) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds

(g) modifications to rights of bondholders, if material

(h) Bond calls, if material and tender offers

(i) defeasances

(j) release, substitution, or sale of property securing repayment of the Bonds

(k) rating changes

(l) bankruptcy, insolvency, receivership or similar event of the District

(m) the consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material

(n) appointment of a successor or additional trustee or the change of name of a trustee, if material

(o) incurrence of a “financial obligation” of the District, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the District, any of which affect Bond holders, if material; and

(p) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the District, any of which reflect financial difficulties.

Event (c) is included pursuant to a letter from the SEC staff to the National Association of Bond Lawyers dated September 19, 1995. However, event (c) is not applicable, since no "debt service reserves" will be established for the Bonds.

With respect to event (d) the District does not undertake to provide any notice with respect to credit enhancement added after the primary offering of the Bonds.

For the purposes of the event identified in (l) of this section, the event is considered to occur when any of the following occur: The appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.

With respect to events (o) and (p), the term “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “financial obligation” shall not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.

The District may from time to time choose to provide notice of the occurrence of certain other events in addition to those listed above, if the District determines that any such other event is material with respect to the Bonds; but the District does not undertake to commit to provide any such notice of the occurrence of any material event except those events listed above. (iii) in a timely manner to EMMA or any other entity designated or authorized by the Commission to receive reports

pursuant to the Rule, notice of its failure to provide the aforedescribed annual financial information and operating data and such audited financial statement, if any, on or before the date specified.

The District reserves the right to terminate its obligations to provide the aforedescribed annual financial information and operating data and such audited financial statement, if any, and notices of material events, as set forth above, if and when the District no longer remains an obligated person with respect to the Bonds within the meaning of the Rule. The District acknowledges that its undertaking pursuant to the Rule described under this heading is intended to be for the benefit of the holders of the Bonds (including holders of beneficial interests in the Bonds). The right of holders of the Bonds to enforce the provisions of the undertaking will be limited to a right to obtain specific enforcement of the District's obligations under its continuing disclosure undertaking and any failure by the District to comply with the provisions of the undertaking will neither be a default with respect to the Bonds nor entitle any holder of the Bonds to recover monetary damages. The District reserves the right to modify from time to time the specific types of information provided or the format of the presentation of such information, to the extent necessary or appropriate in the judgment of the District, provided that, the District agrees that any such modification will be done in a manner consistent with the Rule, in consultation with nationally recognized bond counsel. A Continuing Disclosure Undertaking Certificate to this effect shall be provided to the purchaser at closing.

APPENDIX – D

PORTVILLE CENTRAL SCHOOL DISTRICT

AUDITED FINANCIAL STATEMENTS

FOR THE FISCAL YEAR ENDED

JUNE 30, 2019 Such Audited Financial Statements and opinion were prepared as of date thereof and have not been reviewed and/or updated in connection with the preparation and dissemination of this Official Statement

TABLE OF CONTENTS

2019 REPORTING PACKAGE

Section

School District’s Audited Financial Statements .................................................................................................... 1

School District’s Management Letter ..................................................................................................................... 2

Extraclassroom Activity Fund Audited Financial Statement ................................................................................ 3

Extraclassroom Activity Fund Management Letter ............................................................................................... 4

Letter to those Charged with Governance ............................................................................................................. 5


TABLE OF CONTENTS

2019 FINANCIAL STATEMENTS

Schedule Page

Independent Auditor’s Report .............................................................................................................................. 1-2

Management’s Discussion and Analysis ............................................................................................................ 3-9

Government-wide Financial Statements

Statement of Net Position ................................................................................................ 1…………………10

Statement of Activities ..................................................................................................... 2…………………11

Fund Financial Statements

Combined Balance Sheet - Governmental Funds ............................................................ 3 ………………...12

Combined Statement of Revenue, Expenditures and Changes in Fund Equity - Governmental Funds ....................................................................................... 4…………………13

Statement of Fiduciary Net Position ................................................................................. 5 ………………...14

Statement of Change in Fiduciary Net Position ................................................................ 6 ………………..15

Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Position ............................................................................................................... 7…………………16

Reconciliation of Governmental Funds Revenue, Expenditures and Changes in Fund Equity to the Statement of Activities ................................................................. 8…………………17

Notes to Financial Statements .............................................................................................................. 18-36

Supplementary Information

Combining Schedule of Revenue and Expenditures and Changes in Fund Equity - Budget and Actual - Governmental Funds ......................... SS1&SS1A …………….37-38

Schedule of Change from Adopted Budget to Final Budget and the Real Property Tax Limit ............................................................................... SS2 ………………..39

Schedule of Project Expenditures - Capital Projects Fund .......................................... SS3 ………………..40

Budget Comparison Statement for State and Other Grant Programs - Special Aid and Food Service Funds ..................................................SS4A ………….……..41

Notes to Schedule of Expenditures Federal Awards .................................................SS4B ………….……..42

Schedule of Expenditures Federal Awards .............................................................. SS4C ………….……..42

Schedule of Capital Assets Net of Related Debt ......................................................... SS5 …………….…..43

Schedule of Changes in the District’s Net OPEB Liability and Related Ratios ............ SS6 ………………...44

Schedule of District Contributions - OPEB .................................................................. SS7 ………………...45

Schedule of District Contributions - New York State Teachers' Retirement System (NYSTRS) and New York State and Local Employees' Retirement System (NYSLERS) ............................................................ SS8... ………………46

Schedule of the District's Proportionate Share of the Net Pension Asset/ Liability - New York State Teachers' Retirement System (NYSTRS) and District's Proportionate Share of the Net Pension Liability - New York State and

Local Employees' Retirement System (NYSLERS) ................................................... SS9 ………………..47

Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with "Government Auditing Standards" ............................................................................. 48-49

Independent Auditor’s Report on Compliance for each Major Federal Program and On Internal Control over Compliance Required by Uniform Guidance ..................................................... 50-51

Schedule of Findings and Questioned Costs ................................................................................................. 52-53

Schedule of Prior Audit Findings ..................................................................................................................... 54-55

INDEPENDENT AUDITOR’S REPORT To the President and Members of The Board of Education Portville Central School District Portville, New York

We have audited the accompanying financial statements of the governmental activities and each major fund of Portville Central School District as of and for the year ended June 30, 2019, and the related notes to the financial statements which collectively comprise the Portville Central School District’s basic financial statements as listed in the accompanying table of contents. We have also audited the fiduciary fund types of the Portville Central School District as of June 30, 2019, as displayed in the District’s basic financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in the Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund and aggregate remaining fund information of the Portville Central School District as of June 30, 2019, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information

We have previously audited Portville Central School District’s June 30, 2018 financial statements and our report dated September 18, 2018, expressed unmodified opinions on the respective financial statements of the governmental activities and each major fund and aggregate remaining fund information. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2018, is consistent, in all material respects, with the audited financial statements from which it has been derived.

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Member of American Institute of Certified Public Accountants Private Companies Practice Section

BUFFA.\,t.\NTE WHIPPLE BU'l·rAPARO. P.C. Cc:rtifi1:d Publir. :\<'t.'l>untan\..'i • Business r\d1,,isors

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, schedule of changes in the District’s net OPEB liability and related ratios, Schedule of District contributions -OPEB, schedule of the District’s share of the net pension asset/liability, and the schedule of the District’s contributions for defined benefit pension plans on pages 3 through 9, 38 through 39, and 45 through 48 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Portville Central School District’s basic financial statements. The combining and individual fund financial statements and other schedules listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards, and is also not a required part of the financial statements.

The combining and individual fund financial statements, the schedule of expenditures of federal awards, and other schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements, the schedule of expenditures of federal awards, and other schedules are fairly stated in all material respects in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated September 17, 2019 on our consideration of Portville Central School 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. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the 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 Portville Central School District's internal control over financial reporting and compliance.

BUFFAMANTE WHIPPLE BUTTAFARO, P.C.

Olean, New York September 17, 2019

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PORTVILLE CENTRAL SCHOOL DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 Page 3

I. Discussion and Analysis

The following is a discussion and analysis of thePortville Central School District’s financialperformance for the year ended June 30, 2019. Thissection is a summary of the District’s financialactivities based on currently known facts, decisions,or conditions. It is based on both the government-wide and fund-based financial statements. Theresults of the current year are discussed incomparison with the prior year, with an emphasisplaced on the current year. This section is only anintroduction and should be read in conjunction withthe District’s financial statements, which follows thissection.

II. Financial Highlights

The following items are the financial highlightsexperienced by the Portville Central School Districtduring the fiscal year ended June 30, 2019:

Overall net position from operations of the Districtincreased during the current year in the amountof $635,000 as compared to an increase of$798,000 during the prior fiscal year.

The District’s total revenue increased from$18,605,000 during June 30, 2018 to$18,852,000 during June 30, 2019. Thisincrease was primarily the result of an increase instate aid, property taxes, and Medicaidassistance partially offset by Smart Bond Act aidreceived in the prior year.

The District’s total expenses increasedapproximately 2% from $17,807,000 during theyear ended June 30, 2018 to $18,217,000 duringthe year ended June 30, 2019. This increasewas primarily related to increases in instructionalsalaries and contractual services offset bydecreases in debt service expenses due to bondissuance costs in the prior year along withdecreases in employee benefits related toactuarial calculated TRS and other post-employment benefit expense.

The District had capital outlays during the currentyear in the amount of approximately $450,000,which primarily related to its STEM labimprovements and bus purchases.

III. Overview of the Financial Statements

This annual report consists of three parts: MD&A(this section), the basic financial statements, andrequired supplementary information. The basicfinancial statements include two kinds of statementsthat present different views of Portville CentralSchool District.

III. Overview of the Financial Statements(continued)

A. Reporting the School District as a Whole (District-wide Financial Statements):

The district-wide statements report information aboutthe School District as a whole using accountingmethods similar to those used by private-sectorcompanies. Activities that are fiduciary in nature arenot included in these statements.

1. Statement of Net Position

The Statement of Net Position (page 10) showsthe “assets” (what is owned), “liabilities” (what isowed) and the “net position” (the resources thatwould remain if all obligations were settled) of theDistrict. The Statement categorizes assets toshow that some assets are very liquid, such ascash and cash equivalents. Some assets arerestricted for certain purposes or reserved foremergencies and cash flow purposes. Someassets are invested in “fixed” or “capital” assets,such as buildings, equipment and other long-livedproperty; and some assets are available to fundbudgets of the following year.

2. Statement of Activities

The Statement of Activities (page 11) shows theamounts of program-specific and general Districtrevenue used to support the District’s variousfunctions.

The Statement of Net Position and Statement ofActivities divide the activities of the District intotwo categories: governmental activities (theschool functions, including general support,instruction, transportation, administration, etc.;property taxes, state and federal revenue usuallysupport most of these functions) and proprietaryactivities. The District only had governmentalactivities during the current fiscal year.

The two district-wide statements report theSchool District’s net position and how they havechanged. Net Position – the difference betweenthe District’s assets and liabilities – is one way tomeasure the District’s financial health or position.Over time, increases or decreases in theDistrict’s net position are an indicator of whetherits financial position is improving or deteriorating,respectively. To assess the District’s overallhealth, you need to consider additional non-financial factors such as changes in the District’sproperty tax base and the condition of schoolbuildings and other facilities.


III. Overview of the Financial Statements (continued) B. Reporting the District’s Most Significant Funds (Fund Financial Statements):

The fund financial statements provide more detailed information about the District’s funds, focusing on its most significant or major funds – not the District as a whole. Funds are accounting devices the District uses to keep track of specific sources of funding and spending on particular programs. Significance of funds is determined based on the proportional size of the funds, the relative importance of the activities of the funds to the District’s operations, and the existence of legal budget requirements. Internal Service funds are never reported as major funds, but are combined and presented in a separate column.

The District has two kinds of funds:

1. Governmental Funds Most of the District’s basic services are included

in governmental funds, which generally focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and the balances left at year-end that are available for spending. Consequently the governmental funds

III. Overview of the Financial Statements (continued) B. Reporting the District’s Most Significant Funds (Fund Financial Statements) (continued):

1. Governmental Funds (continued) statements provide a detailed short-term view

that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District’s programs. Because this information does not encompass the additional long-term focus of the district-wide statements, additional information at the bottom of the governmental funds statements explains the relationship (or differences) between them.

2. Fiduciary Funds The District is the trustee, or fiduciary, for assets

that belong to others, such as the scholarship fund and the student activities funds. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The District excludes these activities from the district-wide financial statements because it cannot use these assets to finance its operations.

Figure A-1 - Major Features of the District-Wide Statements and Fund Financial Statements

Fund Financial Statements District-Wide Governmental Funds Fiduciary Funds Scope Entire district (except fiduciary

funds) The activities of the District that are not proprietary or fiduciary, such as special education and building maintenance

Instances in which the District administers resources on behalf of someone else, such as scholarship programs and student activities monies

Required financial statements

Statement of Net Position Statement of Activities

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

Statement of Fiduciary Net Position

Statement of Changes in Fiduciary Net Position

Accounting basis and measurement focus

Accrual accounting and economic resources focus

Modified accrual accounting and current financial focus

Accrual accounting and economic resources focus

Type of asset/liability information

All assets and liabilities, both financial and capital, short-term and long-term

Generally, all assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets or long-term liabilities included

All assets and liabilities, both short-term and long-term; funds do not currently contain capital assets, although they can

Type of inflow/outflow information

All revenues and expenses during the year, regardless of when cash is received or paid

Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and the related liability is due and payable

All additions and deductions during the year, regardless of when cash is received or paid


Figure A-2 - Required Components of the District’s Annual Financial Report

IV. Financial Analysis of the School District as a Whole Net Position The District’s total reporting entity net position was approximately $12,838,000. The components of net position include: invested in capital assets, net of related debt, of $13,649,000; restricted net position of $2,395,000; and unrestricted net position deficit of $3,206,000 as of June 30, 2019. Changes in Net Position The District’s total government-wide revenue increased by approximately 1% to $18,852,000. Approximately 25%, 5% and 62% of total revenue is derived from the property taxes, operating grants and state aid, respectively. The remaining 8% comes from federal aid, use of money and property, miscellaneous, charges for services and other operating grants and contributions.

IV. Financial Analysis of the School District as a Whole (continued) Changes in Net Position (continued) The total cost of all programs and services of the District increased 2% to $18,217,000. The District’s expenses cover a range of services, with 71% related to instruction and 16% related to general support. Figure A-4 through figure A-8 and the narrative that follows considers the operations of governmental activities, along with revenue and net costs percentages for governmental activities. Governmental Activities Revenue of the District’s governmental activities increased approximately 1%, while total expenses increased 2%. The District’s total net position increased approximately $635,000 or 5% from operations during the fiscal year ended June 30, 2019. Figure A-5 presents the major sources of revenue of the District. Revenue of the District totaled $18,852,000 for the fiscal year ended June 30, 2019. The most significant changes in the District’s governmental revenue are more thoroughly discussed as follows: Property tax revenue, which represents approximately

25% of the District’s total revenue for governmental activities, increased approximately 2% during the year ended June 30, 2019. There was an increase of approximately 2% in the property tax levy during the year ended June 30, 2019.

The District’s most significant revenue is state

sources which represent $11,627,000 or 62% of total governmental revenue. The District’s state sources decreased approximately 0% which was primarily related to a decrease in excess cost aid and BOCES aid offset by increases in basic aid and lottery aid.

During the year ended June 30, 2019, the District saw

an increase in program revenue which mostly resulted from an increase in charges for services in the amount of $43,000. This increase was primarily related to an increase in transportation reimbursement from other districts and tuition received.

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IV. Financial Analysis of the School District as a Whole (continued) Expenses Figure A-8 presents the cost of each of the District’s largest expenditure-types, which include; general support, instruction, transportation and cost of sales; as well as each expenditure-type’s net cost (total cost less fees generated by the activities and intergovernmental aid). The net cost shows the financial burden that was placed on the District’s taxpayers and NYS by each of these functions. Total costs of the District’s governmental activities were $18,217,000. The most significant changes in the District’s governmental expenses are more thoroughly discussed as follows: The District’s general support increased by

approximately $133,000 or 5% which was primarily due to increases in salaries and depreciation expense.

The District’s instruction costs increased by

approximately $373,000 or 3% which was related to increases in instructional salaries and depreciation, which was offset by decreases in employee benefits related to actuarial calculated TRS and other post-employment benefit expense.

Debt service of the District decreased approximately

$175,000 during the year ended June 30, 2019, which primarily resulted from a decrease in bond issuance costs on new debt issued in the prior year.

Transportation costs of the District increased

$110,000 during the year ended June 30, 2019 as a result of increases in salaries, fuel, and parts.

The District’s cost of sales (food service fund) totaled

$556,000 during the current year as compared to $587,000 during the fiscal year ended June 30, 2018. This decrease was related to a decrease in food costs.

The District received approximately $2,047,000 of

operating grants and charges for services from its state and federal grants and tuition and transportation aid which subsidized certain programs of the District.

Most of the District’s net costs ($16.2 million) were

financed by state aid and real property taxes.

