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MINUTES - 11042003 - C113
C.113 RESOLUTION OF THE BOARD OF SUPERVISORS CONTRA COSTA COUNTY, CALIFORNIA RESOLUTION NO. 03/ 683 RESOLUTION OF THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY AUTHORIZING THE ISSUANCE AND SALE OF TAX AND REVENUE ANTICIPATION NOTES IN THE NAME OF THE SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT FOR FISCAL YEAR 2003-2004 IN THE PRINCIPAL AMOUNT OF X18,700,000 AND AUTHORIZING PROCEEDINGS RELATING TO THE ISSUANCE AND SALE OF SUCH NOTES On motion of Supervisor Federal n. Glover_, duly seconded and carried, the following resolution was adopted: RESOLVED, by the Board of Supervisors of Contra Costa County, California, as follows: WHEREAS, under Article 7.6 (commencing with Section 53850) of Chapter 4 of Part 1 of Division 2 of Title 5 of the California Government Code (the "Law"), a school district organized and existing under the laws of the State of California is authorized to borrow money by the issuance of temporary notes, the proceeds of which may be used and expended for any purpose for which such school district is authorized to spend moneys; and WHEREAS, under the Law, such notes are required to be issued in the name of such school district by the board of supervisors of the county, the county superintendent of which has jurisdiction over such school district, as soon as possible following receipt of a resolution of the governing board of such school district requesting such borrowing; and WHEREAS, the Assistant Superintendent of Business of the San Barran Valley Unified School District (the "District"), on behalf of the District, by a letter on file with the Clerk of the Board, has formally requested the Board of Supervisors (the "Board") of the County of Contra Costa (the"County")to authorize the issuance and sale of tax and revenue anticipation notes in the name of the District in the principal amount of $18,700,000 under the provisions of the Law; and WHEREAS,the Board of Education of the District has adopted a resolution at its meeting on October 28, 2003, a certified copy of which is on file with the Clerk of the Board (the "District Resolution") approving the sale of such notes to Altura, Nelson & Co., Incorporated as underwriter (the "Underwriter"), and approving the form of an Official Statement relating to such notes (the"Official Statement"); NOW,THEREFORE,itis hereby.DETERMINED and ORDERED as follows: Section 7. Recitals True and Correct. All of the recitals herein set forth are true and correct and the Board so finds and determines. Section 2. Approval of Request of District. The Board hereby approves the request of the District for the Board of Supervisors to issue notes in its name. Such approval is subject to the approval of the District Resolution by the Board of Education of the District. Resolution 03/683 Section 3. Authorization and Terms of Notes. Solely for the payment of current expenses, capital expenditures and other obligations payable from the general fund of District during or allocable to fiscal year 2003-2004, and not under' any common plan of financing, the Board hereby determines to borrow the aggregate principal sum of $18,700,000 in the name of the District. Such borrowing will be evidenced by the issuance of temporary notes under the Law, designated the"San Ramon Valley Unified School District (Contra Costa County, California) 2003-2004 Tax and Revenue Anticipation Notes" (the "Notes"). The Notes will be dated as of their date of issuance. The Notes will mature and bear interest from their date, payable at maturity and computed on a 30-day month/360-day year basis, at the rate of interest to be set forth upon the sale of the Notes under Section 14. Both the principal of and interest on the Notes are payable in lawful money of the United States of America, as described below. Section 4. Eo of Notes: Book-Ent[y, System. The Notes will be issued in fully registered form, without coupons, and will be substantially in the form and substance set forth in Exhibit A attached hereto and by reference incorporated herein, the blanks in said form to be filled in with appropriate words and figures. The Notes will be numbered from 1 consecutively upward, and will be issued in the denomination of$5,000 each or any integral multiple thereof. "CUSIP" identification numbers will be imprinted on the Notes, but such numbers do not constitute a part of the contract evidenced by the Notes and any error or omission with respect thereto does not constitute cause for refusal of any purchaser to accept delivery of and pay for the Notes. In addition, failure on the part of the Board or the District to use such CUSIP numbers in any notice to registered owners of the Notes does not constitute an event of default or any violation of the District's contract with such registered owners and does not impair the effectiveness of any such notice. Except as provided below, the owner of all of the Notes shall be The Depository Trust Company, New York, New York("DTC"), and the Notes shall be registered in the name of Cede & Co., as nominee for DTC. The Notes will be initially executed and delivered in the form of a single fully registered Note in the full aggregate principal amount of the Notes. The Board and the District may treat DTC (or its nominee)as the sole and exclusive owner of the Notes registered in its name for all purposes of this Resolution, and neither the Board nor the District shall be affected by any notice to the contrary. Neither the Board nor the District has any responsibility or obligation to any participant of DTC (a "Participant"), any person claiming a beneficial ownership interest in the Notes under or through DTC or a Participant, or any other person which is not shown on the register of the Board or the District as being an owner, with respect to the accuracy or adequacy of any records maintained by DTC or any Participant or the payment by DTC or any Participant by DTC or any Participant of any amount in respect of the principal or interest with respect to the Notes. The District shall pay all principal and interest with respect to the Notes only to DTC, and all such payments shall be valid and effective to fully satisfy and discharge the District's obligations with respect to the principal and interest with respect to the Notes to the extent of the sum or sums so paid. Except under the conditions noted below, no person other than DTC may receive a Note. Upon delivery by DTC to the Board of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the term"Cede&Co." in this Resolution refers to such new nominee of DTC. If the Board and the District determine that it is in the best interest of the beneficial owners that they be able to obtain Notes and deliver a written certificate to DTC to that effect, DTC shall notify the Participants of the availability through DTC of Notes. In such event, the Board shall issue, transfer and exchange Notes as requested by DTC and any other owners in appropriate amounts. DTC may determine to discontinue providing its services with respect to the Notes at any time by giving notice to the Board and the District and discharging its -2- responsibilities with respect thereto under applicable law. Under such circumstances (if there is no successor securities depository), the Board is obligated to deliver Notes as described in this Resolution. Whenever DTC requests the Board to do so, the Board will cooperate with DTC in taking appropriate action after reasonable notice to (a) make available one or more separate Notes evidencing the Notes to any DTC Participant having Notes credited to its DTC account or (b) arrange for another securities depository to maintain custody of Certificates evidencing the Notes. Notwithstanding any other provision of this Resolution to the contrary, so long as any Note is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to the principal and interest with respect to such Note and all notices with respect to such Note shall be made and given, respectively, to DTC as provided as in the representation letter delivered on the date of issuance of the Notes. Section 5. Use of Proceeds. The moneys so borrowed will be deposited in the Treasury of the County in a proceeds fund to the credit of the District to be withdrawn, used and expended by the District for any purpose for which it is authorized to expend funds from the general fund of the District, including, but not limited to, current expenses, capital expenditures and the discharge of any obligation or indebtedness of the District. I Moneys in such proceeds fund will, to the greatest extent possible, be invested by the Treasurer-Tax Collector of the County (the"Treasurer-Tax Collector"), or such other appropriate investment officer of the County, directly in investments, or through an investment agreement, as permitted by the laws of the State of California as now in effect and as hereafter amended, and in accordance with such procedures and subject to such requirements as the Treasurer-Tax Collector or such other appropriate investment officer of the County may establish. Section 6. Securi The principal amount of the Notes, together with the interest thereon, are payable from taxes, revenues and other moneys which are received by the District for the general fund of the District for the fiscal year 2003-2004. As security for the payment of the principal of and interest on the Notes, the Board, in the name of the District, hereby pledges the first"unrestricted moneys", as hereinafter defined, (a) in the amount of 50% of the principal amount of the Notes, such amount to be received by the County on behalf of the District in the month of May, 2004, and (b) in the amount of 50% of the principal amount of the Notes, plus an amount equal to all interest due on the Notes at maturity, such amount to be received by the County on behalf of the District in the month of June, 2004 (the "Pledged Revenues"). The principal of the Notes and the interest thereon are payable from and secured by a pledge of and lien on the Pledged Revenues. To the extent not so paid from the Pledged Revenues, the Notes are payable from any other moneys of the District lawfully available therefor. If there are insufficient unrestricted moneys received by the District to permit the deposit in the Repayment Fund, as hereinafter defined, of the full amount of the Pledged Revenues to be deposited in any month on the last business day of such month, then the amount of any deficiency shall be satisfied and made up from any other moneys of the District lawfully available for the repayment of the Notes and interest thereon. The term "unrestricted moneys" means taxes, income, revenue and other moneys intended as receipts for the general fund of the District and which are generally available for the payment of current expenses and other obligations of the District. Section 7. Pay na Agent. The Treasurer-Tax Collector is hereby appointed to act as the paying agent of the District (the "Paying Agent") for the purpose of paying to the registered owners of the Notes both the principal of and interest on the Notes at maturity and to perform such other duties and powers of the Paying Agent as are prescribed in this Resolution. -3- Section 8. Repayment Fund. There is hereby created a special fund to be held on behalf of the District by the Treasurer-Tax Collector separate and distinct from all other County and District funds and accounts designated the"San Ramon Valley Unified School District 2003-2004 Tax and Revenue Anticipation Notes Repayment Fund" (the "Repayment Fund") and applied as directed in this Resolution. Any money placed in the Repayment Fund are for the benefit of the registered owners of the Notes, and until the Notes and all interest thereon are paid or until provision has been made for the payment of the Notes at maturity with interest to maturity, the moneys in the Repayment Fund will be applied solely for the purposes for which the Repayment Fund is created. Any interest earned on amounts deposited in the Repayment Fund shall periodically be transferred to the general fund of the District. All Pledged Revenues shall, during the months in which received, be deposited into the Repayment Fund. On the maturity date of the Notes, the Treasurer-Tax Collector shall transfer to DTC the moneys in the Repayment Fund necessary to pay the principal and interest on the Notes at maturity and, to the extent said moneys are insufficient therefor, an amount of moneys from the District's general fund which will enable payment of the full principal.of and interest on the Notes at maturity. Any moneys remaining in the Repayment Fund after the Notes and the interest thereon have been paid, or provision for such payment has been made, shall be transferred to the District's general fund. Section 9. Deposit and Investment of Repayment Fund. All moneys held on behalf of the District in the Repayment Fund, if not invested, shall be held in time or demand deposits as public funds and shall be secured at all times by bonds or other obligations which are authorized by law as security for public deposits, of a market value at least equal to the amount required by law. Moneys in the Repayment Fund shall, to the greatest extent possible, be invested by the Treasurer-Tax Collector, or such other appropriate investment officer of the County, directly in investments, or through an investment agreement, as permitted by the laws. of the State of California as now in effect and as hereafter amended, and the proceeds of any such investments shall, as received, be deposited in the Repayment Fund and shall be part of the Pledged Revenues. Section 10. Execution of Notes. The Notes shall be executed in the name of the District, with the manual or facsimile signature of the Treasurer-Tax Collector or one or more of his duly authorized deputies and the manual or facsimile counter-signature of the Clerk of the Board of Supervisors (although at least one of such signatures must be manual) with the seal of the Board impressed thereon, and said officers are hereby authorized to cause the blank spaces thereof to be filled in as may be appropriate. Section 11. Transfer and Exchange of Notes. Any Note may, in accordance with its terms, but only if the District determines to no longer maintain the book entry only status of the Notes, DTC determines to discontinue providing such services and no successor securities depository is named or DTC requests the Treasurer-Tax Collector to deliver Note certificates to particular DTC Participants, be transferred, upon the books required to be kept under the provisions of Section 12, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Note for cancellation at the office of the Treasurer- Tax Collector, accompanied by delivery of a written instrument of transfer in a form approved by the Treasurer-Tax Collector, duly executed. Whenever any Note or Notes are surrendered for transfer, the Treasurer-Tax Collector will execute and deliver a new Note or Notes, for like aggregate principal amount. -4- Notes may be exchanged at the office of the Treasurer-Tax Collector for a like aggregate principal amount of Notes of authorized denominations and of the same maturity. Section 12. Note Register. The Treasurer-Tax Collector shall keep or cause to be kept sufficient books for the registration and transfer of the Notes if the book entry only system is no longer in effect and, in such case, the Treasurer-Tax Collector shall register or transfer or cause to be registered or transferred, on said books, Notes as herein before provided. While the book entry only system is in effect, such books need not be kept as the Notes will be represented by one Note registered in the name of Cede&Co., as nominee for DTC. Section 13. Covenants and Warranties. Based on the representations and covenants of the District, it is hereby covenanted and warranted by the Board that all representations and recitals contained in this Resolution as to the County are true and correct, and that the Board has reviewed all proceedings heretofore taken relative to the authorization of the Notes and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of the Notes have existed, happened and been performed in due time, form and manner as required by law, and the Board is duly authorized to issue the Notes in the name of the District and incur indebtedness in the manner and upon the terms provided in this Resolution. The Board and the District and their appropriate officials have duly taken all proceedings necessary to be taken by them, and will take any additional proceedings necessary to be taken by them, for the prompt collection and enforcement of the taxes, revenue, cash receipts and other moneys pledged hereunder in accordance with law and for carrying out the provisions of this Resolution. Section 14. Sale of Notes. The Board hereby approves the sale of the Notes by negotiation with the Underwriter, under the Purchase Contract among the District, the County and the Underwriter, in substantially the form on file with the Clerk of the Board together with any changes therein or additions thereto approved by the District in accordance with the District Resolution. The Treasurer-Tax Collector shall execute the Purchase Contract in the name and on behalf of the County, and the Treasurer-Tax Collector is hereby -authorized and directed to execute and deliver said form of Purchase Contract on behalf of the County upon submission of a proposal by the Underwriter to acquire the Notes, which proposal is acceptable to the Assistant Superintendent, Business Services of the District. The Notes shall be sold to the Underwriter for a purchase price at least equal to 98% of the par amount thereof, and the rate of interest to be borne by the Notes may not exceed 2-112% per annum. The Purchase Contract must specify, among other matters, the purchase price of the Notes, the rate of interest to be borne by the Notes, and the date of maturity of the Notes. Section 15. Official Statement. The District has, in the District Resolution, approved and deemed nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, the preliminary Official Statement describing the Notes, in the form on file with the Secretary. The Board hereby authorizes the District's financial advisor and the purchaser of the Notes to distribute said Official Statement in connection with the sale of the Notes. Section 16. Preparation of Notes. Jones Hall, A Professional Law Corporation, as bond counsel to the District, is directed to cause suitable Notes to be prepared showing on their face that the same bear interest at the rate aforesaid, and to cause the blank spaces therein to be filled in to comply with the provisions of this Resolution in accordance with the identified purchaser of the Notes, and to procure their execution by the proper officers, and to cause the Notes to be delivered when so executed to DTC on behalf of the identified purchaser therefor upon the receipt of the purchase price by the Treasurer-Tax Collector on behalf of the District. -5- ee 113 Section 17. Further Approvals, The Treasurer-Tax Collector,the Clerk of the Board, and any officer of the Board or the County, is further authorized and directed to make, execute and deliver to the purchaser of the Notes: (a)a certificate attesting to the use of the proceeds of the Notes,the investment thereof, and any other matters relating to the exclusion of the interest on the Notes from gross income for federal income taxation purposes under applicable federal tax law; (b) a certificate certifying to the due execution of the Notes; (c) a receipt evidencing the payment of the purchase price of the Notes, which receipt is conclusive evidence that said purchase price has been paid and has been received by the County on behalf of the District; and (d) such other certifications and documentation as may be required in connection with the sale and issuance of the Notes. The purchaser of the Notes is hereby authorized to rely upon and is justified in relying upon any such certificate or other document with respect to the Notes executed under the authority of this Resolution. Section 18. limited liability. Notwithstanding anything to the contrary contained herein, in the Notes or in any other document mentioned herein, neither the County nor the Board has any liability hereunder or by reason hereof or in connection with the transactions contemplated hereby and the Notes are payable solely from the moneys of the District available therefor as set forth in Section 6. Section 19. Effectiveness of Resolution. This Resolution takes effect from and after its passage and adoption. I hereby certify that the foregoing is a true and correct copy of a resolution adopted by the Board of Supervisors of Contra Costa County at a regular meeting held on November 4, 20039 by the following vote: AYES: SMS GIOLA, UILIUM, CLOM and D6SAUU--UM NOES: NM ABSENT:NM ABSTAIN. NONE By _.._._._. I Mly Chairman [SEAT..] Attest: November 4,, 2003 B7'Y lerk of the Soar of Superviso& -6_ EE X"nLj I B IT A BOARD OF SUPERVISORS OF CONTRA COSTA, CALIFORNIA IN THE NAME OF THE SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT (CONTRA COSTA COUNTY, CALIFORNIA) 20034004 TAX AND REVENUE ANTICIPATION NOTE RATE OF INTEREST: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP. REGISTERED OWNER: PRINCIPAL AMOUNT: The SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT,a unified school district organized and existing under the laws of the State of California (the "District"), for value received, hereby promises to pay (but only out of the Pledged Revenues and other moneys and securities hereinafter referred to) to the Registered Owner identified above or registered assigns (the "Registered Owner"), on the Maturity Date identified above, the Principal Amount identified above in lawful money of,the United States of America; and to pay interest thereon at the Rate of Interest identified above in like money from the Original Issue Date identified above. The Principal Amount hereof and interest hereon are payable by check ck of the Treasurer-Tax Collector of the County of Contra Costa, as Paying Agent (the "Paying Agent"), mailed by first class mail on the Maturity Date to the Registered Owner hereof at the address of the Registered Owner as it appears on the Registration Books of the Paying Agent as of the Eighteenth calendar day of the month preceding such Maturity Date. This Note is one of an authorized issue of Notes in the aggregate principal amount of $18,700,000 all of like tenor, issued under the provisions of a resolution of the Board of Supervisors (the"Board") of the County of Contra Costa (the"County")duly passed and adopted on November-4, 2003 (the"Resolution"), and under Article 7.6 (commending with Section 53850) of Chapter 4, Part 1, Division 2, Title 5, of the California Government Code, and that all things, conditions and acts required to exist, happen and be performed precedent to and in the issuance of this Note exist, have happened and have been performed in regular and due time, form and manner as required by law, and that this Note, together with all other indebtedness and obligations of the District, does not exceed any limit prescribed by the Constitution or statutes of the State of California. The principal amount of the Notes, together with the interest thereon, are payable from taxes, revenue and other moneys which are received by the County on behalf of the District for Repayment Fund of the District(as defined in the Resolution) for the fiscal year 2003-2004. As security for the payment of the principal of and interest on the Notes, the Board, in the name of the District, has pledged the first"unrestricted moneys", as hereinafter defined, (a) in the amount of 50% of the principal amount of the Notes, such amount to be received by the County on behalf of the District in the month of May, 2004, and (b) in the amount of 50% of the principal amount of the Notes, plus an amount equal to all interest due on the Notes at maturity, such A-1 amount to be received by the County on behalf of the District in the month of June, 2004 (the "Pledged Revenues). The principal of the Notes and the interest thereon constitute a first lien and charge thereon and are payable from the Pledged Revenues. To the extent not so paid from the Pledged Revenues, the Notes are payable from any other moneys of the District lawfully available therefor. The term "unrestricted moneys" means taxes, income, revenue and other moneys intended as receipts for the general fund of the District and which are generally available for the payment of current expenses and other obligations of the District. The Notes are issuable as fully registered Notes without coupons in denominations of $5,000 or any integral multiple thereof. Subject to the limitations and upon payment of the charges, if any, provided in the Resolution, Notes may be exchanged at the office of the Paying Agent for a like aggregate principal amount and maturity of Notes of other authorized denominations. This Note is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the office of the Paying Agent, but only in the manner, subject to the limitations and upon payment of the charges provided in the Resolution, and upon surrender and cancellation of this Note. Upon such transfer a new Note or Notes, of authorized denomination or denominations, for the .same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor. The County, the District and the Paying Agent may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the County, the District and the Paying Agent will not be affected by any notice to the contrary. The Notes are not subject to redemption prior to maturity. Unless this Note is presented by an authorized representative of The Depository Trust Company to the Board or the Paying Agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede&Co.,ANYTRANSFER,PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. IN WITNESS WHEREOF, the Board of Supervisors of the County of Contra Costa, California has caused this Note to be issued in the name of the District and to be executed by the manual signature of the Treasurer-Tax Collector and countersigned by the facsimile signature of the Clerk of the Board, all as of the Original Issue Date stated above. BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA By Treasurer-Tax Collector (S E A L) Countersigned: By Clerk of the Board A-2 FORM OF ASSIGNMENT For value received the undersigned do(es) hereby sell, assign and transfer unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within registered Note and hereby 'irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the Registration Books of the Paying Agent with full power of substitution in the premises. Dated: Signature Guaranteed: Note: Signature(s) must be guaranteed by an N The signature(s)on this Assignment must correspond with t e eligible guarantor institution. name(s) as written on the face of the within Note in every particular, without alteration or enlargement or any change whatsoever. A-3 RESOLUTION NO. 23/03-04 RESOLUTION OF THE BOARD OF EDUCATION REQUESTING THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY TO ISSUE TAX AND REVENUE ANTICIPATION NOTES ON BEHALF OF THE DISTRICT FOR FISCAL YEAR 2003-2004 IN THE PRINCIPAL AMOUNT OF $18,700,000 AND AUTHORIZING PROCEEDINGS RELATING TO THE ISSUANCE AND SALE OF THE NOTES RESOLVED, by the Board of Education of the San Ramon Valley Unified School District, as follows: WHEREAS, the District is authorized by Article 7.6. (commencing with Section 53850) of Chapter 4 of Part 1 of Division 2 of Title 5 of the California Government Code (the "Lavin') to borrow money by the issuance of temporary notes, the proceeds of which may be used and expended for,any purpose for which the District is authorized to spend moneys; and WHEREAS, under the Law such notes are issued in the name and on behalf of the District by the Board of Supervisors of Contra Costa County (the "County") as soon as possible following receipt of a resolution of the governing board of the District requesting such borrowing; and WHEREAS, the District has determined that it is desirable that the District request the County to issue notes under the Law in the amount of $18,700,000 with respect to fiscal year 2003-2004 for authorized purposes of the District; and WHEREAS, the District approves of the issuance of such notes and wishes to take formal action at this time authorizing the proceedings for the issuance and sale thereof; NOW, THEREFORE, it is hereby DETERMINED and ORDERED as follows: Section 1. Request. The Board of Supervisors of the County is hereby requested to issue tax and revenue anticipation notes in the name and on behalf of the District in the principal amount of$18,700,000 (the "Notes"), under the provisions of the Law. The Superintendent is hereby authorized and directed to inform the County of the exact principal amount of the Notes to be issued, based on the cash flow requirements of the District and the requirements of applicable federal tax law. Section 2. Limitation on Maximum Amount. The principal amount of Notes, when added to the interest payable thereon, may not exceed 85% of the estimated amount of the uncollected taxes, revenue and other moneys of the District for the general fund of the District attributable to Fiscal Year 2003-2004, and available for the payment of the Notes and the interest thereon. Section 3. Pledge. The Notes will be general obligations of the District which are secured by a pledge of and first lien and charge against the first "unrestricted moneys", as hereinafter defined, (a) in the amount of 50% of the principal amount of the Notes, such amount to be received by the County on behalf of the District in May, 2004, and (b) in the amount of 50% of the principal amount of the Notes, plus an amount equal to all interest due on the Notes at maturity, such amount to be received by the County on behalf of the District in June, 2004 (the "Pledged Revenues"). To the extent not so paid from the Pledged Revenues, the District shall pay the Notes from any other moneys of the District lawfully available therefor. If there are insufficient unrestricted moneys received by the District to permit the deposit in the Repayment Fund as hereinafter defined) of the full amount of the Pledged Revenues to be deposited in any month on the last business day of such month, then the District will pay the amount of any deficiency from other moneys of the District lawfully available for the repayment of the Notes and interest thereon. The term "unrestricted moneys" means taxes, income, revenue and other moneys intended as receipts for the general fund of the District and which are generally available for,the payment of current expenses and other obligations of the District. Section .4. Approval of Issuance Resolution. The.Board of Supervisors of the County is hereby requested to issue the Notes under a resolution (the "Issuance Resolution") in substantially the form presented to the Board of Education on file with the Secretary of the Board of Education. The Board hereby approves the Issuance Resolution. All of the terms and provisions of the Issuance Resolution are incorporated herein by reference. Section 5. Sale of Notes. The Board hereby approves the sale of the Notes by negotiation with Altura, Nelson & Co., Incorporated (the "Underwriter"),- under the Purchase Contract among the District, the County and the Underwriter, in substantially the form on file with the Secretary of the Board of Education together with any changes therein or additions thereto approved by the Superintendent, whose execution thereof will be conclusive evidence of approval of any such additions and changes., The Assistant Superintendent, Business Services, is hereby authorized and directed to execute and deliver the Purchase Contract on behalf of the District. The Underwriter must purchase the Notes for a purchase price at least equal to 98% of the par amount thereof, and the rate of interest to be borne by the Notes may not exceed 3% per annum. Section 6. Official Statement. The Board hereby authorizes the Superintendent to approve, and to deem final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934 except for permitted omissions, a Preliminary Official Statement describing the Notes. The Underwriter is hereby authorized to distribute the approved for of the Preliminary Official Statement in connection with the sale of the Notes. The Superintendent is hereby authorized and directed to (a) execute and deliver to the Underwriter a certificate deeming the Oreliminary Official Statement to be nearly final prior to the distribution thereof by Underwriter to prospective bidders, (b) approve any changes in or additions to cause the Official Statement to be put in final form, and (c) execute the final Official Statement for and in the name and on behalf of the District. Section 7. Tax Covenants (a) Private Activity Bond Limitation. The District shall assure that the proceeds of the Notes are not so used as to cause the Notes to satisfy the private business tests of Section 141(b) of the Internal Revenue Code of 1986, as amended (the "Tax Code) or the private loan financing test of Section 141(c) of the Tax Code. -2- (b) Federal Guarantee Prohibition. The District will not take any action or permit or suffer any action to be taken which would cause any of the Notes to be "federally guaranteed"within the meaning of Section 149(b) of the Tax Code. (c) Rebate Requirement. The District shall take any and all actions necessary to assure compliance with Section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such Section is applicable to the Notes. (d) No Arbitrage. The District may not take, or permit or suffer to be taken any action with respect to the proceeds of the Notes which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Notes, would have caused the Notes to be "arbitrage bonds"within the meaning of Section 148 of the Tax Code. (e) Maintenance of Tax-Exemption. The District shall take all actions necessary to assure the exclusion of interest on the Notes from the gross income of the registered owners of the Notes to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the Notes. Section 8. Engagement of Professional Services. The Board hereby approves the engagement of the services of Jones Hall, A Professional Law Corporation to act as bond counsel to the District in connection with the issuance and sale of the Notes, upon the same terms and for the same compensation as such firm has previously represented the District on its note issues. Payment of the fees and expenses of said firm shall be contingent upon the successful sale and issuance of the Notes. Section 9. Further Authorization. All actions heretofore taken by the officers and agents of the District with respect to the sale and issuance of the Notes are hereby approved, and the Superintendent, the Assistant Superintendent, Business Services, the Secretary of the Board and any and all other officers of the District are hereby authorized and directed for and in the name and on behalf of the District, to do any and all things and take any and all actions relating to the execution and delivery of any and all certificates, requisitions, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Notes in accordance with the Issuance Resolution and this resolution. Section 10. Effective Date. This resolution shall take effect from and after its adoption. Upon motion of Member Joan Buchanan and duly seconded, the foregoing Resolution was adopted by the following vote: AYES: Buchanan, Clarkson, Gardner, Marvel, Petsuch NOES: None ABSENT: None ABSTAINED: None -3- RESOLUTION NO. /03-04 RESOLUTION OF THE BOARD OF EDUCATION REQUESTING THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY TO ISSUE TAX AND REVENUE ANTICIPATION NOTES ON BEHALF OF THE DISTRICT FOR FISCAL YEAR 2003-2004 IN THE PRINCIPAL AMOUNT OF$18,700,000 AND AUTHORIZING PROCEEDINGS RELATING TO THE ISSUANCE AND SALE OF THE NOTES RESOLVED, by the Board of Education of the San Ramon Valley Unified School District, as follows: WHEREAS, the District is authorized by Article 7.6 (commencing with Section 53850) of Chapter 4 of Part 1 of Division 2 of Title 5 of the California Government Code (the "Law") to borrow money by the issuance of temporary notes, the proceeds of which may be used and expended for any purpose for which the District is authorized to spend moneys; and WHEREAS, under the Law such notes are issued in the name and on behalf of the District by the Board of Supervisors of Contra Costa County (the "County") as soon as possible following receipt of a resolution of the governing board of the District requesting such borrowing; and WHEREAS,the District has determined that it is desirable that the District request the County to issue notes under the Law in the amount of $18,700,000 with respect to fiscal year 2003-2004 for authorized purposes of the District; and WHEREAS, the District approves of the issuance of