EAST PENN SD_OS_2008 - East Penn School District

$7,810,000 Aggregate Principal Amount • East Penn School District • Lehigh County, Pennsylvania • General Obligation Bonds, Series of 2013 

NEW ISSUE—BOOK-ENTRY ONLY 

RATING: Moody’s: “Aa2” (Underlying) 

See “Rating” herein 

In the opinion of Bond Counsel, under existing statutes, regulations and judicial decisions, interest on the Bonds is excluded from 

gross income for purposes of federal income taxation and is not an item of tax preference for purposes of the federal alternative minimum 

tax imposed on individuals and corporations, although in the case of corporations (as defined for federal income tax purposes) such interest 

is taken into account in determining adjusted current earnings for purposes of such alternative minimum tax. This opinion of Bond Counsel 

is subject to continuing compliance by the School District with its covenants in the Resolution and other documents to comply with requirements 

of the Internal Revenue Code of 1986, as amended, and applicable regulations thereunder. 

Bond Counsel is also of the opinion that under the laws of the Commonwealth (the “Commonwealth”) as presently enacted and 

construed, the Bonds are exempt from personal property taxes in the Commonwealth and the interest on the Bonds is exempt from the Commonwealth’s 

Personal Income Tax and the Commonwealth’s Corporate Net Income Tax. 

The Bonds are “qualified tax-exempt obligations”, for purposes and effect contemplated by Section 265 of the Internal Revenue 

Code of 1986, as amended (relating to expenses and interest relating to tax-exempt income of certain financial institutions). 

For further information concerning federal and state tax matters relating to the Bonds, see “Tax Exemption and Other Tax Matters” 

herein. 

$7,810,000 

East Penn School District 

(Lehigh County, Pennsylvania) 

General Obligation Bonds, Series of 2013 

Bonds Dated: Date of Delivery 

Principal Due: October 1, as shown on inside front cover 

Interest Due: April 1 and October 1 First Interest Payment: April 1, 2013 

The General Obligation Bonds, Series of 2013 (the “Bonds”), in the aggregate principal amount of $7,810,000 will be issued in 

book-entry only form, in denominations of $5,000 and integral multiples thereof. All of the Bonds will be registered in the name of Cede 

& Co., which is the partnership owner and nominee of The Depository Trust Company (“DTC”), in New York, New York. Beneficial 

ownership of the Bonds may be acquired only under the book-entry system maintained by DTC through its brokers and dealers who are, 

or act through, DTC Participants. The purchasers of the Bonds will not receive physical delivery of the Bonds. For a purchaser to be the 

beneficial owner of a Bond, that purchaser must maintain an account with a broker or a dealer who is, or acts through, a DTC Participant 

to receive payment of principal of and interest on the Bonds. See “BOOK-ENTRY ONLY SYSTEM” herein. If, under the circumstances 

described herein, Bonds are ever issued in certificated form, the Bonds will be subject to registration of ownership, transfer, exchange and 

payment as described herein. 

The Bonds are general obligations of the East Penn School District, a public school district located in a portion of Lehigh County, 

Pennsylvania (the “School District”), payable from its tax and other general revenues. The School District has covenanted that it will 

provide in its budget in each year, and will appropriate from its general revenues in each such year, the amount of the debt service on the 

Bonds for such year and will duly and punctually pay or cause to be paid from the related sinking fund or any other of its revenues or funds 

the principal of every Bond and the interest thereon on the dates, at the place and in the manner stated in the Bonds, and for such budgeting, 

appropriation and payment the School District irrevocably has pledged its full faith, credit and taxing power, which taxing power presently 

includes the power to levy an annual ad valorem tax on all taxable property within the School District, within the limits provided by law 

(See “THE BONDS-General Obligation Pledge” and “Taxing Powers of the School District” infra). 

Interest on each of the Bonds is payable initially on April 1, 2013, and thereafter semiannually on April 1 and October 1 of each 

year until the maturity date of such Bond or, if such Bond is subject to redemption prior to maturity, until the date fixed for redemption 

thereof, if payment of the redemption price has been duly made or provided for. The School District has appointed U.S. Bank National 

Association (the “Paying Agent”), to serve as the paying agent and sinking fund depositary for the Bonds. So long as Cede & Co., as nominee 

for DTC, is the registered owner of the Bonds, payments of the principal of, redemption premium, if any, and interest on the Bonds, 

when due for payment, will be made directly to DTC by the Paying Agent, and DTC will in turn remit such payments to DTC Participants 

for subsequent disbursement to the Beneficial Owners of the Bonds. If the use of the book-entry only system for the Bonds is ever discontinued, 

the principal of and redemption premium, if any, on each of the Bonds will be payable, when due, upon surrender of such Bond to 

the Paying Agent at its corporate trust office (or any successor paying agent at its designated office(s)) and interest on such Bond will be 

payable by check and mailed to the person(s) in whose name(s) such Bond is registered as of the Record Date with respect to the particular 

interest payment date (See “THE BONDS,” infra). The Bonds are not subject to optional redemption prior to maturity as described 

herein. 

Proceeds of the Bonds will be used to: (1) currently refund the School District’s outstanding General Obligation Bonds, Series of 

2007, (2) currently refund the School District’s outstanding General Obligation Bonds, Series of 2008, and (3) pay the costs of issuing the 

Bonds. 

MATURITIES, AMOUNTS, RATES AND PRICES/YIELDS 

[As Shown on Inside Cover] 

The Bonds are offered when, as and if issued, subject to withdrawal or modification of the offer without notice, and subject to the 

approving legal opinion of Rhoads & Sinon LLP, of Harrisburg, Pennsylvania, Bond Counsel to the School District, to be furnished upon 

delivery of the Bonds. Certain other legal matters will be passed upon for the School District by Worth, Magee & Fisher, P.C., School 

District Solicitor. Public Financial Management, Inc., of Harrisburg, Pennsylvania, serves as the Financial Advisor to the School District 

in connection with the issuance of the Bonds. It is expected that the Bonds will be available for delivery to DTC or its agent, on or about 

January 15, 2013. 

Official Statement Dated: December 10, 2012

$7,810,000 




Dated: Date of Delivery 

Principal Due: October 1 as shown below 

Interest Due: April 1 and October 1 First Interest Payment: April 1, 2013 

MATURITIES, AMOUNTS, RATES AND PRICES/YIELDS 

Maturity Date 

Principal 

Maturity Interest Initial Offering Initial Offering 

(October 1) Amount Rate Yields Prices 

2013 $1,800,000 2.000% 0.350% 101.170% 

2014 2,040,000 2.000 0.500 102.552 

2015 1,165,000 2.000 0.650 103.621 

2016 1,195,000 2.000 0.750 104.566 

2017 1,190,000 2.000 0.850 105.299 

2018 420,000 2.000 1.000 105.537

EAST PENN SCHOOL DISTRICT 


BOARD OF SCHOOL DIRECTORS 

Charles H. Ballard ............................................................................................................................................................. 

Alan C. Earnshaw .............................................................................................................................................................. 

Kenneth Bacher ................................................................................................................................................................. 

Lynn Donches ................................................................................................................................................................... 