Figure A-3 – Condensed Statement of Net Position

2019 2018 % ChangeAssets

Current and other assets 6,747$ 5,645$ 20%Capital assets 23,683 24,592 -4%

Total assets 30,430 30,237 1%

Deferred outflows of resourcesDeferred outflows related to pensions 3,616 4,027 -10%Deferred outflows related to OPEB 813 745 9%Deferred outflows of resources

and assets 34,859$ 35,009$ 0%

LiabilitiesOther liabilities 1,880$ 1,507$ 25%Long-term liabilities 17,259 19,614 -12%

Total liabilities 19,139 21,121 -9%

Deferred inflows of resourcesDeferred inflows related to pensions and OPEB 2,882 1,684 71%Deferred inflows of resources

and liabilities 22,021 22,805 -3%

Net positionNet investment in capital assets 13,649 12,857 6%Restricted 2,395 2,694 -11%Unrestricted (deficit) (3,206) (3,347) -4%

Total net position 12,838 12,204 5%Total liabilities, deferred inflows of resources, and net position 34,859$ 35,009$ 0%

Portville Central School DistrictCondensed Statement of Net Position (in thousands of dollars)

Governmental Activitiesand Total District-wide

Figure A-4 – Changes in Net Position

2019 2018 % ChangeRevenueProgram revenue

Charges for services 1,048$ 1,005$ 4%Operating grants and contributions 999 1,000 0%

General revenueReal property taxes 4,649 4,559 2%Use of money & property 21 9 120%Sale of property & comp for loss 7 14 -48%State sources 11,627 11,647 0%Federal sources 191 40 374%Miscellaneous 310 331 -6%

Total revenue 18,852 18,605 1%

ExpensesGeneral support 2,874 2,741 5%Instruction 12,736 12,363 3%Transportation 1,700 1,590 7%Debt service - interest 351 526 -33%Cost of sales 556 587 -5%

Total expenses 18,217 17,807 2%

Change in net postion 635$ 798$

Portville Central School DistrictChanges in Net Position from Operating Results (in thousands of Dollars)

Governmental Activitiesand Total District-wide

Figure A-5 – Sources of Revenue

Charges for services5%

Operating grants and contributions

5%

Property taxes25%

Use of money and property

0%Sale of property

0%

State sources62%

Federal sources1%

Miscellaneous2%

Portville Central School DistrictSources of revenue

For the year ended June 30, 2019


Figure A-6 – Expenses

General Support16%

Instruction71%

Transportation8%

Community Services

0%

Debt Service -Interest

2%

Cost of Sales -Food3%

For the year ended June 30, 2019

Portville Central School DistrictExpenses

Figure A-7 – Expenditures Supported with Program Revenue

Expenditures supported with general revenue (from taxes & other sources) 16,170$ 89% 15,802$ 89%

Expenditures supported with program revenue 2,047 11% 2,005 11%

Total expenditures related to governmental activities 18,217$ 100% 17,807$ 100%

Governmental Activites & Total District2019 2018

Porville Central School DistrictExpenditures supported with program revenue (in thousands of dollars)

Figure A-8 – Net Cost of Governmental Activities

2019 2018 Change 2019 2018 Change

General support 2,874$ 2,741$ 133$ 2,874$ 2,741$ 133$ Instruction 12,736 12,363 373 11,916 11,542 374 Transportation 1,700 1,590 110 1,038 957 81 Debt service - interest 351 526 (175) 351 526 (175) Cost of sales - food 556 587 (31) (9) 36 (45)

Total 18,217$ 17,807$ 410$ 16,170$ 15,802$ 368$

Total cost of services Net cost of services

Portville Central School DistrictNet Cost of Governmental Activities (in thousands of dollars)

V. Financial Analysis of the School District’s Funds

It is important to note that variances between years for the governmental fund financial statements (Balance Sheets and Statement of Revenue, Expenditures and Changes in Fund Equity) are not the same as variances between years for the District-wide financial statements (Statement of Net Position and Statement of Activities). The District’s governmental funds are presented on the current financial resources measurement focus and the modified accrual basis of accounting, while the statement of net position is presented on the full accrual method of accounting. Therefore, governmental funds do not include long-term debt

V. Financial Analysis of the School District’s Funds

(continued)

liabilities for the funds’ projects and capital assets purchased by the funds. Governmental funds will include the proceeds received from the issuance of debt, the current payments for capital assets, and the current payments for debt. Below is a description of the most significant changes to the fund financial statements from that reported in the previous year.

General Fund

The District’s general fund expenditures and other uses exceeded its revenue and other sources by approximately $456,000.

The District’s general fund unassigned fund balance equated to approximately $1,433,000 as of June 30, 2019.

The District established many fund balance reserves during the year ended June 30, 2019, and had a total restricted fund balance approximated $2,145,000.

The District’s total assets decreased approximately $225,000 as of June 30, 2019 primarily as the result of a decrease in cash. The District’s liabilities increased approximately $231,000, as a result of increases in accrued liabilities and due to teachers’ retirement system.

Total revenue in the District’s general fund increased $686,000, which was primarily related to increases in State aid, real estate taxes and Medicaid assistance. Total expenditures in the District’s general fund increased $1,602,000 primarily as a result of increases in salaries and a transfer to the capital projects fund.

Food Service Fund

The District’s food service fund experienced an increase in fund equity of $16,000.

Revenue in the District’s food service fund was $565,000 during 2019 as compared with $573,000 in 2018.

Special Aid Fund

The District’s special aid fund revenue and expenditures increased approximately $9,000 or 1% which was primarily related to expenditures and revenue associated with the new Ralph Wilson Foundation grant, which was offset by expenditures and revenue associated with the ARC grant that was received in the prior year.

Capital Projects Fund

The District had expenditures in the amount of $422,000 in capital projects during the year ended June 30, 2019, which was primarily related to costs associated with the District’s $4 million capital improvement project, Smart Bond Act Project and bus purchases made during the current fiscal year.


VI. General Fund Budgetary Highlights

Over the course of the year, the District makes many budget transfers, which is the common method utilized to manage the budget throughout the year. Actual expenditures were approximately $1,120,000 below the revised budget. The most significant positive variances were in the area of general support, instruction and employee benefits which totaled $222,000, $455,000 and $343,000, respectively, below that budgeted. On the other hand, resources available for appropriations were approximately $141,000 below the final budgeted amount. Significant variance of revenue items consisted of other sources and state sources which were approximately $146,000 and $451,000, below that budgeted, while local sources and federal sources were $305,000 and $151,000, above that budgeted.

Figure A-9 – Budget vs. Actual Comparison

RevisedBudget Actual Difference %

RevenueLocal sources 5,462$ 5,767$ 305$ 6%State sources 12,078 11,627 (451) -4%Federal sources 40 191 151 n/aOther sources 239 93 (146) -61%

Total revenue 17,819$ 17,678$ (141)$ -1%

ExpendituresGeneral support 2,516$ 2,294$ 222$ 9%Instruction 8,956 8,501 455 5%Transportation 1,310 1,238 72 6%Employee benefits 3,942 3,599 343 9%Debt service 1,476 1,468 8 1%Operating transfers 1,054 1,034 20 2%

Total expenditures 19,254$ 18,134$ 1,120$ 6%

Portville Central School DistrictGeneral Fund - Budget vs Actual Comparison (in thousands of dollars)

VII. Capital Assets and Debt Administration

Capital Assets

As depicted in Figure A-10, as of June 30, 2019, the District had invested approximately $23,683,000 in a broad range of capital assets, including reconstruction projects, transportation vehicles, computer equipment, and other equipment. Capital additions made during the year ended June 30, 2019, totaled approximately $450,000 and consisted primarily of the costs associated with the District’s $4 million capital improvement project, Smart Bond Act Project, and bus purchases. More detailed information about the District’s capital assets is presented in the notes of the financial statements.

VII. Capital Assets and Debt Administration (continued)

Long-term Debt

As depicted in Figure A-11, as of June 30, 2019, the District had approximately $17,259,000 in bonds, other post-employment benefits, net pension liabilities and compensated absences, a decrease of approximately 12% as compared with the previous year. The decrease in bonds payable is the result of the District making regularly scheduled payments. The District had a decrease in other post-employment benefits as a result of a new actuarial study performed in the current. Lastly, the increase in pension liability is related to the NYS ERS liability increasing during the current year. Figure A-10 – Capital Assets

2019 2018 Change

Land 55,292$ 55,292$ 0%Buildings 39,167,455 32,650,910 20%Construction in progress 1,674 6,377,831 -100%Equipment 6,298,483 6,245,116 1%Accumulated depreciation (21,839,594) (20,737,590) 5%

Total Capital Assets, net 23,683,310$ 24,591,559$ -4%

Portville Central School DistrictCapital Assets (net of depreciation)

Governmental Activities & Total District-wide

Figure A-11 – Outstanding Long-term Debt

2019 2018 ChangeBonds payable 10,247,156$ 11,136,717$ -8%Net pension liabilities - ERS 501,597 204,823 145%Other post-employment benefits 5,900,531 7,646,091 -23%Compensated absences 610,000 626,000 -3%

Total Long-Term Debt 17,259,284$ 19,613,631$ -12%

Portville Central School DistrictOutstanding Long-Term Debt and Liabilities

Governmental Activities & Total District-wide


VIII. Factors Bearing on the District’s Future

At the time these financial statements were prepared and audited, the District was aware of the following existing circumstances that could significantly affect its financial health in the future:

The District is cautiously optimistic on the recent

cost reductions in fuel cost and the retirement rates for both ERS and TRS. However, these two cost items and Health insurance cost, combined with the rise in Special Education cost cause the District to have a conservative approach to spending.

IX. Contacting the District’s Financial Management

This financial report is designed to provide citizens, taxpayers, customers and investors and creditors with a general overview of the finances of the District and to demonstrate our accountability with the money we receive. If you have any questions about this report or need additional financial information, please contact:

Portville Central School District

Attention: Ms. Pamela Anderson Business Manager

500 Elm Street Portville, NY 14770

See accompanying independent auditor’s report and notes to financial statements.

PORTVILLE CENTRAL SCHOOL DISTRICT Schedule 1 STATEMENT OF NET POSITION AS OF JUNE 30, 2019 Page 10

2019 2018

AssetsCash

Unrestricted 2,112,676$ 2,099,877$ Restricted 2,394,994 2,693,580

ReceivablesState and federal aid 248,356 253,020Other receivables 311,455 227,932Due from other governments 28,043 28,196 Due from other fiduciary funds 25,118 5,004

Inventories 19,416 7,257Net pension asset - NYS Teachers' Retirement System 608,071 257,418 Cash to be used towards capital project 998,814 73,604 Capital assets, net 23,683,310 24,591,559

Total assets 30,430,253 30,237,447

Deferred Outflows of ResourcesDeferred outflows related to pensions 3,616,212 4,027,048 Deferred outflows related to OPEB 812,758 744,588

Total deferred outflows of resources 4,428,970 4,771,636Total assets and deferred outflows of resources 34,859,223$ 35,009,083$

LiabilitiesCurrent liabilities

Accounts payable 73,878$ 71,118$ Accrued liabilities 296,926 107,586Accrued interest 16,000 35,000Due to other governments 1,412 1,476 Due to retirement systems 722,509 645,761Unearned revenue 117,952 294 Bond anticipation notes payable 650,962 646,360

Long-term liabilitiesPortion due or payable within one year

Bonds payable 845,000 735,000Portion due or payable after one year

Bonds payable 9,402,156 10,401,717Net pension liability - NYS Employees' Retirement System 501,597 204,823Other post-employment benefits 5,900,531 7,646,091Compensated absences 610,000 626,000

Total liabilities 19,138,923 21,121,226

Deferred Inflows of ResourcesDeferred inflows related to pensions 957,675 1,401,517 Deferred inflows related to OPEB 1,924,347 282,847

Total deferred inflows of resources 2,882,022 1,684,364Total liabilities and deferred inflows of resources 22,020,945 22,805,590

Net PositionNet investment in capital assets 13,648,791 12,856,726Restricted 2,394,994 2,693,580Unrestricted (deficit) (3,205,507) (3,346,813)

Total net position 12,838,278 12,203,493Total liabilities, deferred inflows of resources and net position 34,859,223$ 35,009,083$


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule 2 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2019 Page 11

2019 2018Net (Expense) Net (Expense)

Indirect Revenue and Revenue andExpenses Charges for Operating Changes in Changes in

Expenses Allocation Services Grants Net Position Net Position

Functions/ProgramsGeneral support 2,631,549$ 242,674$ -$ -$ (2,874,223)$ (2,740,905)$ Instruction 11,744,983 990,708 143,281 676,962 (11,915,448) (11,541,418) Pupil transportation 1,610,514 89,886 655,919 6,518 (1,037,963) (956,962) Debt service 350,876 - - - (350,876) (526,255) Food service program 548,913 6,944 249,014 315,529 8,686 (36,269)Depreciation 1,330,212 (1,330,212) - - - -

Total functions and programs 18,217,047$ -$ 1,048,214$ 999,009$ (16,169,824) (15,801,809)

General RevenuesReal property taxes 4,648,496 4,559,096Use of money and property 20,672 9,377Sale of property and compensation for loss 7,403 14,224Miscellaneous 309,741 330,048State sources 11,627,184 11,646,957Federal sources 191,113 40,299

Total general revenues 16,804,609 16,600,001

Change in net position 634,785 798,192

Net position - beginning of year 12,203,493 10,938,853

Prior period adjustments - 466,448

Net position - end of year 12,838,278$ 12,203,493$

Program Revenues


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule 3 COMBINED BALANCE SHEET – GOVERNMENTAL FUNDS AS OF JUNE 30, 2019 Page 12

2019 2018 Special Food Debt Capital (Memo only) (Memo only) General Aid Service Service Projects Total Total

Assets Unrestricted cash 2,188,062$ 126,032$ 11,336$ -$ -$ 2,325,430$ 2,099,885$ Restricted cash 2,145,009 - - 37,231 998,814 3,181,054 2,767,176Due from other funds 282,888 - 52 117 - 283,057 231,222State and federal aid receivable 123,918 102,682 21,756 - - 248,356 253,020Other receivables 310,632 - 823 - - 311,455 227,932 Due from other governments 28,043 - - - - 28,043 28,196 Inventories - - 19,416 - - 19,416 7,257

Total assets 5,078,552$ 228,714$ 53,383$ 37,348$ 998,814$ 6,396,811$ 5,614,688$

Liabilities and Fund Equity

Liabilities

Accounts payable 69,676$ 4,000$ 202$ -$ -$ 73,878$ 71,118$ Accrued liabilities 290,430 - 6,496 - - 296,926 107,586Bond anticipation notes payable - - - - 650,962 650,962 646,360 Due to other funds 52 106,591 16,081 - 135,215 257,939 226,218Unearned revenue - 116,826 1,126 - - 117,952 294 Due to other governments - 1,297 115 - - 1,412 1,476 Due to Teachers' Retirement System 640,483 - - - - 640,483 575,998Due to Employees' Retirement System 82,026 - - - - 82,026 69,763

Total liabilities 1,082,667 228,714 24,020 - 786,177 2,121,578 1,698,813

Fund EquityNonspendable - - 19,416 - - 19,416 7,257Restricted 2,145,009 - - 37,348 212,637 2,394,994 2,693,580Assigned 417,768 - 9,947 - - 427,715 423,915Unassigned 1,433,108 - - - - 1,433,108 791,123

Total fund equity 3,995,885 - 29,363 37,348 212,637 4,275,233 3,915,875 Total liabilities and fund equity 5,078,552$ 228,714$ 53,383$ 37,348$ 998,814$ 6,396,811$ 5,614,688$

Governmental Funds


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule 4 COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND EQUITY – GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2019 Page 13

2019 2018Special Food Debt Capital (Memo only) (Memo only)

General Aid Service Service Projects Total TotalRevenue

Real property taxes 4,648,496$ -$ -$ -$ -$ 4,648,496$ 4,559,096$ Charges for services 799,200 - - - - 799,200 746,187Use of money and property 11,428 - 28 9,216 - 20,672 9,377Sale of property compensation for loss 7,403 - - - - 7,403 4,640 Miscellaneous 300,817 33,174 17,658 3,750 - 355,399 1,010,986State sources 11,627,184 207,219 10,521 - - 11,844,924 11,860,862Federal sources 191,113 476,261 271,278 - - 938,652 809,412Surplus food - - 33,730 - - 33,730 17,324Sales (school food service) - - 231,356 - - 231,356 232,587

Total revenue 17,585,641 716,654 564,571 12,966 - 18,879,832 19,250,471

ExpendituresGeneral support 2,293,722 - 191,485 - - 2,485,207 2,390,140Instruction 8,501,052 629,592 - - - 9,130,644 8,741,842Pupil transportation 1,238,287 6,518 - - 213,354 1,458,159 1,393,706Employee benefits 3,599,230 89,981 51,566 - - 3,740,777 3,527,001Debt service

Principal 943,752 - - - - 943,752 905,271 Interest 524,437 - - - - 524,437 413,776

Capital outlay - - - - 140,388 140,388 2,473,276Cost of sales - - 288,131 - - 288,131 296,773Other expenses - - 17,731 - - 17,731 16,812

Total expenditures 17,100,480 726,091 548,913 - 353,742 18,729,226 20,158,597

Excess (deficiency) ofrevenue over expenditures 485,161 (9,437) 15,658 12,966 (353,742) 150,606 (908,126)

Other sources and usesBANS redeemed from appropriations - - - - 208,752 208,752 375,271 Proceeds from the issuance of bonds - - - - - - 5,315,000 Operating transfers in 92,847 9,437 - 64,811 1,024,401 1,191,496 449,043 Operating transfers out (1,033,838) - - (89,000) (68,658) (1,191,496) (449,043)

Total other sources (uses) (940,991) 9,437 - (24,189) 1,164,495 208,752 5,690,271

Excess (deficiency) of revenueand other sources overexpenditures and other uses (455,830) - 15,658 (11,223) 810,753 359,358 4,782,145

Fund equity (deficit), beginning of year 4,451,715 - 13,705 48,571 (598,116) 3,915,875 (866,270)

Fund equity, end of year 3,995,885$ -$ 29,363$ 37,348$ 212,637$ 4,275,233$ 3,915,875$

Governmental Funds


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule 5 STATEMENT OF FIDUCIARY NET POSITION AS OF JUNE 30, 2019 Page 14

Private (Memo only) Purpose Agency Total Total Trusts Funds 6/30/2019 6/30/2018AssetsCash -$ 223,067$ 223,067$ 181,314$ Accounts receivable - 5,016 5,016 7,332 Investments 251,453 - 251,453 264,415

Total assets 251,453$ 228,083$ 479,536$ 453,061$

LiabilitiesAccrued liabilities -$ 136,236$ 136,236$ 113,378$ Due to other funds - 25,118 25,118 5,004Student extraclassroom activity funds - 66,729 66,729 70,264

Total liabilities - 228,083 228,083 188,646 Net positionReserved for scholarships 251,453 - 251,453 264,415

Total liabilities and net position 251,453$ 228,083$ 479,536$ 453,061$


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule 6 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30, 2019 Page 15

(Memo only)6/30/2019 6/30/2018

AdditionsGifts and contributions 25,984$ 73,659$ Interest earnings 12,904 -

Total additions 38,888 73,659

DeductionsScholarships awarded 51,850 46,500

Change in net position (12,962) 27,159

Net position - beginning of year 264,415 237,256

Net position - end of year 251,453$ 264,415$


PORTVILLE CENTRAL SCHOOL DISTRICT RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION AS OF JUNE 30, 2019

Total fund balances - governmental funds 4,275,233$ Amounts reported for governmental activities in the

statement of net position are different because: Capital assets used in governmental activities are not financial

resources and therefore are not reported as assets ingovernmental funds. Capital assets consist of the following at year-end:

Cost of the assets 45,522,904$ Accumulated depreciation (21,839,594) 23,683,310

District's proportionate share of the net pension asset is reported on the statementof net position, whereas in the governmental funds pension costs are based on required contributions. 608,071

Interest on long-term liabilities is not accrued in governmental

funds, but rather is recognized as an expenditure when due. (16,000)

Deferred inflows/outflows of resources related to actuarial pension differences are reported on the statement of net position and amortized over the average members' years of service. In the governmental funds pension expense is based on requiredcontributions. 2,658,537

Deferred inflows/outflows of resources related to actuarial OPEB differences are reported on the statement of net position and amortized over the average members' years of service. In the governmental funds OPEB expense is based on requiredcontributions. (1,111,589)

Long-term liabilities, including bonds payable, are not dueand payable in the current period and therefore are notreported as liabilities in the funds. Long-term liabilities atyear-end consist of the following:

Bonds payable (10,247,156) Net pension liability - ERS (501,597) Other post-employment benefits (5,900,531) Compensated absences (610,000) (17,259,284)

Total net position - governmental activities 12,838,278$

Schedule 7

Page 16

Total Long-term Long-term Reclassification Statement ofGovernmental Asset and Outflow Liability and Inflow and Net

Funds Transactions Transactions Eliminations PositionAssets

Cash 5,506,484$ -$ -$ (998,814)$ 4,507,670$ Due from other funds 283,057 - - (257,939) 25,118 State and federal aid receivable 248,356 - - - 248,356 Other receivables 311,455 - - - 311,455 Due from other governments 28,043 - - - 28,043 Inventories 19,416 - - - 19,416 Net pension asset - 608,071 - - 608,071 Cash to be used for capital assets - - - 998,814 998,814 Capital assets, net - 23,683,310 - - 23,683,310

Total assets 6,396,811 24,291,381 - (257,939) 30,430,253

Deferred Outflows of ResourcesDeferred outflows related to pensions - 3,616,212 - - 3,616,212 Deferred outflows related to OPEB - 812,758 - - 812,758

Total assets and deferred outflows of resources 6,396,811$ 28,720,351$ -$ (257,939)$ 34,859,223$

Liabilities, Deferred Inflows of Resources, and Fund Equity

Liabilities Accounts payable 73,878$ -$ -$ -$ 73,878$ Accrued liabilities 296,926 - - - 296,926 Accrued interest - - 16,000 - 16,000 Due to other funds 257,939 - - (257,939) - Unearned revenue 117,952 - - - 117,952 Due to other governments 1,412 - - - 1,412 Due to retirement systems 722,509 - - - 722,509 Bond anticipation notes payable 650,962 - - - 650,962 Bonds payable - - 10,247,156 - 10,247,156 Net pension liability - - 501,597 - 501,597 Other post-employment benefits - - 5,900,531 - 5,900,531 Compensated absences - - 610,000 - 610,000

Total liabilities 2,121,578 - 17,275,284 (257,939) 19,138,923

Deferred Inflows of ResourcesDeferred inflows related to pensions - - 957,675 - 957,675 Deferred inflows related to OPEB - - 1,924,347 - 1,924,347

Total liabilities and deferred inflows of resources 2,121,578 - 20,157,306 (257,939) 22,020,945

Fund equity and net position 4,275,233 28,720,351 (20,157,306) - 12,838,278

Total liabilities, deferred inflows of resources and fund equity/net position 6,396,811$ 28,720,351$ -$ (257,939)$ 34,859,223$


PORTVILLE CENTRAL SCHOOL DISTRICT RECONCILIATION OF GOVERNMENTAL FUNDS REVENUE, EXPENDITURES AND CHANGES IN FUND EQUITY TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2019

Total net change in fund balances - governmental funds 359,358$ Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported in governmental funds as expenditures. However,

in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. Activity for the current fiscal year ended was as follows:

Capital outlays 449,963$ Depreciation expense (1,330,212) (880,249)

Loss from the disposal of assets are reported as expense in the governmental funds, whereas in the statement of activities a gain or loss on sale is reported. (28,000) Repayment of bond principal, including payment towards the refunding of bonds, capital

lease principal and bond anticipation notes principal is an expenditure the governmentalfunds but the repayment reduces long-term liabilities in the statement of net position. 943,752

Bond anticipation notes redeemed from appropriations is recorded asother sources in the governmental funds, whereas the repayment reducesshort-term liabilities in the statement of net position. (208,752)

Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized as an expenditurein the funds when it is due, and thus required the use of current financial resources.In the statement of activities, however, interest expense is recognized as the interestaccrues, regardless of when it is due. In addition, premiums on bond anticipation notesand bonds are recorded as revenue in the governmental funds, whereas in the statementof activities, premiums are amortized into interest expense. 173,561

District's proportionate share of actuarial calculated pension expense and netamortization of deferred amounts are recorded in the statement of activities,whereas in the governmental funds pension expense is based on District'srequired contribution to pension plans. 86,885

District's actuarial calculated OPEB expense and net amortization

of deferred outflows and inflows related to OPEB are recorded in thestatement of activities, whereas in the governmental funds OPEB expense isbased on District's required contribution to the OPEB plan. 172,230

In the statement of activities, certain operating expenses - compensated absences - are measured by the amounts earned during the year. In the governmental funds,however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid. This year, compensatedabsences changed by this amount. 16,000

Change in net position of governmental activities 634,785$

Schedule 8 Page 17

Total Long-term Long-term Reclassification Statement of Governmental Asset and Outflow Liability and Inflow and Activities Funds Transactions Transactions Eliminations Totals

RevenueReal property taxes 4,648,496$ -$ -$ -$ 4,648,496$ Charges for services 799,200 - - (799,200) - Use of money and property 20,672 - - - 20,672 Sale of property compensation for loss 7,403 - - - 7,403 Miscellaneous 355,399 (28,000) - (17,658) 309,741 State sources 11,844,924 - - (217,740) 11,627,184 Federal sources 938,652 - - (747,539) 191,113 Surplus food 33,730 - - (33,730) - Sales (school food service) 231,356 - - (231,356) -

Total revenue 18,879,832 (28,000) - (2,047,223) 16,804,609

ExpendituresGeneral support 2,485,207 214,624 - 174,392 2,874,223 Instruction 9,130,644 922,537 (16,000) 1,878,267 11,915,448 Pupil transportation 1,458,159 (123,468) - (296,728) 1,037,963 Employee benefits 3,740,777 - (259,115) (3,481,662) - Debt service 1,468,189 - (1,117,313) - 350,876 Capital outlay 140,388 (140,388) - - - Cost of sales 288,131 6,944 - (303,761) (8,686) Other expenses 17,731 - - (17,731) -

Total expenditures 18,729,226 880,249 (1,392,428) (2,047,223) 16,169,824

Excess (deficiency) ofrevenue over expenditures 150,606 (908,249) 1,392,428 - 634,785

Other sources and uses

BANs redeemed from appropriations 208,752 - (208,752) - - Operating transfers in 1,191,496 - - (1,191,496) - Operating transfers out (1,191,496) - - 1,191,496 -

Total other sources (uses) 208,752 - (208,752) - -

Net change for year 359,358$ (908,249)$ 1,183,676$ -$ 634,785$

PORTVILLE CENTRAL SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2019 Page 18

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES I. Significant Accounting Policies

The accompanying financial statements of the Portville Central School District have been prepared in conformity with generally accepted accounting principles (GAAP) for governments as prescribed by the Governmental Accounting Standards Board (GASB) which is the standard setting body for establishing governmental accounting and financial reporting principles.

A. Reporting Entity The financial statements include all funds and

account groups of the School District as well as the component units and other organizational entities determined to be includable in the School District's financial reporting entity.

The decision to include a potential component unit in

the School District's reporting entity is based on several criteria including legal standing, fiscal dependency, and financial accountability. Based on the application of these criteria, the following is a brief review of certain entities included in the School District's reporting entity:

1. The Extraclassroom Activity Funds The extraclassroom activity funds of the Portville

Central School District represent funds of the students of the School District. The Board of Education exercises general oversight of these funds. The extraclassroom activity funds are independent of the School District with respect to its financial transactions, and the designation of student management. The cash and investment balances are reported in the Agency Fund of the District. The audited financial statements (cash basis) of the extra classroom activity funds are a separate financial statement and are available at the district office.

B. Joint Venture The Portville Central School District is one of 22

component school districts in the Cattaraugus-Allegany Board of Cooperative Educational Services (BOCES). A BOCES is a voluntary, cooperative association of school districts in a geographic area that share planning, services, and programs which provide educational and support activities.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. Joint Venture (continued) BOCES are organized under Section 1950 of the

Education Law. A BOCES Board is considered a corporate body. All BOCES property is held by the BOCES Board as a corporation (Section 1950(6)). In addition, BOCES Boards also are considered municipal corporations to permit them to contract with other municipalities on a cooperative basis under Section 119-n(a) of the General Municipal Law.

A BOCES budget is comprised of separate budgets

for administrative, program, and capital costs. Each component school district's share of the administrative and capital cost is determined by resident public school district enrollment as defined in Education Law, Section 1950(4)(b)(7).

There is no authority or process by which a school

district can terminate its status as a BOCES component. In addition, component school districts pay tuition or a service fee for programs in which its students participate. Members of a BOCES Board are nominated and elected by their component member boards in accordance with provisions of Section 1950 of the Education Law.

During the year, the District was billed approximately

$2,361,000 for BOCES administration and program costs. The District’s share of BOCES aid, rentals, and refunds amounted to $1,427,000 for the year ended June 30, 2019. Financial statements for the Cattaraugus-Allegany BOCES are available at the BOCES administrative offices in Olean, New York.

C. Basis of Presentation

1. District-wide Statements The Statement of Net Position and the Statement of Activities present financial information about the District’s governmental activities. These statements include the financial activities of the overall government in its entirety, except those that are fiduciary. Eliminations have been made to minimize double counting of internal transactions. Governmental activities generally are financed through taxes, state aid, intergovernmental revenues, and other exchange and non-exchange transactions. Operating grants include operating-specific and discretionary (either operating or capital) grants.


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

C. Basis of Presentation (continued)

1. District-wide Statements (continued)

The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the District’s governmental activities. Direct expenses are those that are specifically associated with and are clearly identifiable to a particular function. Program revenues include charges paid by the recipients of goods or services offered by the programs, and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

2. Fund Financial Statements The fund statements provide information about the District’s funds, including fiduciary funds. Separate statements for each fund category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The District reports the following major governmental funds:

General - is the general operating fund and is used to account for all financial transactions except those required to be accounted for in another fund. Special Aid - is used to account for the proceeds of specific revenue sources such as Federal and State grants that are legally restricted to expenditures for specified purposes, whose funds are restricted as to use. These legal restrictions may be imposed by either governments that provide the funds or outside parties.

Food Service – is used to account for all revenue and expenditures pertaining to the cafeteria operations. Capital Projects - is used to account for the financial resources used for acquisition, construction, or major repair of capital facilities. Debt Service - is used to account for the accumulation of resources and the payment of general long-term debt principal and interest.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) C. Basis of Presentation (continued) 2. Fund Financial Statements (continued)

Fiduciary Fund Types - This fund is used to account for fiduciary activities. Fiduciary activities are those in which the District acts as trustee or agent for resources that belong to others. These activities are not included in the District-wide financial statements, because their resources do not belong to the District, and are not available to be used. Included in the Fiduciary Fund are Private Purpose Trust Funds and Agency Funds. Agency Funds are custodial in nature (assets equal liabilities) and generally are accounted for on the cash basis which approximates the modified accrual basis of accounting. Private Purpose Trust Funds are accounted for on the accrual basis of accounting.

D. Measurement Focus and Basis of Accounting

The District-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash transaction takes place. Non-exchange transactions, in which the District gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

The governmental fund statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The District considers all revenues reported in the governmental funds to be available if the revenues are collected within the current period or soon enough thereafter to be used to pay liabilities of the current period. Non-expendable trust funds are accounted for on the accrual basis of accounting, whereby revenue is recognized when earned and expenses are recorded when incurred.


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D. Measurement Focus and Basis of Accounting (continued)

Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources.

E. Cash and Cash Equivalents

For financial statement purposes, all highly liquid investments of three months or less are considered as cash equivalents. New York State law governs the District’s investment policies. Resources must be deposited in FDIC-insured commercial banks or trust companies located within the State. Permissible investments include obligations of the United States Treasury, United States Agencies, repurchase agreements and obligations of New York State or its localities. Collateral is required for demand and time deposits and certificates of deposit not covered by FDIC insurance.

F. Inventory

Inventories of food in the School Food Service Fund are recorded at cost on a first-in, first-out basis or in the case of surplus food, at stated value which approximates market. Purchases of inventorial items in other funds are recorded as expenditures at the time of purchase.

G. Investments

Investments are stated at current market value. H. Capital Assets

Capital assets are reported at actual cost for acquisitions subsequent to June 30, 2015. For assets acquired to June 30, 2015, estimated historical costs, based on appraisals conducted by independent third-party professionals was used. Donated assets are reported at estimated fair market value at the time received. Capitalization thresholds (the dollar value above which asset acquisitions are added to the capital asset accounts), depreciation methods, and estimated useful lives of capital assets reported in the District-wide statements as follows:

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) H. Capital Assets (continued)

Capitalization Threshold

Depreciation Method

Estimated Useful Life

Buildings $ 2,500 Straight-line 40 years Land

improvements

$ 2,500

Straight-line

25-30 years Furniture and

equipment

$ 2,500

Straight-line

5-20 years Transportation vehicles

$ 2,500

Straight-line

8 years

I. Due To/From Other Funds

The amounts reported on the Statement of Net Position for due to and from other funds represents amounts due between different fund types (governmental activities, and fiduciary funds). Eliminations have been made for amounts due to and due from within the same fund type. A detailed description of the individual fund balances at year-end is provided subsequently in these notes.

J. Compensated Absences

Sick leave and Retirement Incentive Pay - certain of the District's employee groups have negotiated retirement incentive benefits payable based on accumulated unused sick days. Generally the employee must have accumulated minimum years of service with the District and must be eligible for retirement under the provisions of either the teacher or employee retirement systems. The District has recorded an estimated liability in the District-wide financial statement amounting to $610,000 to recognize the cost of the incentive benefits for those employees eligible to receive such a benefit. Payment of these benefits is dependent on many factors, therefore, the timing of future payments is not readily determinable. The District believes sufficient resources and budgetary appropriations will be available as the benefits become payable in future years. The liability for compensated absences is calculated at rates in effect as of the balance sheet date and is recorded in the district-wide statements.

K. Unearned Revenue

Unearned revenue is reported on the District's combined balance sheet. Unearned revenue arises when potential revenue does not meet both the measurable and available criteria for recognition in the current period. Unearned revenue also arises when resources are received by the District before



K. Unearned Revenue (continued)

it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both recognition criteria are met, or when the District has legal claim to the resources, the liability for deferred revenue is removed and revenue is recognized. Unearned revenues recorded in the governmental funds are not recorded in the District-wide statements.

L. Deferred Inflows and Outflows of Resources

In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then.

The District has three items that qualify for reporting in this category. The first item is related to pensions reported in the district-wide Statement of Net Position. This represents the effect of the net change in the District’s proportion of the collective net pension asset or liability and difference during the measurement period between the District’s contributions and its proportion share of total contributions to the pension systems not included in pension expense. Next is the District contributions to the pension systems (TRS and ERS Systems) and OPEB subsequent to the measurement date. Lastly, the third item relates to OPEB reporting in the district-wide Statement of Net Position. This represents the effect of the net changes of assumptions or other inputs, along with benefits paid subsequent to the measurement date.

In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District has two items that qualify for reporting in this category. The first item is related to pensions reported in the district-wide Statement of Net Position. This represents the effect of the net change in the District’s proportion of the collective net pension liability (TRS and ERS Systems) and difference during the measurement periods between the District’s contributions and its proportion share of total contributions to the pension systems not included in pension expense. The second item is related to OPEB reported in the district-wide Statement of Net Position. This represents the effect of the net changes of assumptions or other inputs and differences between expected and actual experience.


M. Post-Employment Benefits

In addition to the retirement benefits described in Note 3, the District provides post-employment health insurance coverage to its retired employees and their survivors in accordance with the provisions of the employment contracts negotiated between the School District and its employee groups. Substantially all of these employees, upon reaching normal retirement age while working for the District, will have the District pay their health insurance premiums from their retirement incentive benefits (until exhausted) in accordance with their respective employment contract. In certain cases, the District is 100% responsible for this post-employment benefit, such as teachers who retire at age 55 (until they reach age 65), and full time non-teaching employees (hired prior to July 1, 1981).

N. Fund Equity

1. Governmental Funds

The Governmental Accounting Standards Board (GASB) has issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions (GASB 54). This Statement defines the different types of fund balances that a governmental entity must use for financial reporting purposes

GASB 54 requires the fund balance amounts to be reported within one of the fund balance categories listed below:

A. Nonspendable

Fund balance associated with assets that are inherently nonspendable in the current period because of their form or because they must be maintained intact, including inventories, prepaids, long-term loans and notes receivable, and property held for relate (unless the proceeds are restricted, committed, or assigned). Nonspendable Fund Balance includes the following category:

1. Inventory Reserve

This reserve is used to limit the investment in inventory and to restrict that portion of fund balance which is unavailable for appropriation. This reserve is accounted for in the School Food Service Fund.

B. Restricted

Fund balance amounts that can be spent only for specific purposes stipulated by constitutional, external resource providers including creditors, grantors, contributors, etc., or through enabling legislation. Restricted Fund Balance includes the following categories:



N. Fund Equity (continued)

1. Governmental Funds (continued)

B. Restricted (continued)

1. Unemployment Reserve

This reserve is used to accumulate funds to pay the cost of reimbursement to the New York State Unemployment Insurance Fund for payments made to claimants. The reserve may be established by Board action and is funded by budgetary appropriations and such other funds as may be legally appropriated. Within sixty days after the end of any fiscal year, excess amounts may be either transferred to another reserve or the excess applied to the appropriations next fiscal year’s budget. If the District elects to convert to tax basis, excess resources in the fund over the sum sufficient to pay pending claims may be transferred to any other reserve fund. This reserve is recorded in the General Fund.