such notes and wishes to take formal action at this time authorizing the proceedings for the issuance and sale thereof; NOW,THEREFORE, it is hereby DETERMINED and ORDERED as follows: Section 1. Request. The Board of Supervisors of the County is hereby requested to issue tax and revenue anticipation notes in the name and on behalf of the District in the principal amount of $18,700,000 (the "Notes"), under the provisions of the Law. The Superintendent is hereby authorized and directed to inform the County of the exactprincipal amount of the Notes to be issued, based on the cash flow requirements of the District and the requirements of applicable federal tax law. Section 2. Limitation on Maximum Amount. The principal amount of Notes, when added to the interest payable thereon, may not exceed 85% of the estimated amount of the uncollected taxes, revenue and other moneys of the District for the general fund of the District attributable to Fiscal Year 2003-2004, and available for the payment of the Notes and the interest thereon. Section 3. Pledge. The Notes will be general obligations of the District which are secured by a pledge of and first lien and charge against the first "unrestricted moneys, as hereinafter defined, (a) in the amount of 50% of the principal amount of the Notes, such amount to be received by the County on behalf of the District in May, 2004, and (b) in the amount of 50% of the principal amount of the Notes, plus an amount equal to all interest due on the Notes at maturity, such amount to be received by the County on behalf of the District in June, 2004 (the "Pledged Revenues"). To the extent not so paid from the Pledged Revenues, the District shall pay the Notes from any other moneys of the District lawfully available therefor. If there are insufficient unrestricted moneys received by the District to permit the deposit in the Repayment Fund (as hereinafter defined) of the full amount of the Pledged Revenues to be deposited in any month on the last business day of such month, then the District will pay the amount of any deficiency from other moneys of the District lawfully available for the repayment of the Notes and interest thereon. The term "unrestricted moneys" means taxes, income, revenue and other moneys intended as receipts for the general fund of the District and which are generally available for the payment of current expenses and other obligations of the District. Section 4. Approval of Issuance Resolution. The Board of Supervisors of the County is hereby requested to issue the Notes under a resolution (the "Issuance Resolution") in substantially the form presented to the Board of Education on file with the Secretary of the Board of Education. The Board hereby approves the Issuance Resolution. All of the terms and provisions of the Issuance Resolution are incorporated herein by reference. Section 5. Sale of Notes. The Board hereby approves the sale of the Notes by negotiation with Altura, Nelson & Co., Incorporated (the "Underwriter"), under the Purchase Contract among the District, the County and the Underwriter, in substantially the form on file with the Secretary of the Board of Education together with any changes therein or additions thereto approved by the Superintendent, whose execution thereof will be conclusive evidence of approval of any such additions and changes. The Assistant Superintendent, Business Services, is hereby authorized and directed to execute and deliver the Purchase Contract on behalf of the District. The Underwriter must purchase the Notes for a purchase price at least equal to 98% of the par amount thereof, and the rate of interest to be borne by the Notes may not exceed 3% per annum. Section 6. Official Statement. The Board hereby authorizes the Superintendent to approve, and to deem final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934 except for permitted omissions, a Preliminary Official Statement describing the Notes. The Underwriter is hereby authorized to distribute the approved for of the Preliminary Official Statement in connection with the sale of the Notes. The Superintendent is hereby authorized and directed to (a) execute and deliver to the Underwriter a certificate deeming the Oreliminary Official Statement to be nearly final prior to the distribution thereof by Underwriter to prospective bidders, (b). approve any changes in or additions to cause the Official Statement to be put in final form, and (c) execute the final Official Statement for and in the name and on behalf of the District. Section 7. Tax Covenants (a) Private Activity Bond Limitation. The District shall assure that the proceeds of the Notes are not so used as to cause the Notes to satisfy the private business tests of Section 141(b)of the Internal Revenue Code of 1986, as amended (the "Tax Code) or the private loan financing test of Section 141(c) of the Tax Code. (b) Federal Guarantee Prohibition. The District will not take any action or permit or suffer any action to be taken which would cause any of the Notes to be "federally guaranteed"within the meaning of Section 149(b) of the Tax Code. -2- (c) Rebate Requirement. The District shall take any and all actions necessary to assure compliance with Section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such Section is applicable to the Notes. (d) No Arbitrage. The District may not take, or permit or suffer to be taken any action with respect to the proceeds of the Notes which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Notes, would have caused the Notes to be "arbitrage bonds"within the meaning of Section 148 of the Tax Code. (e) Maintenance of Tax-Exemption. The District shall take all actions necessary to assure the exclusion of interest on the Notes from the gross income of the registered owners of the Notes to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the Notes. Section 8. Engagement of Professional Services. The Board hereby approves the engagement of the services of Jones Hall, A Professional Law Corporation to act as bond counsel to the District in connection with the issuance and sale of the Notes, upon the same terms and for the same compensation as such firm has previously represented the District on its note issues. Payment of the fees and expenses of said firm shall be contingent upon the successful sale and issuance of the Notes. Section 9. Further Authorization. All actions heretofore taken by the officers and agents of the District with respect to the sale and issuance of the Notes are hereby approved, and the Superintendent, the Assistant Superintendent, Business Services, the Secretary of the Board and any and all other officers of the District are hereby authorized and directed for and in the name and on behalf of the District, to do any and all things and take any and all actions relating to the execution and delivery of any and all certificates, requisitions, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Notes in accordance with the Issuance Resolution and this resolution. Section 10. Effective Date. This resolution shall take effect from and after its adoption. Upon motion of Member and duly seconded, the foregoing Resolution was adopted by the following vote: AYES: NOES: ABSENT: -3- CONTRACT OF PURCHASE $18,700,000 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT (Contra Costa County, California) 2003-2004 TAX AND REVENUE ANTICIPATION NOTES November-, 2003 San Ramon Valley Unified School District 699 Old Orchard Drive Danville, California 94526 Contra Costa County 625 Court Street, Room 102 Martinez, California 94553 Ladies and Gentlemen: The undersigned (the "Underwriter'), offers to enter into this Contract of Purchase (this "Contract") with the San Ramon Valley Unified School District (the "District") and the County of Contra Costa (the "County") which, upon your acceptance hereof, will be binding upon the District, the County and the Underwriter. This offer is made subject to the written acceptance of this Contract by the District, and the delivery of such acceptance to the Underwriter, at or prior to 11:59 p.m., Pacific Time, on the date hereof. 1. Purchase and Sale of the Notes. Upon the terms and conditions and in reliance upon the representations, warranties and agreements of the District herein set forth, the Underwriter hereby agrees to purchase, and the District agrees to sell to Underwriter, all (but not less than all), if any are purchased, of$18,700,000 in aggregate principal amount of the 2003-2004 Tax and Revenue Anticipation Notes issued by the Board of Supervisors of the County on behalf of the District (the "Notes"). The Notes will bear interest at a rate of % per annum, payable at maturity. The Underwriter will purchase the Notes at an aggregate purchase price of $ , which is the principal amount of the Notes ($18,700,000) less an underwriter's discount of 2. The Notes. The Notes will be issued by the County in the name and on behalf of the District, will be dated November 18, 2003, and will mature on November 17, 2004. The Notes will be issued and secured under the Resolution of the Board of Supervisors of the County adopted at the request of the District on November 4, 2003 (the "Note Resolution"), under Article 7.6, Chapter 4, Part 1, Division 2, Title 5 (commencing with Section 53859) of the California Government Code (the "Act"). The Notes will be issued in the form of fully registered notes. The ownership of the Notes will be registered on the registration books to be maintained by the Treasurer-Tax Collector of the County, as paying agent (the "Paying Agent"), in such denominations and in such names initially as are specified by the Underwriter to the Paying Agent, and the Notes when registered will be delivered to the Paying Agent for authentication and delivery to the Underwriter in accordance with this Contract. 3. Delivery of Official Statement. The District has delivered or caused to be delivered to the Underwriter prior to the execution of this Contract or the first sale of the Notes, whichever first occurs, copies of the Preliminary Official Statement relating to the Notes (the "Preliminary Official Statement') deemed final by the District for purposes of Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule") and approved for distribution by resolution of the District. Within 7 business days from the date hereof, the District shall deliver to the Underwriter a final Official Statement, executed on behalf of the District by an authorized representative of the District and dated the date of delivery thereof to the Underwriter, which shall include information permitted to be omitted by paragraph (b)(1) of the Rule and with such other amendments or supplements, as are been approved by the District and the Underwriter (the "Final Official Statement"). The Preliminary Official Statement and the Final Official Statement, including the cover pages, the appendices thereto and all information incorporated therein by reference are hereinafter referred collectively to as the "Official Statement". The Underwriter agrees that prior to or concurrent with the settlement of the Notes with any purchaser, it will deliver a copy of the Final Official Statement to such purchaser. 4. Offering of the Notes. The Underwriter agrees to make a bona fide offering of all the Notes at the initial offering price or yield to be set forth on the cover page of the Official Statement. Subsequent to such initial offering, the Underwriter reserves the right to change such initial offering price or yield as it deems necessary in connection with the marketing of the Notes. 5. Delivery of Official Statement. At least one (1) business day prior to the date of closing referred to in Section 6 hereof, the District shall deliver to the Underwriter three (3) copies of the Official Statement in a form satisfactory to the Underwriter, dated as of the date of this Contract, duly executed by an authorized officer of the District acting on behalf of the District, and, as promptly as practical thereafter, such reasonable number of conformed copies as the Underwriter requests. 6. Closing. At 8 a.m., Pacific Time, on November 18, 2003 or at such other time or on such other date as are mutually agreed upon by the parties (the "Closing"), the County and the District will deliver to the Underwriter, at the offices of Jones Hall, A Professional Law Corporation ("Bond Counsel") in San Francisco, California or at such other place as may mutually be agreed upon, the proof of delivery of the Notes in the form described below, duly executed, together with the other documents hereinafter mentioned; and the Underwriter will accept such delivery and pay the purchase price thereof in immediately available funds to the order of the County for the account of the District. The Notes will be made available for checking and packaging at the place designated by the Underwriter one (1) business day prior to the Closing. 7. Representations, Warranties and Agreements of the District. The District hereby represents, warrants and agrees with the Underwriter that: - 2 - (A) The District is a unified school district organized and validly existing under the laws of the State of California; (B) (i) At or prior to the Closing, the County and the District and the County will have taken all action required to be taken to authorize the issuance and delivery of the Notes; (ii) the District and the County will have full legal right, power and authority to issue and deliver the Notes to the Underwriter and to perform their obligations under each such document or instrument, and to carry out this Contract and the Note Resolution; (iii) the execution and delivery or adoption of, and the performance by the District and the County and the obligations contained in, the Notes, the Note Resolution and this Contract have been duly authorized and such authorization is in full force and effect at the time of the Closing; (iv) this Contract has been duly executed and delivered and constitutes a valid and legally binding obligation of the District and the County; and (v) the District and the County have duly authorized the consummation of all transactions contemplated by the Contract of Purchase; (C) No consent, approval, authorization, order, filing, registration, qualification, election or referendum, of or by any person, organization, court or governmental agency or public body whatsoever is required in connection with any issuance, delivery or sale of the Notes or the consummation of the other transactions effected or contemplated herein or hereby, except for such actions as may be necessary to qualify the Notes for offer and sale under the Blue Sky or other securities laws and regulations of such states and jurisdictions of the United States as the Underwriter may designate; (D) The District and the County have complied and will continue to comply in all respects with the Act; (E) The issuance of"the Notes, the execution, delivery and performance of this Contract, the Note Resolution and the Notes, and compliance with the provisions hereof and thereof do not conflict with or contribute on the part of the District or the County a violation of or default under, the Constitution of the State or any existing law, charter, ordinance, regulation, decree, order or resolution and do not conflict with or result in a violation or breach of, or constitute a default under, any agreement, indenture, mortgage, lease or other instrument to which the District or the County is a party or by which they are bound or to which they are subject; (F) As of the time of acceptance hereof, no action, suit, proceeding, hearing or investigation is pending or (to the knowledge of the District)threatened against the District or the County: (i) in any way affecting the existence of the District or the County or in any w a y challenging the respective powers of the several offices or the titles of the officials of the District or the County to such offices; or (ii) seeking to restrain or enjoin the sale, issuance or delivery of any of the Notes, the application of the proceeds of the sale of the Notes, or the collection of revenues or assets pledged or to be pledged or available to pay the principal of or the interest on the Notes, or the - 3 - pledge thereof or in any way contesting or affecting the validity or enforceability of the Notes, this Contract or the Note Resolution, or contesting the powers of the District or the County or their authority with respect to the Notes, the Note Resolution or this Contract; or (iii) in which a final adverse decision could (a) materially adversely affect the operations of the District or the County or the consummation of the transactions contemplated by this Contract or the Note Resolution, (b) declare this Contract to be invalid or unenforceable in whole or in material part, or (c) adversely affect the exemption of the interest paid on the Notes from Federal and California personal income taxation; (G) Between the date hereof and the closing, without the prior written consent of the Underwriter, the District will not have issued any bonds, notes or other obligations except for such borrowings as may be described in or contemplated by the Official Statement; (H) The District has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the District or the County is a bond issuer whose arbitrage certificates may not be relied upon; and (I) Any certificates signed by any officer of the District and delivered to the Underwriter is deemed a representation and warranty by the District to the Underwriter to the statements made therein but not of the person signing the same. 8. Covenants of the District. The District covenants and agrees with the Underwriter that: (A) The District will furnish such information, execute such instruments, and take such other action in cooperation with the Underwriter if and as the Underwriter may reasonably request in order (i) to qualify the Notes for offer and sale under the Blue Sky or other securities laws and regulations of such states and jurisdictions of the United States as the Underwriter may designate and (ii) to determine the eligibility of the Notes for investments under the law of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for distribution of the Notes by the Underwriter; (B) The District will apply the proceeds from the sale of the Notes for the purposes specified in the Note Resolution; and (C) For a period of 90 days after the Closing or until such time (if earlier) as the Underwriter shall no longer hold any of the Notes for resale, the District will (a) not adopt any amendment of or supplement to the Official Statement to which, after having been furnished with a copy, the Underwriter shalt object in writing or which shall be disapproved in writing by the Underwriter and (b) if any event relating to or affecting the District shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make any statements -4 - made in the Official Statement not misleading in light of the circumstances existing at the time the Official Statement is delivered to a purchaser, forthwith prepare and furnish (at the expense of the District) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to the Underwriter) which will amend or supplement the Official Statement so that it shall not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. 9. Conditions of Closing. The Underwriter has entered into this Contract in reliance upon the representations and warranties of the District contained herein and the performance by the District and the County of their respective obligations hereunder, both as of the date hereof and as of the date of Closing. The Underwriter's obligations under this Contract are subject, at the option of the Underwriter, to the following further conditions as of the Closing: (A) The representations and warranties of the District and the County contained herein are true, complete and correct in all material respects at the date hereof and at and as of the date of Closing, and the statements made in all certificates and other documents delivered to the Underwriter at the Closing pursuant hereto are true, complete and correct in all material respects on the date of Closing; and the District and the County are in compliance with each of the agreements made by them in this Contract; (B) At the time of Closing, (i)the Official Statement, this Contract and the Note Resolution are in full force and effect and have not been amended, modified or supplemented except as agreed to in writing by the Underwriter; (ii) all actions under the Act which, in the opinion of Bond Counsel, are necessary in connection with the transactions contemplated hereby, have been duly taken and are in full force and effect; and (iii)the District and the County have performed all of their obligations required under or specified in the Note Resolution, this Contract of the Official Statement to be performed at or prior to the date of Closing; (C) No decision, ruling or finding has been entered by any court or governmental authority since the date of this Contract (and not reversed on appeal or otherwise set aside) or, to the best knowledge of the District, shall any action be pending or threatened which has any of the effects, described in Section 7(F) hereof or which contests in any way the completeness or accuracy of the Official Statement; (D) No order, decree or injunction of any court of competent jurisdiction, nor any order, ruling or regulation of the Securities and Exchange Commission, has been issued or made with the purpose or effect of prohibiting the issuance, offering or sale of the Notes as contemplated hereby and no legislation has been enacted, or a bill favorably reported for adoption, or a decision by a court established - 5 - under Article III of the Constitution of the United States rendered, or a ruling, regulation, proposed regulation or official statement by or on behalf of the Securities Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or issued, to the effect Notes or any securities of the District or of any political subdivision (as said term is defined in Section 103(a) of the Internal Revenue Code of 1954, as amended, and the regulations thereunder) are not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, or of the Trust Indenture Act of 1939, as amended and as then in effect; and (E) At or prior to the date of the Closing, the Underwriter has received two copies of the following documents in each case dated as of the Closing Date and satisfactory in form and substance to the Underwriter: (1) An approving opinion of Bond Counsel, as to the Notes, addressed to the District, the County and the Underwriter; (2) Certificates signed by an appropriate official from the District to the effect that (i) the representations, agreements and warranties of the District herein are true and correct in all material respects as of the date of Closing; (ii) the District has complied with all the terms of the Note Resolution and this Contract to be complied with by the District prior to or concurrently with the date of closing and such documents are in full force and effect; (iii) there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or public body, pending, or to his or her knowledge, threatened against the District which has any of the effects described in Section 7(F) hereof or contesting in any way the completeness or accuracy of the Official Statement (but in lieu of or in conjunction with such certification the Underwriter may, at its sole discretion, accept certificates or opinions of the District's Attorney or Bond Counsel, that in their opinion the issues raised in any such pending or threatened litigation are without substance and that the contentions of all plaintiffs therein are without merit); and (iv) such official has reviewed the Official Statement and on such basis certifies that the Official Statement does not contain any untrue statement of a material fact or omit to state any 'material fact required to be stated therein or necessary to make the statements, therein, in light of the circumstances in which they were made, not misleading; (3) Arbitrage certificates of the District in form satisfactory to Bond Counsel; (4) Certified copies of the Note Resolution; (5) Evidence satisfactory to the Underwriter that the Notes are rated MIG-1 by Moody's Investors Service, Inc. and that such rating has not been revoked or downgraded; and - 6 - (6) Such additional legal opinions, certificates, proceedings instruments and other documents as the Underwriter or Bond Counsel may reasonably request to evidence (i) compliance by the District and the County with all applicable legal requirements, (ii) the truth and accuracy, as of the time of Closing, of the representations of the District contained herein and in the Official Statement (iii) and the due performance of satisfaction by the District and the County at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the District and the County. If the District and the County are unable to satisfy the conditions to the Underwriter's obligations contained in this Contract or if the Underwriter's obligations are terminated for any reason permitted by this Contract, this Contract may be canceled either in part or in its entirety by the Underwriter at, or at any time prior to, the time of Closing. Notice of such cancellation must be given to the District and the County in writing, or by telephone or telegraph confirmed in writing. Notwithstanding any provision herein to the contrary, the performance of any and all obligations of the District and the County hereunder and the performance of any and all conditions contained herein for the benefit of the Underwriter may be waived by the Underwriter in writing at its sole discretion. The Underwriter also has the right to cancel, either in part or in its entirety, its obligation to purchase the Notes, by written notice to the District and the County, if between the date hereof and the date of closing: (i) any event occurs or information becomes known, which, in the reasonable professional judgment of the Underwriter makes untrue any statement of a material fact set forth in the Official Statement or results in an omission to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (ii)the market for the Notes or the market price of the Notes or the ability of the Underwriter to enforce contracts for the sale of the Notes has been materially and adversely affected, in the reasonable professional judgment of the Underwriter, by (a) legislation enacted by the Congress of the United States, or passed by either House of the Congress, or favorably reported for passage to either House of the Congress by any Committee of such House to which such legislation has been referred for consideration, or by the State or by the United States Tax Court, or a ruling, order, or regulation (final or temporally) made by the Treasury Department of the United States or the Internal Revenue Service or other Federal or State authority, which would have the effect of changing, directly or indirectly, the exemption from Federal income tax or State personal income tax of interest on obligations of the general character of the Notes in the hands of the holders, thereof, or (b) any new outbreak of hostilities or other national or international calamity or crisis, the effect of such outbreak, calamity or crisis on the financial markets of the United States being such as, in the judgment of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Notes, or (c) a general suspension of trading on the New York Stock Exchange, or fixing of minimum or maximum prices for trading or maximum ranges for prices for securities on the New York Stock Exchange, whether by virtue of a determination by that Exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdictional, or (d) a general banking moratorium declared by either Federal or State authorities having jurisdiction; or (iii) additional material restrictions not in force or being enforced as of the date hereof are imposed upon trading in securities generally by any governmental authority or by any national securities exchange which, in the opinion of the Underwriter, materially adversely affect the market price for the Notes. - 7 - 10. Conditions to Obligations of the District. The performance by the District of its obligations hereunder is conditioned upon (i) the performance by the Underwriter of its obligations hereunder; and (ii) receipt by the District, the County and the Underwriter of the opinions and certificates being delivered at the Closing by persons and entities other than the District or the County. 11. Expenses. The District shall pay any expenses incident to the performance of its and the County's obligations hereunder, including but not limited to the following: (i) the cost of the preparation and reproduction of the Note Resolution; (ii) the fees and disbursement of Bond Counsel; (iii) the cost of the preparation, printing and delivery of the Notes; (iv) the fees, if any, for Note ratings and the costs for materials required by the rating agencies; (v) any costs or expenses incurred with any printing company incident to reproducing facsimile signatures on the Notes; (vi) any paying agent fees and expenses; (vii) any costs or expenses incurred in connection with printing and distributing the Preliminary and Final Official Statement and the Notes; and (viii) any fees required to be paid by the Underwriter. 12. Notices. Any notice or other communication to be given under this Contract (other than the acceptance hereof as specified in the first paragraph hereof) may be given by delivering the same in writing to the District at the address set forth above, or if to the Underwriter, to Altura, Nelson & Co., 18 Crow Canyon Court, Suite 350, San Ramon, California 94583. 13. Parties In Interest; Survival of Representations and Warranties. This Contract when accepted by the District in writing as heretofore specified shall constitute the entire agreement among the District and the Underwriter. This Contract is made solely for the benefit of the District and the Underwriter (including the successors or assigns of any Underwriter). No person shall acquire or have any rights hereunder or by virtue hereof. All representations, warranties and agreements of the District in this Contract shall survive regardless of (a) any investigation or any statement in respect thereof made by or on behalf of the Underwriter, (b) delivery of an payment by the Underwriter for the Notes hereunder, and (c)any termination of this Contract. 14. Execution in Counterparts. This Contract may be executed in several counterparts each of which is an original and all of which constitute one and the same document. - 8 - 15. Applicable Law. This Contract shall be interpreted, governed and enforced in accordance with the laws of the State of California. Very truly yours, ALTURA, NELSON&CO.,INCORPORATED By: Alan R. Altura, President The foregoing is hereby agreed to and accepted as of the date first above written: CONTRA COSTA COUNTY, SAN RAMON VALLEY UNIFIED SCHOOL CALIFORNIA DISTRICT, CALIFORNIA By: By: Treasurer-Tax Collector Assistant Superintendent, Business Services - 9 - PRELIMINARY OFFICIAL STATEMENT DRAFT DATED OCTOBER 27, 2003 NEW ISSUE- Book Entry Only RATING: Moody's: (See"Rating"Herein) In Me coniw ofJones Hall,A Profess /Law Corporabbn,san Francisco, califomia,Bond Counsel,subjea,however, to certain qualfflcabbns desaited herein, under existing law., ffie interest on the Notes is exduded from grass income for federal income tax pufposes and suds Interest is not an ten of tax prdi m%e for purposes of the federal altaw&w minimum tax Imposed on individuals and cava mbrons;pf ovided,however,for the purpose of cumpuang the aftmahe minimum tax imposed on certain corpof abions,soda interest k; taken into acrount in detelmining c"h7 inaym and ealywngs. in Me further qvinion of Band counsel soda in&yest is exempt ffom Caivoimia persawl it mw taxes. see 7AX M 77FRS-0 hereA $18,700,000 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT CONTRA CMA COUNTY STATE OF CAUFORNIA 2003-2004 TAX AND REVENUE ANTICIPATION NOTES Dated: November 18,2003 Due: November 17,, 2004 The Notes will be issued in denominations of$5,000 or any multiple thereof and are dated November 18,, 2003. Principal and interest on the Notes will be payable upon maturity. The Notes will be issued by a book entry system with no physical distribution of Notes made to the public. The Depository Trust Company("DTC"), New York, New York will act as Depository for the Notes,, which will be immobilized in their custody. The Notes will be registered in the name of Cede &Co, as nominee for DTC. The Notes will not be subject to redemption prior to maturity. MATURITY SCHEDULE Amount Rate Yield $18,,700,,000 —% -% The Notes,, in accordance with California law, are a general obligation of the District payable solely from taxes, income,, revenue and other moneys of the District attributable to the District's 2003-2004 fiscal year and lawfully available for payment thereof. As security for the payment of the Notes and the interest thereon,. the District has pledged (i)an amount equal to fifty percent(50%)of the principal amount of the Notes from the first unrestricted revenues received by the District in the month of May., 2004 and (ii)an amount equal to fifty percent (50%) of the principal amount of the Notes plus an amount sufficient to pay interest on the Notes and any deficiency in the amount required to be deposited during any prior month from the first unrestricted revenues received by the District in the month of June, 2004. The Notes are, to the extent more fully described herein., legal investments for commercial banks in California and are eligible to secure deposits of public moneys in the State of California. The Notes will be offered when,as and If issued and received by the Underwriter,subject to the approval as to their legality by Jones Hall,San Francisca, Califor n1a,Band Counsel. It is anticipated that the Notes will be available for delivery in New York,New York for deposit with DTC on or around November 17..2003. This cover page contains certain information for quick reference only. It is a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Altura, Nelson & Co. Incorporated* - salesperson or other �mbm��mo�odm�by�e�m��nr�eUndemvd�runghe�y�nm�atmmor\o m� any representations---'--other than'— those contained herein and,, if given or made,, such other information or representation must not be ~ relied upon ushaving been authorized bvany m,the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Notes bym w�u�����person�»��o���m� �O����� ��construed—.�as a contract between the District or the Underwriter and the purchasers of the Notes. Statements contained in this Official Statement which involve mstimates,forecasts nrmatters of opinion,,whether ornot expressly mmdescribed herein,are intended solely as such and are not mmbmconstrued es representation of facts. The information contained in U*Official Statement has been obtained from official sources deemed reliable.The Underwriter has reviewed the information in this Official Statement in accordance with,,and as a part of,its responsibilities mninvestors under Federal Securities Laws as applied to the facts and circumstances of this transaction,, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall,under any circumstances,,create any implication that there has been no change in the affairs of the District since the date hereof. This Official Statement is submitted With respect to the sale of the Notes referred to herein and may not be reproduced or used, in whole or in part,for any other purpose,,unless authorized in writing by the District. All summaries of the documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. TABLE OF CONlEWM Page 1 INTRODUCTION..~.~.'.-~'...'~~._~-''~'.~.~.'~'~^..~.~,.,,~.~_~,~~._,,,`,_'~....~_~~.,~~,,,,~,,~,,~~,~,~~~_~,~,~,__.~, THENOTES..,'....^~.^~~...~.~'~,~~.^~.~..,.....~..,,~'~'~.'.~~.~~..~.~,~~.,.~~..~.,,.^.._~,~,_~.~~,,~~,~~~,,.,,,~,,,~,,,,,~.,,..~,,_.^ Authorityfor Issuance......^..,'...,..,~,...._~..,..~.^,.'.~.~,~'.~.~~,'~.~......^.~....~'~',~'~~_,~~~.,~_,~~,~,_~__.^,,,,,~_~~~~.1 Purposeof Issue..'......^^.~.~..`~....~~.~'~^.'~'~_~~~....~....-..-.~'..,....,..'~~..~..`,.`.,~~..'.',_~,~~,'..~_.'~1 Descriptionof the Notes.....,,...'.~...~.~.,,'.'~..,~.,~^.~.~'.^..^~~.~~~..~.~,.~.'.~~,,~,,^~,,.,~~~_,^,.~~,.,,,.~.~,,,,.,,~,~,~^~1 Security for the Notes and Available Sources of Repayment and Investment of Funds......ease.....~,,ease.~,,~,,~~~..,~.`.see 2 RepaymentFund ~..~..`~~~..,,~,,..~.'.~~'~...,...,_.'....`~,^.~.~.~~..`..~.~.~.'~...~~...~.~..~...'''~~-~......~~.2 DTCBoon-Entry Only'.~...,..~`..~.~.~..~.-....'..^..~._,~,~,.~,,~.,,,,,.~^,,,,.,,~...~_~,_,,^_~.^.,~,,.~.,`~~,,~~_2 THE SAN R\MON VALLEY UNIFIED SCHOOL DISTRICT.'..'.~.....~..,~,,,~..,,,.,,,,.,_~_~~,~,,.~~,.,~,...~~~...__,~_5 Historyand Operation.~..`...~~.~-~~~.^~.~..-~._~.''~.~'.~~.`~...._'..,...-,.~~~~.~'~.,.~~~..~'',,..,~_'5 EmployeeManagement Relations ~~-~.'~...~~.,~_,..._~...~.-~'...~.......