Francee Fuller ................................................................................................................................................................... 

Rebecca Heid .................................................................................................................................................................... 

Michael Policano, Jr. ......................................................................................................................................................... 

Samuel F. Rhodes, III ........................................................................................................................................................ 

Julian Stolz ........................................................................................................................................................................ 

Cecilia R. Birdsell ............................................................................................................................................................. 

Lynn A. Glancy ................................................................................................................................................................. 

President 

Vice President 

Member 

Member 

Member 

Member 

Member 

Member 

Member 

Secretary* 

Treasurer* 

*Non-voting members 

SUPERINTENDENT OF SCHOOLS 

DR. THOMAS L. SEIDENBERGER 

DIRECTOR OF OPERATIONS 

LYNN A. GLANCY 

BUSINESS MANAGER 

DEBRA A. SURDOVAL 

SCHOOL DISTRICT SOLICITOR 

WORTH, MAGEE & FISHER, P.C. 

Allentown, Pennsylvania 

BOND COUNSEL 

RHOADS & SINON LLP 

Harrisburg, Pennsylvania 

FINANCIAL ADVISOR 

PUBLIC FINANCIAL MANAGEMENT, INC. 

Harrisburg, Pennsylvania 

UNDERWRITER 

ROBERT W. BAIRD & CO., INC. 

Red Bank, New Jersey 

PAYING AGENT 

U.S. BANK NATIONAL ASSOCIATION 

Philadelphia, Pennsylvania 

SCHOOL DISTRICT ADDRESS 

800 Pine Street 

Emmaus, PA 18049

No dealer, broker, salesman or other person has been authorized by the School District to give information or to make any representations, other than those 

contained in this Official Statement, and if given or made, such other information or representations must not be relied upon. 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 Bonds in any jurisdiction in which it is unlawful to make such offer, 

solicitation or sale. The information set forth herein has been obtained from the School District and from other sources which are believed to be reliable but the School 

District does not guarantee the accuracy or completeness of information from sources other than the School District. The information and expressions of opinion herein 

are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any 

implication that there has been no change in any of the information set forth herein since the date hereof. 

TABLE OF CONTENTS 

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

PURPOSE OF THE ISSUE ........................................................... 1 

Sources and Uses of Bond Proceeds...................................... 1 

THE BONDS .................................................................................. 2 

Page 

Description ............................................................................ 2 

Payment of Principal and Interest .......................................... 2 

Transfer, Exchange and Registration of Bonds ..................... 2 

SECURITY FOR THE BONDS .................................................... 3 

General Obligation Pledge .................................................... 3 

Sinking Fund ......................................................................... 3 

Commonwealth Enforcement of Debt Service Payments ...... 3 

BOOK-ENTRY ONLY SYSTEM ................................................. 4 

REDEMPTION OF BONDS ......................................................... 6 

Optional Redemption ............................................................ 6 

Notice of Redemption ........................................................... 6 

Manner of Redemption ......................................................... 6 

THE SCHOOL DISTRICT ........................................................... 7 

Introduction ........................................................................... 7 

Administration ...................................................................... 7 

Enrollment Trends ................................................................. 8 

SCHOOL DISTRICT FINANCES ............................................... 8 

Introduction ........................................................................... 8 

Financial Reporting ............................................................... 8 

Revenue................................................................................. 10 

TAXING POWERS OF THE SCHOOL DISTRICT .................. 12 

Act 48 of 2003 – Limitation on Fund Balances .................... 14 

Commonwealth Aid to School Districts ................................ 18 

Page 

DEBT AND DEBT LIMITS .......................................................... 18 

Debt Limit and Remaining Borrowing Capacity ................... 20 

Debt Service Requirements ................................................... 20 

Future Financing ................................................................... 21 

LABOR RELATIONS ................................................................... 22 

Pension Program ................................................................... 22 

Other Post-Employment Benefits .......................................... 22 

LITIGATION ................................................................................ 22 

DEFAULTS AND REMEDIES ..................................................... 22 

TAX EXEMPTION AND OTHER TAX MATTERS .................. 23 

Federal Income Tax Matters .................................................. 23 

Pennsylvania Tax Matters ..................................................... 24 

Federal Income Tax Interest Expense Deductions for Financial 

Institutions ............................................................................ 24 

CONTINUING DISCLOSURE UNDERTAKING ...................... 24 

RATING ......................................................................................... 26 

UNDERWRITING ........................................................................ 26 

LEGAL OPINION ......................................................................... 26 

APPENDIX A - DEMOGRAPHIC AND ECONOMIC INFORMATION 

RELATING TO THE EAST PENN SCHOOL DISTRICT 

Introduction ........................................................................... A-1 

Population ............................................................................. A-1 

Employment .......................................................................... A-3 

Income .................................................................................. A-4 

Industry ................................................................................. A-4 

Medical Facilities .................................................................. A-5 

Utilities ................................................................................. A-5 

APPENDIX B - FORM OF BOND COUNSEL OPINION 

APPENDIX C - EAST PENN SCHOOL DISTRICT 

AUDIT REPORT FOR FISCAL YEAR ENDING JUNE 30, 2011 

i

OFFICIAL STATEMENT 

$7,810,000 




INTRODUCTION 

This Official Statement, including the cover and inside cover pages hereof and Appendices hereto, is furnished by East Penn School 

District (the “School District”), a public school district located in a portion of Lehigh County, Pennsylvania, in connection with the 

offering of $7,810,000 aggregate principal amount of General Obligation Bonds, Series of 2013 (the “Bonds”), dated the date of delivery 

which is expected to be on January 15, 2013 (the “Date of Delivery”). The Bonds are being issued pursuant to, and are secured by, a 

Resolution of the Board of School Directors of the School District adopted on December 10, 2012 (the “Resolution”), and pursuant to the 

Local Government Unit Debt Act of the Commonwealth of Pennsylvania (the “Commonwealth” or “State”), 53 Pa.C.S. Chs. 80-82 (the 

“Debt Act”). 

PURPOSE OF THE ISSUE 

Proceeds of the Bonds will be used to: (1) currently refund the School District’s General Obligation Bonds, Series of 2007, 

outstanding in the aggregate principal amount of $2,475,000 (the “2007 Bonds”); (2) currently refund the School District’s General 

Obligation Bonds, Series of 2008, outstanding in the aggregate principal amount of $5,375,000 (the “2008 Bonds”); and (3) to pay the 

costs of issuing the Bonds. 

Upon issuance of the Bonds, a portion of the proceeds will be irrevocably deposited with U.S. Bank National Association, as paying 

agent for the 2007 Bonds and 2008 Bonds in amounts sufficient, without investment, to redeem the 2007 Bonds on the Delivery Date, and 

2008 Bonds on April 1, 2013. 

Sources and Uses of Bond Proceeds 

The following is a summary of the sources and uses of the proceeds from the issuance of the Bonds. 