2. Employee Retirement Contribution Reserve

This reserve is used to accumulate funds for employee retirement system contributions. The reserve may be established by a majority vote of the Board of Education and is accounted for in the General Fund.

3. Teachers’ Retirement Contribution Reserve

This reserve is used to accumulate funds for teachers’ retirement system contributions and has limits of 2% annually and 10% in total of teacher retirement system salaries. The reserve may be established by a majority vote of the Board of Education and is accounted for in the General Fund.

4. Reserve for Employee Benefits

The purpose of this reserve is to reserve funds for the payment of any accrued employee benefit due an employee upon termination of service. This reserve fund may be established by a majority vote of the board of education and is funded by budgetary appropriations and such other reserves and legally appropriated funds. This reserve is accounted for in the General Fund.

5. Debt Service Reserve

This reserve is used to account for proceeds from the sale of property that was financed by obligations still outstanding, interest and earnings on outstanding obligations, and remaining bond proceeds not to be utilized for the intended purpose. These reserves are accounted for in the Debt Service Fund.


N. Fund Equity (continued)

1. Governmental Funds (continued)

B. Restricted (continued)

6. Capital Reserve

This reserve is used to accumulate funds to finance all or a portion of future capital projects and vehicles for which bonds may be issued. Voter authorization is required for both the establishment of the reserve and payments from the reserve. This reserve is accounted for in the General Fund.

7. Workers’ Compensation Reserve

This reserve is used to accumulate funds for paying compensation benefits and other expenditures authorized under Article 2 of the New York State Workers’ Compensation Law, and for payment of expenditures of administering this self-insurance program. Excess reserve amounts may be either transferred to another reserve or applied to the appropriations for the next fiscal year’s budget. The reserve is accounted for in the General Fund.

8. Endowment Scholarships Reserve

This reserve is used to account for endowments, scholarships and other funds held in trust by the School District. These monies and earnings must be used for the specific purpose of the original contribution.

C. Committed

Fund balance amounts that can be used only for specific purposes determined by a formal action of the District’s Board of Education, which is the District’s highest level of decision-making authority. The District did not have any committed fund balance as of June 30, 2019.

D. Assigned

Fund balance intended to be used by the District for specific purposes but does not meet the criteria to be restricted or committed. Along with the District’s Board of Education, the Business Manager and Treasurer has been authorized to assign fund balance amounts for specific purposes through the establishment of an encumbrance.



N. Fund Equity (continued) 1. Governmental Funds (continued)

D. Assigned (continued)

1. Encumbrance Accounting

Encumbrance accounting, under which purchase orders, contracts, and other commitments of the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is used in the General Fund, Special Revenue Funds, and Capital Projects Fund. If resources have already been restricted or committed for encumbrances, the encumbered amounts will be included with restricted or committed resources. If resources have not already been restricted or committed, amounts encumbered are considered assigned for the purpose of the expected expenditure. Reserve for encumbrances as of June 30, 2019 totaled $10,444.

2. Appropriated Fund Equity

General Fund - The amount of $400,000 has been designated as the amount estimated to be appropriated to reduce taxes for the year ending June 30, 2020 as allowed by Section 1318 of the Real Property Tax Law.

3. Reserve for Insurance Recoveries

This reserve contains the difference between the insurance recovery received for the destruction of District property and the cost of replacement. As of June 30, 2019 this reserve totaled $7,324.

E. Unassigned

The residual classification of the general fund and includes all spendable amounts not contained in the other classifications.

2. Government-wide financial statements

A. Invested in Capital Assets, Net of Related Debt

This designation of net position is used to accumulate the capital asset balance in the statement of net position less accumulated depreciation and outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) N. Fund Equity (continued)

2. Government-wide financial statements (continued)

B. Restricted

This category represents amounts that can be spent only for specific purposes stipulated by constitutional, external resource providers including creditors, grantors, contributors, etc., or through enabling legislation.

C. Unrestricted

This category represents net position of the District not restricted for any other purpose.

3. Order of Fund Balance Spending Policy

When more than one classification of fund balance of the District are eligible to be utilized for an expenditure of the District, the order in which the fund balance classifications will be utilized will be as follows:

a. Restricted fund balance for which action has been taken by the Board of Education, a designated school official, or by the voters of the District, specifically designating funds to the expenditure;

b. Committed fund balance for which action has been taken by the Board of Education, a designated school official, or by the voters of the District, specifically designating funds to the expenditure;

c. Assigned fund balance created specifically for the expenditure (encumbered fund balance);

d. Assigned fund balance within funds other than the General Fund of the District to which the expenditure relates;

e. Unassigned fund balance. O. Budgetary Procedures and Budgetary Accounting

1. Budget Policies

The budget policies are as follows:

a) The School District administration prepares a proposed budget for approval by the Board of Education for the General Fund.

b) The proposed appropriations budget is approved by the voters within the District.



O. Budgetary Procedures and Budgetary Accounting (continued)

1. Budget Policies (continued)

c) Appropriations are adopted at the program level.

d) Appropriations established by adoption of the budget constitute a limitation on expenditures and encumbrances which may be incurred. Appropriations lapse at the fiscal year end. Supplemental appropriations may occur subject to legal restrictions, if the Board approves them because of a need which exists which was not determined at the time the budget was adopted. During the fiscal year ended June 30, 2019, the District had a supplemental appropriation in the amount of $1,000,000 related to the transfer of capital reserve towards a capital project as approved by voters, along with a $24,401 appropriation related to the emergency boiler project.

2. Budget Basis for Accounting

Budgets are adopted annually on a basis consistent with the fund financial statements and the modified accrual basis of accounting. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year.

The budget and actual comparison for the Food Service Fund reflects budgeted and actual amounts for funds with legally authorized (appropriated) budgets.

Budgetary controls for the special revenue and capital funds are established in accordance with the applicable grant agreement or authorized project limit which may cover a period other than the District's fiscal year. Consequently, the budgets for such funds have been excluded from the combined schedule of revenue, expenditures and changes in fund equity - budget and actual.

P. Property Taxes 1. Calendar Real property taxes are levied annually by the

Board of Education no later than September 1 and become a lien on October 31.


P. Property Taxes (continued)

2. Enforcement

Uncollected real property taxes are subsequently enforced by the Counties, in which the School District resident is located. An amount representing uncollected real property taxes transmitted to the County for enforcement is paid by the County to the School District no later than the forthcoming April 1.

Q. Interfund Transfers

The operations of the School District give rise to certain transactions between funds, including transfers to provide services and construct assets.

R. Deferred Compensation Plan

Portville Central School District offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 403(b) - Tax Sheltered Annuities (TSA). The plan is available to all school employees and permits them to defer taxation on a portion of their salary until future years. The deferred portion is withheld by the District and disbursed to the employees’ TSA plan administrator. The TSA plans are owned by the individuals and held in trust by the plan administrator. The School District has a fiduciary responsibility for funds withheld and remittance to trustees.

S. Estimates

Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses.

T. Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

NOTE 2 - EXPLANATION OF CERTAIN DIFFERENCES BETWEEN GOVERNMENTAL FUND STATEMENTS AND DISTRICT-WIDE STATEMENTS

Due to the differences in the measurement focus and basis of accounting used in the governmental fund statements and the District-wide statements, certain financial transactions are treated differently. The basic financial statements contain a full reconciliation of these items. The differences result primarily from the economic focus of the Statement of Activities, compared with the current financial resources focus of the governmental funds.


NOTE 2 - EXPLANATION OF CERTAIN DIFFERENCES BETWEEN GOVERNMENTAL FUND STATEMENTS AND DISTRICT-WIDE STATEMENTS (continued)

A. Total Fund Balances of Governmental Funds vs. Net Position of Governmental Activities

Total fund balances of the District’s governmental

funds differs from “net position” of governmental activities reported in the Statement of Net Position. Resulting from the additional long-term economic focus of the Statement of Net Position versus the solely current financial resources focus of the governmental fund Balance Sheet.

B. Statement of Revenues, Expenditures and

Changes in Fund Balance vs. Statement of Activities

Differences between the governmental funds Statement of Revenues, Expenditures and Changes in Fund Balance and the Statement of Activities fall into one of three categories. The amounts shown below represent:

1. Long-term Revenue Differences

Long-term revenue differences arise because governmental funds report revenues only when they are considered “available”, whereas the Statement of Activities reports revenues when earned. Differences in long-term expenses arise because governmental funds report on a modified accrual basis, whereas the Statement of Activities utilizes the accrual basis.

2. Capital Related Differences

Capital related differences include difference between proceeds for the sale of capital assets reported on governmental fund statements and the gain or loss on the sale of assets as reported on the Statement of Activities, and the difference between recording an expenditure for the purchase of capital items in the governmental fund statements and depreciation expense on those items as recorded in the Statement of Activities.

3. Long-term Debt Transaction Differences

Long-term debt transaction differences occur because both interest and principal payments are recorded as expenditures in the governmental fund statements, whereas interest payments are recorded in the Statement of Activities as incurred, and principal payments are recorded as a reduction of liabilities in the Statement of Net Position.

NOTE 2 - EXPLANATION OF CERTAIN DIFFERENCES BETWEEN GOVERNMENTAL FUND STATEMENTS AND DISTRICT-WIDE STATEMENTS (continued)

B. Statement of Revenues, Expenditures and Changes in Fund Balance vs. Statement of Activities (continued)

4. Pension differences

Pension differences occur as a result of changes in the District’s proportion of the collective net pension asset/liability and differences between the District’s contributions to the pension systems.

5. OPEB differences

OPEB differences occur as a result of changes in the District’s total OPEB liability and differences between the District’s contributions and OPEB expense.

NOTE 3 - DETAIL NOTES ON ALL FUNDS

I. Cash

The Portville Central School District’s investment policies are governed by State statutes. School District monies must be deposited in FDIC-insured commercial banks or trust companies located within the State. The District treasurer is authorized to use demand accounts and certificates of deposits. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements, and obligations of New York State or its localities. Collateral is required for demand and time deposits and certificates of deposit not covered by Federal Deposit Insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the state and its municipalities and School Districts.

Custodial credit risk is the risk that in the event of a bank failure the District’s deposits may not be returned to it. While the District does not have a specific policy with regards to custodial credit risk, New York State statutes govern the District’s investment policies. At June 30, 2019, the District’s bank deposits were fully collateralized.

A. Deposits

Deposits are valued at cost or cost plus interest and are categorized as either:

(1) Insured through the Federal Deposit Insurance Corporation or collateralized with securities held by the entity or by its agent in the entity's name;

(2) Collateralized with securities held by the pledging financial institution's trust department or agency in the entity's name; or

(3) Unsecured


NOTE 3 - DETAIL NOTES ON ALL FUNDS (continued)

A. Deposits (continued)

Total financial institution (bank) balances at June 30, 2019 per the bank were approximately $6,115,000. Deposits are categorized as follows:

Category

1

Category

2 Category

3

Carrying Value

$750,000

$5,365,000 $ -

$6,115,000

B. Investments

Investments are stated at current market value and are categorized as either:

(1) Insured or registered, or investments are held by the School District or by the School District's agent in the School District's name,

(2) Uninsured investments held by the financial institutions trust department in the District's name,

(3) Uninsured and unregistered, with investments held by the financial institution or its trust department, but not in the District’s name.

Private Purpose

Trust Fund

Market Value Mutual Funds

$ 251,453

These investments are held in the School District’s name. As of June 30, 2019, the cost of the District’s investments approximated $218,000. Market value of the investments as of June 30, 2019 is based on quoted prices in active markets for identical assets and liabilities.

II. Interfund Transactions

Interfund balances and transactions as of and during the year ended June 30, 2019 are as follows:

Interfund Receivable

Interfund Payable

General Fund $ 282,888 $ 52 Food Service Fund 52 16,081 Special Aid Fund - 106,591 Debt Service Fund 117 - Capital Fund - 135,215 Fiduciary Funds - 25,118 Total $ 283,057 $ 283,057

Interfund Revenue

Interfund Expenditures

Special Aid Fund $ 9,437 $ - Food Service Fund - - Debt Service Fund 64,811 89,000 Capital Projects Fund 1,024,401 68,658 General Fund 92,847 1,033,838

Total $ 1,191,496 $ 1,191,496


II. Interfund Transactions (continued)

During the year ended June 30, 2019, the District transferred $9,437 from the general fund to the special aid fund to cover the local portions of grant expenses incurred in the current year. In addition, $1,024,401 was transferred from the general fund to the capital project fund of which $1,000,000 was used to pay for costs associated with the new $13.8 million capital project and $24,401 towards the emergency boiler project. The District transferred $89,000 from the debt service fund to the general fund to pay a portion of debt service costs. Lastly, the District transferred $64,811 from the capital project fund to the debt service fund and $3,847 from the capital project fund to the general fund to close out a complete renovation project and energy project.

III. Receivables Receivables at June 30, 2019 consisted of the following and management has deemed the amounts to be fully collectible.

Fund Description Amount Special Aid

State and Federal Aid

$ 102,682

Food Service State and Federal Aid 21,756 Food Service Other Receivables 823 General State and Federal Aid 123,918 General Other Receivables 310,632 General Due from Other

Governments

28,043 $ 587,854

IV. Capital Assets Capital asset balances and activity for the year ended June 30, 2019 were as follows:

Beginning Balance 06/30/18

Net

change

Ending Balance 06/30/19

Governmental activities:

Capital assets that are not depreciated:

Land $ 55,292 $ - $ 55,292 Construction-in-

progress

6,377,831 (6,376,157) 1,674

Capital assets that are depreciated:

Buildings and improvements

32,650,910

6,516,545

39,167,455

Furniture and equipment

6,245,116

53,367

6,298,483

Total depreciable historical cost

38,896,026 6,569,912

45,465,938

Less accumulated depreciation:

Buildings and improvements

15,841,775

1,023,937

16,865,712

Furniture and equipment

4,895,815

78,067

4,973,882

Total accumulated depreciation

20,737,590

$ 1,102,004

21,839,594

Total net book value $24,591,559 $23,683,310


NOTE 3 - DETAIL NOTES ON ALL FUNDS (continued) IV. Capital Assets (continued)

Depreciation expense was charged to governmental functions during the current year as follows:

General support

$ 242,674

Instruction 990,708 Pupil transportation 89,886 Food Service Program 6,944 $ 1,330,212

The District had capital additions in the amount of $449,963. V. Liabilities A. Pension Plans

1. Plan Descriptions and Benefits Provided

a. Teachers’ Retirement System (ERS)

The District participates in the New York State Teachers’ Retirement System (TRS). This is a cost- sharing multiple-employer retirement system. The System provides retirement benefits as well as, death and disability benefits to plan members and beneficiaries as authorized by the Education Law and the Retirement and Social Security Law of the State of New York. The System is governed by a 10 member Board of Trustees. System benefits are established under New York State Law. Membership is mandatory and automatic for all full-time teachers, teaching assistants, guidance counselors and administrators employed in New York Public Schools and BOCES who elected to participate in TRS. Once a public employer elects to participate in the System, the election is irrevocable. The New York State Constitution provides that pension membership is a contractual relationship and plan benefits cannot be diminished or impaired. Benefits can be changed for future members only by enactment of a State statute. Additional information regarding the System, may be obtained by writing to the New York State Teachers’ Retirement System, 10 Corporate Woods Drive, Albany, NY 12211-2395 or by referring to the NYSSTR Comprehensive Annual Financial report which can be found on the System’s website at www.nystrs.org.

NOTE 3 – DETAIL NOTES ON ALL FUNDS (continued) V. Liabilities (continued)

A. Pension Plans (continued)

1. Plan Descriptions and Benefits Provided (continued)

b. Employees’ Retirement System (ERS)

The District participates in the New York State and Local Employees’ Retirement System (ERS). This is a cost-sharing multiple-employer retirement system. The System provides retirement benefits as well as death and disability benefits. The net position of the System is held in the New York State Common Retirement Fund (the Fund), which was established to hold all net assets and record changes in plan net position allocated to the System. The Comptroller of the State of New York serves as the trustee of the Fund and is the administrative head of the System. System benefits are established under the provisions of the New York State Retirement and Social Security Law (RSSL). Once a public employer elects to participate in the System, the election is irrevocable. The New York State Constitution provides that pension membership is a contractual relationship and plan benefits cannot be diminished or impaired. Benefits can be changed for future members only by enactment of a State statute. The District also participates in the Public Employees’ Group Life Insurance Plan (GLIP), which provides death benefits in the form of life insurance. The System is included in the State’s financial report as a pension trust fund. That report, including information with regard to benefits provided, may be found at www.osc.state.ny.us/retire/publications/index.php or by writing to the NYS and Local Retirement System, 110 State Street, Albany, NY 12244.

2. Contributions

The Systems are noncontributory except for employees who joined after July 27, 1976, who contribute 3 percent of their salary for the first ten years of membership, and employees who joined on or after January 1, 2010 who generally contribute 3.0 to 3.5 percent of their salary for their entire length of service. In addition, employee contribution rates under ERS tier VI vary based on a sliding salary scale. For ERS, the Comptroller annually certifies the actuarially determined rates expressly used in computing the employers’ contributions based on salaries paid during the Systems’ fiscal year ending March 31. For TRS, contribution rates are established annually by the NYS Teachers’ Retirement Board pursuant to Article 11 of the Education law.


NOTE 3 - DETAIL NOTES ON ALL FUNDS (continued) V. Liabilities (continued) A. Pension Plans (continued)

2. Contributions (continued) Contributions for the current year and two

preceding years were equal to 100 percent of the contributions required, and were as follows:

Year TRS ERS

2019 $ 617,000 $ 302,000 2018 537,000 273,000 2017 638,000 266,000

ERS has provided additional disclosures through entities that elected to participate in Chapter 260, 57, and 105. Since 1989, the TRS’ billings have been based on Chapter 62 of the Laws of 1989 of the State of New York. This legislation requires participating employers to make payments on a current basis.

Over the years, State Legislature authorized local governments to make available retirement incentive programs to qualifying employees. The District had no expenditures incurred or liability accrued related to the retirement incentive liabilities as of and for the year ended June 30, 2019.


3. Pension Asset (Liability), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2019, the District reported the following asset/(liability) for its proportionate share of the net pension asset /(liability) for each of the Systems. The net pension asset/(liability) was measured as of March 31, 2019 for ERS and June 30, 2018 for TRS. The total pension asset/(liability) used to calculate the net pension asset/(liability) was determined by an actuarial valuation. The District’s proportion of the net pension asset/(liability) was based on a projection of the District’s long-term share of contributions to the Systems relative to the projected contributions of all participating members, actuarially determined. This information was provided by the ERS and TRS Systems in reports provided to the District.