~~~...—'~-.~.~^~-~.~.~.^~~..~,..~,-'_..__,.,..5 PensionPlans.....~..''~~..~~'~^...^~`^'^^^~'~'^^`~'~~.'~^..~.~~...~~.~-'~~~.~^~~.~~'~~^^.~'~.`_--~.^~-_5 MajorPrivate Employers...eseveasessooset...............*0 sea 66004#9 ease ease 009 salbessessess 66464000984 Boos a soon*as 7 DISTRICT FINANCIAL MATTERS....~....~.~~~.._,~..~..'..~~~.~~~~'.',-~~ ~~,^^~~~,,_~.~,,~~,~~.,_~~_'~~~_~.._.,~9 Budgetary Process for School Dkstkcts~~~..'~.~~,,~,,,,~~~,...^~_.~~.~,.,,`,...,,.,~,,,,,,,.,~~_~~~,_...~,,~~,~.9 General Information....................................................... SignificantAccounting Policies and General Fund Balance Sheets.............................~..~*~foe~9*seems~..000.~.~'~lose see u/ 11 Fund Balances Fiscal Years 1997/98 Through 2OU1/�(��).^...-,._.~.,,,.,,,..~,,,~,~~~,~_,.~~~~,`^,,,,,`~~ GeneralFund Budget Phaca|Year .ease 0~4~.,sea..~~..,...^.~`..ease..Geese gage..-~,,~.~,..,ease...~0 12 Summary of General Fund and Debt Service Fund Revenues and Expenditures Through 2001/02...................~13 EstimatedMonthly Cash Flows....,,....~.-~....~~.~''....^.~'~~,~.~,.~.-~~.,`~,.,.^,_,,,.~_..~_''''_'~,,_,~`^,,~~~,13 2003-2004 Projected Cash Row.....~~'~.._~~~^~^.~_~,..','~......~.~..~,~.~^...,~...~....~..-.`~..~..~~._.'~......u° 2002-2003 Actual Cash Flow..........~~.-~~'.'~~...~.^~~.~,,,,~~...,,_~^~.~.~,,,~,~,~~~.~__,_~~,~...,`_~~15 District's Sources of Revenue.~...~9~~_~96.~.`~~~._^..~~~.~~,'~.~,~,~9.80.*0~ ease ..6~~.-,~',~'~ ~~^**^q Economic Factors Affecting the State Budget and the State Budget Process...........................................................z/ TheCalifornia State Lottery..................................................... .~...,'~.~~.~n~~~.~.~~* ux AdValorem Property Taxation.............................................................................................................................19 TheTeeter Plan.....~...._..~..~~........~..,..~`~..~..,~~,~,~_~,~~~,.~,,,.,,,.,~.~,_,~,~.,,..~~~19 UnitaryTaxation of Utility Property~.~.._~....~~~.~~~~_.`~-,-~-~�~~.�~~..�.~~..``~.~~.~............2u District Ad\��rem ' Taxation FiscalFisYears ................................................... Ye� ��8�/0��hrou�h�OO�/O� 2Contra��n� Costa C�unCountyAdValorem Property Taxation 1988/89 Through 2002/03..`~..~.~~~.~.,.~....~~......'..21 Developerpees..`~—''...~'~..~...~....~....'~..,.~...~......~..~,~,.,,,`,.,_~,``,.~_',,_~.,~_,_``~_21 Directand Overlapping Debt Statement...............................................................................................................21 ° CONSTTTUTIONAL AND STATUTORY PROVISIONS AFFECTING THE DISTRICTS REVENUES.........................................23 Article XIIIA of the California Constitution............................................................................................................23 CourtChallenges to Article XIIIA.........................................................................................................................24 Proposition62.....................................................................................................................................................24 Santa Clara County Local Transportation v.Guardino...........................................................................................25 UnitaryProperty.................................................................................................................................................25 Article XIIIB of the California Constitution......................................................................................................wooeov26 Amendments to Article XIIIB of the California Constitution...........................................................................................26 Proposition98......................................................0.....................0.......................0 .......................................................27 Proposition218............................................................0.........................................................................................27 FutureInitiatives....................................O.."o.................................0....................................................................oo.........28 LEGALMATTERS.........................................0..0.......0.......0..0..0.......................................0..................o...........o..............28 Litigation...................................................0.........................0.......0..0....0..............................00.......0..............0......28 Legalityfor Investment................................................................................................0...........................................28 TAXMATTERS............................o.......0.0..0..........................0.......0..............0......0..0.0.........0......0............o.....o.......o....o.28 CONTINUINGDISCLOSURE...........................................................................................................................................29 CLOSINGPAPERS................................................................................................0....................... 29 CALIFORNIALEGALITYFOR INVESTMENT IN ......0..........0..0...............................0............................................o.....o.....a 30 ELIGIBILITYFOR NATIONAL BANKS...............................................................................................................o...................30 RATING..............o.....................0..0.00...0...............0....0...0.0..0..0......0........000..0.....0.........0......00....0..0........o.o.......o......o.....30 UNDERWRITING.............................................................0....0.............0 0......................................o.......................o.30 MISCELLANEOUS...o-o.............o-oo........0...0.......0......0........0..0..........0.0......................0...0.........0......................o.o............30 APPENDIXA-Audited Financial Statement...................................................................0...............................................A-1 APPENDIX B-Form of Continuing Disclosure Certificate................................o.............................0....................................B-1 APPENDIXC-Form of Legal Opinion................................................................................................0..........................C-1 WITH RESPECT TO THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,IF COMMENCED,MAY BE DISCONTINUED AT ANY TIME. ti THIS PAGE INTENTIONALLY LEFT BLANK SAN RAMON VALLEY UNIFIED SCHOOL DISTRIX Board of Education Paul Gardner., President Greg Marvel,, 0-ce President loan Buchanan, Clerk Bill Clarkson,, Member Nancy Petsuch, Member District Officials Robert Kessler, Superintendent Jim Cerreta,Assistant Superintendent of Business services, Christine Williams,Assistant Superintendent of Educational Services Peggy Perry,, Director of Budget Bond Counsel JONES HALL A Professional Law Corporation San Francisco, California Underwriter ALTuRA, NELSON&CO. INCORPORATED San Ramon, California Paying Agent Contra Costa County Office of the Treasurer-Tax Collector Martinez,, California sr THIS PAGE INTENTIONALLY LEFT BLANK OFFICIAL STATEMENT $18,7130 f000 SAN RAMON VALLEY UNIFIED SCHOOL DISTRIX CONTRA COSTA COUNTY STATE OF CALIFORNIA 2003-2004 TAX AND REVENUE ANTICIPATION NOTES INTRODUCTION This Official Statement has been prepared under the direction of the San Ramon Unified School District (the "District") in order to furnish information with respect to the issuance and sale of its tax and revenue anticipation notes designated "San Ramon Unified School District,, Contra Costa County., State of California, 2003- 2004 Tax and Revenue Anticipation Notes" (the "Notes") in the aggregate principal amount of$18,700.,000. The issuance of the Notes has been authorized by the Board of Supervisors of the County of Contra Costa (the "County") at the request of the District pursuant to a resolution of the Board of Supervisors of the County adopted November 4, 2003 (the "Resolution"). The Notes will be issued in full conformity with the Constitution and laws of the State of California (the "State"), including Article 7.6, Chapter 4,, Part 1., Division 2, Title 5 (commencing with Section 53850) of the California Government Code (the "Act") and under such statute are general obligations of the District but are payable solely from taxes,, income, revenue and other moneys of the District attributable to the fiscal year commencing on July 1., 2003 and ending on June 30,, 2004(the "Fiscal Year 2003-2004") and legally available there from. Proceeds from the sale of the Notes will be used for current general fund expenditures for Fiscal Year 2003-2004, including current expenses, capital expenditures and the discharge of other obligations or indebtedness of the District. The District may issue the Notes only if the principal of and interest on the Notes will not exceed 85 percent of the estimated amount of the then uncollected moneys legally available for the payment of the Notes. THE NOTES Authority for Issuance The Notes are issued by the Board of Supervisors of the County in the name of the District under the authority of the Act and pursuant to the Resolution. Purpose of Issue Issuance of the Notes will provide moneys to meet the District's Fiscal Year 2003-2004 general fund expenditures, including current expenses, capital expenditures and the discharge of other obligations or indebtedness of the District. Description of the Notes The Notes will be in the aggregate principal amount of $18,f700,000, will be dated November 18, 2003 and will mature on November 17,, 2004. The Notes will bear interest at the rate specified thereon, payable at maturity and computed on a 30-day month/360-day year basis. The Notes will be issued in fully registered form in denominations of $5.,000,, or any multiple thereof. Principal and interest on the Notes will be payable upon maturity upon presentation and surrender to Contra Costa County, Office of Treasurer-Tax Collector, as paying agent for the Notes(the "Paying Agent"). The Notes are not subject to redemption prior to maturity. Security for the Notes and Available Sources of Repayment The Notes and the interest thereon are a general obligation of the District but are payable solely from taxes, income, revenue and other moneys received by the District during Fiscal Year 2003-2004 and legally available for payment thereof. Certain of said moneys have been specifically pledged to the total payment of the Notes and the interest thereon. As security for the payment of the Notes and the interest thereon, the District has pledged the following ("Pledged Revenues"): (i) an amount equal to fifty percent (50%) of the principal amount of the Notes from the first unrestricted revenues received by the District in the month of May, 2003 and (ii) an amount equal to fifty percent(50%)of the principal amount of the Notes, plus an amount sufficient to pay interest on the Notes and any deficiency in the amount required to be deposited during any prior month from the first unrestricted revenues received by the District in the month of June, 2003. The term "unrestricted revenues" means all taxes, income, revenues, and other moneys intended as receipts for the general fund of the District and which are generally available for the payment of current expenses and other obligations of the District. The principal of the Notes and the interest thereon constitute a first lien and charge against, and are payable from, the Pledged Revenues and,to the extent not so paid,shall be paid from any other moneys of the District lawfully available therefor(all as provided in Sections 53856 and 53857 of the California Government Code). The District expects to receive an estimated $114,908,235 in unrestricted revenues on a cash basis in Fiscal Year 2003-2004. The amount of unrestricted revenues estimated to be needed to pay principal and interest on the Notes is$18,890,000 providing a note coverage of 6.08 times. Repayment Fund The Resolution creates a special fund to be held on behalf of the District by the Treasurer-Tax Collector of the County designated the "Repayment Fund", into which will be deposited all Pledged Revenues and other amounts required for payments of the Notes. Amounts deposited in the Repayment Fund will be held for the benefit of the Note owners,and until the Notes and all interest thereon are paid or until provision has been made for the payment of the Notes at maturity with interest to maturity, the moneys in the Repayment Fund shall be applied solely for such purpose; provided, however, that any interest earned on amounts deposited in the Repayment Fund shall periodically be transferred to the general fund of the District. Any moneys remaining in the Repayment Fund after the Notes and the interest thereon have been paid, or provision for such payment has been made, will be transferred to the general fund of the District. Moneys in the Repayment Fund will be invested by the Treasurer-Tax Collector in any legal investments as permitted by the laws of the State of California. DTC Book Entry Only The following information concerning DTC and DTC's book-entry-only system has been obtained from DTC. The District takes no responsibility for the accuracy or completeness thereof. There can be no assurances that DTC will abide by its procedures or that such procedures will not be changed from time to time. The following description includes the procedures and record-keeping with respect to beneficial ownership interests in the Notes, payment of principal of and interest, other payments with respect to the Notes to Direct Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in such Notes, notices to beneficial owners and other related transactions by and between DTC, the participants and the Beneficial Owners. However, DTC, the participants, and the Beneficial Owners should not rely on the following information with respect to such matters, but should instead confirm the same with DTC or the Direct Participants, as the case may be. The Depository Trust Company ("DTC'I, New York, New York, will act as securities depository for the Notes(in this section referred to as the"Securities'l. The Securities will be issued as fully registered securities in the name of Cede&Co. (DTC's partnership nominee). One fully registered certificate will be issued for the Notes, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a 2 r "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 securities that its participants (the"Participants deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its direct participants(the"Direct Participants' and by the New York Stock Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain custodial relationships with a Direct Participant, either directly or indirectly(the"Indirect Participants'). The rules (the"Rules") applicable to DCT and its Participants are on file with the Securities and Exchange Commission. Purchasers of Notes under the DTC system must be made by or through Direct Participants, which will receive credit for the Notes on DTC's records.The ownership interest of each actual purchaser of each Note (the "Beneficial Owner'l is in turn to be recorded on the Direct or Indirect Participants'records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participants through which the Beneficial Owners entered into the transaction. Transfers of ownership interests in the Notes are to be accomplished by entries made on the books of Participants acting on behalf of the Beneficial Owners. Beneficial Owners will not receive Notes representing their ownership interests in the Notes, except in the event that use of the book-entry system for the Notes is discontinued. To facilitate subsequent transfers, all Securities deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede &Co. The deposit of Securities with DTC and their registration in the name Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices, if any, will be sent to Cede & Co. If less than all of the Notes within an issue are being redeemed, DTC's practice is to determine by lot the amount of interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to the Notes. Under its usual procedures, DTC only mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Notes are credited on the record date identified in a listing attached to the Omnibus Proxy. Principal and interest payments on the Notes will be made to DTC. DTC's practice is to credit Direct Participants' accounts on payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on a payable date. Payments by Participants to the Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such participant and not of DTC, the Paying Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the District or the Paying Agent, 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 the Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Notes at any time by giving reasonable notice to the District or the Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Notes will be required to be printed and delivered. r 3 The District may decide to discontinue use of the system of book-entry transfers through DTC, (or a successor securities depository). In that event, Notes will be printed and delivered. J ti 4 THE SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT History and Operation The San Ramon Valley Unified School District encompasses an area of approximately 104 square miles in Contra Costa County, California. Included in the District are the unincorporated areas of Alamo, Diablo, and Blackhawk and the incorporated City of San Ramon and the Town of Danville. The combined population served is approximately 123,510. The District operates seventeen (17) elementary schools (grades K-5), six (6) middle schools (grades 6-8), three (3) high schools, one (1) independent study program and one (1) continuation high school program. Average daily attendance in the 2003-2004 school year is estimated to be 21,059,for which the District estimates receiving $4,650.22 per pupil or about $97,928,983 from the State of California. Additional amounts are received for special programs and from other sources resulting in current projected annual income of approximately$134,916,441. Management The governing boards of public schools in California have the responsibility to adopt and maintain balanced budgets for all funds of a district. These budget parameters include the requirement to provide a contingency or reserve amount so that revenue shortfalls and/or expenditures increases, which occur during the fiscal year, can be accommodated. Employee Relations The District enjoys a normal relationship with the employee bargaining units. Teaching personnel of the District are represented by the San Ramon Valley Educational Association,classified personnel are represented by the California State Employee Association and the District's custodial and maintenance employees are represented by the Service Employee International Union. Effective July 1, 1976, provisions of the Rodda Act codified as Chapter 961 of the 1975 Statutes affects all school districts in California. In case of labor disputes, local grievance procedures may be operative (if established by contract), or both parties may agree to submit grievances to advisory arbitration pursuant to rules adopted by the Educational employment Relations Board, which administers the Rodda Act. The Rodda Act's provision with respect to the rights, obligations, and unfair practices applicable to management and labor became effective April 1976. Pension Plans District employees are covered by one of or more of the following retirement systems: The State Teachers' Retirement System; the State Public Employees Retirement System; and/or the Federal Social Security System(Old Age Survivors, Disability, and Health Insurance). The State Teachers' Retirement System (SIRS) operates under provisions of the State Education Code. The System includes California public teachers from preschool through grade fourteen and certain other employees of the public school system. Membership is mandatory for all certified employees meeting the eligibility requirements. The State of California Teachers' Retirement System (STRS) covers basically all full-time certified employees. The District's contribution to STRS for fiscal year 2002-2003 totaled $5,839,296 which includes both current costs and back funding. The District contribution to STRS in 2003-2004 is budgeted at$5,939,668. The District contributes to OASDI (including Medicare) for 2002-2003 amounted to $2,608,651. The estimated District contribution to OASDI during 2003-2004 is$2,561,049. 5 Employment - No annual information is regularly compiled on employment and unemployment for the District alone. Employment in Contra Costa County increased from 458,100 in 1996 to 523,250 in 2002, an increase of 14.2%. The following table presents the employment characteristics in the County for the years 1996 to 2002. Civilian labor Force, Employment and Unemployment 1996 through 2002 Civilian Labor Unemp. 1996 Force Employment Unemployment Rate Contra Costa County................... 458,100 435,500 22,600 4.9 California ................................... 15,596,100 14,469,900 1,126,200 7.2 United States.............................. 126,708,000 119,866,000 6,842,000 5.4 1997 Contra Costa County................... 472,700 453,100 19,600 4.1 California ................................... 15,971,800 14,965,500 11006,300 6.3 United States.............................. 136,297,000 129,618,500 6,678,500 4.9 1998 Contra Costa County................... 480,700 463,400 17,300 3.6 California ................................... 16,329,100 15,360,600 968,500 5.9 United States.............................. 137,673,000 131,463,000 61210,000 4.5 1999 Contra Costa County................... 489,300 474,500 14,800 3.0 California ................................... 16,585,900 15,7211700 864,200 5.2 United States.............................. 139,368,000 133,488,000 51880,000 4.2 2000 Contra Costa County................... 505,100 491,400 13,700 2.7 California ................................... 17,090,800 16,2451600 845,200 4.9 United States.............................. 140,863,000 135,2081000 5,655,000 4.0 2001 Contra Costa County................... 509,800 493,100 16,700 3.3 California ................................... 17,362,300 16,435,200 927,100 5.3 United States.............................. 140,815,000 135,073,000 61742,000 4.8 2002 Contra Costa County................... 523,250 496,400 27,100 5.2 California ................................... 17,432,000 16,247,000 1,176,000 6.7 United States.............................. 145,167,000 137,312,000 8,321,000 5.7 Source: State of California Department of Commerce. 6 M District.The following table presents the major private employers within the geographical area served by the SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT MAJOR PRIVATE EMPLOYERS Employer Business Employees SBC/Pacific Bell Telecommunication 71500 Administrative Headquarters, Northern California Chevron-Texaco U.S.A. Petroleum Production 31000 United States Headquarters San Ramon Regional Medical Center Health Care 700 ADP Auto Claims Solution Insurance Services 450 Home Depot Hardware Superstore 315 Marriott Corporation Hotel 275 PriceCostco Consumer Warehouse 265 Target Department Store 260 Anderson Consulting LLP Financial and Management Services 250 United Parcel Service Package Delivery 150 Kvaevner Meats Administrative Offices 150 Sources: San Ramon Chamber of Commerce;Danville Area Chamber of Commerce. Population Population estimates follow for the District, the Contra Costa County and the State of California for the years 1994-2003. The population of the District grew approximately 20.1% from 1994 to 2003 as compared to 16.2% and 12.4% increases for the Contra Costa County and the State of California, respectively, over the same period. POPULATION For Years 1994 through 2003 Year The Contra Costa State of (as of January) District Coun California 1994 104,300 856,000 31,661,000 1995 106,660 863,300 31,910,000 1996 109,000 870,700 32,231,000 1997 112,200 872,600 32,609,000 1998 116,000 900,700 33,252,000 1999 119,480 924,400 33,766,000 2000 120,204 930,000 34,336,000 2001 123,510 972,100 34,818,000 2002 124,498 981,600 35,037,000 2003 125,297 994,900 35,591,000 Source: State of California Department of Finance 7 r Income Personal Income figures for the District and Contra Costa County are not available. The table below compares the Total Personal Income and Per Capita Personal Income for California and the United States from 1996 through 2002. PERSONAL INCOME As of January 1, 1996 through 2002 Total Personal Per Capita Income Personal Income 1996 California ........................................................ 8121,404,000 25,563 United States................................................... 6,538,100,000 24,651 1997 California ........................................................ 862,114,000 26,759 United States................................................... 6,928,800,000 24,651 1998 California ........................................................ 924,253,000 28,280 United States................................................... 71,383,200,000 27,322 1999 California ........................................................ 991,382,000 29,910 United States................................................... 7,783,200,000 28,542 California ........................................................ 1,094,700,000 32,250 United States................................................... 8,312,3001000 29,451 2001 California ........................................................ 1,128,256,000 32,702 United States................................................... 81678,300,000 30,472 2002 California........................................................ 1,155,247,000 32,898 United States................................................... 8,891,100,000 30,832 Source: State of California Department of Finance. 8 r DISTRICT FINANCIAL MATTERS Budgetary Process for School Districts The fiscal year of each school district begins on the first day of July of each year and ends on the thirtieth day of June of the following year. State law requires school districts to maintain a balanced budget in each fiscal year. The Budget for the forthcoming fiscal year is prepared in the period March through May and approved by the District Board of Education and filed with the County Superintendent of Schools on or before July 1,as required by law. General Information The District general fund finances the legally authorized activities of the District not provided for other restricted funds. General fund revenues are derived from such sources as taxes, use of money, aid from other governmental agencies, charges for current services, and other revenue. The District's revenue limit per unit of ADA was $4,557.22 in 2002-03. The District, for budgeting purposes, is projecting its revenue limit per unit of ADA for 2003-04 of$4,650.22. The District's average daily attendance record since 1988-89 is as follows: SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT Average Daily Attendance Grades K-12 School Average Daily Year Attendance 1988-89 15,290 1989-90 15,643 1990-91 15,905 1991-92 16,400 1992-93 16,613 1993-94 17,355 1994-95 17,880 1995-96 18,299 1996-97 18,935 1997-98 19,333 1998-99 19,494 2000-01 19,965 2001-02 20,372 2002-03 20,839 2003-04(est.) 21,059 Source: San Ramon Valley Unified School District. 9 ..J Significant Accounting Policies and Audited Financial Statements The accounting policies of the District conform to generally accepted accounting principles in accordance with policies and procedures of the School and Accounting Manual. This manual, according to Section 41010 of the State of California Education Code, is to be followed by all California School districts. Revenue is recorded on an accrued basis except for District taxes which are considered revenue in the year collections are made and therefore are fully reserved. Expenditures are recorded according to receipt of goods and services on an accrual basis. Differences between estimated and actual accounts receivable and payable, as of the beginning of the year,are reflected as adjustments to revenue and expenditures in the current fiscal year. The following two tables contain accounting data abstracted from financial statements prepared for the District and unaudited results prepared by the District. The District's independent auditors currently are Vavrinek, Trine, Day&Co., Certified Public Accountants, Pleasanton, California. The following table shows the general fund balance sheets of the District as of June 30 in each of the past five years. SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT General Fund Balance Sheets Fiscal Years 1998/99 through 2002/03 (audited) (audited) (audited) (audited) (unaudited) 1998 99 1999 00 2000/01 2001/02 2002 03 ASSETS Cash $ 50,000 $ 50,000 $ 50,000 $ 52,000 $ 8,160,599 Investment 161166,504 17,532,285 251061,598 35,364,082 20,5811913 Account Receivables 41820,785 51028,520 6,880,938 81099,019 71951,866 Due from other funds 667,485 1,075,656 198,665 229,877 475,942 Stores Inventory 476,936 443,774 328,359 305,973 265,110 Prepaid Expense ---- ---- ---- - --- ---- Total Current Assets $22,181710 $21130235 32.519,559 $3ZA35,430 LIABILITIES AND FUND BALANCE LIABILITIES Accounts Payable $ 1,205,764 $ 1,654,550 $ 1,882,167 $ 5,0601919 $2,731,726 Deferred Income 31172,481 21116,394 1,694,502 11103,081 630,680 Due to Other Funds 112,347 66,362 ---- 21734,868 1,534,804 Other Liabilities -- -- ---- ---- 41500,000 -- -- Tax Anticipation Notes 124365,000 15,142313 16,500,000 211E000,000 18,400,000 Total Liabilities $164855,592 $18,979619 $20,076,669 $29,8984868 $23,297,210 FUND BALANCE Fund Balances Reserved: Revolving Cash $ 501000 $ - --- $ 50,000 $ 52,000 $52,000 Inventory 476,936 ---- 328,359 305,973 265,110 Prepaid Expenses -- -- -- -- ---- - --- Debt Service -- - - -- -- ---- ---- Legally Restricted 1,5301688 21810,515 41116,892 31747,954 2,635129 10 • (audited) (audited) (audited) (audited) (unaudited) 1998 99 1999/00 2000/01 200102 2002 03 Unreserved: Designated for Subsequent Year's Expenditures 3,268,494 --- - 545,348 81795,578 11,185,981 Economic Uncertainties ---- ---- 31928,765 - -- - -- -- Site/Dept. Carryovers and User Fee Allocation ---- ---- 2,7411437 ---- -- -- Undesignated ---- 2,340,,101 732,089 1,250,578 ---- Total Fund Balance 5,3264118 5,150,616 12,442890 14 f 152,083 14,138,220 Total Liabilities&Fund Balance 122.181,710 $24,130235 $32,519.559 $44,050.950 37.435.430 The following table summarizes the fund balances for each of the District's funds as of June 30 in each of the past five years. SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT Fund Balances Fiscal Years 1998/99 through 2002/03 (audited) (audited) (audited ) (audited) (unaudited) Fund 1998 99 1999/00 2000/01 2001/02 2002/2003 General Fund $ 51623,118 $ 51150,616 $ 12,442,890 $ 14,152,083 $ 14,138,220 Special Revenue Fund (1) 155,793 388,535 588,163 159,284 264,198 Debt Service Fund (2) 26,2001594 23,724,134 17,644,686 8,710,211 15,360,211 Capital Projects Fund (3) 94,168,196 82,067,239 65,350,475 117,686,218 78,237,593 Self-Insurance Fund 11286,963 1,288,548 1,958,419 1,928,533 1,3541333 Trust&Agency 2,972,541 30411,974 34603,403 4,808.408 5j408.159 Total Fund Balances $130.110.205 $116,031.046 X101588.036 $147,444.735 $114.763.014 (1) Includes Deferred Maintenance,Cafeteria&Adult Education Funds. (2) Includes Tax Override and Bond Interest&Redemption Funds. (3) Includes Capital Facilities,Building&County School Facilities Funds. M 11 The tabulation that follows summarizes the District's 2003/04 Adopted General Fund Budget. SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT General Fund Budget Fiscal Year 2003/04 REVENUES Revenue Limit Source $ 97,885.808 Federal 31111,095 State 15,339,306 Local 18,580,232 Total Revenues $134,916,441 EXPENDITURES Certified Salaries $ 72,057,743 Classified Salaries 21,090,379 Employee Benefits 26,653,614 Books and Supplies 51746,415 Services&Other Oper. Exp. 12,003,026 Capital Outlay 174,125 Other (171,741) Total Expenditures $137,553,561 EXCESS(DEFICIENCY)OF REVENUES OVER EXPENDITURES (2,637,120) OTHER SOURCES/(USES) (708,757) NET INCREASE(DECR)IN FUND BAL (3,345,877) NET BEGINNING BALANCE 10,636,073 ENDING BALANCE 71290,196 12 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT Summary of General and Debt Service Funds Revenues and Expenditures Fiscal Years 1997/98 through 2001/02 i (audited) (audited) (audited) (audited) (unaudited) I N COME 1998199 1999LOEO 2000/01 20 1 02 2002/03 Revenue Limit Source.................$ 72,670,807 $ 77,399,357 $ 88,162,183 $ 97,853,038 Federal Revenues...................... 2,080,000 2,4501881 2,4161262 3,489,172 Other State Revenues................ 21,892,524 27,208,034 33,183,515 16,813,384 Other Local Revenues................ 15,789,875 17,618,870 17,584,091 20,167,116 Interest&Other Revenue........... 621773 863948 ---- ---- Total Revenues.....................$113,054x979 $125`541x090 $142,228,060 $138,322,710 EXPENDITURES Certificated Salaries...................$ 56,161,643 $ 60,454,757 $ 68,770,584 $ 71,162,122 Classified Salaries...................... 16,169,661 17,372,438 19,911,286 21,481,677 Employee Benefits..................... 16,415,367 17,698,778 22,594,523 24,744,977 Books/Supplies.......................... 5,053,167 61221,884 51750,059 6,580,749 Services&Other........................ 10,041,786 10,448,349 10,004,600 11,352,504 Capital Outlay............................ 3,325,000 31053,389 21255,332 328,838 Debt Service ............................. 11x7721685 11,800,506 11,7484250 4x835,000 Total Expenditures ................$118,939x309 $127x.050x101 $141x034,634 $140x485,867 OTHER FINANCING SOURCES Transfers (Net)..........................$ (1,544,520)$ (11142,950) $ 711,615 $ (434,969) Long Term Debt Proceeds.......... ---- ---- ---- -- -- Other........................................ 938,375 ---- ---- ---- Total Other Financing Services................................$(606,145)$ (lx 142x950) $ 711,615 $4341969) Excess of Revenues and Other Sources Over(Under) Expenditures.........................$ (6,490,475) $ (2,651,961) $ 11212,826 $ (21598,126) Fund Balance-July 1................. 38,0171186 31,526,711 28,874,750 24,474,265 Prior Year Adjustment................ --- - --- - -- -- (448,209) Fund Balance-June 30.............. $31.526.711 $28.874.750 S 301087.576 I 21.427.930 Source: San Ramon Valley Unified School District. Estimated Monthly Cash Flows The District has prepared the accompanying monthly cash flow statements covering the actual fiscal year 2002/03 and projected fiscal year 2003/04. The projected fiscal year 2003/04 cash flow takes into consideration the anticipated $18,700,000 in Note proceeds. Without the proceeds of the Notes, a cash flow deficit of $ is anticipated in November 2003. The anticipated deficit occurs due to the timing of expenditures occurring prior to the receipt of revenues for the first six months of the fiscal year. M 13 •r f 2003/04 PROJECTED CASH FLOW V 14 w CO04 coOtM0 W IN W O O p O§ a 1A CM1 It to N r O) _ g .� CO r W O O CD 0 M �D 0 1t�co O O OD tOp Nit N CO co CD P O N N N r O cD NoC4m ti M M 0 M tA01Om1` ONM S r C')8pgt,NN ImC')'w d'r O M ... ti O O ti O M S C4 M r 4 OD ( IZ ti N N^� r v O r r _ctp�8..8 cc����y S S �M S m tOp_ Of 8 8 0 0 M a0 CD N O aQp'O r O to C to coCV) 081 CV) 0 � X000! pOpC�fSGMf t- in O 3 ch ret O1wcc9't v r��0N 80 0) lqiN f; M M 006 c OD N M r N .= v 0! 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O 1i g 0D r r 0D Cl C M o 01 � 0 0D��t0A N 0 000' ti N N O v� 0 r' M r N C7 r Q O et LL W)J $ p$ p N NO 0 OOS OOi c; S OO O mQtoN�O CN r co tp st r 0D M v 1�N V- tN CMf V N m m v S N 8 Cc")0 S O 1W) Q 10A O C0D N � N N O 1` to M r CO� Cf or r r 01 0D cl t0 r CV r �.. r CCO st p O- r ` O v w W O O O 8 O O c�O st N C O t0D 00p �j cD NMiAm cOcco O c� OSN--� M M O M r N v� N m V N N r V- N N r 0 0D M Q N O N w r O CO M In-W 1` "' r E clNrraD0 •� co m r N M Cf O C6 C7 O C7 t- cD ch 0 S 0 cop 0 r e-M M N r O N M N W)g N N ti N 0 0) N PI-0 0 tD N to 0 O r N r �} r +r st O N M ti P V-000��--r N N O r 00 N 114a0co � f` MM�IQON It v V- Q 0 pp N V-to 00 r r 00 1M r Crj 0 T- 0 w r r A C7 t 1 W)to NO It O 0o cD 1- 00 r tC tD r N r r M r st T- N %11N MccDD t-.M- cl S V-Nr- MV- M S ~ LO CO co CM)N .t-� N 1A CD st 0D m CD cliC, g N N m O 0 CO)40 ti.M-V N S t�pDpp O} 300 0p � A N O1 r N r r c r r r M e- N Cp r N z ca O N 0 LD V = m � W m C cc a EL •E a �, am 6 O tY b r o m m m m 3 a •� m aA m U. c c MM CX c m o m e a��o m o v Jac'�na m�2 m� a c � 30 �0 �°� r � H C -0 C +� oUU� m �� U. �o�oQ� ~ �UUmm UOC� ai-- � w .. Q aD U O r J 2002/03 ACTUAL CASH FLOW 15 r N �Oftiti�S .-.rO a NP�tefMeoNSSMOB et r r � O 00 to to.