Source of Funds 

Bond Proceeds .................................................................................................................................... $7,810,000.00 

Net Original Issue Premium ............................................................................................................... 256,182.65 

Total Source of Funds .................................................................................................................... $8,066,182.65 

Total 

Use of Funds 

Amount Required to Redeem 2007 Bonds ......................................................................................... $2,490,297.92 

Amount Required to Redeem 2008 Bonds ......................................................................................... 5,458,975.00 

Costs of Issuance (1) ............................................................................................................................. 116,909.73 

Total Use of Funds .......................................................................................................................... $8,066,182.65 

(1) Includes legal, financial advisor, printing, credit rating, underwriter’s discount, CUSIP, paying agent, and miscellaneous costs. 

1

THE BONDS 

Description 

The Bonds will be issued in fully registered form in denominations of $5,000 principal amount and integral multiples thereof, 

will be in the aggregate principal amount of $7,810,000, will be dated the Date of Delivery, and will bear interest at the rates and mature in 

the amounts and on the dates set forth on the inside front cover of this Official Statement. Interest on each of the Bonds will be payable 

initially on April 1, 2013, and thereafter, semiannually on April 1 and October 1 of each year until the maturity date of such Bond or, if 

such Bond is redeemable and is called for redemption prior to maturity, until the date fixed for redemption thereof, if payment of the 

redemption price has been duly made or provided for. 

When issued, the Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”), 

New York, New York. Purchasers of the Bonds (the “Beneficial Owners”) will not receive any physical delivery of Bond certificates, and 

beneficial ownership of the Bonds will be evidenced only by book entries. See “BOOK–ENTRY ONLY SYSTEM” herein. 

Payment of Principal and Interest 

So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payments of principal of, redemption premium, 

if any, and interest on the Bonds, when due, are to be made to DTC, and all such payments shall be valid and effective to satisfy fully and 

to discharge the obligations of the School District with respect to, and to the extent of, principal, redemption premium, if any, and interest 

so paid. If the use of the Book-Entry Only System for the Bonds is discontinued for any reason, bond certificates will be issued to the 

Beneficial Owners of the Bonds and payment of principal, redemption premium, if any, and interest on the Bonds shall be made as 

described in the following paragraphs: 

The principal of certificated Bonds, when due upon maturity or upon any earlier redemption, will be paid to the registered 

owners of the Bonds, or registered assigns, upon surrender of the Bonds to U.S. Bank National Association (the “Paying Agent”), acting as 

paying agent and sinking fund depositary for the Bonds, at its specified corporate trust office (or to any successor paying agent at its 

designated office(s)). 

Interest on the Bonds will be payable to the registered owner of a Bond from the interest payment date next preceding the date of 

registration and authentication of the Bond, unless: (a) such Bond is registered and authenticated as of an interest payment date, in which 

event such Bond shall bear interest from said interest payment date, or (b) such Bond is registered and authenticated after a Record Date 

(hereinafter defined) and before the next succeeding interest payment date, in which event such Bond shall bear interest from such interest 

payment date, or (c) such Bond is registered and authenticated on or prior to the Record Date preceding April 1, 2013, in which event such 

Bond shall bear interest from the Date of Delivery, or (d) as shown by the records of the Paying Agent, interest on such Bond shall be in 

default, in which event such Bond shall bear interest from the date to which interest was last paid on such Bond. Interest on each Bond 

will be payable by check drawn on the Paying Agent, which shall be mailed to the registered owner whose name and address shall appear, 

at the close of business on the fifteenth (15 th ) day (whether or not a day on which the Paying Agent is open for business) next preceding 

each interest payment date (the “Record Date”), on the registration books maintained by the Paying Agent, irrespective of any transfer or 

exchange of the Bond subsequent to such Record Date and prior to such interest payment date, unless the School District shall be in default 

in payment of interest due on such interest payment date. In the event of any such default, such defaulted interest shall be payable to the 

person in whose name the Bond is registered at the close of business on a special record date for the payment of such defaulted interest 

established by notice mailed by the Paying Agent to the registered owners of such Bonds not less than fifteen (15) days preceding such 

special record date. Such notice shall be mailed to the persons in whose names such Bonds are registered at the close of business on the 

fifth (5 th ) day preceding the date of mailing. 

If the date for payment of the principal of or interest on any Bonds shall be a Saturday, Sunday, legal holiday or a day on which 

banking institutions in the Commonwealth are authorized or required by law or executive order to close, then the date for payment of such 

principal or interest shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking 

institutions are authorized or required to close, and payment on such date shall have the same force and effect as if made on the nominal 

date established for such payment. 

Transfer, Exchange and Registration of Bonds 

Subject to the provisions described below under “Book-Entry Only System,” each of the Bonds is transferable or exchangeable 

by the registered owner thereof upon surrender of such certificated Bond to the Paying Agent, accompanied by a written instrument or 

instruments in form, with instructions, and with guaranty of signature satisfactory to the Paying Agent, duly executed by the registered 

owner of such Bond or his attorney-in-fact or legal representative. The Paying Agent shall enter any transfer of ownership of certificated 

Bonds in the registration books and shall authenticate and deliver at the earliest practicable time in the name of the transferee or transferees 

a new fully registered bond or bonds of authorized denominations of the same series, maturity and interest rate for the aggregate principal 

amount which the registered owner is entitled to receive. The School District and the Paying Agent may deem and treat the registered 

owner of any Bond as the absolute owner thereof (whether or not a Bond shall be overdue) for the purpose of receiving payment of or on 

account of principal and interest and for all other purposes, and the School District and the Paying Agent shall not be affected by any 

notice to the contrary. 

2

The School District and the Paying Agent shall not be required (a) to register the transfer of or exchange any Bonds then 

considered for redemption during a period beginning at the close of business on the fifteenth (15 th ) day next preceding any date of selection 

of Bonds to be redeemed and ending at the close of business on the day on which the applicable notice of redemption is mailed or (b) to 

register the transfer of or exchange any portion of any Bond selected for redemption until after the redemption date. Bonds may be 

exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same series, maturity and interest rate. 

General Obligation Pledge 

SECURITY FOR THE BONDS 

The Bonds will be general obligations of the School District, payable from its tax and other general revenues. The School 

District has covenanted that it will provide in its budget for each year, and will appropriate from its general revenues in each such year, the 

amount of the debt service on the Bonds for such year, and will duly and punctually pay or cause to be paid from its Sinking Fund, as 

hereinafter defined, or any other of its revenues or funds, the principal of each of the Bonds and the interest thereon at the dates and place 

and in the manner stated on the Bonds, and for such budgeting, appropriation and payment the School District irrevocably has pledged its 

full faith, credit and taxing power, which taxing power presently includes the power to levy an annual ad valorem tax on all taxable 

property within the School District within the limits provided by law (see “Taxing Powers of the School District” herein). The Debt Act 

presently provides for enforcement of debt service payments as hereinafter described (see “Defaults and Remedies” herein), and the Public 

School Code presently provides for the withholding and application of subsidies in the event of failure to pay debt service (see 

“Commonwealth Enforcement of Debt Service Payments” herein). 

Sinking Fund 

A sinking fund for the payment of the debt service on the Bonds, designated “Sinking Fund, General Obligation Bonds, Series of 

2013” (the “Sinking Fund”), has been created under the Resolution and shall be maintained by the Paying Agent, as sinking fund 

depositary. The School District shall deposit in the Sinking Fund a sufficient sum not later than the date when interest and/or principal is 

to become due on the Bonds so that on each payment date the Sinking Fund will contain an amount which, together with any other funds 

available therein, is sufficient to pay, in full, interest and/or principal then due on the Bonds. 