ERS TRS Measurement date 3/31/2019 06/30/2018 Net pension asset (liability) $ (501,597) $ 608,071 District's portion of the Plan's total net Pension asset (liability) .0070794% .033627%

For the year ended June 30, 2019, the District recognized pension expense of $362,144 for ERS and $467,663 for TRS. At June 30, 2019 the District’s reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Resources Deferred Inflows of Resources ERS TRS ERS TRS Differences between expected and

actual experience $ 98,775 $ 454,407 $ 33,671 $ 82,311 Changes of assumptions 126,081 2,125,607 - - Net difference between projected

and actual earnings on pension plan investments - - 128,737 675,005

Changes in proportion and differences between the Districts contributions and proportionate share of contributions 88,658 23,976 4,597 33,354

District’s contributions subsequent to the measurement date 82,026 616,682 - -

Total $ 395,540 $ 3,220,672 $ 167,005 $ 790,670



3. Pension Asset (Liability), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (continued)

District contributions subsequent to the measurement date which will be recognized as a reduction of the net pension liability/asset in the year ending June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions, along with contributions subsequent to the measurement date, will be recognized in pension expense as follows: ERS TRS Year ended: 2020 $ 135,287 $ 605,232 2021 (75,967) 409,550 2022 6,639 39,382 2023 80,550 408,117 2024 - 281,989 Thereafter - 69,050

4. Actuarial Assumptions The total pension liability as of the measurement date was determined by using an actuarial valuation as noted in the table below, with update procedures used to roll forward the total pension asset (liability) to the measurement date. The actuarial valuations used the following actuarial assumptions: Significant actuarial assumptions used in the valuations were as follows: ERS TRS Measurement date 3/31/19 6/30/18 Actuarial valuation date 4/1/18 6/30/17 Interest rate 7% 7.25% Salary scale 4.2% average 1.90% - 4.72%

Decrement tables

4/1/10 – 3/31/15 System’s

Experience

7/1/09 – 6/30/14 System’s

Experience Inflation rate 2.5% 2.25%


4. Actuarial Assumptions (continued) For ERS, annuitant mortality rates are based on April 1, 2010 – March 31, 2015 System’s experience with adjustments for mortality improvements based on MP-2014. For TRS, annuitant mortality rates are based on member experience with adjustments for mortality improvements based on Society of Actuaries Scale MP2014, applied on a generational basis. Active members’ mortality rates are based on plan members’ experience. For ERS, the actuarial assumptions used in the April 1, 2018 valuation are based on the results of an actuarial experience study for the period April 1, 2010 – March 31, 2015. For TRS, the actuarial assumptions used in the June 30, 2017 valuation are based on the results of an actuarial experience study for the period July 1, 2009 – June 30, 2014. The long term rate of return on pension plan investments was determined using a building block method in which best estimate ranges of expected future real rates of return (expected returns net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long term expected rate of return by weighting the expected future real rates of return by each the target asset allocation percentage and by adding expected inflation. Best estimates of the arithmetic real rates of return for each major asset class included in the target asset allocation are summarized below: Expected Expected

Measurement date ERS

3/31/19 Rate of Return

TRS 6/30/18

Rate of Return

Asset Type: Domestic Equity 36% 4.55% 33% 5.8% International Equity 14% 6.35% 16% 7.3% Private Equity 10% 7.50% 8% 8.9% Real Estate 10% 5.55% 11% 4.9% Absolute return strategies 2% 3.75% -% -% Opportunistic portfolio 3% 5.68% -% -% Real assets 3% 5.29% -% -% Global Equity -% -% 4% 6.7% Domestic fixed income securities -% -% 16% 1.3% Global fixed income securities -% -% 2% 0.9% High-yield fixed income -% -% 1% 3.5% Private debt -% -% 1% 6.8% Bonds and Mortgages 17% 1.31% 7% 2.8% Cash 1% (.25%) 1% 0.3% Inflation-indexed bonds 4% 1.25% -% -% Total: 100% 100%



5. Discount Rate The discount rate used to calculate the total pension asset (liability) was 7% for ERS and 7.25% for TRS. The projection of cash flows used to determine the discount rate assumes that contributions from plan members will be made at the current contribution rates and that contributions from employers will be made at statutorily required rates, actuarially. Based upon the assumptions, the Systems’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore the long term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension asset (liability).

6. Sensitivity of the Proportionate Share of the Net Pension Asset (Liability) to the Discount Rate Assumption

The following presents the District’s proportionate share of the net pension asset (liability) calculated using the discount rate of 7% for ERS and 7.25% for TRS, as well as what the District’s proportionate share of the net pension asset/(liability) would be if it were calculated using a discount rate that is 1-percentage point lower (6% for ERS and 6.25% for TRS) or 1-percentage point higher (8% for ERS and 8.25% for TRS) than the current rate:

ERS

1% Decrease

(6%)

Current Assumption

(7%)

1% Increase

(8%) Employer’s

proportionate share of the net pension asset/ (liability) $ (2,193,061) $ (501,597) $ 919,353

TRS

1% Decrease (6.25%)

Current Assumption

(7.25%)

1% Increase (8.25%)

Employer’s proportionate share of the net pension asset/ (liability) $ (4,177,548) $ 608,071 $ 4,617,090

NOTE 3 - DETAIL NOTES ON ALL FUNDS (continued) V. Liabilities (continued)

A. Pension Plans (continued)

7. Pension Plan Fiduciary Net Position The components of the current-year net pension liability of the employers as of the respective measurement dates, were as follows:

(Dollars in Thousands) ERS TRS Measurement date 3/31/19 6/30/18 Employers’ total

pension liability $ 189,803,429 $ 118,107,253 Plan net position $ 182,718,124 $ 119,915,518 Employers’ net pension

asset (liability) $ (7,085,305) $ 1,808,265 Ratio of plan net

position to be Employers’ total pension asset (liability) 96.27% 101.53%

8. Payables to the Pension Plan

For ERS, employer contributions are paid annually based on the System’s fiscal year which ends on March 31st. Accrued retirement contributions as of June 30, 2019 represent the projected employer contribution for the period of April 1, 2019 through June 30, 2019 based on paid ERS wages multiplied by the employer’s contribution rate, by tier. Accrued retirement contributions as of June 30, 2019 amounted to $82,026.

For TRS, employer and employee contributions for the fiscal year ended June 30, 2019 are paid to the System in September, October and November 2019 through a state aid intercept. Accrued retirement contributions as of June 30, 2019 represent employee and employer contributions for the fiscal year ended June 30, 2019 based on paid TRS wages multiplied by the employer’s contribution rate, by tier and employee contributions for the fiscal year as reported to the TRS System. Accrued retirement contributions as of June 30, 2019 amounted to $ 640,483 (employer contribution $616,682 and employee contributions of $23,801).



V. Liabilities (continued)

B. Other Post-Employment Benefits

a. General Information about the OPEB Plan

Plan Description

The District maintains a single-employer defined benefit healthcare plan (the Plan). The Plan provides medical and vision insurance benefits to eligible retires and their spouses. Benefit provisions are based on bargaining agreements as negotiated from time to time. The Plan does not issue a publicly available financial report. Eligibility for the Plan is established by the District and specified in the District’s employment contracts.

Benefits Provided

The District provides healthcare for retirees and their dependents. The benefit terms are dependent on which contract each employee falls under. The specifics of each contract are on file at the District offices and are available upon request.

Employees Covered by Benefit Terms

At June 30, 2019, the following employees were covered by the benefit terms:

2. Total OPEB Liability

The District’s total OPEB liability of $5,900,531 was measured as of July 1, 2018 for the fiscal year ending June 30, 2019. Actuarial Assumptions and Other Inputs

The total OPEB liability was valued at July 1, 2018. The actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Inflation – 2.5%

Salary Increases

Years of Service

Non-Teachers

Teachers/ Administrators

0 8.00% 10.00% 10 3.80% 4.07% 20 3.00% 2.82% 30 3.00% 2.06% 40 3.00% 1.76%

NOTE 3 DETAIL NOTES ON ALL FUNDS (continued)


B. Other Post-Employment Benefits (continued)

2. Total OPEB Liability (continued)

Actuarial Assumptions and Other Inputs (continued)

Discount Rate – 3.87%

Healthcare Cost Trend Rates – 8.0% for 2019, decreasing 0.5% to 4.5% for 2026 and later.

Retirees’ Share of Benefit-Related Costs – Retirees are required to contribute the portion of premiums not covered by the District’s explicit subsidy. The discount rate was based on Fidelity 20-Year Go Municipal Bond Index. Mortality rates were based on the RPH-2018 Total Dataset Mortality Table. The actuarial assumptions for the July 1, 2018 measurement were based on the actuarial experience study for the period July 1, 2015 – July 1, 2016 projected to July 1, 2017.

3. Changes in the Total OPEB Liability

Service cost $ 140,206 Interest 268,830 Differences between expected and actual experience (1,240,067) Changes in assumptions (440,636) Benefit payments (473,893) Net changes (1,745,560)

Net OPEB liability – beginning of year 7,646,091 Net OPEB liability – end of year $ 5,900,531

Changes of assumptions Changes of assumptions reflect a change in the discount rate from 3.56% in 2018 to 3.87% in 2019. Payroll growth rate reflects NYSERS and NYSTRS valuations for 2019 and 2018. Inflation rate of 2.5% in 2019 and 1.3% in 2018. Health care trend rate of 8.0%-4.5% in 2019 and 8.5%-5.0% in 2018. Mortality rates based on Scale MP-2018 in 2019 and Scale MP-2015 in 2018.

Inactive employees or beneficiaries 55 Currently receiving benefit payments

Active Employees 121 176




B. Other Post-Employment Benefits (continued)

3. Changes in the Total OPEB Liability (continued)

Sensitivity of the Total OPEB Liability to changes in the Discount Rate The following presents the total OPEB liability of the District, as well as what the District’s total OPEB liability would be if it were calculated using a discount rate that is 1% point lower (2.87%) or 1% point higher (4.87%) than the current discount rate:

1% Decrease (2.87%)

Discount Rate

(3.87%)

1% Increase (4.87%)

Total OPEB liability $ 6,393,639 $ 5,900,531 $ 5,457,453

Sensitivity of the Total OPEB Liability to changes in the Healthcare Trend Costs The following presents the total OPEB liability of the District, as well as what the District’s total OPEB liability would be if it were calculated using healthcare trend costs that are 1% point lower (7.00%-3.50%) or 1% point higher (9.00%-5.50%) than the current discount rate:

1% Decrease (7%-3.5%)

Discount Rate

(8%-4.5%)

1% Increase

(9%-5.5%) Total OPEB liability $ 5,421,425 $ 5,900,531 $ 6,441,587



B. Other Post-Employment Benefits (continued) 4. OPEB Expense and Deferred Outflows of

Resources and Deferred Inflows of Resources Related to OPEB

For the year ended June 30, 2019, the District recognized OPEB expense of $154,067. At June 30, 2019, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows of Resources

Deferred Inflows of

Resources Differences between

expected and actual experience $ -

$ 1,259,666 Changes of assumptions

or other Inputs 468,268

664,681 Benefits paid subsequent

to measurement period 344,490

- Total $ 812,758 $ 1,924,347

Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year ended: Amount

2020 $ (254,969) 2021 (254,969) 2022 (254,969) 2023 (411,055) 2024 (280,117)

Thereafter -

Total $ (1,456,079)




C. Indebtedness

1. Short-Term Debt

a. Bond Anticipation Notes

Notes issued in anticipation of proceeds from the subsequent sale of bonds is recorded as a current liability of the fund that will actually receive the proceeds from the issuance of the bonds. Such notes may be classified as part of the financial statements when (1) the intention is to refinance the debt on a long-term basis and (2) the intention can be substantiated through a post balance sheet issuance of long-term debt or by an acceptable financing agreement. State law requires that bond anticipation notes issued for capital purposes be converted to long-term financing within five years after the original issue date.

On September 14, 2017, the District issued bond anticipation notes in the amount of $646,360. The notes carried an interest rate of 1.53% and matured on September 14, 2018. The bond anticipation notes were issued to pay for transportation vehicles.

On September 13, 2018, the District issued bond anticipation notes in the amount of $650,962. The notes carry an interest rate of 3.00% and mature on September 13, 2019. The bond anticipation notes were issued to pay for transportation vehicles ($213,354) and to pay a portion ($437,608) of the BANS that matured on September 14, 2018.

b. Short-Term Debt Interest

The District had $9,889 of short-term interest for the year ended June 30, 2019.

2. Long-Term Debt

a. Debt Limit

At June 30, 2019, the total indebtedness represents approximately 55% of its debt limit.



C. Indebtedness (continued)

2. Long-Term Debt (continued)

b. Serial Bonds

The District borrows money in order to acquire or construct buildings and improvements. This enables the cost of these capital assets to be borne by the present and future taxpayers receiving the benefit of capital assets. These long-term liabilities, which are full faith and credit debt of the District, are recorded in the Statement of Net Position. The provisions to be made in future budgets for capital indebtedness represents the amount, exclusive of interest, authorized to be collected in future years from taxpayers and others for liquidation of the long-term liabilities. On June 25, 2009, the District issued serial bonds in the amount of $2,755,000 with rates ranging from three and one-eighth per centum (3.18%) to four and one-eighth per centum (4.18%). The bonds mature on June 15, 2024.

On June 27, 2012, the District issued serial bonds in the amount of $5,600,000 with rates ranging from two percent (2.00%) to three and seventy-five hundredths percent (3.75%). The bonds mature on June 15, 2032. On June 7, 2018, the District issued serial bonds in the amount of $5,315,000 with a rate of five percent (5.00%). The bonds mature on June 15, 2033.

c. Changes

The changes in the School District's indebtedness during the year ended June 30, 2019 and 2018 are summarized as follows:

Balance June 30, 2019

Balance

June 30, 2018 2009 Serial Bonds $ 1,030,000 1,235,0002012 Serial Bonds 3,423,548 3,808,2872018 Serial Bonds 5,793,608 6,093,430Other post- employment benefits

5,900,531 7,646,091Net pension liabilities -

ERS 501,597 204,823Compensated absences

610,000 626,000

$ 17,259,284 $ 19,613,631






c. Changes (continued)

During the year, the District made principal payments on its serial bonds in the amount of $735,000 and had amortization on bond premiums in the amount of $154,561. The net change in compensated absences was a net decrease of $16,000 during the fiscal year ended June 30, 2019. The net change in other post-employment benefits was a decrease of $1,745,560 during the fiscal year ended June 30, 2019. The net pension liability – ERS increased $296,774 during the current year.

d. Maturity

1. The following is a summary of serialbonds indebtedness:

Description of Issue Outstanding at June 30, 2019

Serial Bonds, issued in 2009 with a maturity date of 2024, with interest rates ranging from 3.18% - 4.18%. $ 1,030,000

Serial Bonds, issued in 2012 with a maturity date of 2032, with interest rates ranging from 2%-3.75%. 3,375,000 Plus: Unamortized premiums on bonds 48,548

3,423,548 Serial Bonds, issued in 2018 with a maturity date of 2033, with an interest rate of 5.00%. 5,130,000 Plus: Unamortized premiums on bonds 663,608

5,793,608

$ 10,247,156





d. Maturity (continued)

2. The following is a summary of maturingdebt service requirements for serialbonds:

Serial Bonds – 2018 Construction Bond

Year Principal Interest

2020 $ 280,000 $ 256,500 2021 295,000 242,500 2022 310,000 227,750 2023 325,000 212,250 2024 340,000 196,000 2025-2029 1,980,000 706,250 2030-2033 1,600,000 181,000

Total $ 5,130,000 $ 2,022,250



2020 $ 355,000 $ 103,350 2021 365,000 92,700 2022 375,000 81,750 2023 385,000 70,500 2024 400,000 58,950 2025-2029 1,255,000 129,431 2030-2032 240,000 16,425

Total $ 3,375,000 $ 553,106



2020 $ 210,000 $ 42,488 2021 220,000 33,825 2022 230,000 24,750 2023 240,000 15,263 2024 130,000 5,363

Total $ 1,030,000 $ 121,689

e. Long-Term Debt Interest

Interest expense on long-term debt amounted to $514,548 for the year ended June 30, 2019.


NOTE 3 - DETAIL NOTES ON ALL FUNDS (continued) V. Liabilities (continued)


3. Refunding of Long-Term Debt

In prior years, the District defeased other general obligations and other bonds by placing the proceeds of new bonds in an irrevocable trust to provide for future debt service payments on the old bonds. Accordingly, the trust account assets and liability for the defeased bonds are not included in the District’s financial statements.

4. Debt Issuance Costs, Premium and Amortization

Net premiums resulting from bond and other debt refinancing are being amortized over the life of the relating debt using the interest method. These premiums are accordingly included in the outstanding principal balances for the bonds. Debt issuance costs related to the bonds are expensed in accordance with GASB 65.

VI. Fund Equity

A. Fund Equity

The District’s fund equity is comprised of various components.

Category/Fund

Description

Balance June 30, 2019

Nonspendable:

Food Service Inventory $ 19,416

Restricted:

General Reserve for employee

benefits

$ 764,063 Reserve for retirement

system contributions

549,535 Reserve for TRS retirement

Contributions subfund

100,000 Reserve for capital 500,000 Unemployment reserve 200,000 Reserve for workers’

compensation

31,411

$ 2,145,009

Capital Fund Equity $ 212,637 Debt Service Reserve for debt service $ 37,348 Trust and Agency

Reserve for endowment scholarships

$ 251,453

Assigned: General Reserve for encumbrances $ 10,444 Reserve for insurance

recoveries

7,324 Appropriated fund balance 400,000

$ 417,768 Food Service Fund Equity

$ 9,947

NOTE 3 - DETAIL NOTES ON ALL FUNDS (continued) VI. Fund Equity (continued)

B. District-wide Net Position

Net position of the District includes restricted net position of $2,394,994 which represent restricted amounts in the general and debt service funds as presented above.

VII. Commitments and Contingencies

A. Risk Financing and Related Insurance

1. General Information

The Portville Central School District is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; errors and omissions; natural disasters, etc. These risks are covered by commercial insurance purchased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past two years.