-aD N r tD P e!aD r 0?O N M tD to f:Cf CS O P P N pO O N� �Op m . p pb $ �+r� N p t-M�I�U)B�� It R V-T�1A1��N'fNCnN�N st N N I--' r er r e7 ma O W) r r of tD r N M r aD r' r r r t[) P N N •- r to r V_ r Cf M r O S N$_m aCd co 0)O m CO)O V GO co 1 pO to N ON(0OCC�AOoocO to c IN V_1pNA���lOO� O N t) CO) toP- OaN00op0eO�f ti �psIcIPI-C4 n0) fNC?F) N O e�! p c� cp co C)O� )0 M Id N P r N4 av0 0 t r M N N4 C) N O O N�pMNGo c•) NaO�rz C N 8'w*-ti to SO M P O I`N hepp- e- P C) 1AO stM 00 4 Vti�NS� S OO M O S tq N VC-4 M N Cf t- r't-C)it cA N e- /� r r st eC r V O) N N Q M a0 r N N N qw N co 00 P cC O to cN N r' N tD r'_ V VZ ��pp 1)W�p)co)ppV-ppV OM W) N apoo cA W O!V-1 to O M c�cli Or Cf MCD � c�N N m N N m ti ti tt[ �OSD N CO) M tP0_ NaI�N v N N aO e?N a0 m e=r r r to V_ r r O r 00 CO)N P MN N r O P aD to N 0 O) 0 O OD C) P O to r N CO) V to P N r to 00 P tp v O N r fl U) r CO Cs W O to f`co M O A O O to r N r M 2 to V N M V N et V P cD N Of P I a0 to mV aD P r r a0 O N as G�N tC O W) o N r 'i m r V- O a0 Z` O r-.CO) D.Nt4t- ti aD N1�tia al CO � c� co C OODD. co)V-WQ V tv NIS Wit- v to ap •-VZ N V-c+! a0 N CO P N r U O p�t0 (DD GOD aro t0 V-�S N O i S V_ c7 t0 r e? OD In QD OD � N O N M c0 O to Il N to tD pC t[)06 O N E to M M O m N M r MV-r aD r r a) N O M r r 00 tp 40 r tD to P 0 m N N r N N M 4U. D O= � N ^ OM�MO $ V_ Qeq o NtAA-ON co S U E rn `''ccoo to$ ccoo $ cci oMC)VM a �n E N r O V_ N et to st N Oqt p r r N C3 00 et tD r N V N N N z +.,r r r N mco�co5- N O O sr-tt?tiSSN O�? 4N L p of J �p W) �O�pp�c� W �M�pp O pMp ti N to COf ONO V ~ w O� ti)N r N Mto N C1 r oD to M O N O N r N w V_ to r r e- r •- r to Go OD .p. sept COs p m co co qT m N O O a� cM CO r-tN O O It E le mO to M C)m o aD o;is N to C6 N O P qw P O a0 N O O O N P N P r .- CD to a N o r r r e7 a0.-O m O r__O P �t a) W V N rr -to V. t0 r N r CO) v r r N tt r P C) N O N to M M M P to M r to N O tD M CO)a4 P 0)ty to to O ...N O N P oo r a0 to r CO CO��`1� a0 cn in p N as to N vi th N OD 0 � r cx r qt O O P r r N 40 r N 3 P r M to et M It 1`O P M to O N Q ap r r to r N N r N_ to M co 0) Grp� W) W me C)M 0 r a0 C� O 0 CD N m O tci a0 O V N 400w Go OD V 9 cD O) r P to to O X06 Cf NON r tD I, N 7 S O co)r eV- M N N N N ti tt N e= 46 C) OD r co N p as N to N E v 3 4R c °� a a o �� U. C.7 3 � m a `- c O OC g° _ ar NNm� c°N m L O $ .00 a Eaa >w� E O o(a 0 )a m a — m o c, aCa o o a0_ � °� Em U c a�C �`p.Zv3 p� �`� a O >>m 4:DC p c z m _ O ca O0 m c ®"�a o m g a m{ o c c _ > bc�Ui aS cc ~�aa �- oc3Ummt�c`� ��?aac �- w N 4 Cd U O District's Sources of Revenue The District receives revenue from federal, state and local sources. The most significant source of revenue is the State; such State funding is described below: State Funding of Education. The State Constitution requires that from all State revenues there shall first be set apart the moneys to be applied by the State for support of the public school system and public institutions of higher education. California school districts and county districts receive a significant portion of their funding from State appropriations. Thus, State school districts receive a significant portion of their funding from State appropriations. As a result, decreases in State revenues can significantly affect appropriations made by the State Legislature to school districts. The District has no control over the level of state funding it receives. Annual State apportionments of basic and equalization aid to school districts for general purposes are computed up to a revenue limit per unit of average daily attendance ("ADA"). Such apportionments will, generally speaking, amount to the difference between the district's revenue limit and the district's local property tax allocation. Revenue limit calculations are adjusted annually in accordance with a number of factors designed primarily to provide cost of living increases and to equalize revenues among all of the same type of State school districts (i.e., unified, high school, elementary school districts or districts of education). State law also provides for State support of specific school-related programs including summer school, adult education, deferred maintenance of facilities, pupil transportation, portable classrooms and other capital outlays and various categorical aids. The State revenues limit was first instituted in fiscal year 1973-74 to provide a mechanism to calculate the amount of general purpose revenue an education entity is entitled to receive from state and local sources. Prior to fiscal year 1973-74, taxpayers in areas with low property values per pupil paid higher tax rates than taxpayers in areas with high property values per pupil. However, despite higher tax rates, less was spent per pupil in areas with low property values per pupil than areas with high property values per pupil. Thus, the State revenue limit helps to alleviate the inequities between the two types of areas. The State revenue limit is calculated three times a year for each education entity. The first calculation is performed for the February 20th First Principal Apportionment, the second calculation for the June 25th Second Principal Apportionment, and the final calculation for the end of the year Annual Principal Apportionment. Calculations are reviewed by the county and submitted to the State Department of Education to review the calculations for accuracy, calculate the amount of State aid owed to such education entity and notify the State Controller of the amount, who then distributes the State aid. The calculation of the amount of State aid an education entity is entitled to receive each year is basically a five step process. First, the prior year State revenue limit per ADA is established, with recalculations as are necessary for adjustments for equalization or other factors. Second, the adjusted prior year State revenue limit per ADA is inflated according to formulas based on the implicit price deflator for government goods and services and the statewide average State revenue limit per ADA for the education entities. Third, the current year's State revenue limit per ADA for each education entity is multiplied by such education entity's ADA for either the current or prior year. Fourth, revenue limit add-ons are calculated for each education entity if such education entity qualifies for the add-on. Add-ons include the necessary small adjustment, meals for needy pupils, and small area transportation, and are added to the State revenue limit for each qualifying education entity. Finally, local property tax revenues are deducted from the State revenue limit to arrive at the amount of state aid based on the State revenue limit each education entity is entitled to for the current year. The State of California, upon which the District relies for a substantial portion of its revenues, has experienced severe budget shortfalls in recent years. Decreases in State revenues may significantly affect appropriations made by the State to county districts of education, and the timing of payments to county Districts by the State may depend upon the ability of the State to access the credit markets with respect to its own cash flow borrowings. California Teachers'Association v. Gould. During several years in the early 1990's,the State realized less tax receipts than it had previously budgeted, so that in each of those years public education received more in funding than its minimum entitlement under Proposition 98. The State legislature characterized the over funded 16 • amounts as "loans" to be repaid from the Proposition 98 entitlement in future years. The aggregate amount of these loans is approximately $1.76 billion. The validity of the loan characterization and repayment mechanism were challenged by the California Teachers' Association (CTA), which sought to void the obligation to repay the R loan amounts. On April 26, 1994, a Sacramento County superior court entered a judgment that K-14 districts are not obligated to repay the inter-year loans. The decision was appealed by the State, and pending appeal CTA and the State reached a settlement which became final on April 12, 1996. Pursuant to the settlement agreement, no new inter-year loans will be created; the existing loans are required to be repaid over an eight year period, with K-14 schools contributing $825 million from funds allocated to education under Proposition 98, and the State contributing the balance of$938 million. The final Proposition 98 funding levels for the years in dispute will be certified, and the schools' contribution will be counted toward the Proposition 98 guarantee in future years. Other issues are still subject to negotiation. Economic Factors Affecting the State Budget. Public school districts in California are dependent on revenues from the State for a large portion of their operating budgets. California school districts receive an average of about 55 percent of their operating revenues from various State sources. The primary source of funding for school districts is the revenue limit, which is a combination of State funds and local property taxes. State funds typically make up the majority of a district's revenue limit. School districts also receive substantial funding from the State for various categorical programs. The availability of State funds for public education is a function of constitutional provisions affecting individual school district revenues and expenditures, the condition of the State economy (which affects total revenue available to the State general fund), and the annual State budget process. The State requires that from all State revenues there first shall be set apart the moneys to be applied for support of the public school system and public institutions of higher education. California school districts receive a significant portion of their funding from State appropriations. As a result, decreases in State revenues may significantly affect appropriations made by the legislature to school districts. The following information concerning the State's budgets for the current and most recent preceding years has been compiled from publicly-available information provided by the State. Neither the District, nor the Underwriter is responsible for the information relating to the State's budgets provided in this section. Further information is available from the Public Finance Division of the State Treasurer's Office. The Budget Process. The State's fiscal year begins on July 1 and ends on June 30. The annual budget is proposed by the Governor by January 10 of each year for the next fiscal year (the "Governor's Budget"). Under State law, the annual proposed Governor's Budget cannot provide for projected expenditures in excess of projected revenues and balances available from prior fiscal years. Following the submission of the Governor's Budget,the Legislature takes up the proposal. Under the State Constitution, money may be drawn from the Treasury only through an appropriation made by law. The primary source of the annual expenditure authorizations is the Budget Act as approved by the Legislature and signed by the Governor. The Budget Act must be approved by a two-thirds majority vote of each House of the Legislature. The Governor may reduce or eliminate specific line items in the Budget Act or any other appropriations bill without vetoing the entire bill. Such individual line-item vetoes are subject to override by a two-thirds majority vote of each House of the Legislature. Appropriations also may be included in legislation other than the Budget Act. Bills containing appropriations (except for K-14 education) must be approved by a two-thirds majority,vote in each House of the Legislature and be signed by the Governor. Bills containing K-14 education appropriations only require a simple majority vote. Continuing appropriations, available without regard to fiscal year, may also be provided by statute or the State Constitution. Funds necessary to meet an appropriation need not be in the State Treasury at the time such appropriation is enacted; revenues may be appropriated in anticipation of their receipt. 17 Recent State Budgets. Certain information about the State budgeting process and the State Budget is available through several State of California sources. A convenient source of information is the State's website, where recent official statements for State bonds are posted. The references to internet websites shown below are shown for reference and convenience only, the information contained within the websites has not been reviewed by the District or the underwriter and is not incorporated herein by reference. (i) The California State Treasurer Internet home page at www.treasurer.ca.gov, under the heading "Bond Information," posts various State of California Official Statements, many of which contain a summary of the current State Budget, past State Budgets,and the impact of those budgets on school districts in the State. (ii) The California State Treasurer's Office Internet home page at www.treasurer.ca.gov, under the heading "Financial Information," posts the State's audited financial statements. In addition, the "Financial Information" section includes the State's Rule 15c2-12 filings for State bond issues. The "Financial Information" section also includes the "Overview of the State Economy and Government, State Finances, State Indebtedness, Litigation" from the State's most current Official Statement, which discusses the State budget and its impact on school districts. (iii) The California Department of Finance's Internet home page at www.dof.ca.gov, under the heading "California Budget," includes the text of proposed and adopted State Budgets. (iv) The State Legislative Analyst's Office prepares analyses of the proposed and adopted State budgets. The analyses are accessible on the Legislative Analyst's Internet home page at www.lao.ca.gov under the heading "Products". California's Electricity Supplies. The state is currently earpervencing adverse conditions with regard to the cost of electricity and natural gas throughout most of the state. The situation has resulted in the filing of bankruptry by Pacifrc Gas&Electric..the primary power supplier for northern California, financial difficulty for southern California Edison, a major power supplier for southern California, and increased electricity billings for most users of electricity in California. The State has purchased e%ti1city using available moneys and the financial position of the state has been adversely affected by the electricity expenditures and the credit rat"ngs of the stage have been lowered. The short and long-range imp w&of these developments are unknown, but the cost and a vailability of electricity has the potential to significantly affect ec oaomic development throughout the State. THE STATE HAS NOT ENTERED INTO ANY CONTRACTUAL COMMITMENT WITH THE DISTRICT, THE PAYING AGENT OR THE OWNERS OF THE NOTES TO PROVIDE STATE BUDGET INFORMATION TO DISTRICT OR THE OWNERS OF THE NOTES. ALTHOUGH THEY BELIEVE THE STATE SOURCES OF INFORMATION LISTED ABOVE ARE RELIABLE, THE DISTRICT ASSUMES NO RESPONSIBILITY FOR THE ACCURACY OF THE STATE BUDGET INFORMATION SET FORTH HEREIN OR INCORPORATED BY REFERENCE HEREIN. State Lottery- Proposition 37. In the November 1984 general election, the voters of the State approved Proposition 37, a constitutional amendment establishing a State lottery (the "State Lottery").. the net revenues of which are used to supplement money to public education. The amendment prohibited the use of funds derived from the State Lottery for non-instructional purposes, such as the acquisition of real property, the construction of facilities or the financing of research. State Lottery revenues (gross revenues less prizes and administration expenses) are allocated by computing an amount per total A.D.A. of full time equivalent ("F.T.E."), i.e., by dividing the total net revenue figures by the total A.D.A. for grades K-12 and F.T.E.S. (Full Time Equivalent Students)for community colleges, and by the total F.T.E.S. for each University of California system and California State University and College system. Each entity receives an amount equal to its total A.D.A. or F.T.E.S., as applicable, multiplied by the per A.D.A. or F.T.E.S. figure. Ad Valorem Property Taxation. In the State, property which is subject to ad valorem taxes is classified as "secured" or "unsecured". The "secured roll" is that part of the assessment roll containing State-assessed public utilities' property and property the taxes on which are a lien on real property sufficient, in the opinion in the county assessor, to secure payment of the taxes. A tax levied on unsecured property does not become a lien against such unsecured property, but may become a lien on certain other property owned by the tax payer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law 18 on such secured property, regardless of the time of the creation of the other liens. Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent becomes tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1- 1/2% per month to the time of redemption. If taxes are unpaid for a period of five years or more,the property is deeded to the State and then is subject to sale by the county tax collector. Historically, property taxes are levied for each fiscal year on taxable real and personal property situated in the taxing jurisdiction as of the preceding March 14. A bill enacted in 1983.. SB 813 (Statues of 1983, Chapter 498), however, provided for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Thus this legislation eliminated delays in the realization of increased property taxes from new assessments. As amended, SB 813 provided increased revenue to taxing jurisdictions to the extent that supplemental assessments of new construction or changes or ownership occur subsequent to the March 14 lien date. Property taxes on the unsecured roll are due on the March 14 lien date and become delinquent, if unpaid on the following August 31. A ten percent (10%) penalty is also attached to delinquent taxes in respect of property on the unsecured roll, and further, an additional penalty of 1-1/2% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4)seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes in respect of property on the secured roll is the sale of the property securing the taxes to the State for the amount of taxes which are delinquent. Teeter Plan. General taxes and special assessments entered and collected on the secured tax roll are collected by the County. The County is operating under Sections 4701-4717 of the Revenue and Taxation Code of the State(the"Teeter Plan"). Under the Teeter Plan,the County maintains a County Tax Losses Reserve Fund for the purpose of paying each taxing entity 100 percent of the amounts of secured taxes levied and 1915 Act assessments posted to the tax bill. The County Auditor/Controller reports that, to date, the Tax Losses Reserve Fund has proved adequate to meet all tax and special assessment delinquencies, with the effect that each year, the County's public entities have received the full amount of taxes levied and assessment installments posted to the tax bill. No assurances can be given that the County Tax Losses Reserve Fund will continue to be sufficient to meet the delinquencies in the future. The County has the power to discontinue the Teeter Plan on a County-wide basis with respect to either or both general taxes and special assessment installments. The Teeter Plan may also be discontinued by petition of two-thirds (2/3) of the participating taxing agencies. In addition, the County may choose to not include a specific assessment district or City under certain circumstances. The balance in the County Tax Losses Reserve Fund as of June 30, 2002,was estimated by the County Auditor/Controller to be$26,735,236. Unitary Taxation of Utility Property. Historically, property of regulated public utilities has been assumed for local tax purposes by the State Board of Equalization on a geographical basis in basically the same manner as other taxable property in any taxing jurisdiction. In 1987, the State Legislature enacted Chapter 921 amending Section 98.9 and various other sections of the Revenue and Taxation Code. The changes call for the establishment in each county of one county-wide tax rate area with the assessed value of all unitary and operating non-unitary utility property being assigned to this tax rate area. The result is a single assessed valuation figure for all utility property owned by each utility within 19 the county without any breakdown for individual taxing jurisdictions. All of this property is then subjected to a tax at a rate equal to the sum of the following two rates: 1. A rate determined by dividing the county's total ad valorem tax levies for the secured roll for the prior year, exclusive of levies for debt service, by the county's total ad valorem secured roll assessed value for the prior year. 2. A rate determined by dividing the county's total ad valorem tax levies for the secured roll for the prior year for debt service only by the county's total ad valorem secured roll assessed value for the prior year. The foregoing process results in the creation to two pools of money, pool one being available for general tax purposes and pool two for debt service purposes, each pool being then allocated to the various taxing jurisdictions in the county by a statutory formula for Contra Costa County as a whole. The following tables present assessed valuation information for the District and Contra Costa County. SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT Ad Valorem Property Taxation Fiscal Years 1992/93 through 2003/04 Fiscal Total Percentage Year Assessed Value Change 1992/93 11,318,979,979 1993/94 11,800,081,625 4.3% 1994/95 12,f 1371275f 182 2.9 1995/96 1215721208,976 3.6 1996/97 13,035,8081175 3.7 1997/98 13,623,319,614 4.5 1998/99 14,715,589,860 8.0 1999/00 1519501449,402 8.3 2000/01 17,477,154,876 9.5 2001/02 19,487,287,555 11.5 2002/03 21,087,268,065 8.2 2003/04 23,074,149,846 9.4 Source: California Municipal Statistics and County Auditor-Controller. 20 CONTRA COSTA COUNTY Ad Valorem Property Taxation Fiscal Years 1992/93 through 2003/04 Fiscal Total Percentage Year Assessed Value Change 1992/93 58,5231281,919 1993/94 60,7461926,251 3.8% 1994/95 62,653,937,984 3.1 1995/96 64,504,4141136 3.0 1996/97 66,658,249,083 3.3 1997/98 67,510,795,657 1.3 1998/99 70,649,893,937 4.6 1999/00 75,3991301,117 6.7 2000/01 82,480,0631534 9.4 2001/02 91,337,447,127 10.7 2002/03 98,658,324,194 8.0 2003/04 106,873,657,538 8.3 Source: California Municipal Statistics and County Auditor-Controller. Developer Fees. The District also anticipates receiving, in addition to general fund revenues, revenue from fees collected from developers of housing units calculated from square footage of new construction. The District currently projects$2,000,000 in developer fees during fiscal year 2003-2004. The receipt of these fees is dependent on new construction; therefore, no assurance can be given that this source of additional revenue will be received at the level projected. Direct and Overlapping Debt Statement Set forth below is a direct and overlapping debt report (the "Debt Report") prepared by California Municipal Statistics, Inc. and dated November 1, 2002. The Debt Report is included for general information purposes only. The District has neither reviewed nor commented on the Debt Report for completeness or accuracy and makes no representations in connection therewith. The Debt Report generally includes long term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the District in whole or in part. Such long term obligations generally are not payable from revenues of the District(except as indicated) now are they necessarily obligations secured by land within the District. In many cases, long term obligations issued by a public agency are payable only from the General Fund or other revenues of such public agency. r 21 r SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT 2002-2003 Assessed Valuation: $21,087,268,065 Redevelopment Incremental Valuation: 736,640,648 Adjusted Assessed Valuation: $20,350,627,417 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: %Aoolicable Debt 11/1/02 Contra Costa Community College District.................................................... 22.951 $ 11,475,500 San Ramon Valley Unified School District.................................................... 100.00 62,129,416 (1) East Bay Municipal Water District............................................................... 19.011 1,0601814 East Bay Regional Park District...............................................................fees 10.278 16,564,539 County Service Area No. R-8...................................................................... 1.685 24,685 Contra Costa County Community Facilities District No. 2001-1 ...................... 100.00 71220,000 Town of Danville 1915 Act Bonds..............................................................■ 100.00 16,813,000 City of San Ramon 1915 Act Bonds ............................................................ 100.00 3,065,000 County and Special District1915 Act Bonds.................................................. Various 125,655,079 TOTAL GROSS DIRECT AND OVERLAPPING TAX AND ASSESSMENTDEBT......................................................................................savage.. $244,008,033 Less: East Bay Municipal Utility District(100%self-supporting) ....................................... 16060,814 TOTAL NET DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT................................ $242,947,219 DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT: Contra Costa County General Fund Obligations............................................ 22.972% 731762,805 Contra Costa County Pension Obligations.................................................... 22.972 64,648,951 Contra Costa County Board of Education Certificates of Participation.................................................................... 22.972 551,328 Contra Costa County Mosquito Abatement District Certificates of Participation.................................................................... 22.972 242,355 Chabot-Las Positas Community College District Certificates of Participation.................................................................... 0.067 61774 Contra Costa Community College District Certificates of Participation.................................................................... 22.951 320,166 San Ramon Valley Unified School District Certificates of Participation.................................................................... 100.00 29,755,000 Town of Danville Certificates of Participation.......offesseleasses geese**ease Goofs Be asses see 100.00 6,555,000 City of San Ramon Certificates of Participation............................................ 100.00 24,415,000 City of Walnut Creek General Fund Obligations............................................ 1.842 41,445 San Ramon Valley Fire Protection District Certificates of Participation...........................................................ease,.... 99.803 8,338,541 TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT................... $208,637,365 Less: San Ramon Valley Unified School District Certificates of Participation supported by guaranteed investment contract from Bayerische Landesbank................... 8.,885,000 TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT......................... $199,752,365 GROSSCOMBINED TOTAL DEBT......................................................................................... ........................................................................................................................................ $452,645,398 (2) NETCOMBINED TOTAL DEBT............................................................................................. $442,699,584 (1)Excludes tax and revenue anticipation notes. (2)Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non- bonded capital lease obligations. 22 i Ratios to 2001-2002 Assessed Valuation: DirectDebt ($)......................................................................................0.29% Total Gross Direct and Overlapping Tax and Assessment Debt....................1.16% Total Net Direct and Overlapping Tax and Assessment Debt ......................1.15% Ratios to Adjusted Assessed Valuation: Gross Combined Direct Debt ($)..............................................................0.45% Net Combined Direct Debt ($).................................................................0.41% Gross Combined Total Debt.....................................................................2.22% Net Combined Total Debt........................................................................2.18% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/01: $0 Outstanding Debt As of June 30, 2002, the District had outstanding long term debt of$114,165,672. This debt is estimated to be comprised of: General Obligation Bonds...................................................$ 146,961,963 Arbitrage.......................................................................... 904,000 Certificates of Participation................................................. 29,755,000 Accumulated Vacation-Net................................................. 1,117,812 CapitalLeases................................................................... 658,822 Other General Long Tern Debt........................................... 74500 Total Long Term Debt................................................$181,11165,t672 CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING THE DISTRICT'S REVENUES Article XIIIA of the California Constitution On June 6, 1978, California Voters approved Proposition 13, which added Article XIIIA to the California Constitution ("Article XIIIA"). Article XIIIA of the State Constitution limits the amount of ad valorem taxes on real property to 1% of"full cash value" as determined by the county assessor. Article XIIIA defines "full cash value" to mean "the county assessor's valuation of real property as shown on the fiscal year 1975-76 bill under'full cash value', or thereafter, the appraised value of real property when purchased, newly constructed or a change in ownership has occurred after the 1975 assessment", subject to exemptions in certain circumstances of property transfer or reconstruction. The "full cash value" is subject to annual adjustment to reflect increases, not to exceed 2% for any year, or decreases in the consumer price index or comparable local data, or to reflect reductions in property value caused by damage,destruction or other factors. Article XIIIA requires a vote of two-thirds of the qualified electorate of a city, county, special district or other public agency to impose special taxes, while totally precluding the imposition of any additional ad valorem, sales or special transaction tax on real property. Article XIIIA exempts from the 1% tax limitation any taxes above that level required to pay debt service (a) on any indebtedness approved by the voters prior to July 1, 1978, and (b) as a result of an amendment approved by California voters on June 3, 1986, on any bonded indebtedness approved by two-thirds of the votes cast by the voters for the acquisition or improvement of real property on or after July 1, 1978. In addition, Article XIIIA requires the approval of two-thirds of all members of the State legislature to change any State taxes for the purpose of increasing tax revenues. 