The Sinking Fund shall be held by the Paying Agent, as sinking fund depositary, and invested by the Paying Agent in such 

securities or shall be deposited in such funds or accounts as are authorized by the Debt Act, upon direction of the School District. Such 

deposits and securities shall be in the name of the School District, but subject to withdrawal or collection only by the Paying Agent, as 

sinking fund depositary, and such deposits and securities, together with the interest thereon, shall be a part of the Sinking Fund. 

The Paying Agent, as sinking fund depositary, is authorized without further order from the School District to pay from the 

Sinking Fund the principal of and interest on the Bonds, as and when due and payable. 

Commonwealth Enforcement of Debt Service Payments 

Section 633 of the Pennsylvania Public School Code of 1949, as amended (the “Public School Code”), presently provides that in 

all cases where the board of school directors of any school district fails to pay or to provide for the payment of any indebtedness on the 

date of maturity or date of mandatory redemption or on any sinking fund deposit date, or any interest due on such indebtedness on any 

interest payment date or on any sinking fund deposit date, in accordance with the schedule under which the bonds were issued, the 

Secretary of Education shall notify such board of school directors of its obligation and shall withhold out of any Commonwealth 

appropriation due such school district an amount equal to the sum of the principal amount maturing or subject to mandatory redemption 

and interest owing by such school district, or sinking fund deposit due by such school district, and shall pay over the amount so withheld to 

the bank or other person acting as sinking fund depositary for such bond issue. These withholding provisions are not part of any contract 

with the holders of the Bonds and may be amended or repealed by future legislation. 

There can be no assurance, however, that any payments pursuant to this withholding provision will be made by the date on which 

such payments are due to the Bondholders. 

The effectiveness of Section 633 of the Public School Code may be limited by the application of other withholding provisions 

contained in the Public School Code, such as provisions for withholding and paying over of appropriations for payment of unpaid 

teachers’ salaries. Enforcement may also be limited by bankruptcy, insolvency, or other laws or equitable principles affecting the 

enforcement of creditors’ rights generally. 

3

BOOK-ENTRY ONLY SYSTEM 

The information in this section has been obtained from materials provided by DTC for such purpose. The School District 

(herein referred to as the “Issuer”) and the Underwriter do not guaranty the accuracy or completeness of such information, and such 

information is not to be construed as a representation of the School District or the Underwriter. 

The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). 

The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other 

name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for the 

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

DTC the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a 

"banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System. a "clearing 

corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency'' registered pursuant to the provisions 

of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and 

non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's 

participants ("Direct Participants'') deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and 

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

Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and 

non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a whollyowned 

subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities 

Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users 

of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and 

dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, 

either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its 

Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com . 

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

the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner'') is in turn to be 

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

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

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

transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect 

Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in 

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

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

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

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

ownership. DTC has no knowledge of the actual Beneficial Owners of the 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 Direct and Indirect 

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

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

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

statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps 

to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, 

and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the 

nominee holding the Securities for their benefit bas agreed to obtain and transmit notices to Beneficial Owners. In the alternative, 

Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to 

them. 

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

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

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized 

by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 

4

Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee 

as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of 

funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on 

DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the 

case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such 

Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. 

Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an 

authorized representative of DTC) is the responsibility of Issuer or 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 Direct and Indirect 

Participants. 

A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to Tender 

Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on 

DTC's records, to Tender Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory 

purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and 

followed by a book-entry credit of tendered Securities to Tender Agent's DTC account. 

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

to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to 

be printed and delivered. 

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

depository). In that event, Security certificates will be printed and delivered to DTC. 

The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Issuer 

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

NEITHER THE ISSUER NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY 

DTC PARTICIPANT, INDIRECT PARTICIPANT OR BENEFICIAL OWNER OR ANY OTHER PERSON WITH RESPECT TO: (1) 

THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT OR INDIRECT 

PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT 

DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE 

BONDS; (4) THE DELIVERY TO ANY BENEFICIAL OWNER BY DTC OR ANY DTC PARTICIPANT OR INDIRECT 

PARTICIPANT OF ANY NOTICE WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE RESOLUTION TO BE 

GIVEN TO BONDHOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF 

ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY OTHER ACTION TAKEN BY DTC AS BONDHOLDER. 

The Issuer and the Paying Agent cannot give any assurances that DTC or the Participants will distribute payments of the 

principal or redemption price of and interest on the Bonds paid to DTC or its nominee, as the registered owner of the Bonds, or any 

redemption or other notices, to the Beneficial Owners or that they will do so on a timely basis, or that DTC will serve and act in the 

manner described in this Official Statement. 

{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK} 

5

REDEMPTION OF BONDS 

Optional Redemption 

The Bonds are not subject to redemption prior to maturity. 

Notice of Redemption 

So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, however, the School District and the Paying 

Agent shall send redemption notices only to Cede & Co. See “BOOK-ENTRY ONLY SYSTEM” herein for further information regarding 

conveyance of notices to Beneficial Owners. 

Notice of any redemption shall be given by depositing a copy of a redemption notice in first class mail not less than thirty (30) 

days prior to the date fixed for redemption addressed to the registered owners of each of the Bonds to be redeemed, in whole or in part, at 

the addresses shown on the registration books; provided, however, that failure to give such notice by mailing, or any defect therein or in the 

mailing thereof, shall not affect the validity of any proceeding for redemption of other Bonds called for redemption as to which proper 

notice has been given. 

On the date designated for redemption, notice having been provided as aforesaid, and money for payment of the principal and 

accrued interest being held by the Paying Agent, interest on the Bonds or portions thereof so called for redemption shall cease to accrue 

and such Bonds or portions thereof shall cease to be entitled to any benefit or security under the Resolution, and registered owners of such 

Bonds or portions thereof so called for redemption shall have no rights with respect thereto, except to receive payment of the principal 

thereof and accrued interest thereon such Bonds to the date fixed for redemption. 

If at time of mailing of a notice of redemption the School District shall not have deposited with the Paying Agent, as sinking fund 

depositary, money sufficient to redeem all Bonds called for redemption, the notice of redemption may state that it is conditional, i.e., that it 

is subject to the deposit of sufficient redemption money with the Paying Agent not later than the opening of business on the redemption 

date, and such notice shall be of no effect unless such money is so deposited. If the Bonds to be called for redemption shall have been 

refunded, money sufficient to redeem such Bonds shall be deemed to be on deposit with the Paying Agent for the purposes of this 

paragraph and the notice of redemption need not state that it is conditional, if the redemption money has been deposited irrevocably with 

another bank or bank and trust company which shall have been given irrevocable instructions to transfer the same to the Paying Agent not 

later than the opening of business on the redemption date. 