A. Risk Sharing Pools

For its employee health and accident coverage, Portville Central School District is a participant in the Cattaraugus-Allegany Regional Medical Plan, a public entity risk pool operated for the benefit of 23 individual governmental units located within Allegany and Cattaraugus Counties. The School District pays monthly premiums to the Plan for this health coverage.

The Plan is authorized to assess supplemental premiums to the participating districts. The Plan provides coverage for its members up to $100,000 per insured event. The Cattaraugus-Allegany Regional Medical Plan obtains independent coverage for insured events in excess of this amount.

The Portville Central School District also participates in a risk sharing pool, Cattaraugus-Allegany BOCES, to insure Workers' Compensation claims. This is a public entity risk pool created under Article 5, Workers' Compensation Law, to finance liability and risks related to Workers' Compensation claims. Administrators of the Plan have indicated that the Plan’s reserves are believed to be in excess of estimated unbilled and open claims.



VII. Commitments and Contingencies (continued)

B. Federal and State Grants

The District has received grants reported in thespecial aid fund which are subject to audit byagencies of the state and federal government. Suchaudits may result in disallowances and a request for areturn of funds. Based on past audits and no knownsignificant areas of non-compliance, the Districtbelieves disallowances, if any, will not be material.

C. Compensated Absences

The District does not accrue a liability foraccumulating, non-vesting sick leave, since paymentis based on an uncontrollable future event (sickness).In accordance with the provisions of GovernmentalAccounting Standards Board Statement No. 16, thevalue for accumulating, non-vesting sick leave isconsidered a contingent liability. The District reportsapproximately $633,000 as of June 30, 2019 foraccumulating non-vesting sick leave.

D. Contingencies

The District may be a party to various claims andlegal proceedings covering a wide range of mattersthat arise in the course of the District’s business. InAugust, 2019, a claim was brought by a formerstudent against the District under the New York StateChild Victims Act. This matter is in the early stagesand the scope of damages, if any, cannot presentlybe assessed. The District intends to vigorously defendagainst the claim.

NOTE 4 - CAPITAL PROJECTS

On May 20, 2014, the voters of the District authorized a new capital project and energy project in the amount of $6,135,894. The project includes general reconstruction to its school buildings and bus garage, roof replacement, along with an energy efficiency project. Total expenditures incurred on the projects through June 30, 2019 totaled $6,129,062.

During the fiscal year ended June 30, 2019, the District purchased transportation vehicles in the amount of $213,354 which was recorded in the capital projects fund.

The District also had expenditures in the current year in the amount of $93,574 related to the Smart Schools Bond Act project.

NOTE 4 - CAPITAL PROJECTS (CONTINUED)

In the prior year, the Board of Education of the District authorized an emergency boiler project and an emergency asbestos project with estimated costs of $260,000 and $150,000, respectively. The District incurred expenditures of $25,226 to complete the emergency boiler project. Also, a transfer of $3,847 was made to the general fund to close out the emergency asbestos project.

On May 21, 2019, the voters of the District authorized a new capital improvement project in the amount of $13,800,000. The project includes general reconstruction to its school buildings and athletic facilities in addition to furnishings, equipment, and other related expenses. Project expenditures were incurred in the amount of $1,674 for the year ended June 30, 2019.

Lastly, during the current year, the District closed out its $5.9 million project by transferring remaining funds to the debt service fund in the amount of $64,811 and closed out its $4 million project, energy project and prior year bus purchases.

NOTE 5 – PRIOR PERIOD ADJUSTMENT

For the fiscal year ended June 30, 2018, the District recorded a prior period adjustment in the amount of $466,448 as an addition to the District’s net position. This prior period adjustment was made to reflect the benefits paid subsequent to the measurement date as a deferred outflow of resources as part of the District’s Other Post-Employment Benefits (OPEB) liability.

NOTE 6 – SUBSEQUENT EVENTS

Subsequent events were evaluated though September 17, 2019, which is the date the financial statements were available to be issued.

SUPPLEMENTARY INFORMATION

See accompanying independent auditor’s report.

PORTVILLE CENTRAL SCHOOL DISTRICT COMBINING SCHEDULE OF REVENUE AND EXPENDITURES AND CHANGES IN FUND EQUITY - BUDGET AND ACTUAL - GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2019

Current Over (Under)Adopted Final Year's RevisedBudget Budget Revenue Budget

Revenues

Local Sources:Real property taxes and tax items 4,636,404$ 4,636,404$ 4,636,405$ 1$ Real property tax items 12,000 12,000 12,091 91 Charges for services 644,290 644,290 799,200 154,910 Use of money and property 7,000 7,000 11,428 4,428 Sale of property and compensation for loss 17,500 17,500 7,403 (10,097) Miscellaneous 145,000 145,000 300,817 155,817

State Sources:Basic formula 10,681,932 10,681,932 10,354,310 (327,622) BOCES 1,309,682 1,309,682 1,192,376 (117,306) All other aid 86,412 86,412 80,498 (5,914)

Federal Sources:Medicaid reimbursement 40,000 40,000 191,113 151,113

Total revenue 17,580,220 17,580,220 17,585,641 5,421

Other SourcesOperating transfer in 239,000 239,000 92,847 (146,153)

Total revenue and other sources 17,819,220 17,819,220 17,678,488$ (140,732)$

Supplemental Appropriations - 1,024,401 Appropriated fund equity and carryover encumbrances 400,000 410,143

Total revenue, other sources andappropriated fund equity 18,219,220$ 19,253,764$


Schedule SS1 Page 37

Current Adopted Final Year's Unencumbered Budget Budget Expenditures Encumbrances BalancesExpenditures General Support:

Board of education 19,000$ 19,000$ 18,072$ -$ 928$ Central administration 215,015 224,244 222,155 - 2,089 Finance 279,443 333,186 323,924 - 9,262 Staff 292,332 304,797 251,259 - 53,538 Central services 1,296,883 1,333,282 1,224,476 485 108,321 Special items 264,135 301,473 253,836 - 47,637

Instructional:

Instruction, administration andimprovement 572,583 586,460 532,857 - 53,603 Teaching - regular school 5,300,060 5,229,579 4,964,788 1,800 262,991 Programs for children with

handicapping conditions 1,245,527 1,206,590 1,128,978 1,133 76,479 Teaching - special schools 500 500 - - 500 Occupational education 547,155 547,155 547,155 - - Instructional media 521,399 539,023 493,128 677 45,218 Pupil services 817,696 846,364 834,146 - 12,218

Pupil Transportation 1,306,464 1,309,639 1,238,287 6,182 65,170 Employee Benefits 4,035,203 3,942,246 3,599,230 167 342,849 Debt Service:

Debt service principal 1,083,752 951,388 943,752 - 7,636 Debt service interest 392,073 524,437 524,437 - -

Total expenditures 18,189,220 18,199,363 17,100,480 10,444 1,088,439 Other Uses:Transfer to other funds 30,000 1,054,401 1,033,838 - 20,563

Total other uses 30,000 1,054,401 1,033,838 - 20,563 Total expenditures and other uses 18,219,220$ 19,253,764$ 18,134,318 10,444$ 1,109,002$

Excess (deficiency) of revenue and other sources over expenditures and other uses (455,830)$


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule SS1A COMBINING SCHEDULE OF REVENUE AND EXPENDITURES AND CHANGES IN FUND EQUITY - BUDGET AND ACTUAL - GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2019 Page 38

Budget Variance (Amended) Actual Fav. (Unf.)RevenueState sources 12,250$ 10,521$ (1,729)$ Federal sources 265,000 271,278 6,278 Sales 260,000 231,356 (28,644) Miscellaneous 25,000 17,658 (7,342) Surplus food 50,000 33,730 (16,270) Use of money and property 100 28 (72)

Total revenue 612,350 564,571 (47,779) ExpendituresGeneral support 215,000 191,485 23,515 Employee benefits 61,850 51,566 10,284 Cost of sales 336,500 288,131 48,369 Other expenses 19,000 17,731 1,269

Total expenditures 632,350 548,913 83,437 Excess (deficiency) of revenue over expenditures (20,000) 15,658 35,658 Other sources (uses)Transfer from general fund 20,000 - (20,000)

Excess of revenue over expenditures -$ 15,658 15,658$

Fund equity, beginning of year 13,705 Fund equity, end of year 29,363$

School Food Service Fund


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule SS2 SCHEDULE OF CHANGE FROM ADOPTED BUDGET TO FINAL BUDGET AND THE REAL PROPERTY TAX LIMIT FOR THE YEAR ENDED JUNE 30, 2019 Page 39

CHANGE FROM ADOPTED BUDGET TO FINAL BUDGET

Adopted budget 18,219,220$

Additions:Prior year encumbrances 10,143

Original Budget 18,229,363

Budget Revisions:Supplemental appropriation - transfer to capital project fund - capital improvement project 1,000,000 Supplemental appropriation - transfer to capital project fund - emergency project 24,401

Final budget 19,253,764$

SECTION 1318 OF REAL PROPERTY TAX LAW LIMIT CALCULATION

2019-20 voter-approved expenditure budget 18,666,044$ Maximum allowed (4% of 2019-20 budget) 746,642$

General Fund Fund Balance Subject to Section 1318 of Real Property Tax Law*:

Unrestricted fund balance:Committed fund balance -$ Assigned fund balance 417,768 Unassigned fund balance 1,433,108

Total unrestricted fund balance 1,850,876

Less:Appropriated fund balance 400,000Insurance recovery reserve 7,324 Enumbrances included in committed and assigned fund balance 10,444

Total adjustments 417,768

General Fund Fund Balance Subject to Section 1318 of Real Property Tax Law 1,433,108$

Actual percentage 7.7%

* Per Office of State Comptroller's "Fund Balance Reporting and Governmental Type Definitions", UpdatedApril 2011 (Orginally Issued November 2010), the portion of the General Fund fund balance subject toSection 1318 of the Real Property Tax Law is: unrestricted fund balance (i.e., the total of the committed,assigned, and unassigned classifications), minus appropriated fund balance, amounts reserved forinsurance recovery, amounts reserved for tax reduction, and encumbrances included in committed andassigned fund balance.


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule SS3 SCHEDULE OF PROJECT EXPENDITURES - CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2019 Page 40

Unexpended Fund

Original Revised Prior Current Transfer to Transfer to Debt (Overexpended) Proceeds of State Local Balance

Project Title Appropriation Appropriation Years Year General Fund Service Fund Total Balance Obligations Sources Sources Total June 30, 2019

Renovation project #2 5,900,000$ 5,900,000$ 5,760,034$ -$ -$ 64,811$ 5,824,845$ 75,155$ 5,720,000$ 104,845$ -$ 5,824,845$ -$

Capital Project $4M 4,041,920 4,295,837 4,288,091 19,914 - (12,168) 4,295,837 - 4,295,837 - - 4,295,837 -

Capital Project $14M 13,800,000 13,800,000 - 1,674 - - 1,674 13,798,326 - - 1,000,000 1,000,000 998,326

Energy Project 2,093,974 1,840,057 1,821,057 - - 19,000 1,840,057 - 1,840,057 - - 1,840,057 -

SMART Bond Act Phase 1 974,908 974,908 423,486 93,574 - - 517,060 457,848 - 382,308 - 382,308 (134,752)

Emergency Boiler Project 260,000 260,000 224,175 25,226 - - 249,401 10,599 - - 249,401 249,401 -

Emergency Asbestos Project 150,000 150,000 103,153 - 3,847 - 107,000 43,000 - - 107,000 107,000 -

Buses 2015-16 207,482 207,787 214,471 - - (6,831) 207,640 147 207,335 - 305 207,640 -

Buses 2016-17 216,088 216,088 218,918 - - (1) 218,917 (2,829) 218,917 - - 218,917 -

Buses 2017-18 231,554 231,554 225,979 - - - 225,979 5,575 226,004 - - 226,004 25

Buses 2018-19 255,393 255,393 - 213,354 - - 213,354 42,039 213,354 - - 213,354 -

28,131,319$ 28,131,624$ 13,279,364$ 353,742$ 3,847$ 64,811$ 13,701,764$ 14,429,860$ 12,721,504$ 487,153$ 1,356,706$ 14,565,363$ 863,599

Less: Bond anticipation notes outstanding (650,962)

Ending fund equity balance as of June 30, 2019 212,637$

Expenditures Methods of financing


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule SS4A BUDGET COMPARISON STATEMENT FOR STATE AND OTHER GRANT PROGRAMS - SPECIAL AID AND FOOD SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2019 Page 41

Award/ Grantors Grant Program Total TotalGrant Title Project No. Period Budget Revenue Expenditures Summer school * N/A 2019 N/A 47,184$ 47,184$ Universal Pre-kindergarten 0409-19-7485 2019 169,472$ 169,472 169,472

Ralph Wilson Foundation Grant N/A 2019 150,000 33,174 33,174 School breakfast programs N/A 2019 N/A 2,807 2,807

School lunch programs N/A 2019 N/A 7,714 7,714

260,351$ 260,351$

* Revenue includes interfund transfer from general fund in the amount of $9,437 which represents local share.


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule SS4B NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2019

Note 1 - Basis of Presentation

The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Portville Central School District and is presented on the modified accrual basis of accounting. The information in the schedule is presented in accordance with the requirements of Uniform Guidance, Audits of States, Local Government and Non-Profit Organizations. Therefore, some amounts presented in the schedule may differ from amounts presented in, or used in the preparation of the basic financial statements. Basis of Accounting

The basis of accounting varies by Federal program consistent with underlying regulations pertaining to each program. The amounts reported as Federal expenditures generally were obtained from the appropriate Federal financial reports for applicable program and periods. The amounts reported in there Federal financial reports are prepared from records maintained for each program, which are periodically reconciled with the District’s financial reporting system.

Note 2 - Non-monetary Federal Program

The accompanying Portville Central School District is the recipient of a non-monetary federal award program. During the year ended June 30, 2019, the District reported in the Schedule of Federal Awards $33,730 of donated commodities at fair market value received and disbursed.

Note 3 – Indirect Cost Rate

The District has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance in the current year.


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule SS4C SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2019 Page 42

Federal Agency or Program or CFDA Pass-through Award

Federal Program Title Number Number Amount Revenue Expenditures

Applachian Regional Commission (ARC)Direct Program:

Appalachian Regional Commission Grant 23.011 Q215F120322 146,368$ 34,818$ 34,818$

US Department of Education:Passed through NYS Department of Education:

Title I, Part A 84.010A 0021-19-0255 163,314 162,477 162,477 Title I, Part D 84.010A 0016-19-0255 8,056 8,056 8,056 Title IIA 84.367A 0147-19-0255 32,489 32,489 32,489 Title IV, SSAE 84.424A 0204-19-0255 10,000 9,835 9,835 IDEA Part B, Section 611 ** 84.027A 0032-19-0081 220,292 218,317 218,317 IDEA Part B, Section 619 ** 84.173A 0033-19-0081 11,571 10,269 10,269

US Department of Agriculture:Passed through NYS Department of Education:

National School Breakfast Program *** 10.553 N/A N/A 57,523 57,523 National School Lunch Program *** 10.555 N/A N/A 213,755 213,755

Passed through NYS Office of General Services:

National School Lunch Program *** Noncash assistance (commodities) 10.555 N/A N/A 33,730 33,730

Total expenditures and revenue 781,269$ 781,269$

** Constitutes a cluster of Federal programs named Special Education Cluster, with total revenue and expenditures of 228,586$ *** Constitutes a cluster of Federal programs named Child Nutrition Cluster with total revenue and expenditures of 305,008$


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule SS5 SCHEDULE OF CAPITAL ASSETS NET OF RELATED DEBT AS OF JUNE 30, 2019 Page 43

Capital Assets 23,683,310$

Less:

Serial bonds (10,247,156) Bond anticipation notes (650,962)

Assets to be used for capital improvements, net of related liabilities 863,599

Investment in capital assets, net of related debt 13,648,791$


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule SS6 SCHEDULE OF CHANGES IN THE DISTRICT’S NET OPEB LIABILITY AND RELATED RATIOS FOR THE YEARS ENDED JUNE 30, 2017 THROUGH 2019 Page 44

As of the measurement date of July 1, 2018 2017 2016

Total OPEB LiabilityService cost 140,206$ 162,238$ 131,513$ Interest 268,830 245,886 296,631 Differences between expected and actual experience (1,240,067) (339,417) - Changes in assumptions (440,636) (446,226) 749,229 Benefit payments (473,893) (466,449) (427,935) Net change in total OPEB liability (1,745,560) (843,968) 749,438 Total OPEB liability - beginning 7,646,091 8,490,059 1,333,852 Prior period adjustment - - 6,406,769 Total OPEB liability - ending 5,900,531$ 7,646,091$ 8,490,059$

Plan fiduciary net positionContributions - employer 473,893$ 466,449$ 427,935$ Net investment income - - - Benefit payments (473,893) (466,449) (427,935) Net change in plan fiduciary net position - - - Plan fiduciary net position - beginning - - - Plan fiduciary net position - ending -$ -$ -$

District's net OPEB liability 5,900,531$ 7,646,091$ 8,490,059$

Plan fiduciary net position as a percentage of total OPEB liability 0.00% 0.00% 0.00%

Covered-employee payroll 5,714,433$ 7,035,236$ 6,944,952$

District's net OPEB liability as a percentage of covered-employee payroll 103.26% 108.68% 122.25%

Notes to Schedule:

Benefit Changes: None

Changes in assumptions:

Inflation rate from 1.3% as of 7/1/17 to 2.5% as of 7/1/18Mortality table updated from SOA RPH-2015 Total Dataset Mortality Table fully generational using Scale MP-2015 to SOA RPH-2018 Total Dataset Mortality Table fully generational using Scale MP-2018

Health care trend rates from 8.5% to 5.0% as of 7/1/17 to 8.0% to 4.5% as of 7/1/18Discount rate from 3.56% as of 7/1/17 to 3.87% as of 7/1/18


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule SS7 SCHEDULE OF DISTRICT CONTRIBUTIONS – OPEB FOR THE YEARS ENDED JUNE 30, 2017 THROUGH 2019 Page 45

For the year ended June 30, 2019 2018 2017

Actuarially determined contributions 473,893$ 466,449$ 427,935$

Contributions in relation to the actuarially determined contribution (473,893) (466,449) (427,935)

Contribution deficiency (excess) -$ -$ -$

District's covered-employee payroll 5,714,433$ 7,035,236$ 6,944,952$

Contributions as a percentage of District's covered-employee payroll 8.29% 6.63% 6.16%

Notes to Schedule:

Valuation date: 7/1/2018

Methods and assumptions used to determine contribution rates:

Actuarial cost methodDiscount RateInflation

Healthcare cost trend ratesSalary increases

Mortality

Retiree Cost Sharing Participants

RPH-2018 Total Dataset Mortality Table fully generational usinng Scale MP-2018

Faculty members employed prior to 2/1/02 retiring in first year of eligibility will have health insurance benefits paid by District until age 65. Full-time support staff hired prior to 7/1/81 are eligible to receive health insurance benefits paid by the District for life. Those employed subsequent to 7/1/81 can remain on District's plan at their own cost.121 Active and 55 Retirees

Entry Age Normal Level % of Salary Method3.87% as of July 1, 20182.5% per year

2019 - 8.0%. Rates expected to decrease 0.5% each year thereafter with an ultimate rate of 4.5% after 2026.Based on NYSERS and NYSTRS valuation as of June 30, 2017.