23 Court Challenges to Article XIIIA The United States Supreme Court in 1989 struck down as a violation of equal protection certain property tax assessment practices in West Virginia which had resulted in vastly different assessments of similar properties. Since Article XIIIA provides that property may only be reassessed to reflect increases in value not to exceed 2% per year, except upon change of ownership or new construction, recent purchasers may pay substantially higher property taxes than long-time owners of comparable property in a community. The Supreme Court in the West Virginia case expressly declined to comment in any way on the constitutionality of Article XIIIA. Three lawsuits challenging the assessment provisions of Article XIIIA were filed in California and dismissed by the trial courts. In December of 1990 the State Courts of Appeal upheld Article XIIIA in two of these three cases and the third appeal, upholding Proposition 13, was resolved in April of 1991. On February 28, 1991, the California Supreme Court declined to hear the further appeals of the two cases decided by the State Courts of Appeal. The United States Supreme Court accepted for review, Nordlinger v. Lynch, a suit which challenged Article XIIIA. In June of 1992, the Supreme Court announced its decision upholding the constitutionality of Proposition 13. The Supreme Court held that the acquisition value property tax system established by Proposition 13 does not violate the Constitution's equal protection clause. Proposition 62 A statutory initiative ("Proposition 62") was adopted by the voters at the November 4, 1986 general election which (a) requires that any new or higher taxes for general governmental purposes imposed by local governmental entities such as the District be approved by a two-thirds vote of the governmental entity's legislative body and by a majority vote of the voters of the governmental entity voting in an election of the tax, (b) requires that any special tax (defined as taxes levied for other than general governmental purposes)imposed by a local governmental entity be approved by a two-thirds vote of the voters of the governmental entity voting in an election on the tax, (c) restricts the use of revenues from a special tax to the purposes of the service for which the special tax was imposed, (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities, and (f) requires that any tax imposed by a local governmental entity on or after August 1, 1985, be ratified by a majority vote of the voters voting in an election on the tax within two years of the adoption of the Initiative or be terminated by November 15, 1988. However, a court of appeal, in City of Westminster v. County of Orange(1988) 204 Cal. App. 3d 623, held that an effort to apply Propositions 62's voter approval requirement to taxes imposed between August 1, 1985, and Proposition 62's effective date(November 5, 1986)was unconstitutional. California appellate court cases had overturned the provisions of Proposition 62 pertaining to the imposition of taxes for general government purposes, but not for special taxes. On September 28, 1995, the Supreme Court of the State of California filed its opinion in the case of Santa Clara County Local Transportation Authority v. Guardino that upheld Proposition 62 generally and overruled specifically the Court of Appeal case of City of Woodlake v. Logan(1991), 230 Cal App. 3rd 1058. Woodlake held that portions of Proposition 62 were unconstitutional, namely Government Code Section 53723 (requiring a majority vote approval for a general tax), 53724 (specifying election requirements) and 53728 (requiring property tax withholding). The consequences of Santa Clara County Local Transportation Authority upholding the validity of Proposition 62 are that annual revenues of any local government or district as shown in the general fund budget must be reduced in any year to the extent that they rely on the proceeds of any general tax enacted since Proposition 62 which has not been approved by majority vote of the electorate. The District does not receive tax revenue from any measure adopted in violation of Proposition 62. Santa Clara County Local Transportation Authority v.Guardino On September 28, 1995,the Supreme Court of the State of California filed its opinion in the case of Santa Clara County Local Transportation Authority v. Guardino. The holding was that a sales and use tax levied by the Authority to finance local streets, highways and mass transit systems was invalid under statewide Proposition 62, adopted in 1986, because it was approved by a simple majority rather than a two-thirds vote of the electorate. The court found that(i) the Santa Clara County Local Transportation Authority (the "Authority") was a "district", 24 and (ii) the tax was a "special tax" within the meaning of Proposition 62. This holding is consistent with the previous Supreme Court decision in Rider v. County of San Diego(1991), 1 Cal. 4th 1, which invalidated a sales and use tax levied by a special authority to finance criminal justice facilities, except that the latter was decided on constitutional grounds, namely Proposition 13, rather than on the statutory initiative grounds of Proposition 62. Proposition 62 was a statutory initiative adding Sections 53720 to 53730, inclusive, to the California Government Code. It confirmed the distinction between a general tax and special tax, established by the State Supreme Court in City and County of San Francisco v. Farrell(1982), 32 Cal. 3rd 47, by defining a general tax as one imposed for general governmental purposes and a special tax as one imposed for specific purposes. Proposition 62 further provided that no local government or district may impose (i) a general tax without prior approval of the electorate by majority vote or(ii)a special tax without such prior approval by two-thirds vote. It further provided that if any such tax is imposed without such prior approval, the amount thereof must be withheld from the levying entity's allocation of annual property taxes for each year that the tax is collected. The decision in Guardino went beyond the particular facts of the case to uphold the validity of Proposition 62 generally and to overrule specifically the Court of Appeal case of City of Woodlake v. Logan, decided in 1991, 230 Cal. App. 3rd 1058. Woodlake held that portions of Proposition 62 were unconstitutional, namely Government Code Sections 53723 (requiring a majority vote approval for a general tax), 53724 (specifying election requirements)any 53728(requiring property tax withholding). The consequences of Guardino upholding the validity of Proposition 62 are herefore that the annual revenues of any local government or district as shown in the general fund budget must be reduced in any year to he extent that they rely on he proceeds of any general tax which has not been approved by majority vote of the electorate. The court provided no guidance as to past years, but he decision clearly applies to current and future years. Proposition 62 defines he term "local government" to mean "any county, city, city and county, including a chartered city or county, or any public or municipal corporation"; it defines "district"to mean "an agency of he state, formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited boundaries." It thus purports to cover virtually every form of local jurisdiction in the state, including the District. On March 6, 1995, in he case of Rossi v. Brown, the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit he imposition of further such taxes and that constitutional and charter exemptions from the referendum requirements relating to statutes and ordinances levying taxes do not apply to initiatives. Unitary Property AB 454 (Chapter 921, Statutes of 1987) provides that revenues derived from most utility property assessed by he State Board of Equalization ("Unitary Property"), commencing with fiscal year 1988-89, will be allocated as follows: (a) each jurisdiction will receive up to 102% of its prior year State-assessed revenue; and (b) if countywide revenues generated from Unitary Property are less than he previous year's revenues or greater than 102% of the previous year's revenues, each jurisdiction will share the burden of he shortfall or excess revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas. Article XIIIB of the California Constitution In a special election on November 6, 1979, the voters approved Proposition 4, which added Article XIIIB to the California Constitution. Article XIIIB became effective July 1, 1979, and provided that state and local government appropriations from certain revenue sources each year could not exceed the appropriations limit related to such revenue beginning in fiscal year 1978-79, with annual adjustments for changes in the cost of living and the change in population. Any surplus revenues were required to be returned to the taxpayers. The measure also provided for emergency situations, revisions of he appropriations limit by a vote of the electorate, 25 nonimpairment of bonds, reorganizations of governmental entities, and other miscellaneous provisions. Article XIIIB has been subsequently modified,details of which are described below. Amendments to Artide XIIIB of the California Constitution - Article XIIIB of the State Constitution as subsequently amended by Propositions 98 and Ill.. respectively, limits the annual appropriations of the State and of any city, county, school district, authority or other political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living and population, transfers in the financial responsibility for providing services and for certain declared emergencies. As amended through voter approval of Proposition 111 in June 1990, for fiscal years beginning on or after July 1, 1990, the appropriations limit of each school or community college district shall be the appropriations limit for fiscal year 1986-87 adjusted annually for changes made from that fiscal year in the cost of living and in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of government. The change in cost of living is, at such entity's option, either (a) the percentage change in California per capita personal income, or(b)the percentage change in the local assessment roll for the jurisdiction due to the addition of nonresidential new construction. The change in population is a blended average of overall state and population growth and the change in school attendance at local school and community college districts. Appropriations subject to Article XIIIB include generally any authorization to expend during the fiscal year the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds. "Proceeds of taxes" include, but are not limited to, all tax revenues and the proceeds exceed the cost of providing the service or regulation, (b) the investment of tax revenues and (c) certain State subventions received by local governments. Appropriations subject to limitation pursuant to Article XIIIB do not include debt service on indebtedness existing or legally authorized as of January 1, 1979, on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for such purpose, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriations by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels. State legislation implementing Proposition 111 provides for the exclusion from the appropriations subject to limitation "an appropriation for a fixed asset (including land and construction) with a useful life of 10 or more years and a value which equals or exceeds one hundred thousand dollars". Article XIIIB permits any governmental entity to change the appropriations limit by vote of the electorate in conformity with statutory and constitutional voting requirements, but any such voter-approved change can only be effective for a maximum of four years. Article XIIIB includes a requirement that all revenues received by an entity of government other than the State in a fiscal year and in the fiscal year immediately following it in excess of the amount permitted to be appropriated during that fiscal year and the fiscal year immediately following it shall be returned by a revision of tax rates or fee schedules within the next two subsequent fiscal years. Proposition 98 At the November 8, 1988 general election, California voters approved an initiative known as "Proposition 98". This Proposition amended Article XIIIB to require that(i)the California Legislature establish a prudent state reserve fund in an amount as it shall deem reasonable and necessary and (ii) revenues in excess of amounts permitted to be spent and which would otherwise be returned pursuant to Article XIIIB by revision of tax rates or fee schedules, be transferred and allocated (up to a maximum of 4%) to the State School Fund and be expended solely for purposes of instructional improvement and accountability. Proposition 98 also amended Article XVI to require that the State of California provide a minimum level of funding for public schools and community colleges. 26 Moneys to be applied by the State for the support of school districts and community college districts shall not be less than the greater of: (i) the amount which, as a percentage of the State general fund revenues which may be appropriated pursuant. to Article XIIIB, equals the percentage of such State general fund revenues appropriated for school districts and community college districts, respectively, in fiscal year 1986-87, (ii) the amount required to ensure that the total allocations to school districts and community college districts from the State general fund proceeds of taxes appropriated pursuant to Article XIIIB and allocated local proceeds of taxes shall not be less than the total amount from these sources in the prior year, adjusted for increases in enrollment and adjusted for changes in the cost of living pursuant to the provisions of Article XIIIB or (iii) the amount actually appropriated to school districts in the prior fiscal year from General Fund proceeds and from allocated local proceeds of taxes adjusted for changes in enrollment and for the change in per capita General Fund revenues, and, in addition, an amount equal to one-half of one percent times the prior year appropriations (excluding any excess state revenues) adjusted for changes in enrollment pursuant to the provisions of Article XIIIB. The Proposition permitted the enactment of legislation, by a two-thirds vote, to suspend the minimum funding requirement for one year. The District cannot predict the ultimate impact of Proposition 98 upon the District's finances. The District believes its appropriations from "proceeds of taxes" including Proposition 98 revenues, are well within the appropriations limit imposed by Article XIIIB. In addition to the amounts applied to school districts under the tests discussed above, the State Controller is directed to allocate available excess state revenues (pursuant to Article XIIIB) to the State School Fund. However, no such allocation is required at any time that the Director of Finance and the Superintendent of Public Instruction mutually determine that current annual expenditures per student equal or exceed the average annual expenditures per student of the 10 states with the highest annual expenditures per student and the average class size equals or is less than the average class size of the 10 states with the lowest class size. Such allocations do not constitute appropriations subject to Article XIIIB limitations and are to be made in an equal amount per enrollment. Proposition 218 On November 5, 1996, California voters approved Proposition 218-Voter Approval for Local Government Taxes-Limitation on Fees.. Assessments, and Charges-Initiative Constitutional Amendment. Proposition 218 added Articles XIIIC and )(IIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes,assessments and property-related fees and charges. The District does not impose any such taxes, assessments, fees or charges; and, with the exception of the basic one percent ad valorem property tax levied and collected by Contra Costa County pursuant to Article XIIIA of the California Constitution,a portion of which is allocated to the District, no such taxes, assessments,fees or charges are imposed on behalf of the District. Accordingly, while the provisions of Proposition 218 may have an indirect effect on the District, such as by limiting or reducing the revenues otherwise available to other local governments whose boundaries encompass property located within the District thereby causing such local governments to reduce service levels and possibly adversely affecting the value of property within the District, the District does not believe that Proposition 218 will directly impact the revenues available to it to pay the principal of and interest on the Notes when due. Future Initiatives Article XIIIA, Proposition 62, Article XIIIB, Proposition 111, Proposition 98, and were all adopted measures that qualified for the ballot pursuant to California's initiative process. From time to time, other initiative measures could be adopted, further affecting District revenues or the District's ability to expend revenues. The nature and impact of hese measures cannot be anticipated by the District. LEGAL MATTERS Litigation No litigation is pending or,to the best of the knowledge of the District, threatened concerning the validity of the Notes, and an opinion, representation or certificate of the County Counsel to that effect will be given at the time of the original delivery of the Notes. The District is not aware of any litigation pending or threatened 27 r questioning the political existence of the District or contesting the District's ability to levy and collect ad valorem taxes or to collect or receive other pledged revenues or contesting the District's ability to issue and retire the Notes. Legality for Investment Under provisions of the California Financial Code, the Notes are legal investments for commercial banks in California to the extent that the Notes, in the informed opinion of the bank, are prudent for the investment of funds of its depositors and are eligible to secure deposits of public moneys in the State of California under provisions of the California Government Code. TAX MATTERS In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however, to the qualifications set forth below, under existing law, the interest on the Notes is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes),such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding paragraph are subject to the conditions that the District comply with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Notes in order that such interest be, or continue to be, excluded from gross income'for federal income tax purposes. The District has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Notes. In the further opinion of Bond Counsel, interest on the Notes is exempt from California personal income taxes. Purchasers should be aware that the Internal Revenue Service had issued Notice 94-84 which may have certain tax ramifications with respect to the Notes. This Notice provides generally that, in the case of short-term tax-exempt obligations (such as the Notes), the Internal Revenue Service is studying whether interest payable at maturity on the obligations should, or should not, be included in stated redemption price at maturity, for purposes of the rule that original issue discount represents the excess of stated redemption price at maturity over issue price. Notice 94-84 states that until the Internal Revenue Service provides further guidance, taxpayers may treat stated interest on certain short-term obligations, such as the Notes, either as includable in stated redemption price at maturity or as not included in stated redemption price at maturity. A taxpayer, however, must treat stated interest payable at maturity on all short-term tax-exempt bonds in a consistent manner. A short-term tax-exempt bond is defined as a tax-exempt bond with a term that is not more than one year from the date of issue. Purchasers of the Notes are cautioned that the opinion of Bond Counsel does not identify the amount of interest that is excluded from gross income for federal income tax purposes. Purchasers of the Notes should consult their tax advisors regarding the effects of Notice 95-84 upon individual tax circumstances. Owners of the Notes should also be aware that the ownership or disposition of, or the accrual or receipt of interest on the Notes may have federal or state tax consequences other than described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Notes other than as expressly described above. 28 CONTINUING DISCLOSURE The District has covenanted for the benefit of the holders and beneficial owners of the Notes to provide notices of the occurrence of certain enumerated events, if material. The notices of material events will be filed by the District with the Municipal Securities Rulemaking Board (and with the appropriate State information depository, if any). The specific nature of the information to be contained in the notices of material events is set forth below under the caption "APPENDIX B - Form of Continuing Disclosure Certificate". These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). The District has never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events. CLOSING PAPERS The District will furnish to the Underwriter, without charge,concurrently with payment for and delivery of the Notes,the following closing papers,each dated the date of such delivery: (a) The opinion of Jones Hall, A Professional Law Corporation, Bond Counsel, in the form attached to this Official Statement as Appendix C, approving the validity of the Notes and stating that interest on the Notes is excluded from the gross income for federal income tax purposes under present law and that such interest is also exempt from personal income taxes of the State of California under present law; (b) The certificates of the District that on the basis of the facts, estimates and circumstances in existence on the date of issue, it is not expected that the proceeds of the Notes will be used in a manner that would cause the Notes to be arbitrage bonds; (c) Certificates on behalf of the District and the Board that there is no litigation threatened or pending affecting the validity of the Notes; (d) The certificate of an appropriate District official acting on behalf of the District solely in his official, and not in his personal capacity, that at the time of the sale of the Notes and at all times subsequent thereto up to and including the time of the delivery of the Notes to the initial purchasers thereof the portions of the Official Statement of the District pertaining to said Notes relating to the District did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of circumstances under which they were made, not misleading; (e) The signature certificate of the officials of the County, showing that they have signed the Notes, whether by facsimile or manual signature, and that they were respectively duly authorized to execute the same; and (f) The receipt of the County Treasurer-Tax Collector showing that the purchase price of the Notes, including interest accrued to the date of delivery thereof, has been received by him. LEGALITY FOR INVESTMENT IN CALIFORNIA Under provisions of the California Financial Code, the Notes are legal investments for commercial banks in California, and under provisions of the California Government Code are eligible to secure deposits of public moneys in California. ELIGIBILITY FOR NATIONAL BANKS In previous years, the Comptroller of the Currency has indicated that similar note issues were eligible for • purchase, dealing in, and underwriting and unlimited holdings by national banks. 29 RATING The Notes are rated by Moodys Investor's Service. Such rating reflects only the view of Moody's Investors Service. An explanation of the significance of such rating may be obtained from the Moody's Investors Service, 99 Church Street, New York, New York 10007, (212) 553-0300. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward entirely by the rating organization if, in the judgment of said organization, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Notes. UNDERWRITING The Notes are being purchased by Altura, Nelson & Co., Incorporated (the "Underwriter"). The Note Purchase Contract provides that the Underwriter will purchase all of the notes, if any are purchased, subject to certain terms and conditions set forth in the Contract of Purchase at a price of$ which represents the par amount of the Notes less an underwriting discount of$ . The Notes may be offered and sold to dealers (including dealers depositing said Notes into investment trusts) and others at prices lower than the initial public offering price, and the public offering price may be changed from time to time by the Underwriter. MISCELLANEOUS The execution of this Official Statement has been authorized by the Board of Education of the District. At the time of delivery and payment for the Notes, the Superintendent of the District or a Board of Education's authorized official will deliver a certificate stating that to the best of his or her knowledge this Official Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein, in light of the circumstances under which they were made, not misleading. Such certificate will also certify that to the best of his knowledge,from the date of this Official Statement to the date of such delivery and payment,there was no material adverse change in the information set forth herein. SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT By: Superintendent 30 r w APPENDIX A Audited Financial Statements A-1 THIS PAGE INTENTIONALLY LEFT BLANK ti s ; SANRAMON..VALLEY UNIFIED SCHOOL DISTRICT ANNUAL FINANCIAL REPORT JUNE 30, 2002 F a c i l SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT OF CONTRA COSTA COUNTY DANVILLE,CALIFORNIA JUNE 30,2002 -wwW--- .iwwnrm-----+w------rsrrr.rwvwirrrr tvw+rwrvrw+rm nrvwr r rwrrwvwr+r rwrrww r�wwnrww.nsr nrw+r nrawwwrrw^mrrrsws GOVERNING BOARD WMBER OFFICE TERM EXPIRES s William Clarkson President 2002 Marianne Gagen vice President 2002 Paul Garchier Clerk 2004 r Joan Buchanan Member 2002 Greg Marvel Member 2004 k ADMINISTRATION x Robert Kessler Superintendent Roberta Silverstein Assistant Superintendent,Human Resources -Butt Assistant Su rintendent,Business Joan-Butt � Christine Williams Assistant Superintendent, Educational Services SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT TABLE OF CONTENTS JUNE 30, 200.2 •rte.dry.Nr.RfrWyIlMsrwl+r+r.-rNr.•rrrwrwrrrvw.vwrts+resy'w..•.+.Asa'rrrwvlftrrr.ryrrrrrWMWYw/vrsrrrir•'ltwmrNM+MlrrrrIarrwfY"eo.'+YrrrYrrrtnrr.r.rwr.r+r►,rrlMrIww^rrlrrvMMrSlnwrrslar'rIrNMrrrrrtwwwlvVYrv/w'rlrw.•rw'riwwl.Prrr'+Irr+INlwrwHMrenwvvNW.rwrrrrrY+r1M+Iwww FINANCIAL SECTION Independent Auditors' Report 1 l Management's Discussion and Analysis 3 Basic Financial Statements Government-Wide Financial Statements Statement of Net Assets g. Statement of Activities 9 Fund Financial Statements Balance Sheet Governmental Funds 1 Reconciliation of the Governmental Funds Balance Sheet with the Statement of Net Assets 11 Statement of Revenues,Expenditures,and Changes in Fund Balance 12 Reconciliation of the Governmental Funds Statement of Revenues,Expenditures,and Changes 13 in Fund Balances with the.District-wide Statement of Activities Statement of Net Assets--Proprietary Funds 15 Statement of Revenues,Expenses and Changes in Fund Net Assets 16 Statement of Cash Flows—Proprietary Funds 17 Statement of fiduciary Net Assets 18 Statement of Changes in Fiduciary Net Assets 19 Notes to Financial Statements 20 REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule for the General Fund 45 SUPPLEMENTARY INFORMA TION Schedule of Expenditures of Federal Awards 46 . Schedule of Average Daily Attendance 47 . Schedule of Instructional Time 48 Reconciliation of Annual Financial and Budget Report with Audited Financial Statements 49 Schedule of Financial Trends and Analysis 50 Schedule of Assessed Valuation of Taxable Properties and.Secured Tax Charges and . Delinquencies within the San Ramon Valley Unified School District Boundaries 51 Note to Supplementary h formation 52 INDEPENDENT A UDI TORS'REPORTS Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing,Standards 53 Report on Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with LIMB Circular A-133 55 Report on State.Compliance 57 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Summary of Auditors' Results 59 Financial Statement Findings 60 Federal Award Findings and Questioned Costs 62 State Award Findings and Questioned Costs 62 Summary of Schedule of Prior Audit Findings 62 Vawinek,Trina, Day&Co., LLP Certified Public Accountants&Consultants INDEPENDENT AUDITORS'REPORT Board of Education San Ramon Valley Unified School District Danville, +California We have audited the accompanying financial statements of the governmental activities,each major fund,and the aggregate remaining fund information of the District,as of and for the year ended June 30,2002,which collectively comprise the District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District's management. Our responsibility is to express opinions on these financial statements based on our audit. t. We conducted our audit 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 Standards and Procedures for Audits of California K-12 Local Educational agencies,prescribed by the State Controller, Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining,on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In-our opinion,the financial statements referred to above present fairly,in all material respects,the financial .a position of the governmental activities,each major fixed,and the aggregate remaining fund information of the San Ramon valley Unified School District,as of June 30,2002,and the respective changes-in financial positions and cash flows,where applicable,thereof for the.year then ended in conformity with accounting principles generally L; accepted in the United States of America. As described in Note 2,the District has implemented a new financial reporting model,as required by the provisions of GASB Statement No. 34,Basic Financial Statements--and Management Discussion and.Analysis— for State and Local Governments,as of June 30, 2002. In accordance with Government Auditing Standards,we have also issued our report dated September 27,2002,on our consideration.of the District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Y, i 8270 Aspen Street Rancho Cucamonga,CA 91730 Tei:909.466.4410 Fax:909.466.4431 rwww.vtdcpa.com FRESNO • LAGUNA HILLS • PLEASANTON • RANCHO CUCAMONGA * SACRAMENTO 0 SAN JOSE 'The required supplementary information, such as management's discussion and analysis on pages 3 through 7, and budgetary comparison are not a required ired part-of the basic financial statements but are supplementary, information required by the Governmental Accounting Standards Board.-We have applied certain limited Procedures,which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However,we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's basic financial statements. Ile other supplementary information listed in the table of contents including the Schedule of Expenditures of Federal awards which is required by.U.S. Office of Management and Budget Circular A-133,Audits of State.,Local Governments,and Non-Profit Organizations,are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and,in our opinion,are fairly stated in all material respects in relation to the basic fi:nancial statements taken as a whole. VaA,,�KD�, L CO Pleasanton,California September 27, 2002 2 San Ramon Valley Unified School District 699 Old Orchard Drive, Danville, California, 94526 2001-02 Audit Report MANAGEMENT'S DISCUSSION AND ANALYSIS,(MD&A1 This section of the San Ramon Valley Unified School District's annual audit report presents management's discussion and analysis of the District's financial performance during the fiscal year that ended on June 30, 2002. 0VER VIE W OF TRF F.I1VANCL 4L STATEMENTS The financial statements presented herein include all of the activities of the San Ramon Valley Unified School District in accordance with the requirements prescribed by GASB Statement Number 34. f This annual report consists of three parts--management's discussion and analysis(this section),the basic financial statements, and.required supplementary information. The basic financial statements include two kinds of statements that present different views of the District: • The first,two statements are district wide financial statements that provide both-short-term and long-term information about the district's overall financial status. • The remaining statements are,fund financial statements that focus on individual parts of the District, reporting the District's.operations in more detail than the district-wide statements. • The,governmental funds statements report how basic services like instruction and instruction- related services were financed. • .Proprietary funds statements provide financial information about the activities the District operates life businesses, such as self-insurance funds. Fiduciary funds statements provide information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others. fy There are also notes that explain some of the information contained in the financial statements and that provide more detailed data. The financial statements are followed by a section of required supplementary infoi ation that frther explains and supports the financial statements with a comparison of the District's budget for the year. ,Dlsft ct-w d e Statements .he district-wide statements report financial information about the District as a whole using accounting .methods similar to those used in the private sector. The statement of net assets includes all of the District's assets and liabilities. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. District-wide statements have not been required of School Districts prior to the 2001-02 fiscal year and, as a result, are not found in prior year financial reports. 3 The two district-wide statements report the District's net assets and how they have changed. Net assets —the difference between the District's assets and liabilities—are one way to measure the District's • financial health or Position. To assess the overall health of the District, you need to also consider non- financial factors such as changes in the District's condition of school buildings and other facilities. Most of the District's basic services are included under Governmental Activities, such as regular and special education,transportatior4 and administration. Property taxes and state formula aid finance most of these activities. 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 expenditures for particular programs: • Some funds are required by State law and by bond covenants. • The District establishes other funds to control and manage money for particular purposes(like developer fees) or to show that it is properly using certain revenues(like state grants for building projects). The District has three kinds of funds: • Governmental finds—Most of the District's basic services are included in governmental funds, whichgenerally focus on(1)how cash and other financial assets that can readily be converted to cash-flow in and out; and(2)the balances left at year-end. Consequently, the governmental funds financial statements provide a detailed short-term view that helps to determine the amount of financial resources that are available to finance the District's programs in the near future. • Pro pries aryfinds—Services for which the District charges a fee are generally reported in proprietary funds. • Fiduciaryfunds—The District is the trustee, or fiduciary, for assets that belong to others, such as for student body activities. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and expended by those to whom the assets belong. These activities are not included in the district-wide financial statements because the District cannot use these assets to finance its operations. ANALYSIS OF HIE DISTRICT AS A WHOLE Net Assets. For the first time, under GASB34, the district's net assets include land, buildings and improvements, and furniture and equipment as well as the depreciation of those capital assets. The District's combined net assets were$234,661,628 for the fiscal year ended June 30,2002. Of this amount, $16,120,763 was unrestricted and $14,402,483 was restricted,, with the balance invested in capital assets. Changes in net assets. Since the District was never previously required to report land, buildings, or furniture andequipment in its net assets, nor to depreciate those capital assets, no valid comparison can . . be made between the last two fiscal years. 4 Governmental Activities The District's total governmental activities revenues were$157,458,379,or approximately$1720003,000 less than in 2000-01. This decrease in revenues is due entirely to the fact that State Facility Program revenues for Measure D construction projects were received in-prior years. The total cost of all governmental activities was $205,425,798, or$47,967,419 greater than revenues. or which This deficit spending was entirely due to the construction costs related to Measure D projects f GO bond and state revenues were received in prior years. General Fund Budgetary Highlights Over the course of a fiscal year, the District routinely revises its annual operating budget each month based upon the most recent available financial information. Typically the projected ADA included in the original budget is not revised until P-1 actual ADA is known(December), and is revised.again at P-2 i (Arilp ). The formal First and Second Interim Reports reflect the then current revised budget and also include multi-year financial projections. In February, 2002,the Governor signed legislation to cut more than$850 million from K-12 education funding and resulted.in a loss of$1.2 million that this District would otherwise have received. This was the first State imposed mid-year budget reduction of this nature in the State's history. The District's General Fund had a positive net increase to fund balance of$1,835,262 when books were closed on the 2001-02 fiscal year. This was due to an increase of 61.47 ADA between the time that the 2001-02 budget was originally developed and P-2 as well as District budget reductions that were made prior to the development of the District's 2001-02 General Fund Budget. Capital Assets During 2001-02,the Distract contracted with a professional appraisal company to conduct-on-site inventories of all district-owned buildings, land, site improvements, and furniture and equipment. This data was entered into a computerized database of all capital assets. The appraisers then conducted an investigation to determine original cost of each capital asset, if possible. If original cost information ng was not available, the appraisers developed an"estimated cost" for each asset based upon either'a known average cost to acquire a similar asset at the estimated acquisition date or on a present cost to acquire the asset, indexed by factors to determine an estimated original cost. Accumulated depreciation was then applied to each capital asset based upon its actual or estimated acquisition date. By the end of 2002,the District had$277,233,964 in Capital Assets, including both current and accumulated depreciation. Long-term Debt At year-end, the District had$79,961,963 million in General Obligation bonds outstanding, $29,755,000 million in outstanding OOP's, and $4,448,709 in other long-term debt outstanding—a reduction of 11% from last year. 5 The District continues to pay down its COP debt by approximately $4,000,000 per year and is on course _ to retire all of its COP debt in February, 2004, the first non-penalty call date. The final payment has been made on 1991 Measure A debt. -There is approximately$1.2 million .remaining in the Fund. According to the Board Resolution passed at the time that Measure A was placed on the ballot, any remaining balances are to be returned to the property taxpayers in our District. The Contra Costa County Auditor-Controllers Office has advised the District that we should wait three years before returning any remaining balance to the taxpayers in order to give sufficient time for all late property tax payments to be made and for all protested tax payments to clear. FACTORS BEARING ON THE DISTRICT'S FUTURE At the time these financial statements were prepared and audited,the District was aware of the following circumstances that could significantly affect its financial health in the future: • In November, 2002,the Governor announced cuts to K-12 education in the 2002-03fiscal year of$1.9 billion. If actually imposed by the Legislature, a reduction of this magnitude would result in the loss of approximately$2 million to this District. The Governor and Legislative Analyst also announced in November, 2002,that the 2002-03 fiscal year could face a$6 billion General Fund deficit; and the 2003-04 fiscal year deficitmay be as large as$21.1 billion. The State's economic condition will have a severe negative impact upon K-12 education for at least the next two or three fiscal years. • The District is scheduled-to begin receiving Redevelopment payments as a result of the court case Santa Ana Unified School District vs. Orange County Development Agency,beginning with the 2002-03 fiscal year. The Contra Costa County Auditor-Controller estimates that the pass-through redevelopment funding related to the City of San,Ramon for the 2001=02 fiscal year will be$262,796.26 and the pass-through redevelopment funding related to the Town of Danville for the 2001-02 fiscal year will be$85,360.52. These redevelopment funds should be available to the District until approximately 2025. These redevelopment monies are restricted for land acquisition, facility construction, reconstruction, remodeling and deferred -maintenance. • The District's enrollment growth appears to be headed back into the 2.50/o-3.0%range for the next few years. The Dougherty Valley developments are the major factor for this enrollment growth. • High school enrollments are anticipated to remain high for the.next several years, and the District's current high schools will be overcrowded until the new high school in the Dougherty Valley is built in 2007 or when sufficient enrollments have been generated in 9-11 grades to enable a wide variety of course offerings to be in place. • It is anticipated that BLC/windemere will build an elementary school in the Dougherty.Valley to open in-2004-05. As a result, it will-be necessary for the District to budget sufficient funds to hire a principal and school office manager sometime during the course of the 2003-04 school i 6 year. It will also be necessary to budget approximately $100,000 for start-up school supplies and materials. CONTACTING THE DISTRICT'S FINANCIAL MANAGE MENT This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the District's finances and to demonstrate the District's accountability for the revenue it receives. If you have any questions about this report or need additional financial information, please contact the District's Business Office, Ms. Joan I. Butt, Assistant Superintendent/Business Services, at 699 Old Orchard Drive,Danville,'CA 94526. f,. a i w l t SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT STATEMENT OF NET ASSETS FOR TYEAR.ENDED JUNE 30,2002 --------------------------------------------------------------------------- Governmental Assets Activities Cash and cash equivalents $ 191 371 Investments 9124592630 Receivables 112509,990 Prepaid expenses 962?446 Stores inventories 330 563 Other current assets 4482209 Capital assets 348,244,001 Accumulated depreciation (71,010,041) Total assets 38221361V129 Liabilities Accounts payable 11,205,748 Deferred revenue 1311032081 Current loans 2139001000 Current portion of long-term obligations 813662388 .Noncurrent portion of long-term obligations 10527992284 Total liabilities 147 474 501 Net Assets Invested in capital assets,net of related debt 204138382 Restricted for: Debt service 635662098 Capital projects 324482801 Educational programs 327592419 Other activities 628 165 Unrestricted 16301202763 Total net assets $ 23426612628 The accompanying notes are an integral part of these financial statements. 