Manner of Redemption 

So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payment of the redemption price shall be made 

to Cede & Co. in accordance with the existing arrangements by and among the School District, the Paying Agent and DTC and, if less 

than all Bonds of any particular maturity of a series are to be redeemed, the amount of the interest of each DTC Participant, Indirect 

Participant and Beneficial Owner in such Bonds to be redeemed shall be determined by the governing arrangements among them, subject 

to any statutory or regulatory requirements as may be in effect from time to time. See “BOOK-ENTRY ONLY SYSTEM” herein for further 

information regarding redemption of Bonds registered in the name of Cede & Co. 

If a Bond is of a denomination larger than $5,000, a portion of such Bond may be redeemed. For the purposes of redemption, a 

Bond shall be treated as representing that number of Bonds that is equal to the principal amount thereof divided by $5,000, each $5,000 

portion of such Bond being subject to redemption. In the case of partial redemption of a Bond, payment of the redemption price shall be 

made only upon surrender of such Bond in exchange for Bonds of authorized denominations in an aggregate principal amount equal to the 

unredeemed portion of the principal amount thereof. 

If the redemption date for any Bonds shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the 

Commonwealth are authorized or required by law or executive order to close, then the date for payment of the principal, premium, if any, 

and interest upon such redemption shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such 

banking institutions are authorized or required to close, and payment on such date shall have the same force and effect as if made on the 

nominal date of redemption. 

6

THE SCHOOL DISTRICT 

Introduction 

The School District is located in eastern Pennsylvania in the southern portion of Lehigh County, approximately seven miles to the 

south and west of Allentown, the county seat of Lehigh County. Encompassing 45.4 square miles in Lehigh County, the School District is 

comprised of Alburtis, Emmaus and Macungie Boroughs and Lower Macungie and Upper Milford Townships. 

Prior to 1966, and pursuant to law, the former School Districts of the Boroughs of Emmaus, Alburtis, and Macungie and the 

Townships of Lower Macungie and Upper Milford, Lehigh County, formed the East Penn Union School District. Pursuant to Act 299 of 

the 1963 Pennsylvania Legislature requiring a consolidation of school districts, effective July 1, 1966, the East Penn Union School District 

formed the East Penn School District. The reorganized School District has assumed all rights and obligations of the predecessor school 

district. 

Administration 

The School District is governed by a board of nine School Directors (the “Board of School Directors”) who are residents of the 

School District and who are elected every two years, on a staggered basis, for a four-year term. The daily operations and management of 

the School District are performed by the administrative staff of the School District headed by the Superintendent of Schools who is 

appointed by the Board of School Directors. The Business Manager is responsible for budget and financial operations and is also 

appointed by the Board of School Directors. 

School Building Facilities 

The School District currently operates seven elementary schools, two middle schools and one high school. An inventory of existing 

public school facilities within the School District is as follows: 

TABLE 1 

EAST PENN SCHOOL DISTRICT FACILITIES 

Original Addition/ Rated 

Construction Renovation Number of Pupil 2012-13 

Building Date Date(s) Grades Classrooms Capacity Enrollment 

Elementary: 

Alburtis ....................................... 2004 --- K-5 16 525 360 

Jefferson ..................................... 1999 --- K-5 13 300 277 

Lincoln ....................................... 1928 1960, 1995 K-5 17 450 415 

Macungie .................................... 1988 --- K-5 23 625 480 

Shoemaker .................................. 1970 2005 K-5 28 775 740 

Wescosville ................................ 1966 1997 K-5 26 700 584 

Willow Lane ................................ 2009 --- K-5 32 825 724 

Secondary: 

Lower Macungie Middle ............ 1999 --- 6-8 36 1,192 1,066 

Howard A. Eyer Middle ............. 1973 2008 6-8 18 1,350 890 

Emmaus High ............................. 1954 1958, 1996, 1999, 2004 9-12 31 2,441 2,535 

Source: School District officials. 

7

Enrollment Trends 

The following table presents recent trends in school enrollment and projections of enrollment for over the next five years, as prepared 

by School District officials. 

TABLE 2 

EAST PENN SCHOOL DISTRICT ENROLLMENT TRENDS 

Actual Enrollments* 

Projected Enrollments 

School 

School 

Year Elementary Secondary Total Year Elementary Secondary Total 

2008-09 3,500 4,541 8,041 2013-14 3,646 4,474 8,120 

2009-10 3,528 4,472 8,043 2014-15 3,615 4,576 8,191 

2010-11 3,535 4,503 8,038 2015-16 3,650 4,646 8,296 

2011-12 3,532 4,479 8,011 2016-17 3,663 4,742 8,405 

2012-13 3,580 4,491 8,071 2017-18 3,749 4,726 8,475 

*Grade 6 is included in secondary. 


SCHOOL DISTRICT FINANCES 

Introduction 

The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. 

An annual operating budget is prepared by the Superintendent and Business Manager and submitted to the Board of School Directors for 

approval prior to the beginning of the fiscal year on July 1. 

Financial Reporting 

The School District utilizes the modified accrual basis of accounting under which expenditures other than interest on long-term debt 

are recorded when incurred and revenues are recorded as received in cash unless susceptible to accrual. The School District’s financial 

statements are audited annually by a firm of independent certified public accountants, as required by Commonwealth law. The firm of 

Gorman & Associates PC serves as the School District’s auditor. 

The School District’s auditor has not been engaged to perform, and has not performed, since the date of its report included in an 

Appendix to this Official Statement, any procedure on the financial statements addressed in that report. Such auditor also has not 

performed any procedures relating to this Official Statement. 

Budgeting Process in School Districts under Act 1 (Taxpayer Relief Act) 

In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of 

Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such 

Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1. 

Procedures for Adoption of the Annual Budget. Under Pennsylvania Act No. 1 of the Special Session of 2006, as amended by Act 

25 of 2011 (the “Taxpayer Relief Act” or “Act 1”), all school districts of the first class A, second class, third class and fourth class (except 

as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax 

rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be 

printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public 

hearing on the budget; and the board must give at least 10 days’ public notice of its intent to adopt the final budget. 

If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the 

Pennsylvania Department of Education (“PDE”) no later than 85 days prior to the date of the election immediately preceding the fiscal 

year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district’s Index (see “The Taxpayer 

Relief Act” herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the 

proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the 

school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to 

utilize one of the referendum exceptions authorized under The Taxpayer Relief Act. 

8

With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see 

“The Taxpayer Relief Act” herein), the school district must publish notice of its intent to seek PDE approval not less than one week 

before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, 

time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district’s request and inform the school 

district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district’s request, the school 

district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses. 

If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks 

approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved 

by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the 

applicable Index. 

Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school 

directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it 

will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance 

its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made 

available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days’ public notice be given of the board’s 

intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution. 