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule SS8

SCHEDULE OF DISTRICT CONTRIBUTIONS – NYSTRS AND NYSLERS FOR THE YEARS ENDED JUNE 30, 2013 THROUGH JUNE 30, 2019 Page 46

For the year ended June 30, 2019 2018 2017 2016 2015 2014 2013

Contractually required contributions 616,682$ 536,797$ 637,717$ 691,600$ 870,335$ 804,767$ 580,195$

Contributions in relation to the contractually required contribution (616,682) (536,797) (637,717) (691,600) (870,335) (804,767) (580,195)

Contribution deficiency (excess) -$ -$ -$ -$ -$ -$ -$

District's covered-employee payroll 5,801,336$ 5,477,520$ 5,441,271$ 5,215,686$ 4,964,832$ 4,952,412$ 4,900,296$

Contributions as a percentage of District's covered-employee payroll 10.63% 9.80% 11.72% 13.26% 17.53% 16.25% 11.84%

For the year ended March 31, 2019 2018 2017 2016 2015 2014 2013

Contractually required contributions 302,044$ 273,179$ 266,090$ 304,833$ 300,400$ 304,391$ 250,150$

Contributions in relation to the contractually required contribution (302,044) (273,179) (266,090) (304,833) (300,400) (304,391) (250,150)

Contribution deficiency (excess) -$ -$ -$ -$ -$ -$ -$


Contributions as a percentage of District's covered-employee payroll 13.32% 13.87% 14.00% 17.48% 17.65% 18.23% 15.06%

New York State Teachers' Retirement System

New York State Local Employees' Retirement System


PORTVILLE CENTRAL SCHOOL DISTRICT Schedule SS9

SCHEDULE OF DISTRICTS PROPORTIONATE SHARE OF THE NET PENSION ASSET/LIABILITY – NYSTRS AND PROPORTIONATE SHARE OF NET PENSION LIABILITY – NYSLERS FOR THE YEARS ENDED JUNE 30, 2013 THROUGH JUNE 30, 2019 Page 47

As of the measurement date of June 30, 2019 2018 2017 2016 2015 2014 2013

District's proportion of the net pension asset/(liability) n/a 0.033627% 0.033866% 0.033800% 0.033052% 0.033527% 0.033454%

District's proportionate share of the net pension n/a 608,071$ 257,418$ (362,012)$ 3,433,030$ 3,734,662$ 220,212$ asset/(liability)District's covered-employee payroll n/a 5,477,520$ 5,441,271$ 5,215,686$ 4,964,832$ 4,952,412$ 4,900,296$

District's proportionate share of the net pension asset/(liability) as a percentage of its covered employee payroll n/a 11.10% 4.73% 6.94% 69.15% 75.41% 4.49%

Plan fiduciary net position as a percentage of the total pension asset/(liability) n/a 101.53% 100.66% 99.01% 110.46% 111.48% 100.70%

As of the measurement date of March 31, 2019 2018 2017 2016 2015 2014 2013

District's proportion of the net pension (liability) 0.0070794% 0.0063463% 0.0064856% 0.0062402% 0.0059174% n/a n/a

District's proportionate share of the net pension (liability) (501,597)$ (204,823)$ (609,398)$ (1,001,567)$ (199,904)$ (267,399)$ n/a


District's proportionate share of the net pension (liability) as a percentage of its covered employee payroll 22.13% 10.40% 32.07% 57.42% 11.75% 16.02% n/a

Plan fiduciary net position as a percentage of the total pension asset/(liability) 96.27% 98.24% 94.70% 90.70% 97.90% n/a n/a

n/a - information is not available

New York State Teachers' Retirement System - Net Pension Asset (Liability)

New York State Local Employees' Retirement System - Net Pension (Liability)

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS

PERFORMED IN ACCORDANCE WITH "GOVERNMENT AUDITING STANDARDS"

To the President and Members of the Board of Education Portville Central School District Portville, New York

We have audited in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of Portville Central School District as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise Portville Central School District’s basic financial statements and have issued our report thereon dated September 17, 2019.

Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Portville Central School District’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Portville Central School District’s internal control. Accordingly, we do not express an opinion on the effectiveness of Portville Central School District internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the District’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exit that were not identified. Given these limitations, during our audit did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. We did identify a deficiency in internal control described in the accompanying schedule of findings and questioned costs that we consider to be a significant deficiency as item II.A.2019-001.

Compliance and Other Matters As part of obtaining reasonable assurance about whether Portville Central School District’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed one instance of noncompliance that is required to be reported under Government Auditing Standards which is described in the accompanying schedule of findings and questioned costs as item II.B.2019-002.

-48-Member of American Institute of Certified Public Accountants

Private Companies Practice Section

B UF FAMANTE ' iVI-IIPPLE BUTTAFARO . P.C. Cerlll'lc-11 Pu blic t\ceounla nl,-; • Hushwss A d v i sors

Portville Central School District’s Responses to Findings

Portville Central School District’s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. Portville Central School District’s responses were not subjected to auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not provided an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.



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INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY UNIFORM GUIDANCE

To the President and Members of the Board of Education Portville Central School District Portville, New York Report on Compliance for Each Major Federal Program

We have audited Portville Central School District’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of Portville Central School District’s major federal programs for the year ended June 30, 2019. Portville Central School District’s major federal programs are identified in the Summary of Audit Results section of the accompanying Schedule of Findings and Questioned Costs. Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of Portville Central School District’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principle, and Audit Requirements of Federal Awards (Uniform Guidance). Those standards and Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Portville Central School District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide legal determination on Portville Central School District’s compliance. Opinion on Each Major Federal Program

In our opinion, Portville Central School District complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019. Report on Internal Control Over Compliance

Management of Portville Central School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Portville Central School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over compliance.

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B UF FAMANTE ' iVI-IIPPLE BUTTAFARO . P.C. Cerlll'lc-11 Pu blic t\ceounla nl,-; • Hushwss A d v i sors

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct, noncompliance with a type of compliance requirement of a federal award program on a timely basis. 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 type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program 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 the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in the internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance and its operation that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Purpose of this Report

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of Uniform Guidance. Accordingly, this report is not suitable for any other purpose.



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PORTVILLE CENTRAL SCHOOL DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2019 Page 52

Section I - Summary of Auditor's Results

Financial Statements

Type of auditor's opinion(s) issued or whether the financial statements auditedwere prepared in accordance with GAAP: Unmodified

Internal control over financial reporting:

Material weakness(es) identified? yes X noSignificant deficiency(ies) identified? X yes none reported

Noncompliance material to financial statements noted? X yes no

Federal Awards

Internal control over major programs:

Material weakness(es) identified? yes X noSignificant deficiency(ies) identified? yes X none reported

Type of auditor's opinion issued on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reportedin accordance with section 2 CFR-200.516(a) yes X no

Federal CFDAFederal Program Title Number Amount Total expenditures of Federal Awards 781,269$

Identification of Major Programs Tested:

U.S. Department of Education - IDEA, Part B Section 611 ** 84.027A 218,317$ U.S. Department of Education - IDEA, Part B Section 619 ** 84.173A 10,269 U.S. Department of Agriculture - National School Lunch Program *** 10.555 247,485 U.S. Department of Agriculture - National School Breakfast Program *** 10.553 57,523 Total major programs tested 533,594$

% of Federal programs tested 68%

** Constitutes a cluster of Federal programs *** Constitutes a cluster of Federal programs

Dollar threshold used to distinguish between Type A and Type B programs: 750,000$

Auditee qualified as low risk? yes X no


II. FINANCIAL STATEMENTS AUDIT - FINDINGS

A. INTERNAL CONTROL OVER FINANCIAL REPORTING

2019-001 Adjusting Journal Entries and Required Disclosures to the Financial Statements

Year ended June 30, 2019 Condition and Criteria: During the current year, adjusting journal entries, along with footnote disclosures were proposed by the auditors and accepted by the District to properly reflect the financial statements in accordance with generally accepted accounting principles. Some of the adjustments and footnotes were related to reclassifying interfund transfers, recording unearned revenue in the special aid fund and converting to the full accrual method for government-wide financial statement purposes. In addition, a draft of the financial statements was prepared by the auditors and reviewed and accepted by the District.

Cause and Effect: AU-C Section 265 entitled Communicating Internal Control Related Matters Identified in an Audit, issued by the American Institute of Certified Public Accountants (AICPA) considers the need for significant adjusting journal entries and assistance when preparing the financial statements to be indicative of an internal control deficiency. Without this assistance, the potential risk exists of the District’s financial statements not conforming to generally accepted accounting principles.

Auditor’s Recommendation: Although auditors may continue to provide such assistance both now and in the future, under the new pronouncement, the District should continue to review and accept both proposed adjusting journal entries and footnote disclosures, along with the draft financial statements.

School District’s Response: The District has received, reviewed and approved all journal entries, footnote disclosures and draft financial statements proposed for the current year audit and will continue to review similar information in future years. Further, the District believes it has a thorough understanding of these financial statements and the ability to make informed judgments based on these financial statements.

B. COMPLIANCE AND OTHER MATTERS

2019-002 Fund Balance

Year ended June 30, 2019

Conditions and criteria: Portville Central School District’s unassigned fund balance as of June 30, 2019 amounted to $1,433,108. This amount constitutes approximately 7.7% of the 2019-2020 school budget.

Effect: The District’s unassigned fund balance violated New York State Education Law, which limits school districts from retaining an unassigned fund balance not greater than 4% of the subsequent year’s budget.

Auditor’s Recommendation: Portville Central School District should continue to monitor fund balance throughout the year and continue to review its options with regards to reservation of fund balance.

School District’s Response: The District has undergone a New York State Comptroller's audit, responded to concerns of the audit, and has already made adjustments to respond to concerns of this nature. The District will continue to review and monitor fund balance reserve levels.


III. MAJOR FEDERAL AWARD PROGRAMS AUDIT - FINDINGS AND QUESTIONED COSTS

A. COMPLIANCE

Year Ended June 30, 2019

No findings related to compliance are being reported upon during the year ended June 30, 2019.

B. INTERNAL CONTROL OVER COMPLIANCE


No findings related to internal controls over compliance are being reported upon during the year ended June30, 2019.

PORTVILLE CENTRAL SCHOOL DISTRICT SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2019 Page 55

I. FINANCIAL STATEMENTS AUDIT - FINDINGS

A. INTERNAL CONTROL OVER FINANCIAL REPORTING

2018-001 Adjusting Journal Entries and Required Disclosures to the Financial Statements


Summary of Prior Year Finding: Adjusting journal entries, along with footnote disclosures were proposedby the auditors and accepted by the District to properly reflect the financial statements in accordance withgenerally accepted accounting principles. In addition, a draft of the financial statements was prepared bythe auditors and reviewed and accepted by the District. AU-C Section 265 entitled Communicating InternalControl Related Matters Identified in an Audit, issued by the American Institute of Certified PublicAccountants (AICPA) considers the need for significant adjusting journal entries and assistance whenpreparing the financial statements to be indicative of an internal control deficiency.

Current Status: Similar finding related to internal control over financial reporting is being reported uponduring the year ended June 30, 2019 as finding 2019-001.

B. COMPLIANCE AND OTHER MATTERS

2018-002 Fund Balance

Year Ended June 30, 2018 Summary of Prior Year Finding: Portville Central School District’s unassigned fund balance as of June30, 2018 amounted to approximately $1,389,239. This amount constitutes approximately 7.6% of the 2018-2019 school budget. The District’s unassigned fund balance violated New York State Education Law, whichlimits school districts from retaining an unassigned fund balance not greater than 4% of the subsequentyear’s budget.

Current Status: Similar finding related to compliance and other matters is being reported upon during theyear ended June 30, 2019 as finding 2019-002.

PORTVILLE CENTRAL SCHOOL DISTRICT SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2019 Page 56

II. MAJOR FEDERAL AWARD PROGRAMS AUDIT - FINDINGS AND QUESTIONED COSTS

A. COMPLIANCE Year Ended June 30, 2018

2018-003 Special Tests and Provisions U.S. Department of Agriculture – National School Lunch and Breakfast (CFDA #10.555 and #10.553) Free and Reduced Price School Meals Applications

Summary of Prior Year Finding: Annually the District is required to complete the “Verification of Free and Reduced Price Applications” Form as required by Federal guidelines. This Form requires the District to select 3% of its free and reduced applications and obtain supporting documentation from the sampled families to substantiate their income. We reviewed documentation received for each of the six applications selected by the District. In one instance, the supporting documentation had a slight difference from income reported on the original application and therefore required the District to change the family’s status from Free to Reduced, while in two instances supporting documentation could not be located, thereby requiring the District to reclassify the family’s status from Free to Paid. In each of these cases reclassification did not occur. Once completed, the District should have an independent individual review the Form and its determination. In addition, this individual should verify that any students that are required to be reclassified are done so within the Food Service point of sale system. Current Status: During the 2018-19 year, the District assigned an individual to review the 3% Verification of Free and Reduced Price Applications form prior to its submittal.

B. INTERNAL CONTROL OVER COMPLIANCE

Year ended June 30, 2018 No findings related to compliance were reported upon during the year ended June 30, 2018.

To the President and Members of the Board of Education and School Administration Portville Central School District Portville, New York

Ladies and Gentlemen:

We have completed our audit for the year ended June 30, 2019 of the District's financial statements and have issued our reports thereon dated September 17, 2019. Our audit report expressed an unqualified opinion which states that the District's financial statements are in accordance with generally accepted accounting principles for governments and school districts located in New York State. In addition, we have issued a separate report on internal controls over financial reporting and compliance with laws and regulations as required by Government Auditing Standards.

In planning and performing our audit of the financial statements of the Portville Central School District for the year ended June 30, 2019, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control structure and its operation.

Attached to this letter is a schedule of revenue and expense comparisons (modified accrual basis) and analysis of fund equity for the school years ended June 30, 2015 through June 30, 2019. In addition, we have also presented a summary of additional comments which we desire to bring to the board and administration's attention involving various matters. Although such matters were not of sufficient nature to be disclosed in the previously mentioned reports, we do feel the comments should be reviewed and acted upon primarily by the business staff. Portville Central School District has provided responses to the additional comments, however, we did not audit these responses and, accordingly, we express no opinion on them.

The analysis of the use of the District’s fund equity shows that the District maintains a number of reserves. The reserves presented here are only those that are reported in the General Fund. The uses and legal restrictions of each of these reserve categories are listed in the footnotes to the financial statements. These reserves reduce the amount of the District’s unassigned fund equity.

We have reviewed the financial statements extensively with the Audit Committee, School Superintendent and the Business Manager. We believe these individuals have a good understanding of the financial condition of the District as well as the comments expressed in our annual report. We have enjoyed working with the District this year, and wish to thank all of the staff who have assisted us during our audit.

Very truly yours,



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BUFFA.~l.\NTE WHIPPU..: BUTTAFARO, P.C.

PORTVILLE CENTRAL SCHOOL DISTRICT REVENUE AND EXPENDITURES COMPARISON AND ANALYSIS OF FUND EQUITY - GENERAL FUND (AMOUNTS IN $1,000) Page 2

6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015Revenue and other sources

Property taxes 4,648$ 4,559$ 4,460$ 4,389$ 4,389$ State aid 11,627 11,265 11,307 10,842 10,316 All other 1,403 1,169 1,043 913 1,121

17,678 16,993 16,810 16,144 15,826

Expenditures and other usesGeneral support 2,294 2,185 2,210 2,192 2,174 Instruction 8,501 8,110 7,996 7,628 7,357 Transportation 1,238 1,163 1,111 1,032 1,054 Benefits 3,599 3,393 3,454 3,404 3,491 Debt 1,468 1,319 1,740 1,716 1,706 Transfers 1,034 363 25 18 34

18,134 16,533 16,536 15,990 15,816

Excess (deficiency) of revenue over expenditures (456) 460 274 154 10

Fund equityBeginning of year 4,452 3,992 3,718 3,564 3,554

End of year 3,996$ 4,452$ 3,992$ 3,718$ 3,564$

Analysis of fund equity

RestrictedReserve for retirement system 550$ 550$ 550$ 550$ 550$ Reserve for TRS 100 - - - - Reserve for employee benefits 764 864 918 996 1,063Reserve for unemployment insurance 200 200 200 200 200 Reserve for workers' compensation 31 31 31 31 31 Reserve for capital 500 1,000 700 350 -

AssignedReserve for insurance recoveries 7 7 9 9 10 Reserve for encumbrances 10 10 9 2 29 Next year's budget 400 400 400 400 400

Unassigned 1,433 1,390 1,175 1,180 1,281

3,996$ 4,452$ 3,992$ 3,718$ 3,564$

PORTVILLE CENTRAL SCHOOL DISTRICT SUMMARY OF ADDITIONAL COMMENTS FOR THE YEAR ENDED JUNE 30, 2019 Page 3

Capital Assets

The District reports approximately $24 million of capital assets. During the course of the audit, we discovered that significant reconciliations were needed to agree the District’s records to the fixed asset appraisal. We recommend the District work to identify the differences and contact the appraisal company to reconcile the appraisal report with District audited records. In the future, an important step in the capital assets process is not only reporting additions and disposals to the appraisal company on an annual basis but also reviewing the report once an update is complete to verify that such items were accounted for properly.

District response: The District intends to work with the appraisal company and further evaluate the use of the current provider.

Accrued Liabilities

The District recorded approximately $80,000 of accrued liabilities related to various deposits, including use of the ropes course, laptop deposits, and fuel farm deposits. Although it may make economic sense to reserve these funds to offset future expenses, government accounting standards and accounting under New York State Education Department Guidelines do not provide a mechanism to do so. We recommend that the District budget for such revenue sources annually in the general fund, along with associated expenditures.