8 4 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30,2002 i rr....•r............r.....r........... ..............r.....•......r......r........•.:.......... .....•...r:•r....... r...•....•....r..r...........•...r.....rrr.:..r.rr...r•.r.•.•..•..•.......•rr...•r..rrr••.r..r..rr..rr.r.....w.r..vrrr.r•...•...r....•......... Net(Expenses) Revenues and Changes in Program Revenues Net Assets Charges for Operating Capital Services and Grants and Grants and Government Functions/Programs EWnses Sales Contributions Contributions Activities Governmental activities: Instruction $ 9618141856 $ 2107432763 $ 123091310934 $ 20000 $ (802,9571,159) } Instruction related activities: Supervision of instruction 3306511002 3197506 1,791,598 - (13,539,898) Instructional library,media and techr. 413058,283 22292 1,571,197' - (23,484,794) School site administration 11,279,241 236 3842007 - (1028942998) Pupil services: Home-to-school transportation 126657520 2371Y980 121231P051 - (3043,489) Food services " 31)44230805 8842212 2241631894 - (1413,699) All other pupil services 42478,676 35350443 1,312,536 - (23,8123,697) General administration: Data processing 1303723,353 - 560 - (1,3713,793) All other general administration 5,175,457 531980 1977499 - (43,971,978) Plant services 15,498107 - 1901895 - (15,3073,192) Facility acquisition and construction 230769,422 - 48030764 - (2,288,658) Ancillary services 1,294,533 - 4,186 - (11,2903,347) Community services 305,902 - - - (3053,902) Interest on long-term debt 2,04230229 - - - (21P042,229) Other(outgo) 25792855 - - - (21,579,855) Total school district $ 156,428,221 $ 4,547,412 $ 22,387,121 $ 20010000 (12922933,688) General revenues and subventions: Property taxes,levied for general purposes 77,476,431 Property taxes,levied for debt service 9298630293 Federal and State aid not restricted to specific purposes 28,019x,612 Interest and investment earnings 2242610416 Miscellaneous 11,194,850 Subtotal,general revenues 129,103,602 Changes in net assets (190,086) Net assets-beginning 234,851,71=1 Net assets-ending $ 234,6612628 • The accompanying notes are an integral part of these financial statements. 9 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT BALANCESHEET GOVERNMENTALFUN_ DS AS OF JUNE 30,2002 ....................... ........ ...... Capital Non Major Total General Building Facilities Governmental Governmental Fund Fund Fund Fund Fund ASSETS Cash and cash equivalents $ 523,000 $ - $ 551)186 $ 107 31186 Investments 35,0364082 15,009,434 28,448,447 10,871,383 89,693,346 Receivables 8100991)019 574,734 502,814 13P860$890 11,037,457 Due from other funds 229,876 122473,983 283,440 4472886 23209$185 Stores inventories 305,973 - - 243,590 330,563 Other current assets - 448,209 448,209 Total assets $443950*950 16,832,151 $ 29,234,701 $ 13,708,144 $103108252946 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 51060P919 218283,187 $ 250,731 214*504 8,354,341 Due to other funds 217341,868 1,669 93,807 13,1273,206 32957 31550 Other current Liabilities 21$0003,000 - - 21,000,000 Deferred revenue 111 1032080 - 1,103;080 Total liabilities 29i8983,867 23,82931856 344,538 1IP3412710 34,414,971 I Fund Balances: Reserved for: Stores inventories/revolving cash 357,973 24P590 382,563 Other reservations 3,747,954 3,747,954 -Unreserved: Designated 8IP79515* 78 112596 30621 20,392,199 Undesignated,reported in: General fund 1,250,578 - 1,250,578 Special revenue funds - 302,476 302,476 Capital projects funds - 14,002,295 28.*89030163 442,747 43,335,205 Total fund balance 14V 15221083 14,002,295 28)89030163 .12103663434 69,410,975 Total liabilities and fund balances $447050,950 16,832,151 29,234,701 13,708,144 $103282530946 The accompanying notes are an integral part of these.financialstatements. 10 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT . RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET WITH STATEMENT OF NET ASSETS JUNE 307 2002 wrwrrwY+rrwwtrnwwrwv+.nrwww.nrrrrw5rrnw'rr+rrwwrwrrrwiwrrwvNrwasvvwwrr�wrwww.rri.nrerr+wwrrwwwr.vwr +r+wr.. m+rr...rw.www.wr^n+..yr.w.ivrrw.wr.iwowv+rwrwwrnr ►rv.rwvww.rwrrwrrw+.rw I Amounts reported for governmental activities in the statement of net- assets-are different because: c Total fund balance-governmental funds $ 693,4102975 Capital assets used in governmental activities are not financial resources and therefore-are not reported as assets in governmental funds. The cost of capital assets is $348,244,4101. Accumulated depreciation is (711,01030041) Y 277123331960 Special education settlement receivable not available soon enough to pay for the current period's expenditures,and therefore are deferred in the funds. 882124 Expenditures relating to issuance of debt of next fiscal year were recognized in modified accrual basis,but should not be recognized in accrual.basis. 9622406 4 In governmental funds,unmatured interest on long-term debt is recognized in the period when it is due. On the government-wide statements,unmatured interest on long-term debt is recognized when it is incurred. (9313,838) An internal service fund is used by the District's m nagement to charge the costs of the health and welfare and property and liability insurance program to the individual funds. The assets and liabilities of the internal service fund are included with governmental activities. 220632673 Dong-term liabilities,including bonds payable,are not due and payable in the current period and therefore,are not reported as liabilities in the funds. Lang-term liabilities at year end consist of.- Bonds f:Bonds payable 7919612963 COP's payable 29275530000 Capital leases payable 23,42+6,897 •..h Compensated absences (vacations) 1;1172$12 Other debt 9041000 (1143,1652672) Total net assets-governmental activities $2341V6612628 s . The accompanying notes are an integral part of these financial statements. 11 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS . AS OF JUNE.309 2002 Capital Nonmajor Total General Building Facilities Governmental Governmental Fund Fund Fund Fund Fund Revenues: Revenue limit sources S 931P9242723 $ - S - $ 212869 $ 93,9461,592 Federal sources 218111,049 - - 1651143 22976,192 Other state sources 283,503,777 - - 6142612 2921183,389 Other local sources 1098643,489 22661,585 411433,725 13,7479407 3124173,206 TOTAL-REVENUES 136,1043,038 226613,585 41,143,725 14,549,031 1571P4582379 Expenditures Cuff ent Instruction 8599279521 - - 20,313 85,947,834 Instruction related activities: Supervision of instruction 33,6401,295 - - - 316402295 Instructional library,media and technology 33,4053,959 - - - 33,4053,959 School site administration 1026312176 - - - 10306319176 Pupil Services: Home to school transportation 13,6633,451 - - - 126633,451 Food services - - - 31426,834 324269834 All other pupil services 4,4761161 - - - 424761,161 General administration: Data processing 13,3803,090 - - - 131380,090 All other general administration 42833,879 - 93,807 243084 43,9512770 Plant services 14,735,786 245,170 212,553 2941274 15,4871,783 Facility acquisition and construction 3912890 251,4679,596 13,552,844 121499684 287562,014 Ancillary services 122943,443 - - - 12294,443 Conwmity services 3057245 - - - 305,245 Debt service Principal 291,916 508,185 2228403,668 15,754,127 39,1323,896 Interest and other 5613,744 32550 622672 491,880 1,1191,846 TOTAL EXPENDITURES 1333,277,556 263,2243,501 24,762,544 212161,196 205,425,797 Excess(deficiency)of revenues over expenditures 23,8267482 (23,5623,916) (20,6182819) (63,6123,165) (479,967,418) Other Financing Sources(Uses): Transfers in - 2032751,211 - 702,252 202977,463 Other sources - - 20,8703,000 - 2028701,000 Transfers out (9942209) - (2603,473) (193,9641,738) (21,2193,420) Other uses 23,989 - - - 21989 NET FINANCING SOURCES(USES) (9913,220) 20,275,211 2026092527 (193,262,486) 203,631,032 NET CHANGE IN FUND BALANCES 12835,262 (33,2871,705) (91,292) (253,8742651) (273,336,386) Fund Balance-Beginning,restated 12,3161821 173,2903,000 28,899,455 38,2412085 96,747,361 Fund Balance-Ending $ 14,1522083 S 142002,295 $ 28,8903,163 $ 12,366,434 $ 69,4103,975 The accompanying notes are an integral part of these financial statements. 12 . SAN-RAMON VALLEY UNIFIED SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES WITH TDISTRICT-WIDE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30,2002 - wwl'.rwYwrl+rw+.^.'.rarwrwwl✓..+wrvOwrr+wwv.+rrrrlrs.wMl`+4wwirIwrlw.rM+wriFwV4l.vw•Iwrs.wrvwr..r.rhe.r.rr+I..hMrlrirwrrrrrrvr.rrrwrvN.'/.rrr'.Ilrr'Ir'wvrrw vvwwl+rwOrnrNNVrwir+rI.MwMllvwvrNlMMwwr..ww .er/IY.Nv.hnwrhMMww1lw.wr.. Amounts reported for governmental activities in the statement of activities are different because: Total net change in fund balances-governmental funds $ (27,3362386) Capital outlays to purchase or build capital assets are reported in governmental fiends as expenditures, however,for governmental activities those costs are shown in the statement of net assets and allocated over their estimated useful lives as annual depreciation expenses in the statement of activities. This is the amount by which depreciation exceeds capital outlays in the period. Depreciation expense S (1020123,897) Capital outlays 23,675,583 133,6621,686 Donated Capital Assets are reported in the government-wide statement of net assets,but is not recorded in the governmental funds. (1172000) Some of the capital assets acquired this year were financed with capital leases. The amount financed.by the leases is reported in the governmental funds as a source of financing. On the other hand,the capital leases are not revenues in the statement of activities, but rather constitute long term liabilities in the statement of net assets.First new capital lease acquisitions were 51,643,112. Second payments on capital leases were$658,822 (984,290) In the statement of activities,curtain operating expenses-compensated absences(vacations) 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,vacation earned was more than the amount paid by S 178,769 (1783,769) In the statement of activities,certain operating revenues are measured by amounts earned during the year. In the governmental funds,however,revenues for these items are measured by the amount of 4' financial resources collected within 90 days of year end. The special education settlement is the long term receivable that is not included in the governmental fiends statement of revenues. (882124) Proceeds received from Certificates of Participation is revenue in the governmental funds,but it increases long-term liabilities in the statement of net assets and does not affect the statement of activities. (20,8701,000) Discounts and issuance costs on the bonds are expenditures in the governmental f rods,but it increases prepaid assets in the statement of net assets and are amortized over the life of the bond in the statement of activities.First discounts and issuance costs increased by$423,545 for the new bonds-issued. . Second,discounts and issuance costs decreased by$525,811 for amortization over the life of the bonds. (102,266) Repayment of bond principal is an expenditure in the governmental funds,but it reduces long-term r liabilities in the statement of net assets and does not affect the statement of activities. 359883,441 Increase in rebate liabilities are an expenditure in the governmental fiinds,but it increases long-term liabilities in the statement of net assets and does not affect the statement of activities. (42000) Decrease in other general long-term debt is an expenditure in the governmental funds,but it decreases long term liabilities in the statement of net assets and does not affect the statement of activities. 72500 .s The accompanying notes are an integral part of these financial statements. r 13 SAN SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT RECONCILIATION OF TIRE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES WITH T DISTRICT-WIDE STATEMENT OF ACTIVITIES FOR T YEAR ENDED JUNE 30,12002 Interest on long-term debt in the statement of activities differs from the amount reported in the governmental Rinds because interest is recorded as an expenditure in the hands when it is due,and thus requires the use of cun-ent financial resources. In the statement of activities,however,interest expense is recognized as the interest accrues,regardless of when it is due. The additional interest reported in the statement of activities is the net result of two factors. First,accrued interest on bonds,leases,and contracts payable decrease by$535,266. Second,$703,398 of additional accumulated interest was accreted on the district's"capital appreciation"bonds.. (1683,132) An intawl service fund is used by the Districfsmanagement to charge the costs of the health and welfare and %paty and liability insurance programs to the individual fiords. The net revenue of the internal service fund is reported with governmental activities. 105�254 Change in net assets of governmental activities S (1903,086) The accompanying notes are an integral part of these financial statements. 14 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT PROPRIETARY FUNDS .STATEMENT OF NET ASSETS • FOR THE YEAR ENDED JUNE 30,2002 : Governmental Activities.- internal ctivities:Internal Service Fund Assets Current assets: Cash and cash equivalents 842185 Investments 127667285 Receivables 3127014 Due from other funds 49,905 Total assets 2312122389 LIABILITIES Current liabilities: Accounts payable 1483716 Total current liabilities 14830716 NET ASSETS Restricted Nonexpendable 1482716 Unrestricted 1191430957 Total net assets 2,063,673 k; ,y ti r, �l I` ■ The accompanying notes are an integral part of these financial statements. • 15 SAN R.A►MON VALLEY UNIFIED SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN FUND NET ASSETS PROPRIETARY-FUNDS ` FOR THE YEAR ENDED JUNE 30,2002 Governmental Activities: Internal Service Fund Aerating revenues: Local and intermediate sources $ 327802354 Total.operating revenues 327802354 Operating expenses: Employee benefits 3238031317 Professional and contract services - 1702056 Other operating cost 17410632 Total operating expenses 327252005 Operating income 551P349 Nonoperating revenues(expenses): Interest income 491V905 Change in net assets 10530254 Total net assets-Beginning 1295810419 Total net assets-Ending $ 2206330673 w The accompanying notes are an integral part of these financial statements. 16 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT STATEMENT OF FIDUCIARY NET ASSETS AS OF JUNE 3%2002 Governmental Activities: Internal Service Fund. CASH FLOWS FROM OPERATING ACTIVITIES Cash received from user charges $ 3,4181,624 Cash payments to employees for benefits (324222190) Cash payments for insurance claims (1707056) Cash Payments for other operating expenses (174,632) Net cash used for operating activities (3487254) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 49,905 Net increase in cash and cash equivalents (2981,349) Cash and cash equivalents_Beginning 221483,818 Cash and cash equivalents_Ending S 1;850,469 RECONCIELIATION OF OPERATING INCOME TO NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES: Operating income $ 5530349 Changes in assets and liabilities: Receivables (3113,825) Due from other fiord (492905) Accrued liabilities (413,873) Net cash provided by operating activities (348,254) r.. . Theaccompanying notes are an inWgral-part of these financial statements. y. 17 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT STATEMENT OF FIDUCIARY NET ASSETS AS OF JUNE 3%2002 . Private- Warrant. Agency Purpose Clearing Funds Trust ASSETS Cash and cash equivalents $ - $ 1,651,932 $ - Investments - 2118412627 Receivables 392317 - - Due from other funds* 4902592 - 1,230,359 Due from other governments 32736 - - Total assets $ 53330645 $ 126512932 $420712986 LIABILITIES Overdrafts 5112155 - - Accounts payable - - 27 Due to student groups - 1,651,932 - Due to other finds 222490 - - Total liabilities $ 5332645 $ 1,651,932 27 NET ASSETS Unreserved 4,071;959 Total Net Assets $420712959 The accompanying notes are an integral part of these financial statements. 18 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS AS OF JUNE 30,2002 ' „ .,. Private- Purpose ADDITIONS Trust District contributions $ 9062657 Interest 812718 Total additions 9882375 DEDUCTIONS Other expenditures 936 408 Change in net assets before transfers 512967 TRANSFERS Tranfer in - 4162589 Change in net assets 468 556 Net Assets-Beginning 3 603 403 Net Assets-Ending $ 4300712959 e: r. xv a The accompanying notes are an integral part of these financial statements. 19 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Reporting Entity The San Ramon Valley Unified School District was organized on July 1, 1965 under the laws of the State of California. The District operates under a locally-elected five-member Board form of government and provides educational services to grades K- 12 as mandated by the State and/or federal agencies. The District operates seventeen elementary, six middle,three high schools,a continuation school,and independent study school,and a community day school. A reporting entity is comprised of the primary government,component units and other organizations that are included to ensure the financial statements are not misleading. The primary government of the District consists of all funds,departments,boards and agencies that are not legally separate from the District. For San Ramon Valley Unified School District,this includes general operations,food service and student relaxed activities of the District. : Component Units Component units are legally separate organizations for which the District is financially accountable. Component units may also include organizations that are fiscally dependent on the District in that the District approves their budget,the issuance of their debt or the levying of their taxes. For financial reporting purposes the component units discussed below are reported in the District's financial statements because of the significance of their relationship with the District. The component units,although legally separate entities,'are reported in the financial statements as if they were part of the District's operations because the governing board of the component units is essentially the same as the governing board of the District and because their purpose is to finance the constr6ction of facilities to be used for the benefit of the District. The San Ramon Valley Unified School District Educational Facilities Corporation's financial activity is presented in the financial statements as the Tax Overide Fund and part of the Building Fund. Certificates of participation issued by the Corporation are included in the General Long-Term Debt Account Group. Individually prepared financial statements of the San Ramon Valley Unified School District Educational Facilities Corporation may be obtained through the business office of the District. The San Ramon Valley Unified School District Financing Corporation's financial activity is presented in the financial statements as the Capital Facilities Fund. Certificates of participation issued by the Corporation are included in the General Long-Term Debt Account Group. Individually prepared financial statements of the San Ramon Valley Unified School District Educational Facilities Corporation may be obtained through the business office of the District. Joint Powers Agencies and Public Entity Risk Pools The District is associated with three public entity risk pools: These organizations do not meet the criteria for inclusion as component units of the District: Summarized audited financial information is presented in Note 15 to the financial statements. These organizations are: The Contra.Costs County School Insurance Group Northern California Regional Excess Liability Fund School Excess.Liability Fund 20 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 309 2002 — Basis of Presentation Fund Accounting und basis. A fund is defined as a fiscal and accounting The accounting system is organized and operated on a f entity with a self balancing set of accounts,which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The District's aand funds are grouped into three broad fund categories:governmental,proprietary fiduciary. Governmental funds Governmental fiwds are those through which'most governmental functions typically are financed. Governmental fund reporting focuses on the sources,uses and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used. Current liabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets and liabilities is reported as fund balance. The following are the District's major governmental funds. General Fund The general fund accounts for all racial resources except those required to be accounted for in another fund. The general fund balance is available to the District for any purpose provided it is expended or transferred according to the general laws of California. Building Fund The building fund capital projects fund accumulates proceeds from bond issuance to be used for the acquisition,construction,or improvements of major capital facilities. Capital Facilities Fund The capital facilities.-fired capital projects fund is used primarily to account separately for monies received from fees levied on developers or other agencies as a condition for approving a development.The authority for the levies may be county/city ordinances(Government Code sections 65970- 65981)or private agreements between the Local Education Agency and the developer. Proprietary Funds Proprietary fund reporting focuses on the determination of operating income,changes in net assets,financial position and cash flows. The District applies all GASB pronouncements as well as the Financial Accounting Standards Board pronouncements issued on or before November 30, 1989,unless those pronouncements conflict with or contradict GASB pronouncements. Proprietary funds are classified as enterprise or internal service. The District has the following proprietary funds: Internal Service Fund Internal service funds may be used to account for any activity for which goods or services are provided to other funds of the District in return for a fee to cover the cost of operations. The District operates two self insurance funds that are accounted for in internal service funds for health and welfare.and property and liability. Fiduciary Funds Fiduciary fund reporting focuses on net assets and changes in net assets. The fiduciary fund category is split into four classifications: pension trust funds,investment trust funds,private-purpose trust fiends and agency funds. Trust funds are used to account for the assets held by the District under a trust agreement for individuals,private organizations,or other governments and are therefore not available to support the District's own programs. The District's trust funds are the retiree benefits pension trust fund and expendable trust funds. Agency funds are custodial in nature(assets equal liabilities)and do not involve measurement of results of operations. The District's agency fund accounts for student body activities(ASB)and the warrant clearing fund. 21 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30,2002 Basis of Accounting—Measurement Focus Government-Wide Financial Statements The government-wide statements are prepared using the economic resources measurement focus and the accrual basis of accounting. This is the same approach used in the preparation of the proprietary fund financial statements but differs from the manner in which governmental fund financial statements are prepared. The government-wide statement of activities presents a comparison between expenses,both direct and indirect, and program revenues for each segment of the business-type activities of the District and for each governmental program. Direct expenses are those that are specifically associated with a service,program or department and are therefore clearly identifiable to a particular function. Indirect expenses for centralized services and administrative overhead are allocated among the programs,functions and segments using a full cost allocation approach and are presented separately to enhance comparability of direct expenses between governments that allocate direct expenses and those that do not. Program revenues include charges paid by the recipients of the 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 are presented as general revenues. The comparison of program revenues and expenses identifies the extent to which each program - or business segment is self-financing or draws from the general revenues of the District. Net assets should be reported as restricted when constraints placed on net asset use are either externally imposed by creditors(such as through debt covenants),grantors,contributors,or laws or regulations of other governments or unposed by law through constitutional provisions or enabling legislation. The net assets.restricted for other purposes result from special revenue funds and the restrictions on their net asset use. Fund Financial Statements Fund financial statements report detailed information about the District. The focus of governmental and enterprise fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Nonmajor fiends are aggregated and presented in a single column. The internal service fund is presented in a single column on the face of the proprietary fund statements. Governmental Funds All governmental funds are accounted for using a flow of current financial resources measurement focus and the modified accrual basis of accounting. With this measurement focus,only current assets and current liabilities generally are included on the balance sheet. The statement of revenues, expenditures and changes in fund balance reports on the sources (revenues and other financing sources)and uses(expenditures and other financing uses)of current financial resources. This approach differs from the manner in which the governmental activities of the government-wide statements are prepared. Governmental fund financial statements therefore include reconciliation with brief explanations to better identify the relationship between the government-wide statements and the statements for the governmental funds on a modified accrual basis of accounting and the current financial resources measurement focus. Under this basis revenues are recognized in the accounting period in which they become measurable and available. Expenditures are recognized in the accounting period in which the fund liability is incurred,if measurable. Proprietary Funds Proprietary funds are accounted for using a flow of economic resources measurement focus and the accrual basis of accounting. 'All assets and all liabilities associated with the operation of this fund are included in the statement of net assets. The statement of changes in fund net assets presents increases(revenues)and decreases(expenses)in net total assets. The statement of cash flows provides information about how the District finances and meets the cash flow needs of its proprietary fund. . 22 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STA'T'EMENTS JUNE 309 2002 Fiduciary Funds Fiduciary funds are accounted for using the flow of economic resources measurement focus and the accrual basis of accounting. Revenues--Exchange and Non-Exchange Transactions Revenue resulting from exchange transactions,in which each party gives and receives essentially equal value,is recorded on the accrual basis when the exchange takes place. On a modified accrual basis,revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the District,available means expected to be received within 90 days of fiscal year-end. Non-exchange transactions,in which the District receives value without directly giving equal value in return, include property taxes,certain grants,entitlements and donations. Revenue from property taxes is recognized in the fiscal year in which the taxes are received. Revenue from certain grants,entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include time and purpose requirements. On a modified accrual basis,revenue from non-exchange transactions 5. must also be available before it can be recognized. Under the modified accrual basis,the following revenue sources are considered to be both measurable and available at fiscal year-end: state apportionments,interest,certain grants,and other local sources. Deferred Revenue Deferred revenue arises when potential revenue does not meet both the"measurable"and "available"criteria for recognition in the current period or when resources are received by the District prior to the incurrence of qualifying expenditures. In subsequent periods,when both revenue recognition criteria are met or is when the District has a legal claim to the resources,the liability for deferred revenue is removed from the L combined balance sheet and revenue is recognized. Certain grants received before the eligibility requirements are met and are recorded as deferred revenue. On the governmental fiord financial statements,receivables that will not be collected within the available period are also recorded as deferred revenue. Expenses/Expenditures On the accrual basis of accounting,expenses are recognized at the time they are incurred. The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures)rather than expenses. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred,if measurable. The fair value of donated commodities used during the year is reported in the operating statement as an expense with a like amount reported as donated commodities revenue. Unused donated commodities are reported as part of stores inventory. Principal and interest on general long-term debt,which has not matured,are recognized when paid in the governmental funds. Allocations of costs,such as depreciation and amortization,are not recognized in the governmental funds. Cash and Cash Equivalents The District's cash and cash equivalents are considered to be cash on hand,demand deposits and short-term -investments with original maturities of three months or less from the date of acquisition. Cash equivalents also include cash with county treasury balances for purposes of the statement of cash flows. 23 SAN R.AMON VALLEY UNIFIED SCHOOL.DISTRICT _ NOTES TO FINANCIAL STATEMENTS r JUNE 3% 2002 Investments Investments held at June 30,2002 with orighial maturities greater than one year are stated at fair value. Fair value is estimated based on quoted market prices at year-end. All investments not required to be reported at fair value are stated at cost or amortized cost. Restricted Assets Restricted assets arise when restrictions on their use change the normal understanding of the availability of the asset. Such constraints are either imposed by creditors,contributors,grantors,or laws of other governments or imposed by enabling legislation. Restricted assets in the debt service fund represent cash and cash equivalents required by debt covenants to be set-aside by the District for the purpose of satisfying certain requirements of the bonded debt issuance. Prepaid Expenditures Prepaid expenditures(expenses)represent amounts paid in advance of receiving goods or services. The District has the option of reporting an expenditure in governmental funds for prepaid items either when purchased or during the benefiting period. The District has chosen to report the expenditures when incurred. Stores Inventory Inventories consist of expendable food and supplies held for consumption and unused donated commodities. Inventories are stated at cost,on the average cost purchase method. The costs of inventory,items are recorded as. expenditures in the governmental type holds and expenses in the proprietary type fields when used. Capital Assets and Depreciation The accounting and reporting treatment applied to the capital assets associated with a fund are determined by.its measurement focus. General capital assets are long-lived assets of the District as a whole. The District maints�ins a capitalization threshold of$5,000 dollars. The District does not possess any' cture,as defined by GASB 34,such as public roads or utilities. Improvements are cap*- d;the costs of normal maintenance and repairs that.do not add to the value of the asset or materially extend an asset's life are not. When purchased,such assets are recorded as expenditures in the governmental funds and caped. The valuation bases for general capital assets are historical cost,or where historical cost is not available,estimated historical cost based on replacement cost. Donated capital assets are capat estimated fait market value on. the date donated. Capital assets in the proprietary funds are capitalized in the fund in which they are utilized. The valuation bases for proprietary fund capital assets are the same as those used for the general.capital assets. Depreciation of capital assets is computed and recorded by the straight-line method. E d useful lives of the various classes of depreciable capital assets are as follows:buildings, 20 to 30 years;improvements/infrastructure, 7 to 30 years;equipment,5 to 20 years. 24 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Interfund Balances On fund financial statements,receivables and payables resulting from short-term interfund-loans are classified as "interfund receivables/payables." These amounts are eliminated in the governmental and business type activities columns of the statement of net assets,except for the net residual amounts due between governmental and business-type activities,which are presented as internal balances. Compensated Absences Accumulated unpaid employee vacation benefits are accrued as a liability as the benefits are earned. The entire compensated-absence liability is reported on the government-wide financial statements. For governmental funds, the current portion of unpaid compensated absences is the amount that is normally expected to be paid usin expendable available financial resources. liability g p The non-current portion of the lability is not reported. The Distract treats the entire portion of compensated absences as non-current in the governmental funds. In proprietary funds, the entire amount of compensated absences is.reported as a fund liability. Sick leave is accumulated without limit for each employee at the rate of one day for each month worked.. Leave with pay is provided when employees are absent for health reasons;however,the employees do not gain a vested right to accumulated sick leave. Employees are never paid for any sick leave balance at termination of employment or any other time. Therefore,the value of accumulated sick leave is not recognized as a liability in the District's financial statements. However, credit for unused sick leave is applicable to all classified school members who retire after January 1, 1999. At retirement,each member will receive.004 year of service credit for each day of unused sick leave. Accrued Liabilities and Long-Term Obligations All payables,accrued liabilities and long-term obligations are reported in theg overnment-wide financial 'statements, and all payables,accrued liabilities and long-term obligations payable from the enterprise fund are reported on the enterprise fund financial statements. In general,governmental fund payables and accrued liabilities that,once incurred,are paid in a timely manner and in full from current financial resources are reported as obligations of the funds. However, claims and judgments,compensated absences, special termination benefits and contractually required pension contributions that will be paid from governmental funds are reported as a liability in the fund financial i statements only to the extent that they are due for payment duringthe current year. Bonds y ,capital leases and long-term loans are recognized as a liability on the fund financial statements when due. f 25 -:1 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Fund Balance Reserves.and Designations - The District reserves those portions of fund equity which are legally segregated for a specific future use or which do not represent available expendable resources and therefore are not available for appropriation or expenditure. Unreserved fund balance indicates that portion of fund equity which is available for appropriation in future periods. Fund equity reserves have been established for revolving cash accounts, stores inventories,prepaid expenditures(expenses),,and legally restricted grants and entitlements. Designations of fund balances consist of that portion of the fund balance that has been designated(set aside)by the governing board to provide for specific purposes or uses. Fund equity designations have been established for economic uncertainties,unrealized gains of investments and other purposes. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets,net of j related debt consists of capital assets,net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition,construction or improvement of those assets. Net assets are reported.as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the District or through external restrictions imposed by creditors,grantors or laws or regulations of other governments. The District applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. Operating Revenues and Expenses Operating revenues are those revenues that are generated directly from the primary activity of the proprietary funds. For the District,these revenues are In-District Premiums. Operating expenses are necessary costs incurred to provide the good or service that is the primary activity of the fund. lnterfund Activity Transfers between governmental and business-type activities on the government-wide statements are reported in the same manner as general revenues. Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds and after non-operating revenues/expenses in proprietary funds. Repayments from funds responsible for particular expenditurestexpenses to the funds that initially paid for them are not presented on the financial statements. w Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. 26 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT DOTES TO FINANCIAL STATEMENTS JUNE 30,2002 ---------------- ---------------------------------------------------------------- Budgetary Data The budgetary process is prescribed by provisions of the California Education Code and requires the governing board to hold a public hearing and adopt an operating budget no later July I of each year. The District governing board satisfied these requirements. The adopted budget is subject to amendment throughout the year to give consideration to unanticipated revenue and expenditures primarily resulting from events unknown at the time of budget adoption with the legal restriction that expenditures cannot exceed appropriations by major object account. The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts when the original appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetary statements reflect the amounts after all budget amendments have been accounted for. Property Tax Secured property-taxes attach as an enforceable lien on property as of January 1. Taxes are payable in two installments on November I and February I and become.delinquent on December 10 and April 10.,respectively. Unsecured property taxes are payable in one installment on or before August 31. The County of Contra Costa bills and collects the taxes in behalf of the District. Local property tax revenues are recorded when-received. NOTE 2—CEL&NGES IN ACCOUNTING PRINCIPLES For the fiscal year ended June 30, 2002,the District has implemented Governmental Accounting Standards Board (GASB)Statement No. 34,"Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments,GASB Statement No. 36, "Receipt Reporting,for Certain Shared Nonexchange Revenues",GASB Statement No. 37, "Basic Financial Statements for State and Local Governments: Omnibus" and GASB Statement No. 38 "Certain Financial Statement Note Disclosures". As a result the financial statements for the first time include: 1)a Management Discussion and Analysis(MI3&A)section providing an analysis of the District's overall financial position and,results of operations.,2)financial statements prepared using full accrual accounting for all of the District"s activities and 3)a change in the fund financial statements to focus on the major funds. These and other changes are reflected in the accompanying financial statements, including notes to financial statements. L NOTE 3—DEPOSITS AND INVESTMENTS Policies and Practices The District is considered to be an involuntary participant in an external investment pool since the District is required to deposit all receipts and collections of monies with their county treasurer(Education Code Section 41001). In addition,the District is authorized to + in deposits with certain financial institutions that are federally insured up to$100,000. 27 IWT SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30,2002 s The District is also authorized to make direct investments in local agency bonds,notes or warrants within the state; U.S.Treasury instruments; registered state warrants or treasury notes;securities of the U.S.Government,or its agencies;bankers acceptances; commercial paper;-certificates of deposit placed with commercial banks and/or savings and loan companies;repurchase or reverse repurchase agreements;medium term corporate notes;shares of beneficial interest issued by diversified management companies,certificates of participation,obligations with first priority security;and collateralized mortgage obligations. Deposits At year-end,the carrying amount of the District's deposits were$191,371 for government activities, and $1,651,932 held in fiduciary funds. The bank balances totaled$2,068,858. Of the bank balances, $726,512 was covered by federal deposit insurance and$1,342,346 was covered by pooled and/or pledged collateral,but not necessarily held in the District's name(uncollateralized,risk Category 3). Investments The District's investments are categorized to give an indication of the level of risk assumed by the District at year-end. Category 1 includes investments that are insured or registered or for which the securities are.held by the District or its agent in the District's name. Category2 includes uninsured and unregistered investments for which -the counterparty's trust department or agent in the District's name holds the securities. Category 3 includes t uninsured and unregistered investments for which the securities are held by the financial institution's trust department or agent but not in the District's name. Deposits with the County Treasury,Investments in the State Treasurer's Investment Pool,guaranteed investment contracts,and money market accounts are not categorized because they do not represent securities,which exist in physical or book entry form. The Local Agency Investment Fund(LAIEF)is an external investment pool sponsored by the State of California authorized under Section 16429.1,2,and 3 of the California Government code. The fund is a voluntary proms created by statute as an investment alterative for California local governments and special districts and is administered by -California.State Treasurer. The deposits with county treasury and the state pool's investments are valued using the amortized cost method(which approximates fair value). The fair values were provided by the county and state treasurers for their respective pools. The investments at June 305,2002 had reported and fair values and were categorized as follows: Reported in Reported in Reported in Fair Governmental Proprietary Fiduciary Value Funds Funds Funds - Deposits with county treasurer $492544,781 $ 4427562134 $ 1276631285 $ 2,841,627 Investment in state treasurer's pool 2228422483 22,779,154 - - American International Group (Guarantped Investment Contracts) 23051511)870 230515,870 - - FGIC-Capital Markets (Guaranteed Investment Contracts) 6306572956 63p6572956 - - Bayerische Landesbank 6312222561 62222,561 - - First American Treasury Corporate Trust 522873 521V873 - - Wells Fargo Treasury Plus 6307082797 627082797 -$9415457321 $ 8916932345 $ 1,766,285 $ 228412627 e 28 ' SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30,2002 NOTE 4-RECEIVABLES Receivables at June 30,20022 for the District's individual major funds and nonmajor funds,internal service,and the fiduciary funds in the aggregate,consisted of intergovernmental grants,entitlements and interest and other local sources. All receivables are considered collectible in full. Capital Nonmajor Internal General Building Facilities Governmental Service Fiduciary Federal Government Categorical aid $1300302767 $ - $ - $ 271539 $ - $ - State Government Apportionment - - - 2 193 - - Categorical aid 13071631944 - - 633 - - Other state 6952350 - - 1240531377 - - Local Government Interest 2562656 - 4812579 242113 - - Other Local Sources 423992303 57430734 2110235 401,035 31230034 39,317 Total $83009930019 $574,734 $ 502,814 $ 1,8602890 $312,034 $ 392317 Additional long-term receivables include$88,124 for a special education settlement with payments expected to be received annually over the next ten years,and$3,303,953 for mandated cost reimbursements. 29 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 R NOTE 5-CAPITAL ASSETS Capital asset activity for the fiscal year ended June 30,2002,was as follows: Balance Balance July 1, 2001 Additions Deductions June 302 2002 Governmental Activities Capital assets not being depreciated: . Land $ 11523162797 $ - $ - $1153031627.97 Construction in progress 1326592537 22116572593 - 3623172130 Total assets not being depreciated 128297612334 22,657,593 - 151263312927 Capital assets being depreciated: Land improvements 3420202382 .5432940 - 3425642322 Buildings and improvements 153,654,695 1962474 153285111169 Furniture and equipment 7,917,011 2772572 - 82194,583 Total capital assets being depreciated 19525921V088 12017,986 - 19626102074 Less Accumulated Depreciation: Land Improvements 1427232091 2;4912132 - 17502142223 Buildings and improvements 4128922743 7,176,341 - 491P0692084 Furniture and equipment 423812310 '34531424 - 41Y7262734 Total accumulated depreciation 60299730144 1020122897 - 712010,041 Total capital assets being depreciated 13415942944 (8,994,911) - 125,60030033 Governmental Activities Capital Assets,net $263,5712278 $13266230682 $ - $277,233,960 Depreciation expense was charged to governmental activities as follows: Governmental activities: Instruction $ 814942902 Instructional library,media and technology 664,5 82 School site administration 62910612 Food services 132493 Data processing 189 All other general ministration 20030900 Plant services 92219 Total Depreciation Expenses Governmental Activities $ 10,012,897 R 30 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30,2002 ---------------- ------------------------------------- NOTE 6 INTERFUND TRANSACTIONS Interfund Receivables/Payables(Due To/Due From) Interfund receivable and payable balances at June 30,,2002,between major and nonniajor governmental funds,, nonmaior enterprise funds, internal service funds,and fiduciary funds are as follows: Due From Capital Nonmajor internal General Building Facilities Governmental Fiduciary Service Total General $ - $ 247,450 $2812115 $ 446,418 $ 1,709,981 $49,905 $ 2,734,869 Building 1,669 1,669 Capital Facilities 93,807 - 931,0807 Nownajor governmen 116,237 1,000,000 10Y970 1,127,207 Fiduciary 18,163 533. 2,325 1,468 22,489 Total $ 229,876 $12247.?983 $2832440 $ 447,886 $ 1,720,951 $49,905 $ 33,9803,041 All balances resulted from the time lag between the date that(1)interfund goods and services are provided-or reimbursable expenditures occur,,(2)transactions are recorded in the accounting system,and(3)payments between funds are made. Operating Transfers - Interfund transfers for the year ended June 30,2002,consisted of the following: Transfers in Nonmajor Build Governmental Fiduciary Total E2 Getieral 50,000 $ 702,252 $2417957 994,209 Capital Facilities 260,473 - 260,473 Nonmajor governmental 19,964,738 - 19,964,738 E.-i Internal service - - 174,632 174,632 Total $2022752211 702,252 $4162589 . 21 394 2052 -Interfund transfers are used.to(1)move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2)move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due,and are paid off,and(3)use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. 31 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 309 2002 NOTE 7—ACCOUNTS PAYABLE Accounts payable at Jure 30,2002,consisted of the following: Building Capital Nonmajor Internal General Fund Facilities Governmental Service Fiduciary Vendor payables- $225561?337 $2,818,943 $ 2502728 $ 185,068 $ - $ - State apportionment 340,787 - - - - Salaries and benefits 1,840,582 9,244 3 29,462 -heOt r significant significant payables - - - 148,716 - Other 3232213 - - - - 27 Total $5,060,919 $2,828,187 $ 2502731 $214,530 $148,716 $ 27 NOTE 8—DEFERRED REVENUE Deferred revenue at June-301,2002,consists of the following: s General Federal financial assistance $. 170,605 State categorical aid 932,475 $1L Total $ 12103,080 32 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30,2002 NO'D'E 9--LONG-TERM LIABILITIES ` Long-Term Debt Summary The changes in the District's long-term obligations during the year consist of the following: Balance Balance Due in July 1,2001 Additions Deductions June 30,2002 one year General obligation bonds $ 831Y5302849 $ 703,398 $ 4,272,284 $ 79,961,963 $4,835,000 Arbitrage 9002000 42000 - 9042000 - Certificates of participation 411024030000 20,8702000 3-223552000 29275530000 129552000 Accumulated vacation-net 93930043 1782769 - 1,117,812 89508 Capital leases. 1114422607 1,643,112 6582822 22426,897 6802700 Other general long-term 72500 - 731500 - - $ 128,059,999 $23,399,279 $37,293,606 $ 1142165,1672 $8,366,388 Bonded Debt The outstanding general obligation Measure D bonded debt is a follows: Bonds. Bonds Issue Maturity Interest original outstanding Outstanding Date Date Rate Issue July 1,2001 Accretion Redeemed June 301, 2002 1999 2018 4.15-5.25% $70,000,000 $83,530,849 $703,398 $4,272,284 $7929612963 Debt Service Requirements to Maturity 'Che bonds mature through 2018 as follows: Interest to Fiscal Year Principal Maturity Total 2003 $ 4,090,168 $ 744,832 $ 4,835,000 W. 2004 4,197,284 1,002,716 5,200,000 2005 420732898 12226,102 523002000 2006 4,1.82,107 1,522,893 5,705,000 2407 4,190.520 1,809,480 6,000,000 2008-2012 20,072,355 1326372645 3327102000 2013-2017 1825112697 22,9681303 411480,000 . 2017-2018 6,409,687 12,038,445 18448132 Total $65,7272716 $54,9502416 $ 12016781P132 Accretions to date 14,234,247 Total earrymg amount $79,961,963 r 33 w ' SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30,2002 Certificates of Participation In February-1989,the Financing Corporation issued certificates of participation in the amount of$26,000,000 with interest rates ranging from 6.4 to 7.7 percent. At June 30,2002,the principal balance outstanding was $8108852000. In'January 1992,the Financing Corporation issued certificates of participation in the amount of$22,250,000 with an interest rate of 7 percent. At June 30,2002,the principal balance outstanding was$0. In December 2001,the Financing Corporation issued certificates of participation of$20,870,000 with a variable interest rate(current swap rate of 2.79%)to advance refund certificates of participation with interest rate of 7% and a par value of$19,425,000. The certificates of participation mature on April 15,2022,and were called on February 1,2002. The certificates of participation were issued at par,and after paying issuance costs of $423,545,the net proceeds were$20,484,675. The net proceeds from the issuance of the certificates of participation were used to purchase U.S.government securities and those securities were deposited in an irrevocable trust with an escrow agent to provide debt service payments until the certificates of participation were called on February 1, 2002. 11hie advance refunding met the requirements of an in substance debt defeasance and the term bonds were removed from the District's General Long-Term Debt Account Group. As a result of the advance refunding,the District reduced its total debt service requirements by approximately $9,500,000. The economic gain(difference between the present value of the debt service payments on the.old and - new debt)was not computed. The outstanding financing corporation certificates of participation are as follows: Outstanding Issue Maturity Interest Original July 1,2001 Ou�ding Date Date Rate Issue of Year Issued Redeemed June 30,2002 02/01/89 0.1/15/04 6.4-7.7% $26,000,000 $40718030000 $ - $ 1102953P000 $ 828851000 01/29/92 04/15/22 7% 22225031000 19304252000 - 1924252000 - 12/14/01 02/01/22 2.79% 20508702000 - 2028701000 - 20318703100 $29,605,000 $20,870,000 $ 20207202000 $29;755,000 _J . 34 +� . SAN R.AMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS SNE 30, 2002 s The certificates mature through 2022 as follows(interest on variable rate debt is calculated at the current.rate): Year Ending June 30, Princi a] Interest Total 2003 $ 729552000 $ 121282131 $ 9208330131 2004 210951000 6792441 22774,441 2005 6402{}00 5492770 131892770 2006 675,000 5312914 122061914 2007 7152000 513,081. 1,22830081 2008-2012 4312852000 222402510 62525,5.10 2013-2017 5177252000 1,56730283 712922283 2018-2022 7116652000 6662392 81>33110392 Total $29,755,000 $ 728762522 $37106312522 In October 1991,the Educational Facilities Corporation issued certificates of participation in the amount of $39,500,000 with interest rates ranging from 6.35 to-6.5 percent. At June 30,2002,the principal balance outstanding was$0. In January 1992,the Educational Facilities Corporation issued certificates of participation in the amount of $191,645,000 with an interest rates ruiging from 3.0 to 5.13 percent. At June 30,2002,the principal balance outstanding was$0. In March 19932 the Educational Facilities Corporation issued certificates of participation in the amount of . $14,035,000 with an interest rate of 5.95 percent. At June 30, 2002,the principal balance outstanding was$0. Outstanding Issue Maturity Interest Original July 1,2001 Outstanding Date Date Rate Issue of Year Issued Redeemed. June 3 0,2002 10116/91 10101/01 6.35-6.5% $39500000 $ 4,050,000 $ - $ 4,050,000 $ - 03123/93 10/01/01 3.0-5.13%► 192645,000 31076530000 - 327652000 - 06/29/94 10/01101 5.95% 1420352000 318202000 - 3108207000 - $1126351000 $ - $ 1126352000 $ - Accumulated Unpaid Employee Vacation The long-term portion of accumulated unpaid employee vacation for the District at June 30,2002,amounted to :• $121172812. 35 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOBS TO FINANCIAL STAMENTS JUNE 30,2002 -------------------- t Capital Leases The District has entered into Various capital lease arrangements and has recorded capital assets in the amount of $3,231,459 with corresponding accumulated depreciation of$757,776 at June 30,2002. The Duct's liabdi ty on lease agreements with options to purchase are summarized below: Swm' mning . uip T t Portables Pool Total :Balance,July 1,2001 $ 114182515 $ 2791899 $ - $ 1698 414 Additions 432112 - 1108467140 1308892252- Payments 2692408 9330299 4612535 8242242 ;fiance,June 30, 2002 $ 12192,219 $ 1862600 $ 1 384 605 $ 230763,2424 The capital leases have.minimwm lease payments as follows.- Year ollows:Year EndingLease June 34, Payment 2003 $ 9232895 2004 877,374 t 2005 71311025 1 2006 91,356 2007 912356 2008=2012 662418. Total2307632424 Less: Amount Representing Interest 336 527 Present Value of Minimum Lease Payments .$ 2304262897 s 36 ; . }` SAN RA.MON VALLEY UNIFIED SCHOOL DISTRICT s ' NO S TO FINANCIAL STATEMENTS JUNE 30, 2002 MOTE 10--FUND BALANCES Fund balances are composed of the.following elements: vital Nonmajor General Building Facilities governmental Reserved Revolving cash $ 5211000 $ Stores inventory 3051973 - - 242590 Prepaid expenditures - - - - Restricted programs 3274731954 - - - Total Reserved 4111052927 - - 242590 Unreserved Designated Economic uncertainties 4251531743 - - - Other designations 11025050577 - - 11,596,621 Total Designated 527662320 - - 11,5962621 Undesignated 4312792836 14310022295 23262810139 74531223 Total Unreserved 10100467156 - 141000210295 233,6282039 1223411844 Total $14311522083 $1420023295 $233062830039 $ 12236630434 NOTE 11—POSTEMPLOYMENT BENEFITS The District provides postemployment health care-benefits,in accordance with District employment contracts,to all employees who retire from the District on or after 9 age 55 with at least 10 years of service. Currently, 430 employees meet those eligibility requirements._ District contributions for retiree benefits range from an amount equal to the premium cost of the Kaiser single participant rate to 100 percent of the amount of premiums incurred by retirees and their dependents. Expenditures for postemployment benefits are recognized on a pay-as- you-go basis,as premiums are paid. During the.year,expenditures of$936,408.were recognized for retirees' health care benefits. An actuarial study is required to be completed every three years for those benefits that extend beyond 5 years or age 65. The District had an actuarial study completed in March 2002. The present value of future benefit payments as of July 2001 amounted to$67,390,000 as determined by the actuarial study. 37 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 309 2002 r NOTE 12-RISK MANAGEMENT Property and Liability The District is exposed to various risks of loss related to torts;theft of,damage to,and destruction of assets;errors and omissions;injuries to employees and natural disasters. During fiscal year ending June 30,2002,the District contracted with.Schools Excess Liability Fund for excess property and liability insurance coverage. Settled claims have not exceeded this commercial coverage in any of the past three years. There has not been a significant reduction in coverage from the prior year. Workers' Compensation For fiscal year 2002,the District participated in the Contra Costa County Schools Insurance Group,an insurance purchasing pool. The intent of the Contra Costa County Schools Insurance Group is to achieve the benefit of a reduced premium for the District by virtue of its grouping and representation with other participants in the Contra Costa County Schools Insurance Group. The workers'compensation experience of the participating Districts is i calculated as one experience and a common premium rate is applied to all Districts in the Contra Costa County Schools Insurance Group. Each participant pays its workers'compensation premium based on its individual rate. Total savings are then calculated and each participant's individual performance is compared to the overall savings percentage of each participating school district. A participant will then either receive money from or be required to contribute to the"equity-pooling fund." This "equity pooling"arrangement insures that each participant shares equally in the overall performance of the Contra Costa County Schools Insurance Group. Participation in the r Contra Costa County Schools Insurance Group is limited to Districts that can meet the Contra.Costa County Schools Insurance group's selection criteria. ;S Coverage provided by Contra Costa County Schools Insurance Group,Northern California Regional Excess Liability Fund,and Schools Excess Liability Fund for property and liability and workers'compensation is as follows: , w; { Insurance P, ro ram/ .2M=y Name Lya of Coverage Limits `' The Contra Costa County Schools.. Croup Workers'Compensation State of California j Statutory Limitations The Contra Costa County Schools Insurance Croup Property and Liability $211500-$252000 The Contra Costa County Schools Insurance Group Property and Liability $252000-$5,2502*000 The Contra Costa County School$Insurance Group Excess-Property and Liability $95,0001,000 excess of$5,2502000 Northern California Regional Excess Liability Fund Excess Property $257000-$500300002000 Northern'California Regional Excess Liability Fund Excess Liability $25200041200013000 Schools Excess Liability Fund Excess Liability $110000,000-$14,0003000 38 ' SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT s_ NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Claims Liabilities The District records an estimated liability for indemnity torts and other claims against the District. Claims liabilities are based on estimates of the ultimate cost of reported claims(including future claim adjustment expenses)and an estimate for claims incurred,but not reported based on historical experience. Unpaid Claims Liabilities The fund establishes a liability for both reported and unreported events,which includes estimates of both future payments of losses and related claim adjustment expenses. The liability for unreported events is not significant and therefore was estimated at zero because the property and.liability fiend has a small amount of activity and the health and welfare fund self insures prescription costs,dental coverage and vision coverage only. The remainder of the health and welfare fund consists of medical costs which are insured through commercial coverage. The following.represent the changes in approximate aggregate liabilities for the District from July 1,2001,to June 30, 2002: Property Health and-Liability and Welfare Liability Balance,July 1,2000 $ 371203 $ 14910004 Claims and changes in estimates 3130771 31V2372186 Claims payments (37,435) (33,227,0140) Liability Balance,-June 30;2001 3.12539 1592050 Claims and changes in estimates 472858 313371163 Claims pants (46.1577) (3238030317) Liability Balance,June 30,2002 $ 32,8261 $ 1152896 Assets available to pay claims at June 30, 2002 $ 285;503 $ 127782170 -NOTE 13--EMPLOYEE RETIREMENT SYSTEMS Qualified employees are covered under multiple-employer contributory retirement pians maintained by agencies of the State of California. Certificated employees are members of the State Teachers'Retirement System(STRS) and classified employees are members of the Public Employees'Retirement System(PERS J. -STRS . Plan Description The District contributes to the California State Teachers'Retirement System(STRS);a cost- sharing multiple-employer public employee retirement system defined benefit pension plan administered by STRS. The plan provides retirement and disabili benefits and survivor bene n p p ty fits to beneficiaries. Benefit provisions are established b State statutes as legislatively amend within the State Teachers'Retirement Law. p � � y +� STRS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the STRS annual financial report may be obtained from STRS, 7667 Folsom Blvd., Sacramento,CA 95826. 39 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS. JUNE 30,2002 f.. Funding Policy Active plan members are required to contribute 8.0 percent of their salary and the District is required to contribute an actuarially determined rate. -The actuarial methods and assumptions used for determining the rate are those adopted by-STRS Teachers'Retirement Board. The required employer. contribution rate for fiscal year 2001-2002 was 8.25 percent of annual payroll. The contribution requirements of the plan members are established by State statute. The District's contributions to SIRS for the fiscal year ending June 30,2002,2001,and 2000 were$5,267,851, $5,337,278,and$4,730,784,respectively,and equal 100 percent of the required contributions for each year. PERS Plan Description The District contributes to the School Employer Pool under the California Public Employees' Retirement System(CalPERS);a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalPERS. The plan provides retirement and disability benefits,annual cost- of-living adjustments,and death benefits to plan members and beneficiaries. Benefit provisions are established by State des,as legislatively amended,within the Public Employees'Retirement Laws. CalPERS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the CalPERS'annual financial report may be obtained from the CalPERS Executive Office,400 P Street,Sacramento, CA 95814. Funding Policy Active plan members are required to contribute 7.0 percent of their salary and the District is required to contribute an actuamMy determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the CalPERS Board of Administration. The required employer contribution rate for fiscal 2001-2002 was 0 percent of annual payroll. The contribution requirements of the plan members are established by State statute. The District's contributions to CalPERS for the fiscal year ending June 3030 2002,2001,and 2000 were$0, $0,and$0,respectively,and equal 100 percent of the required contributions for each year. c Social Security As established by Federal law,all public sector employees who are not members of their employer's existing retirement system(SIRS or Pte)must be covered by social security or an alternative plan. The District has elected to use Social Security as its alternative plan. Contributions made by the District and an employee vest immediately. The District contributes 6.2 percent of an employee's gross earnings. An employee is required to contribute 6.2 percent of his or her gross earnings. On Behalf Payments The State of California makes contributions to SIRS and PERS on behalf of the District. These payments consist of State General Fund contributions to SIRS in the amount of$1,260,693 (1.975 percent of salaries subject to STRS). A Contribution to PERS.-was not required for the year ended June.30,2002. Under accounting principles generally accepted in the United States of America,these amounts are to be reported as revenues and expenditures,however.,guidance received from the California Department of Education advises local educational agencies not to record these amounts in the Annual Financial and Budget Report. These amounts also have not been recorded in these financial statements. i 40 t SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 3012002 -------------- ----------------------- ------------- NOTE 14-COMMITMENTS AND CONTINGENCIES Grants The District received financial assistance from federal and state agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the Any disallowed claims resulting from such grant agreements and are subject to audit by the grantor agencies. audits could become a liability of the general fund or other applicable funds. However,in the opinion of management,any such disallowed claims will not have a material adverse effect on the overall financial position of the District at June 30.,2002. Litigation The District is involved in.various litigation arising;from the normal course of business. In the opinion of management and legal counsel,the disposition of all litigation pending is not expected to have a material adverse effect on the overall financial position of the district at June 30,2002. Construction Commitments As of June 302 2002,the District had the following commitments with respect to the unfinished capital projects: Remaining Expected Construction Date of CAPITAL PROJECT Commitment Completion Los Ceffos modernization and gym $ 2,270,773 12/25/02 Monte Vista modernization and new classroom buildings 826.1885 08/31/02 Alamo multipurpose building 120142170 12/19/02 San Ramon Valley High new auditorium 3,886,484 04/21/03 San Ramon Valley High parking facility 250,000 04/21/03 8,248,312 NOTE 15—PARTICIPATION IN PUBLIC ENTITY RISK POOLS AND JOINT POWERS AUTHORITIES The District is a member of the Schools Excess Liability Fund(SELF),and the Northern California Regional Excess Liability Fund(ReLiEF)and the Contra Costa School Insurance Group joint powers authority public entity risk pools. The District pays an annual premium to each entity for its health;workers'compensation,and rx property liability coverage. The relationships between the District and the pools are such that they are not component units of the District for financial reporting purposes. These entities have budgeting and financial reporting requirementsindependent of member units and their financial statements are not presented in these financial statements;however,fund transactions between the -entities and the District are included in these statements. Audited financial statements are available from the respective entities. 41 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE-309 2002 A. EaftContra.Costa Schools Insurance SELF RELIEF Group B. Pu ose Provides property Provides property Provides workers and liability and liability compensation insurance insurance insurance C. Participants Various school Various school Various school districts districts districts D. Governing Board One representative One representative One representative from each member from each member from each member district district district E. Condensed Audited Financial Information Follows June 30, 2001* June 30, 2001* June 30,2001* Assets $ 1.1327812050 $ 16,428,455 $ 52,24130'761 Liabilities 8029462594 12,7122716 31249110367 Fund Equity $ 32183430456 $ 33152739 $ 2027502394 Revenues 1722482961 112750,757 17212430791 _ Expenses 43293631893 13306212905 19146%319- Net 9,469,319Net Increase in Fund Equity $ (263,6873932) $ (1,.871,148) $ -(2,344,528) F. Payments for the Current Year $ (43,286) $ 40310755 $ - None of the JPA's had long-term debts outstanding at June 30,2001. The District's share of year-end assets, liabilities or fund equity has not been calculated. *Most recent information available. MOTE 16—FUND BALANCE RESTATEMENTS The prior year building fund'was restated by$708,741 to correct estimates of constriction retention liabilities,the deferred maintenance fund was restated by$138,475 to correct a prior'year audit adjustment,and the general fund balance was restated to correct the class size reduction coding. 42 .� r.•...I SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENT_ S JUNE 30,2002 . IVMH{IOIVL JMRMJWMfILMMRAW VYWYY\14'IWiMA/irJl/A .t NOTE 17—TAX AND REVENUE ANTICIPATION NOTES At June 30,2002 the District had outstanding Tax and Revenue Anticipation Notes in the amount of$21 000 000 P > which mature on November 26,2002. On November 27, 2001,the District issued$21,000,000 Tax and Revenue Anticipation Notes bearing interest at 1.95 percent. The notes were issued to supplement cash flows. Interest and principal are due and payable on November 26, 2002. By May,2002,the District was required to led a 50 P. g percent of principal and interest in an irrevocable trust for the sole purpose of satisfying the notes: The remaining f 50 percent plus accrued interest was required to be pledged by June 2002. The District was not required to make any additional payments on the notes. The District has recorded the cash available to make the principal and interest payments as Cash with Fiscal Agent and with the corresponding liability as a current loan. The changes in the District's tax and revenue anticipation notes during the year consist of the following: Balance Balance f July 1,2001 Additions Deductions June 30,2002 t Tax revenue and anticpation notes $ 16,500,000 $21,000,000 $16,500,00 $ 21,000,000 P. a i t M I 1• 43 a s i . - t navy- intEnto �S- r. • a 1 r 1• t� 4, Required Supplementary Information E 2 f a SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT • r BUDGETARY COMPARISON SCHEDULE FOR THE MAJOR FUND FOR THE YEAR ENDED JUNE 30, 2002 Variances- Budgeted Amounts Positive(Negative) (GAAP Basis) Actual Final Revenues: Original Final (GAAP Basis) to Actual Revenue limit sources S 93305122859 $ 93303363,626 $ 933,924,723 S 5883,097 Federal sources 226052860 310082,625 2,811,049 (2713,576) Other state sources 27,2433,406 2923042794 283,5032777 (8012017) Other local sources 72852,090 112180,292 1028642489 (315,803) Total revenues: 131,214,215 13629042337 1361P1042038 (8002299) Expenditures Current Inshwtion 833,8502869 9120073,771 8529277521 520802250 Instruction related activities: Supervision of instruction 3,7212515 42087,725 .33,6402295 4473,430 [nstYuctio►nai library,media and technology 2,515,393 4,491,565 3,405,959 1,085,606 School site administration 93,9923,092 10308412559 103,6319176 2102383 Pupil services: Home-W-school transportation 11,652,287 126292552 126632451 (333,899) All other pupil services 43,3822701 4107092319 424762161 2333,158 General Administration: Data,processing 425409101 42547,886 1,3801,090 33,1673,796 All other general administration 53,0803,710 520182495 418333,879 1847616 Plant services 111P97112750 1129323,360 141N7352786 (23,8031,426) -Facility acquisition and construction. 