TABLE 3 


SUMMARY OF COMPARATIVE GENERAL FUND BALANCE SHEET 

(Years ending June 30) 

Unaudited 

ASSETS 2008 2009 2010 2011 2012 (1) 

Cash .................................................................. $10,036,597 $12,505,281 $12,041,340 $15,365,748 $19,678,164 

Investments (at Cost) ........................................ 1,394,897 406,920 0 247,000 0 

Taxes Receivable (Net) ..................................... 2,486,352 2,689,381 2,696,412 2,353,940 2,206,617 

Due From Other Funds ..................................... 0 130,158 216,333 217,087 1,533 

Due From Other Governments .......................... 1,402,146 1,232,834 2,177,690 1,991,880 1,811,405 

Other Receivables ............................................. 14,033 9,501 44,319 38,778 27,578 

Other ................................................................ 0 0 1,065 0 0 

TOTAL ASSETS .............................................. $15,334,025 $16,974,075 $17,177,159 $20,214,433 $23,725,297 

LIABILITIES 

Due To Other Funds.......................................... $3,942 $3,977 $3,977 $5,701 $7,532 

Due To Other Governments .............................. 220,417 229,009 20,123 378,761 268,838 

Accounts Payable .............................................. 957,688 848,949 605,821 1,374,786 1,178,639 

Current Portion of Long-Term Debt 

(e.g.St.Comp.Abs)............................................. 163,920 179,149 201,219 266,480 289,030 

Accrued Salaries & Benefits ............................. 4,290,106 4,151,230 4,501,557 4,836,876 5,351,293 

Deferred Revenues ............................................ 1,809,183 1,802,627 1,788,292 1,502,813 1,506,566 

Other ................................................................. 82,743 45,699 46,773 39,070 79,729 

TOTAL LIABILITIES $7,527,999 $7,260,640 $7,167,762 $8,404,487 $8,681,627 

FUND EQUITIES 

Restricted Fund Balance ................................... $0 $0 $0 $0 $4,177 

Committed Fund Balance .................................. 6,321,830 7,524,332 0 398 1,250,294 

Assigned Fund Balance ..................................... 1,484,196 2,189,103 8,103,223 8,813,072 10,021,093 

Unassigned Fund Balance ................................. 0 0 1,906,174 2,996,476 3,768,106 

TOTAL FUND EQUITIES .............................. $7,806,026 $9,713,435 $10,009,397 $11,809,946 $15,043,670 

TOTAL LIABILITIES AND FUND EQUITIES $15,334,025 $16,974,075 $17,177,159 $20,214,433 $23,725,297 

(1) Unaudited, subject to change and final audit. 

Source: School District Annual Financial Reports. 

9

TABLE 4 

EAST PENN SCHOOL DISTRICT GENERAL FUND* 

SUMMARY OF CHANGES IN FUND BALANCE 

(Years Ending June 30) 

Actual Unaudited Budget 

2008 2009 2010 2011 2012 (1) 2013 (2) 

Beginning Fund Balance: 

General Fund .................................... $8,043,622 $7,806,026 $9,713,436 $10,119,618 $11,809,946 $15,043,670 

Surplus (Deficit ) of Revenue 

Over Expenditure: 

General Fund .................................... (237,597) 1,907,410 295,961 1,690,328 3,233,724 (10,021,093) 

Other (Budgetary Reserve) ................ 1 0 110,221 0 0 5,952,195 

Ending Fund Balance ..................... $7,806,026 $9,713,436 $10,119,618 $11,809,946 $15,043,670 $10,974,772 

*Totals may not add due to rounding. 


(2) Budget, as adopted June 25, 2012. The School District does not anticipate using the budgetary reserve of $5,952,195; this should result 

in an ending general fund balance of approximately $10,974,772. 

Source: School District Annual Financial Reports and Budget. 

Revenue 

The School District received an unaudited $114,045,139 in revenue in 2011-12 and has budgeted $114,975,011 in 2012-13. Local, 

as a share of revenue in the past five years, decreased as a share of total revenue from 78.7 percent to an unaudited 77.8 percent over this 

period. Revenue from Commonwealth sources increased as a share of the total revenue from 20.8 percent to an unaudited 21.3 percent 

over this period. Federal and other sources increased as a share of total revenue from 0.5 percent to an estimated 0.9 percent. 

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10

TABLE 5 


SUMMARY OF SCHOOL DISTRICT GENERAL FUND 

REVENUES AND EXPENDITURES* 

(For years ending June 30) 

REVENUE: Actual Unaudited Budgeted 

Local Sources: 2008 2009 2010 2011 2012 (1) 2013 (2) 

Real Estate Taxes ......................................... $63,224,804 $65,666,678 $69,731,396 $73,487,382 $75,496,980 $76,103,988 

Interim Real Estate ....................................... 1,130,809 1,555,790 964,622 779,619 305,375 950,000 

Total Act 511 Taxes ..................................... 9,360,967 8,975,751 8,349,899 8,643,666 8,805,032 8,403,000 

Public Utility Tax ......................................... 99,297 96,017 106,331 111,987 113,473 114,000 

Payments in Lieu of Current Taxes/State & 

Local ............................................................ 9,014 10,509 10,510 11,705 10,733 11,725 

Delinquent Taxes ......................................... 1,833,655 1,891,454 2,001,958 1,956,604 1,926,381 2,026,000 

Earnings from Investments .......................... 1,303,496 763,188 247,233 148,506 149,776 150,100 

State Revenue Rec'd from Other Public 

Schools ......................................................... 0 30,000 25,000 25,000 13,320 0 

Federal Revenue Rec'd from Other Public 

Schools ......................................................... 979,955 984,144 1,152,049 1,099,976 1,190,017 1,216,325 

Federal ARRA IDEA Pass through Revenue 0 0 900,000 473,547 0 0 

Rentals ........................................................ 7,561 11,061 29,775 43,468 52,393 80,580 

Contributions and Donations from Private 

Sources ......................................................... 27,917 7,894 121,265 110,292 125,663 110,300 

Tuition and Other Receipts from Patrons..... 173,267 167,089 138,779 144,150 136,088 183,600 

Receipts from Other LEAS in PA-Education 37,724 74,350 1,301 20,445 184,382 20,000 

Refunds of Prior Yr. Expenditures ............... 519 220 7,094 5,460 3,401 8,000 

Other Sources ............................................... 7,657 11,101 15,270 130,857 224,523 162,750 

Total Local Sources .................................... $78,196,642 $80,245,246 $83,802,481 $87,192,663 $88,737,536 $89,540,368 

State Sources: 

Instructional Subsidy ................................... $9,688,797 $10,096,882 $9,413,543 $9,284,001 $10,366,451 $10,341,389 

Charter Schools ............................................ 195,403 310,898 343,891 555,208 0 0 

Alternative Education .................................. 10,412 28,652 20,821 0 0 0 

Tuition for Orphans ..................................... 103,672 116,653 90,830 4,531 142,865 50,000 

Homebound Instruction ............................... 2,965 2,287 0 0 0 0 

Driver Education .......................................... 9,030 9,975 9,205 10,115 11,400 0 

Migratory Children ...................................... 160 120 0 0 0 0 

Special Education ........................................ 2,903,039 3,099,746 3,137,552 3,118,944 3,119,219 3,008,944 

Transportation .............................................. 1,749,858 1,726,666 1,479,581 1,596,320 1,763,206 1,903,123 

Rentals and Sinking Fund Payments ............ 2,046,499 1,385,746 1,756,706 1,442,644 2,743,578 1,748,198 

Health Services ............................................ 160,490 162,883 156,073 154,203 155,340 155,350 