District response: After reviewing the Liabilities held for the Fuel Farm, members other than the District do not have the staff or expertise to manage the groups finances, and as all other parties of the consortium have the legal authority to hold the funds in such a manner as the District is doing, the District will continue to maintain the Liability in the manner as it has to this point. As to the other funds being held in Liability accounts, the District maintains that the current method of record keeping is the most transparent for the constituents of the District.

School Funding Transparency Reporting

In 2018, New York State passed a law requiring New York Schools to annually report a detailed statement of total funding allocation for each school in the District. A School Funding Transparency Form was created by New York State to capture this information. Beginning in 2020, the District will be required to submit this form annually to the Division of the Budget and State Education Department.

As part of a Federal mandate, school districts will be required to report per-pupil expenditure data at the school level as mandated by the Every Student Succeeds Act (ESSA) during 2019. The new ESSA financial requirements include reporting money spent on staff compared with other expenses at the school and the levels of federal, state, and local funding provided to each school building.

We recommend that the District continue to review any new guidance issued by New York State and seek opportunities to attend future educational seminars if they arise related to these reporting models.

District response: The District is aware of the two new upcoming reporting requirements, monitoring the new guidance issuances and awaiting the announcements of new training.

Future Governmental Accounting Standards

GASB 84 – Fiduciary Activities

In 2017, the Governmental Accounting Standards Board issued Statement No. 84, Fiduciary Activities, which will be effective for the fiscal year ending June 30, 2020. This new standard’s objective is to improve the guidance regarding the identification and reporting of fiduciary activities and focuses on the source of the revenue and control over activity assets. One of the characteristics of a fiduciary activity as defined by the standard are that the assets are for the benefit of individuals and the district does not have administrative involvement with the assets or direct financial involvement with the assets. School districts will be required to evaluate activity currently recorded in the trust and agency fund, including extraclassroom activities. Those activities that do not meet the fiduciary definition will be required to be reported in the governmental funds, either in the general fund or special revenue fund. The change also affects how certain fiduciary activities, custodial funds, are reported by requiring additions and subtractions to be included on the Statement of Changes in Fiduciary Net Position. We recommend the District review the new fiduciary activity standard to ensure proper adherence.

PORTVILLE CENTRAL SCHOOL DISTRICTSUMMARY OF ADDITIONAL COMMENTS FOR THE YEAR ENDED JUNE 30, 2019 Page 4

Future Governmental Accounting Standards

GASB 87- Accounting for Leases

In 2017, the Governmental Accounting Standards Board issued Statement No. 87, Accounting for Leases, which will be effective for the fiscal year ending June 30, 2021. The primary objective of this is new standard is to bring most leases onto the balance sheet. The goal is to determine if any operating leases contain a right-to-use asset and record an asset and liability related to that lease. Also under the new standard there will be changes in the terms used for the two classifications; operating leases and finance leases (previously capital leases) and additional financial statement disclosures. We recommend that the District begin to collect pertinent data on all lease agreements for evaluation along with familiarizing themselves with the new lease standard, which may include continuing education, webinars and further training.

District response: District Response: At this time the District does not have any lease agreements, however, the District will continue to participate in further available training concerning the accounting changes.

Free and Reduced Price School Meals Applications

At the beginning of each school year, families eligible to receive free and reduce lunches complete an application which provides information to the District such as the number of individuals in the household and household income. Based on the size of the household and levels of income, a determination is made as to whether the students are eligible to receive free or reduced lunches and breakfasts. During testing, we noted an instance that incorrect wage information was utilized from the application when calculating income eligibility of a family. We also noted an instance, where a student was inadvertently assigned an application number, however, they were not part of the household and therefore incorrectly received free meals. We recommend the District continue to review the applications to ensure that the mathematical accuracy is correct. We also recommend that the review includes looking over the free and reduced eligibility report to verify that the correct wage figures and the correct students are assigned to the appropriate application.

District response: The District has reinforced the importance of the review process for both applications and direct certifications. A second review process has been added for applications and direct certifications.


EXTRACLASSROOM ACTIVITY FUND FINANCIAL STATEMENT

FOR THE FISCAL YEAR ENDED JUNE 30, 2019

WITH REPORT OF CERTIFIED PUBLIC ACCOUNTANTS

PORTVILLE CENTRAL SCHOOL DISTRICT EXTRACLASSROOM ACTIVITY FUND

TABLE OF CONTENTS

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

Extraclassroom Financial Statements

Statement of Receipts and Disbursements-Cash Basis .............................................................................. 2

Notes to the Financial Statement ................................................................................................................. 3


INDEPENDENT AUDITOR’S REPORT

To the President and Members of the Board of Education Portville Central School District Portville, New York

We have audited the accompanying statement of cash receipts and disbursements of the Extraclassroom Activity Fund of the Portville Central School District for the year ended June 30, 2019, and the related notes to the financial statement.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of this financial statement in accordance with the cash basis of accounting described in Note 1; this includes determining that the cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in the Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free from material misstatement.

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

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

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the cash transactions of the Extraclassroom Activity Fund of the Portville Central School District for the year ended June 30, 2019 on the basis of accounting described in Note 1.



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BUFFAMANTE \\lHIPPU.: BU1iAFARO, P.C.

See accompanying independent auditor’s report and notes to financial statement on extraclassroom activity fund.

PORTVILLE CENTRAL SCHOOL DISTRICT STATEMENT OF RECEIPTS AND DISBURESEMENTS-CASH BASIS JULY 1, 2018 THROUGH JUNE 30, 2019 Page 2

Total Total TotalBalances Receipts Receipts & Payments Balances

July 1, 2018 2018-19 Balances 2018-19 June 30, 2019

Class of 2017 1,784$ 45$ 1,829$ 1,829$ -$ Class of 2018 1,160 - 1,160 1,160 - Class of 2019 9,037 51,288 60,325 54,676 5,649 Class of 2020 3,715 10,813 14,528 5,405 9,123 Class of 2021 3,561 8,925 12,486 5,732 6,754 Class of 2022 - 3,359 3,359 2,196 1,163 Art Club 688 744 1,432 1,013 419 Cheerleading 795 1,703 2,498 2,177 321 Drama Club 5,199 13,942 19,141 16,658 2,483 Ecology Club - 6th grade 8,834 2,877 11,711 2,112 9,599 International Club 11,034 2,880 13,914 5,507 8,407 National Honor Society 3,139 10,500 13,639 11,595 2,044 Student Council 856 4,500 5,356 1,642 3,714 Americorp 46 - 46 46 - Yearbook Club 9,535 8,460 17,995 6,380 11,615 Sales Tax - 2,673 2,673 2,584 89 Veteran's Memorial 322 - 322 322 - Student Capital Fund 1,949 - 1,949 1,949 - Dewey Fund 3,662 601 4,263 2,550 1,713 Physics Club 4,476 7,289 11,765 8,129 3,636 Ski Club 137 2,808 2,945 2,945 - Volleyball 293 - 293 293 - Trap Club 42 - 42 42 -

Total activity fund 70,264$ 133,407$ 203,671$ 136,942$ 66,729$

PORTVILLE CENTRAL SCHOOL DISTRICT EXTRACLASSROOM ACTIVITY FUND NOTE TO FINANCIAL STATEMENT FOR THE YEAR ENDED JUNE 30, 2019 Page 3

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The transactions of the Extraclassroom Activity Fund are not considered part of the reporting entity of Portville Central School District. Consequently, such transactions are not included in the financial statements of the School District. However, cash balances of $66,729 are included in the Trust and Agency Fund as restricted cash, with a corresponding amount recorded as a liability in the Fund.

The accounts of the Extraclassroom Activity Fund of Portville Central School District are maintained on a cash basis, and the statement of cash receipts and disbursements reflects only cash received and disbursed. Therefore, receivables and payables, inventories, long-lived assets, and accrued income and expenses, which would be recognized under generally accepted accounting principles, and which may be material in amount, are not recognized in the accompanying financial statement.

To the President and Members of the Board of Education and School Administration Portville Central School District Portville, New York


In planning and performing our audit of the statement of cash receipts and disbursements – cash basis of the Extraclassroom Activity Fund of Portville Central School District as of and for the year ended June 30, 2019, in accordance with auditing standards generally accepted in the United States of America, we considered Portville Central School District’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Portville Central School District’s internal control. Accordingly, we do not express an opinion on the effectiveness of Portville Central School District’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified a deficiency in internal control that we consider to be a material weakness.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. However, material weaknesses or significant deficiencies may exist that have not been identified.

During the course of our audit of the Extraclassroom Activity Fund, we noted the following items:

Point of Sale Records

We commend the District for its improvement in this area. We recommend the District continue its efforts of ensuring that each cash receipt received by the central treasurer is accompanied by supporting documentation which reconciles cash received to participation times rates/fees.

Fundraiser Approval/ Gross Margin Analysis

The District should consider developing a form to document the approval of all fundraisers. This form should include a description of the fundraising activities, the timeframe for the activity, and the expected revenue and expenditures. At the conclusion of the fundraiser the Activity is expected to compare the actual revenue and expenditures to the expected results. We recommend that going forward these forms be required to be completed for each individual fundraiser. Further, we recommend that these forms be filed separate from the receipts and disbursements records and that they be analyzed by someone in an oversight role to ensure that fundraisers meet budgeted expectations and achieve appropriate margins.

District’s response: The District does have a Profit/Loss form in place for the Gross Margin Analysis. The District continues to work with the Advisors for completion of forms and providing accurate data required. Advisors are met with at least once annually to review forms.

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Faculty Auditor

Outlined in the “Safeguarding, Accounting and Auditing of Extraclassroom Activity Funds” publication are certain controls, one of which is the creation of a Faculty Auditor position. This position would be approved by the Board of Education and function distinct and separate from the duties of other officers. The duties of the Faculty Auditor is to receive records from the Central Treasurer and examine various transactions and documentation to determine if correct procedures are being used. In addition, at least twice per year, on a rotating basis, the Faculty Auditor would compare balances maintained by the Central Treasurer and the Student Treasurer and Faculty Advisor and investigate any differences. The District should consider whether this position should be established or whether such duties could be assumed by the Claims Auditor.

District’s response: The District will review the possibility of filling the Faculty Advisor positon or having the Claims Auditor assume the duties.

This communication is intended solely for the information and use of management, Board of Education, and others within Portville Central School District, and is not intended to be, and should not be, used by anyone other than these specified parties.



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September 17, 2019

To the Audit Committee and Board of Education Portville Central School District Portville, New York

We have audited the financial statements of Portville Central School District as of and for the year ended June 30, 2019. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Governmental Auditing standards and Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated April 11, 2019. Professional standards also require that we communicate to you the following information related to our audit.

Significant Audit Findings

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Portville Central School District are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year ended June 30, 2019. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the financial statements were:

Management’s estimate of depreciation is based on estimates of useful lives of assets and cost basis of certain assets were derived from a third-party independent appraisal company. We evaluated the key factors and assumptions used to develop depreciation in determining that it is reasonable in relation to the financial statements taken as a whole.

In addition, the District also has estimated future costs associated with pension and other post-employment benefits and has recorded a net pension liability (TRS & ERS) and an other post-employment benefit liability based on an actuarial study performed by a third-party actuary. We evaluated the key assumptions used to develop this study and its reasonableness in relation to the financial statements.

Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were the disclosures on long-term debt in Note 3IV to the financial statements, due to their significance.

The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management in performing and completing our audit.

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Portville Central School District Page 2 Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated September 17, 2019. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the governmental unit’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the District’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to management’s discussion and analysis, budgetary comparison information, schedule of funding progress, schedule of the District’s share of the net pension asset/liability, and the schedule of the District’s contributions for defined benefit pension plans, which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on supplementary information, including combining and individual fund financial statements, the schedule of expenditures of federal awards, and other schedules, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. This information is intended solely for the use of the Board and management of Portville Central School District and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours,


APPENDIX - E

FORM OF BOND COUNSEL’S OPINION

September 2, 2020

Portville Central School District, Counties of Cattaraugus and Allegany, State of New York

Re: Portville Central School District, Cattaraugus and Allegany Counties, New York $3,545,000* School District Refunding (Serial) Bonds, 2020


We have been requested to render our opinion as to the validity of an issue of $3,545,000* Public Improvement (Serial) Bonds, 2020 (the “Obligations”), of the Portville Central School District, Cattaraugus and Allegany Counties, New York (the “Obligor”), dated September 2, 2020, initially issued in registered form in denominations such that one bond shall be issued for each maturity of bonds in such amounts as hereinafter set forth, bearing interest at the rate of ____ hundredths per centum (_____%) per annum as to bonds maturing in _____, payable on December 15, 2020, and semi-annually thereafter on June 15 and December 15, and maturing in the amount of $_________ on June 15, 2021, $_________ on June 15, 2022, $_________ on June 15, 2023, $_________ on June 15, 2024, $_________ on June 15, 2025, $_________ on June 15, 2026, $_________ on June 15, 2027, $_________ on June 15, 2028, $_________ on June 15, 2029, $_________ on June 15, 2030, $_________ on June 15, 2031, and $_________ on June 15, 2032.

The Bonds maturing on or before June 15, 2028 shall not be subject to redemption prior to maturity. The Bonds maturing on or after June 15, 2029 shall be subject to redemption prior to maturity as a whole or in part (and by lot if less than all of a maturity is to be redeemed) at the option of the District on June 15, 2028 or on any date thereafter at par (100.0%), plus accrued interest to the date of redemption.

We have examined:

(1) the Constitution and statutes of the State of New York;

(2) the Internal Revenue Code of 1986, including particularly Sections 103 and 141 through 150 thereof, and the applicable regulations of the United States Treasury Department promulgated thereunder (collectively, the "Code");

(3) an arbitrage certificate executed on behalf of the Obligor which includes, among other things, covenants, relating to compliance with the Code, with the owners of the Obligations that the Obligor will, among other things, (i) take all actions on its part necessary to cause interest on the Obligations not to be includable in the gross income of the owners thereof for Federal income tax purposes, including, without limitation, restricting, to the extent necessary, the yield on investments made with the proceeds of the Obligations and investment earnings thereon, making required payments to the Federal government, if any, and maintaining books and records in a specified manner, where appropriate, and (ii) refrain from taking any action which would cause interest on the Obligations to be includable in the gross income of the owners thereof for Federal income tax purposes, including, without limitation, refraining from spending the proceeds of the Obligations and investment earnings thereon on certain specified purposes (the “Arbitrage Certificate”); and

(4) a certificate executed on behalf of the Obligor which includes, among other things, a statement that compliance with such covenants is not prohibited by, or violative of, any provision of local or special law, regulation or resolution applicable to the Obligor.

We also have examined a certified copy of proceedings of the finance board of the Obligor and other proofs authorizing and relating to the issuance of the Obligations, including the form of the Obligations. In rendering the opinions expressed herein we have assumed (i) the accuracy and truthfulness of all public records, documents and proceedings, including factual information, expectations and statements contained therein, examined by us which have been executed or certified by public officials acting within the scope of their official capacities, and have not verified the accuracy or truthfulness thereof, and (ii) compliance by the Obligor with the covenants contained in the Arbitrage Certificate. We also have assumed the genuineness of the signatures appearing upon such public records, documents and proceedings and the certifications thereof.


In our opinion:

(a) The Obligations have been authorized and issued in accordance with the Constitution and statutes of the State of New York and constitute valid and legally binding general obligations of the Obligor, all the taxable real property within which is subject to the levy of ad valorem taxes to pay the Obligations and interest thereon, without limitation as to rate or amount; provided, however, that the enforceability (but not the validity) of the Obligations: (i) may be limited by any applicable bankruptcy, insolvency or other law now existing or hereafter enacted by said State or the Federal government affecting the enforcement of creditors' rights, and (ii) may be subject to the exercise of judicial discretion in appropriate cases.

(b) The Obligor has the power to comply with its covenants with respect to compliance with the Code as such covenants relate

to the Obligations; provided, however, that the enforceability (but not the validity) of such covenants may be limited by any applicable bankruptcy, insolvency or other law now existing or hereafter enacted by said State or the Federal government affecting the enforcement of creditors' rights.

(c) Interest on the Obligations is excluded from gross income for federal income tax purposes under Section 103 of the Internal

Revenue Code of 1986, and is exempt from personal income taxes imposed by the State of New York and any political subdivision thereof (including The City of New York). Interest on the Obligations is not a specific preference item for purposes of the federal alternative minimum tax. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Obligations.

Certain agreements, requirements and procedures contained or referred to in the Arbitrage Certificate and other relevant documents may be changed and certain actions (including, without limitation, economic defeasance of the Obligations) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents.

The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. Accordingly, this opinion is not intended to, and may not, be relied upon in connection with any such actions, events or matters. Our engagement with respect to the Obligations has concluded with their issuance, and we disclaim any obligation to update this opinion. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents. Furthermore, we have assumed compliance with all covenants and agreements contained in the Arbitrage Certificate, including without limitation covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Obligations to be included in gross income for federal income tax purposes. We call attention to the fact that the rights and obligations under the Obligations and the Arbitrage Certificate and their enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium or other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against municipal corporations such as the Obligor in the State of New York. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice of venue, or waiver provisions contained in the foregoing documents.

The scope of our engagement in relation to the issuance of the Obligations has extended solely to the examination of the facts and law incident to rendering the opinions expressed herein. Such opinions are not intended and should not be construed to express or imply any conclusion that the amount of real property subject to taxation within the boundaries of the Obligor, together with other legally available sources of revenue, if any, will be sufficient to enable the Obligor to pay the principal of or interest on the Obligations as the same respectively become due and payable. Reference should be made to the Official Statement prepared by the Obligor in relation to the Obligations for factual information which, in the judgment of the Obligor, could materially affect the ability of the Obligor to pay such principal and interest. While we have participated in the preparation of such Official Statement, we have not verified the accuracy, completeness or fairness of the factual information contained therein and, accordingly, we express no opinion as to whether the Obligor, in connection with the sale of the Obligations, has made any untrue statement of a material fact or omitted to state a material fact necessary in order to make any statements made, in the light of the circumstances under which they were made, not misleading.

Very truly yours,

Orrick, Herrington & Sutcliffe LLP

matters” herein. the bonds will $3,545,000* · assuming among other matters, the accuracy of...

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