4003,000 542,984 3912890 1513,094 Ancillary services 735,433 173191,849 1,294,443 253,406 Community services 1583,538 3219521 305,245 167276 Debt Service Principal - - 292916 (293,916) Interest 3053,438 623,018 5613,744 61,274 TOTAL EXPENDITURES 1293,3063,827 1413,0733,604 133,2772556 727963,048 Excess(deficiency)of revenues over expenditures 129072388 (4,169,267) 228263,482 629953,749 f Other Financing Sources(Uses): Transfers out (13,733,297) (9943,209) (9947209) - Other uses - - 22989 230989 NET FINANCING.SOURCES(USES) (1,733,297) (9942209) (991,220) 21P989 NET CHANGE IN FUND BALANCES 1743,091 (52163,476) 128352262 63,9982738 Fund balance-Big 123,3162821 1223162821 12,3162821 - Fund balance-Ending S 122490,912 S 73,153,345 S 1421523,083 $ 629983,738 45 ::. SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2002 vlNnrrwwwrWrierrrV..r.wr..wlrf.n.rrml.•wvlvr.•m..rwe/I.rrNrw.vw+rlv.vlwlVvwrla,wlwlww«.wrrrow.wm.rmr101rslYrewII.VIMrmwvmwrwrlwwrrrwevm.r.•awr.wr .yyWw++wNwV�IVWIf.vwvlllm.rrwr Pass-Through Federal Entity Federal Grantor/Pass-Through CFDA Identifying Federal Grantor/Program or Cluster Title Number Number Expenditures U.S. DEPARTMENT OF EDUCATION b Passed through California Department of Education(CDE): Title IV-Drug Free Schools 84.184 03453 $ 182,269 f_ Title II-Eisenhower 84.164 03207 501932 Elementary and Secondary Education Act Title I-Basic�1� 84.010 03797 329 844 Title VI 84.151 03340 732506 Goals 2000 84.276 03155 60 285 Federal CSR 84.340A 03073 1102308 Special Education-State Grants is Local Assistance t1] 84.027 03379 1 573 056 IDEA Inservice��� 84.027 03613 411448 Infant Discretionary�1� 84.027 03612 9,322 Early Intervention t�� 84.027 03761 104 324 r, Preschool IDEA�1� 84.027. 03682 2552764 Vocational Educational Grants Secondary Education 84.048 03577 562991 a Total U.S. Department of Education 84.027 03379 2,811,049 C U.S. DEPARTMENT OF AGRICULTURE `i Passed through CDE: j National School Lunch 10.555 03396 165,143 := FMV of commodities t21 10.555 03755 80 406 Total U.S. Department of Agriculture • 2452549 Total Expenditures of Federal Awards $320562598 C [1]Tested as a major program [2]Not included in financial statements i.. .4 See accompanying note to supplementary information. 46 SAN RAMON VALLEY UNIFIED.SCHOOL DISTRICT SCHEDULE OF AVERAGE DAILY ATTENDANCE FOR THE YEAR ENDED JUNE 30t 2002 Second Period Annual Report Report ELEMENTARY Kindergarten 1,459 12460 First through third 42518 4,524 Fourth through sixth 4,794 42797 Seventh and eighth 32243 3,244 Home and hospital 2 3 Extended year 14 14 Special education 157 157 - Total Elementary 1430187 1430199 - SECONDARY Regular classes 51963 510931 Continuation education 86 86 Opportunity schools 11 11 Home and hospital 6 7 Special education 73 73 Community day school 3 3 : Extended year 4 4 Total Secondary 62-146 62115 Total K-12 202333 2030314 CLASSES FOR ADULTS Concurrently enrolled 7. 8 Not concurrently enrolled 1 2 Total Classes for Adults 8 10 Grand Total 202341 202324 Hours of Attendance SUMMER SCHOOL Elementary 11230701 High School - 60,363 Total Hours ' 1731064 See accompanying note to supplementary information. • 47 R SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT SCHEDULE OF INSTRUCTIONAL TIME FOR THE YEAR ENDED JUNE 30, 2002 A 4 b 1986-87 1982-83 2001-02 Number of Days Minutes Actual Actual Traditional Multitrack y Grade Level Requirement Minutes Minutes Calendar Calendar Status Kindergarten 363,000 31,680 36,000 180 n/a In compliance t Grades 1 -3 502400 46,640 50,765 180 n/a In compliance 3' Grades 4-6 54,000 522500 543,050 -180 n/a In compliance Grades 7-8 54,000 599448 60,090 180 n/a In compliance r Grades 9- 12 64,800 612599 672990 180 n/a In conaphance r e 4 ; t y 1 4 , Y Z` 1 l Z+ See accompanying note to supplementary information. 48 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT WITH AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30.12002 The following were adjustments to the Annual Financial and Budget Report Unaudited Actuals which required reconciliation to the audited financial statements at June 30,2002. Capital Facilities FUND BALANCE Balance,June 30.,2002,Unaudited Actuals $233,6283,039 Decrease in: Accounts payable 53,2623,124 Balance,June 30, 2002, Audited Financial Statement $283,8902163 General Long. Tenn Debt Account Group GENERAL LONG-TERM LIABILITIES Total Liabilities,June 30,2002,Unaudited Actuals $ 1 12 3,780 2993 Adjustments Increase(decrease)in: Capital leases 112342679 Payment on 1989 certificates of participation (122952000) Issuance of 2001 certificates of participation 203,8702000 Refunding of 1992 certificates of participation (19242530000) Total Liabilities,June 30,2002,Unaudited Actuals Audited Financial Statement $ 1142165,672 See accompanying note to supplementary information. 49 • SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS 1R FOR THE YEAR ENDED JUNE 301, 2002 (Budget) 20031 2002 2001 2000 GENERAL FUND Revenues $ 13539101629 $ 13621042038 $ 135,765,296 $ 116,237,547 Other sources 30030000 2,989 2,6503,849 419,639 Total Revenues and Other Sources 1363,210,629 13611073,027 13814162145 116,6579186 Expenditures 136,008,935 133,277,556 129,374,431 1153,270,099 n Other uses and transfers out 6801,045 9941209 117492440 13,562,589- Total ,562,589Total Expenditures and Other Uses 136,6882980 134,271,765 1313,1232871 116,832,688 INCREASE/(DECREASE) IN FUND BALANCE $ (478,351) $ 11835,262 $ 73,2923,274 $ (1753,502) ENDING FUND BALANCE $ 1326732732 $ 141,1522083 $ 12,442,890 $ 52150,616. AVAILABLE RESERVES 2 $ 873171228 $ 81795,579 $ 416603,854 $ 2 340 101 AVAILABLE RESERVES AS A PERCENTAGE OF TOTAL OUTGO 6.08% 6.55% 3.55% 2.00% LONG-TERM DEBT $ 102,120,504 $ 114,165,672 $130,759,999 $ 135,753,410 AVERAGE DAILY ATTENDANCE AT P-2 3 2%586 203333 19,927 193,476 w' The general fund balance has increased by$9,001,466 over the past two years. The fiscal year 2002-03 budget projects a decrease of$478,351. For a district this size,the State recommends available reserves of at least 3 .; percent of total general fund expenditures,transfers out,and other usesoutgo).total ( The District has incurred operating surpluses in two of the past three years,and anticipates incurring an operating deficit during the 2002-03 fiscal year. Total long-term debt has decreased b $22 821 883 over the past two ears y p y due to debt retirements of various certificates of participation. Average daily attendance has increased by 857 over the past two years. Additional growth of 253 ADA is anticipated during fiscal year 2002-03. 1 Budget 2002 is included for analytical purposes only and has not been subjected to audit. 2 Available reserves consist of all undesignated fiord balances and all funds designated for economic uncertainty contained within the general fund. 3 Excludes Adult Education ADA. See accompanying note to supplementary information. 50 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT ASSESSED VALUATION OF TAXABLE PROPERTIES AND SECURED TAX CHARGES AND DELINQUENCIES WITHIN THE SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT BOUNDRIES -UNAUDITED FOR THE YEAR ENDED JUNE 309 2002 Secured(including utilitites) $20,0364,174730493 Unsecured 4952773,772 Total 2001-2002 Assessed Valuation $20,860252110265 4• t See accompanying note to-supplementary information. 51 SAN RA.MON VALLEY UNIFIED SCHOOL DISTRICT NOTE TO SUPPLEMENTARY INFORMATION JUNE 30, 2002 w n NOTE 1-PURPOSE OF SCHEDULES Schedule of Expenditures of Federal Awards The accompanying schedule of expenditures of federal awards includes the federal grant activity of the District and is presented on the modified accrual basis of accounting. T The information in this schedule is resented in accordance with the requirements of the United States Office of � p q Management and Budget Circular A-133,Audits of States, Local Governments, and Non Profit Organizations. Therefore,some amounts presented in this schedule may differ from amounts presented in,or used in the preparation of,the general-purpose financial statements. r, Schedule of Average Daily Attendance Average daily attendance(ADA)is a measurement of the number of pupils attending classes of the District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionment's of State.funds are made to school districts. The schedule provides information regarding the attendance.of students at various grade levels and in different programs. rl Schedule of Instructional Time The District has received incentive funding for increasing instructional time as provided by the Incentives for Longer Instructional Day. The schedule presents information on the amount of instructional time offered by the District and whether the District complied with the provisions of Education Code Sections 46201 through 46206. Districts must.maintain their instructional minutes at either the 1982-83 actual minutes or the 1986-87 requirement,whichever is greater,as required by Education Code Section 46200 through 46206. Reconciliation of Annual Financial and-Budget Report with Audited Financial Statements This schedule provides the information necessary to reconcile the fund balance of all funds reported on the Annual Financial and Budget Report to the audited financial statements. Schedule of Financial Trends and Analysis. This schedule discloses the District's financial trends by displaying past years'data along with current year budget information. These financial trend disclosures are used to evaluate the District's ability to continue as a going concern for a reasonable period of time. Assessed valuation of Taxable Properties and Secured Tax Charges and Delinquencies Within the San Ramon Unified School District Boundaries As part of the District's continuing disclosure certification of reporting to official depositories the assessed valuation of taxable properties and secured tax charges and delinquencies within the San Ramon Unified School District boundaries have been presented. This information was prepared by the Auditor/Controller's Office of Contra Costa County. We have not audited this information and therefore do not express an opinion on this information. ..Y ;1, tC 52 6tank�"t¢nap°aAY• Iritis Page�e� �} Vavrinek, Trine, Day Co.,& LLP . Certified Public Accountants&Consultants INDEPENDENT AUDITORS'REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN = AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Governing Board San Ramon Valley Unified School District Danville,.California We have audited the financial statements of as of and for the year ended June 30, 2002,and have issued our report thereon dated September 27, 2002. We conducted our audit in accordance with auditing standards enerall • g 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. Compliance r As part of obtaining reasonable assurance about whether San Ramon Valley Unified School District's financial statements are free of material misstatement,we performed tests of its compliance with certain provisions of laws, regulations,contracts and grants,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 no instances of noncompliance that are required to be reported under Government Auditing Standards. s I. Internal Control Over Financial Reporting _ In planning and performing our audit,we considered San Ramon Valley Unified School District's internal control over financial reporting 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 over financial reporting. However,we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coIL ming oming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment,could adversely affect San Ramon Valley Unified School District's ability to record,process, summarize and report financial data consistent with the assertions of management in the-financial statements. Reportable conditions are described in the accompanying Schedule of Financial Statement Findings as items 2002-1 through 2002-3. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be I material in relation to the financial statements being audited may.occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration ofthe internal control over financial reporting would not necessarily disclose all matters in the internal control that might be 53 8270 Aspen Street Rancho Cucamonga,CA 91730 Tel:909.466.4410 Fax:909.466.4431 rwww.vtdcpa.com FRESNO LAGUNA HILLS PLEASANTON • RANCHO CUCAMONGA • SACRAMENTO SAN JOSE .reportable conditions and,accordingly,would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none of the reportable conditions described above is . a material weakness. Mils report is untended solely for the information and use of the Governing Board,audit committee, emen the'California De � n�a�nag Department of Education,the State kontroller s t3 'iice,federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. • 'Doe. Co ' Pleasanton,California September 27,2002 54 • Vavrinek, Trine, Dal &Co. LLP VALUE THE DIFFERENCE Certified Public Accountants&Consultants } h_. 4 INDEPEND. ENT AUDITORSS 'REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR.PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WM-I OMB CIRCULAR A-133 -Governing Board San Raman Valley Unified.School District -Danville,California y Compliance We have audited the compliance of San Ramon Valley Unified School District with the types of compliance 4 requirements described in the U S. Office ofManagement and Budget(OMB)Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for.the year ended June 30,2002. San w Ramon Valley Unified School Districts major federal programs are identified in the summary of auditors results i section of the accompanying schedule of findings and questioned costs. Compliance with the requirements o laws, regulations,contracts and grants applicable to each of its mayor federal programs is the responsibility of San Ramon Valley Unified School District's management. Our responsibility is to express an opinion on San Ramon Valley Unified School District's compliance based on our audit. 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 OMB Circular A-133,Audits of States,Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 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 examiu*ng,on a test basis,evidence about San Ramon Valley Unified School District's compliance with those requirements and performing such other procedures,as we considered necessary m the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on San Ramon Valley Unified School District's compliance with those requirements. In our opinion, San Ramon Valley Unified School District complied,in all material respects,with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 301 2002. j 2 55 8270 Aspen Street Rancho Cucamonga,CA 91730 Tel:909.466,4414 Fax:909.466,4431 rwww.vtdcpa.com FRESNO • LAGUNA HILLS • PLEASANTON • RANCHO CUCAMONGA • SACRAMENTO SAN JOSE Internal Control Over Compliance The management of San Ramon Valley Unified School District is responsible for establishing and maintaining effective internal control over.compliance with requirements of laws,regulations,contracts and grants applicable to federal programs. In p and performing our audit,we considered San Ramon Valley Unified School District's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control.over compliance in accordance with OMB Circular A-133. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be Imaterial weaknesses. A material -weakness is a condition M' which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws,regulations,contracts and grants that would be material in 'relation to a major federal MUM being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no I - matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the Governing Board,audit committee,, e ent the California Department of Education,the State Controller s * Office,federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specifiedparties. cz) Pleasanton,California September 27,2002 56 VaWinek,Trine, Da & LP Co.,! VALUE THEDIFFERENCE . ; Certified Public Accountants&Consultants r r' INDEPENDENT AUDITORSREPORT ON STATE COMPLIANCE �r #: Governing Board San Ramon Valley Unified School District Danville, California We have audited financial statements of San Ramon Valley Unified School District as of and for the year ended r June 30,20021y and have issued our report thereon dated September 27,2002_ We conducted our audit in accordance with auditing sl�andards generally accepted in the united States of America,the standards applicable to financial and compliance audits contained in Government Auditing Standards,issued by the Comptroller General of the United States,and the State Controllers Standards and Procedures for Audits of California K-12 Local Educational Agencies. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether financial statements are free of material misstatement. An audit includes examining,on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the.accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. we believe that our audit provides a reasonable basis for our opinion, Ile management of San mon Valley Unified School District is responsible for compliance with laws an regulations. In connection with the audit referred to above,we selected and tested transactions and records to determine the San Ramon Valley Unified School District's compliance with the laws and regulations of the following items: -Procedures in Controller's Procedures Audit Guide Performed Attendance accounting Attendance reporting 4 Yes Kindergarten continuation 3 Yes Independent study 13 Yes Continuation education 11 Mone Adult education 8 bane Regional occupational centers/programs 4 Not Applicable Staff development days 3 Yes Incentives for longer instructional day: School districts 3 Yes County offices of education 3 Not Applicable GANN limit calculation 2 Yes • Early retirement incentive program 5 Not Applicable r ' 1 57 8270 Aspen Street Rancho Cucamonga,CA 91730 Tet:909.466.4410 Fax:909.466.4431 rwww.vtdcpa.com FRESNO • LAGUNA HILLS PLEASANTON • RANCHO CUCAM©NGA • SACRAMENTO • SAN JOSE Procedures in Controller's Procedures Audit Guide Performed Community day schools 8 None Class size reduction program: Option one classes 11 y es Option two classes 10 Not Applicable Option one and two classes 16 Not Applicable Reduce class size in two courses in grade-9 8 Yes State instructional materials fund K-8 10 Yes 9-12 7 Yes Schiff-Bustamanter standards-based instructional materials 9 Yes Digital High School Mucation Technology Grant Program 5 Yes California Public School Library Act of 1998 4 Yes Office of Cinal Justice Planning Not Applicable " We did not perform testing for continuation,adult-education,and community day schools because their ADA was below the testing threshold. Based on our audit,we found that,..for the items tested,the San Ramon Valley Unified School District complied with the state laws and regulations referred d to above. Further,based on our audit,for items not tested„nothing came to our attention to indicate that the San Ramon Valley Unified School District had not complied with the laws and regulations. This report is intended solely for the information and use of the Governing Board,audit committee,nauagement, the California Department of Education,the State Controller's Office,federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Co r . Pleasanton,California ' September 27,2002 • f 58 • SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT SCHEDULEOF FINDINGS AND QUESTIONED COSTS J FOR.YEAR ENDED JUNE 30, 2002 r SUMMARY OFAUDITORS'RESULTS i FINANCIAL STATEMENTS Type of auditors'report issued: Unqualified Internal control over financial reporting: Material weaknesses identified? No Reporting conditions identified not considered to be material weaknesses? Yes Noncompliance material to financial statements noted? No w �7 FEDERAL AWARDS ti Internal control over major programs: Material weaknesses identified? No Reporting conditions identified not considered to be material weaknesses? None reported Type of auditors'report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with Circular A- 133, Section.510(a) No Identification of major programs: CFDA Numbers Name of Federal Proms or Cluster 84.010 Title I-Basic 84.027 Special Education Cluster rrrrrn�r�r��i�r� -- rrrrr�.�i irrrri Dollar threshold used to distinguish between Type A and Type B programs: $ 300,000 Auditee qualified as low-risk auditee? No STATE AWARDS Internal control over state programs: Material weaknesses identified? No Deporting conditions identified not considered to be material weaknesses? None reported. Type of auditors'report issued on compliance for state programs: Unqualified 59 SAN R.AMON VALLEY UNIFIED SCHOOL DISTRICT SCHEDULEOF FINDINGS AND QUESTIONED COSTS FOR YEAR ENDED JUNE 303o 2002 FINANCIAL STATEMENT FINDINGS The following findings represent reportable conditions,material weaknesses,and/or instances of noncompliance related to the financial statements that are required to be reported in accordance with generally accepted government audit standards. The findings have been coded as follows: Five Digit Code AB 3627 Finding Type 20000 Inventory of Equipment 30000 Internal Control 60000 Miscellaneous STUDENT BODY 2002-1 Findin (30000) The following internal control exceptions were identified at one or more student body accounts visited during our audit. • Revenue potential/sales analysis are not always prepared for major fundraisers. • Ticket logs are not always used to account for all tickets on hand and used during the year.In addition,ticket sales recap forms,which calculate the number of tickets sold and the total revenue generated based on the ticket sales price,are not prepared. • Disbursements at one site included payments for bookkeeping services that were not appropriate for student body expenditures. • Funds generated by student store are used for technology department expenses. • Student council minutes were not maintained. Recommendation Revenue earned in the Student Body funds is subject to greater risk of loss due the nature of the receipts being primarily in cash and because of the decentralization of collections. Increased internal control procedures will assist the District in decreasing the risk of potential losses of these funds. we recommended the following to improve the internal controls over the student body funds: • Revenue potentials/sales analysis provides accountability for funds collected and spend for a particular fundraising event and should be prepared for all major fundraising activities. • Ticket logs should be maintained indicating the type of ticket,color and current beginning. number in order to provide control over the ticketinventory.inventory. In addition,.the preparation of the ticket sales recaps provide a means to ensure that all money collected for ticket sales have been deposited into the bank. • Payments for services provided to the student body funds should be paid from the District and the student body funds should reimburse the District for these payments so that the payments are included in the Districts year end 1099 reporting procedures. • Funds generated by the student store should be used for student body expenditures only. • The student council should be advised to prepare and retain minutes of meetings. 60 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT 4 r rf-r,l '`'° SCHEDULEOF FINDINGS AND QUES'T'IONED COSTS r1 y: y. FOR YEAR ENDED JUNE 30 2002 i• District Response The District has distributed student body manuals and provided in-house training in October 2002. Sites will be notified of audit findings and will be reminded of their responsibilities regarding proper po g g P Per accounting procedures for student body funds. r. EQUIPMENT 2002-2 Finding(20000) r•, Equipment disposals occurring throughout the year were not tracked and removed from the equipment valuation or the inventory listing. Recommendation In order to maintain an accurate valuation of the capital assets,we recommend that disposals of capitalized equipment(items over$5,000)be tracked and*removed from the equipment records so that disposals occurring throughout the year as well as additions are recorded and the result is an accurate equipment valuation. In addition items above$500 that are ' ' included in the District's property inventory listing also need to be removed from that listingat the time of disposal. spo District Response Y" The District is developing and implementing procedures to track and record removal of equipment from asset valuations and inventory listings in its purchases and warehouse departments. WARRANT CLEARING FUND 2002-3 Finding-(30000) During our audit we noted that the warrant clearing fund was not reconciled as of June 30,2002. The warrant clearing fund should be used to transfer amounts from other funds and thenpaY the vendor disbursements simultaneously so that the fund clears. Recommendation We recommend that the District reconcile the warrant clearing fund and post any necessary adjustments to correct the amounts that did not clear out. District Response The District is contracting with School Services to correct financial account. t mapping by the QSS software of the warrant clearing fund. This will facilitate the monthly reconciliation of the warrant clearing fund. 61 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT SCHEDULEOF FINDINGS AND QUESTIONED COSTS FOR YEAR ENDED JUNE 30, 2002 FEDERAL FINDINGS AND QUESTIONED COSTS There were no findings representing reportable conditions,material weaknesses,and/or instances of noncompliance including questioned costs that are required to be reported by OMB Circular A-133. STATE AWARDS FINDINGS AND QUESTIONED COSTS The were no findings representing instances ofnoncompliance and questioned costs relating to state program laws and regulations. SUMN![ARY SCHEDULE OF PRIOR YEAR FINDINGS Except as specified in previous sections of this report,sUnniarl'zed below is the current status of all audit findings reported in the prior year's schedule of financial statement findings. Financial Statement Findings 2001-1 Findin The equipment inventory listing was not completed during the current year. Annual site surveys were sent out and.retumed,however,the permanent records were not updated based on the surveys. The equipment inventory listing assists the District in maintaining control over the location of purchased equipment and would be needed for insurance purposes in the event of a loss. Recommendation We recommend that the District complete the updating,of the equipment inventory listing to verify that purchased or leased equipment remains under the District's control and is in the expected locations. Current Status Implemented 62 F y SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT SCHEDULEO►F FINDINGS AND QUESTIONED COSTS r4 \ L t FOR YEAR.ENDED JUNE 301, 2002 !F`7 2001-2 Finding «f _ During our examination of the student body account at the sites,we noted the following items: • Revenue potentials were not prepared for major fundraising events. •. Ticket sales were not controlled by maintenance of a ticket control log or reconciliation of the number of tickets sold to the amount of cash collected. t• I' t Reconunendation r To enhance the internal controls at the sites,we recommend that corrective action be taken to implement the above items. Revenue potential forms should be prepared for major fimdraising activities of all ASB's in order to assess the profitability of the events and determine which events are most effective. Ticket sales should be controlled by use of a master log and reconciliation of the number of tickets sold to the amount of cash collected to assist sites in reducing the potential risk of loss. Status Not 1Wlemented. See Current Year Findings and Recommendations. f i' t- ,r. ti e, 63 A' 4 1 • � t' nr i APPENDIX B Form of Continuing Disclosure Certificate B-1 4. THIS PAGE INTENTIONALLY LEFT BLANK 7 CONTINUING DISCLOSURE CERTIFICATE This CONTINUING DISCLOSURE CERTIFICATE (this "Disclosure Certificate") is executed and delivered by the SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT (the "District") in connection with the issuance of $18,700,000 San Ramon Valley Unified School District (Contra Costa County, California) 2003-2004 Tax and Revenue Anticipation Notes (the "Notes"). The Notes are being issued under a Resolution adopted by the Board of Education of the District on October 21, 2003, and by a resolution of the Board of Supervisors of Contra Costa County adopted on November 4, 2003 (collectively, the "Resolution"). The District covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the holders and beneficial owners of the Notes and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms have the following meanings: "Dissemination Agent" means the District, or any successor Dissemination Agent designated in writing by the District and which has filed with the District a written acceptance of such designation. "Listed Events" means any of the events listed in Section 3(a) of this Disclosure Certificate. "Participating Underwriter' means any of the original underwriters of the Notes required to comply with the Rule in connection with offering of the Notes. "Repository" means any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Certificate, there is no State Repository. "Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 3. Reporting of Significant Events. (a) Under the provisions of this Section 3, the District will give, or cause to be given, notice of the occurrence of any of the following events with respect to the Notes, if material: (i) Principal and interest payment delinquencies. (ii) Non-payment related defaults. (iii) Unscheduled draws on debt service reserves reflecting financial difficulties. 1 Mr (iv) Unscheduled draws on credit enhancements reflecting financial difficulties. (v) Substitution of credit or liquidity providers, or their failure to perform. (vi) Adverse tax opinions or events affecting the tax- exempt ax- exempt status of the security. (vii) Modifications to rights of security holders. (viii) Contingent or unscheduled bond calls. (ix) Defeasances. (x) Release, substitution, or sale of property securing repayment of the securities. (xi) Rating changes. (b) If the District obtains knowledge of the occurrence of a Listed Event, the District will as soon as possible determine if such event would be material under applicable Federal securities law. (c) If the District determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the District will promptly file a notice of such occurrence with the Municipal Securities Rulemaking Board and each Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(viii)and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Notes pursuant to the Resolution. Section 4. Termination of Reporting Obligation. The District's obligations under this Disclosure Certificate will terminate upon the legal defeasance, prior redemption or payment in full of all of the Notes. If such termination occurs prior to the final maturity of the Notes, the District will give notice of such termination in the same manner as for a Listed Event under Section 3(c). Section 5. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent, if other than the District, is not responsible in any manner for the content of any notice prepared by the District pursuant to this Disclosure Certificate. The District is the initial Dissemination Agent. Section 6. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of Section 3(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Notes, or type of business conducted; 2 r (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Notes, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either(i) is approved by holders of the Notes, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Notes. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made must present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison must include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the District to meet its obligations. To the extent reasonably feasible, the comparison will be quantitative. A notice of the change in the accounting principles must be sent to the Repositories in the same manner as for a Listed Event under Section 3(c). Section 7. Additional Information. Nothing in this Disclosure Certificate prevents the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the District has no obligation under this Disclosure Certificate to update such information or include it in any future notice of occurrence of a Listed Event. Section 8. Default. If the District fails to comply with any provision of this Disclosure Certificate any holder or beneficial owner of the Notes may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Disclosure Certificate; provided that any such action may be instituted only in Superior Court of the State of California in and for the County of Contra Costa or in U.S. District Court in or nearest to the County of Contra Costa. A default under this Disclosure Certificate is not an Event of Default under the Resolution, and the sole remedy under this Disclosure Certificate if the District fails to comply with this Disclosure Certificate is an action to compel performance. Section 9. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent has only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify the Dissemination Agent, its officers, directors, employees and agents, against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or 3 • willful misconduct. The obligations of the District under this Section survive resignation or removal of the Dissemination Agent and payment of the Notes. Section 10. Beneficiaries. This Disclosure Certificate inures solely to the benefit of the District, the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Notes, and creates no rights in any other person or entity. Date: November , 2003 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT By: Superintendent 4 w APPENDIX C Form of Legal Opinion C-1 a THIS PAGE INTENTIONALLY LEFT BLANK rr November , 2003 Board of Education San Ramon Valley Unified School District 699 Old Orchard Drive Danville, California 94526 Board of Supervisors Contra Costa County 625 Court Street, Room 102 Martinez, California 94553 Altura, Nelson & Co., Incorporated 18 Crow Canyon Court, Suite 350 San Ramon, California 94583 OPINION: $18,700,000 San Ramon Valley Unified School District (Contra Costa County, California) 2003-2004 Tax and Revenue Anticipation Notes Ladies and Gentlemen: We have acted as bond counsel to the San Ramon Valley Unified School District (the "District") in connection with the issuance by the Board of Supervisors of Contra Costa County (the "Board") of $18,700,000 principal amount of San Ramon Valley Unified School District (Contra Costa County, California) 2003-2004 Tax and Revenue Anticipation Notes (the "Notes"), under Article 7.6 (commencing with Section 53850), Chapter 4, Part 1, Division 2, Title 5 of the California Government Code, and a resolution of the Board adopted on November 4, 2003 (the "Resolution"). We have examined the law and such certified proceedings and other papers as we deemed necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Board contained in the Resolution and in the certified proceedings and certifications of public officials and others furnished to us, without undertaking to verify such facts by independent investigation. San Ramon Valley Unified School District • Contra Costa County Altura, Nelson&Co., Incorporated November 2003 Page 2 Based upon our examination,we are of the opinion, as of the date hereof, that: 1. The District is duly created and validly existing as a school district with the power to cause the Board to issue the Notes in its name and to perform its obligations under the Resolution and the Notes. 2. The Resolution has been duly adopted by the Board and creates a valid first lien on the funds pledged under the Resolution for the security of the Notes. 3. The Notes have been duly authorized, issued and delivered by the Board and are valid and binding general obligations of the District enforceable in accordance with their terms. 4. The interest on the Notes is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the District comply with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Notes in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The District has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Notes in gross income for federal income tax purposes to be retroactive to the date of issuance of the Notes. We express no opinion regarding other federal tax consequences arising with respect to the Notes. 5. The interest on the Notes is exempt from personal income taxation imposed by the State of California. The rights of the owners of the Notes and the enforceability thereof may be subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. Respectfully submitted, Jones Hall A Professional Law Corporation r