State Property Tax Reduction ...................... 0 1,791,709 1,792,689 1,793,925 1,794,357 1,795,989 

Other Services .............................................. 0 0 0 0 0 0 

Extra Grants ................................................. 0 5,293 0 0 0 0 

PA Accountability Grant .............................. 590,745 583,066 583,066 546,765 214,817 200,000 

Revenue for Retirement Payments ............... 1,553,571 1,131,204 1,161,575 1,435,448 2,149,299 3,192,433 

Revenue Social Security Payments .............. 1,692,627 1,763,751 1,823,479 1,936,593 1,871,562 1,956,377 

Additional grants not listed elsewhere ......... 6,341 187,810 0 0 0 0 

Total State Sources ..................................... $20,713,611 $22,403,341 $21,769,011 $21,878,696 $24,332,093 $24,351,803 

Federal Sources: 

Total Federal Sources ................................. $478,127 $852,958 $2,206,956 $3,096,292 $972,803 $1,080,740 

Other Sources: 

Total Other Sources .................................... $12,683 $3,566 $272 $31,067 $2,706 $2,100 

Fund Balance Reserve ................................ $0 $0 $0 $0 $0 $0 

TOTAL REVENUE ..................................... $99,401,063 $103,505,111 $107,778,719 $112,198,718 $114,045,139 $114,975,011 






11

TABLE 5 


SUMMARY OF SCHOOL DISTRICT GENERAL FUND 

REVENUES AND EXPENDITURES* 

(For years ending June 30) 

EXPENDITURES: Actual Unaudited Budgeted 

2008 2009 2010 2011 2012 (1) 2013 (2) 

Instruction ............................................. $53,777,574 $55,983,513 $59,706,059 $62,809,898 $62,713,715 $67,806,977 

Pupil Personnel ..................................... 3,749,060 3,833,274 4,007,318 3,801,484 3,566,385 3,796,563 

Instructional Staff .................................. 3,286,042 3,286,843 3,289,197 3,410,226 3,192,759 3,282,869 

Administration ...................................... 4,844,932 4,983,701 5,196,416 5,137,335 4,980,605 5,312,551 

Pupil Health .......................................... 916,522 964,057 996,486 1,057,309 1,163,389 1,266,853 

Business ................................................ 760,626 819,789 848,048 844,853 865,310 956,107 

Operation and Maintenance .................. 9,163,885 9,374,679 9,843,362 10,195,764 10,181,170 11,082,931 

Student Transportation .......................... 5,480,928 5,451,414 5,674,842 5,914,363 6,459,842 6,446,432 

Central ................................................... 1,281,864 1,526,173 1,645,582 1,537,457 1,506,183 1,582,585 

Other Support Services ......................... 116,984 131,380 137,863 142,008 138,099 138,569 

Operation of Noninstructional Services 281,835 301,647 299,202 1,487,952 1,527,530 1,643,152 

Fac Acq, Const, and Imp ....................... 0 0 58,529 0 0 

Debt Service .......................................... 14,379,942 13,606,343 14,131,253 14,069,238 14,197,277 15,588,320 

Refund of Prior Year Receipts .............. 0 21,933 88,330 503 219,150 40,000 

Fund Transfers ...................................... 1,598,467 1,312,955 1,560,271 100,000 100,000 100,000 

Budgetary Reserve ................................ 0 0 0 0 5,952,195 

TOTAL EXPENDITURES ................... $99,638,660 $101,597,701 $107,482,758 $110,508,390 $110,811,414 $124,996,104 

SURPLUS (DEFICIT) OF 

REVENUES 'OVER 

EXPENDITURES ................................ ($237,597) $1,907,410 $295,961 $1,690,328 $3,233,725 ($10,021,093) 






In General 

TAXING POWERS OF THE SCHOOL DISTRICT 

Subject to certain limitations imposed by the Taxpayer Relief Act, Act No. 1 of the Special Session of 2006, as amended (see “The 

Taxpayer Relief Act (Act 1)” herein), the School District is empowered by the School Code and other statutes to levy the following taxes: 

1. A basic annual tax on all real property taxable for school purposes, not to exceed 25 mills on each dollar of assessed valuation, 

to be used for general school purposes. 

2. An unlimited ad valorem tax on the property taxable for school purposes to provide funds: 

a. for minimum salaries and increments of the teaching and supervisory staff; 

b. to pay rentals due any municipality authority or non-profit corporation or due the State Public School Building 

Authority; 

c. to pay interest and principal on any indebtedness incurred pursuant to the Local Government Unit Debt Act, or any 

prior or subsequent act governing the incurrence of indebtedness of the school district; and 

d. to pay for the amortization of a bond or note issue which provided a school building prior to the first Monday of July, 

1959. 

3. An annual per capita tax on each resident or inhabitant over 18 years of age of not more than $5.00. 

12

4. Additional taxes subject to division with other political subdivisions authorized to levy similar taxes on the same person, subject, 

business, transaction or privilege, under Act No. 511, enacted December 31, 1965, as amended (“The Local Tax Enabling Act”). 

These taxes, which may include, among others, an additional per capita tax, a wage and other earned income tax, a real estate 

transfer tax, a gross receipts tax, a local services tax and an occupation tax, shall not exceed, in the aggregate, an amount equal to 

the product of the market valuation of real estate in the School District (as certified by the State Tax Equalization Board of the 

Commonwealth – “STEB”) multiplied by twelve mills. All local taxing authorities are required by the Local Tax Enabling Act 

to exempt disabled veterans and members of the armed forces reserve who are called to active duty at any time during the tax 

year from any local services tax and to exempt from any local services tax levied at a rate in excess of $10 those persons whose 

total income and net profits from all sources within the political subdivision is less than $12,000 for the tax year. The Local Tax 

Enabling Act also authorizes, but does not require, taxing authorities to exempt from per capita, occupation, and earned income 

taxes and any local services tax levied at a rate of $10 or less per year, any person whose total income from all sources is less 

than $12,000 per year. 

The Taxpayer Relief Act (Act 1) 

Under the Taxpayer Tax Relief Act, a school district may not levy any new tax for the support of the public schools, raise the rate of 

any earned income and net profits tax if already imposed under the authority of the Local Tax Enabling Act (Act 511), or increase the rate 

of any tax for school purposes by more than the Index (defined below), unless in each case either (a) such increase is approved by the 

voters in the school district at a public referendum or (b) one of the exceptions summarized below is applicable and the use of such 

exception is approved by the Pennsylvania Department of Education (PDE): 

1. to pay interest and principal on indebtedness incurred (i) prior to September 4, 2004, in the case of a school district 

which had elected to become subject to the provisions of the prior Homeowner Tax Relief Act, Act 72 of 2004, or (ii) 

prior to June 27, 2006, in the case of a school district which had not elected to become subject to Act 72 of 2004; to 

pay interest and principal on any indebtedness approved by the voters at referendum (electoral debt); and to pay 

interest and principal on debt refunding or refinancing debt for which one of the above exceptions is permitted, as long 

as the refunding or refinancing incurs no additional debt other than for costs and expenses related to the refunding or 

refinancing and the funding of appropriate debt service reserves; 

2. to pay costs incurred in providing special education programs and services to students with disabilities, under specified 

circumstances; and 

3. to make payments into the State Public School Employees’ Retirement System when the increase in the estimated 

payments between the current year and the upcoming year is greater than the Index, as determined by PDE in 

accordance with the provisions of Act 1. 

Any revenue derived from an increase in the rate of any tax allowed under the exception numbered 1 above may not exceed the 

anticipated dollar amount of the expenditure, and any revenue derived from an increase in the rate of any tax allowed pursuant to any other 

exception enumerated above may not exceed the rate increase required, as determined by PDE. If a school district’s petition or request to 

increase taxes by more than the Index pursuant to one or more of the allowable exceptions is not approved, the school district may submit 

the proposed tax increase to a referendum. 

The Index (to be determined and reported by PDE by September of each year for application to the following fiscal year) is the 

average of the percentage increase in the statewide average weekly wage, as determined by the State Department of Labor and Industry for 

the preceding calendar year, and the employment cost index for elementary and secondary schools, as reported by the federal Bureau of 

Labor Statistics for the preceding 12-month period beginning July 1 and ending June 30. If and when a school district has a Market 

Value/Income Aid Ratio greater than 0.40 for the prior school year, however, the Index is adjusted upward by multiplying the unadjusted 

Index by the sum of 0.75 and such Aid Ratio. 

The Indexes applicable to the School District in the current and previous fiscal years (not including exemptions) are as follows: 

Fiscal Year 

Applicable 

(ending June 30) 

Index 

2012-13 1.7% 

2011-12 1.4 

2010-11 2.9 

2009-10 4.1 

2008-09 4.4 

Source: Pennsylvania Department of Education website. 

In accordance with Act 1, the School District put a referendum question on the ballot at the May, 15, 2007, primary election seeking 

voter approval to levy (or increase the rate of) an earned income and net profits tax (“EIT”) or a personal income tax (“PIT”) and use the 

proceeds to reduce local real estate taxes by a homestead and farmstead exclusion. The referendum was not approved by the voters. 

13

A board of school directors may submit, but is not required to submit, a referendum question to the voters at a municipal election 

seeking approval to levy or increase the rate of an EIT or impose PIT for the purpose of funding homestead and farmstead exclusions, but 

the proposed rate of the EIT or PIT shall not exceed the rate that is required to provide the maximum homestead and farmstead exclusions 

allowable under law. 

Act 1 also provides for gaming revenues received by the Commonwealth to be accumulated in the Property Tax Relief Reserve 

Fund (“Fund”). When the Fund has sufficient money according to a formula, the Secretary of the Commonwealth announces that funds are 

available for distribution to school districts. The money received by school districts from the Fund may only be used to provide a 

reduction in real estate taxes to qualified homestead/farmstead properties. To qualify for a homestead and/or farmstead tax reduction, the 

property must be owner-occupied and used for residential purposes. The money received by the local school district from the Fund are 

offset on a dollar for dollar basis by reductions in the local real estate tax payments from owners of qualified homestead and farmstead 

properties. 

Status of the Bonds Under Act 1 

The Bonds described in this Official Statement are being issued to refund indebtedness that was originally approved (“incurred”) by the 

School District under the Local Government Unit Debt Act prior to June 27, 2006, the effective date of the Taxpayer Relief Act. The School 

District already has levied and has in place sufficient tax millage to provide for payment of the annual debt service on the indebtedness being 

refunded. The maximum annual debt service on the Bonds will be less than or approximately equal to the annual debt service on the 

indebtedness being refunded by the Bonds and, therefore, for the School District does not expect to levy any new tax or to increase the rate of 

any existing tax in order to provide for payment of the interest and principal of the Bonds. 

Act 130 of 2008 

Act 130 of 2008 of the Commonwealth amended the Local Tax Enabling Act so as to authorize school districts levying an occupation 

tax to replace that occupation tax with an increased earned income tax or, if the school district has implemented a personal income tax in 

accordance with the Taxpayer Relief Act, an increased personal income tax, in a revenue neutral manner. To so replace an occupation tax, the 

board of school directors must first hold at least one public hearing on the matter and then place a binding referendum question on the ballot at 

a general or municipal election for approval by the voters. 

The School District has not placed and currently does not intend to place such a referendum on the ballot. 

Act 48 of 2003 – Limitation on Fund Balances 

Pennsylvania Act No. 2003-48 (enacted December 23, 2003) prohibits a school district from increasing real property taxes for 

the school year 2005-2006 or any subsequent school year, unless the school district has adopted a budget for such school year that includes 

an estimated ending unreserved undesignated fund balance which is not more than a specified percentage of the total budgeted 

expenditures, as set forth below: 

Estimated Ending Unreserved Undesignated Fund Balance as 

Total Budgeted Expenditures: 

a Percentage of Total budgeted Expenditures: 

Less than or equal to $11,999,999 12.0% 

Between $12,000,000 and $12,999,999 11.5% 

Between $13,000,000 and $13,999,999 11.0% 

Between $14,000,000 and $14,999,999 10.5% 

Between $15,000,000 and $15,999,999 10.0% 

Between $16,000,000 and $16,999,999 9.5% 

Between $17,000,000 and $17,999,999 9.0% 

Between $18,000,000 and $18,999,999 8.5% 

Greater than or equal to $19,000,000 8.0%* 

“Estimated ending unreserved, undesignated fund balance” is defined in Act 2003-48 as that portion of the fund balance which is 

appropriable for expenditure or not legally or otherwise segregated for a specific or tentative future use, projected for the close of the school 

year for which a school district’s budget was adopted and held in the general fund accounts of the school district. 

*Applicable to the School District. 

14

. 

Tax Levy Trends 

Table 6 shows the recent trend of tax rates levied by the School District. Table 7 shows the comparative trend of real property tax 

rates for the School District, Lehigh County and the municipalities within the School District. 

TABLE 6 

EAST PENN SCHOOL DISTRICT TAX RATES 

Real Estate 

Wage and 

Real Estate Transfer Income 

(mills) (%) (%) 

2008-09 .................................................. 42.27 0.5 0.5 

2009-10 .................................................. 43.64 0.5 0.5 

2010-11 .................................................. 45.32 0.5 0.5 

2011-12 .................................................. 46.15 0.5 0.5 

2012-13 .................................................. 46.75 0.5 0.5 

Source: Department of Community and Economic Development- Municipal Statistics 

TABLE 7 


COMPARATIVE REAL PROPERTY TAX RATES 

(Mills on Assessed Value) 

2008 2009 2010 2011 2012 

School District ............................................................. 40.49 42.27 43.64 45.32 46.15 

Alburtis Borough ......................................................... 9.90 9.90 9.90 9.90 9.90 

Emmaus Borough ........................................................ 10.70 10.70 13.00 13.00 13.25 

Macungie Borough ...................................................... 5.95 5.95 5.95 6.95 8.40 

Lower Macungie Township ......................................... 0.00 0.00 0.00 0.00 0.00 

Upper Milford Township ............................................. 0.25 0.25 0.25 0.50 0.50 

Lehigh County ............................................................. 10.25 10.25 10.25 11.90 11.90 

Source: Department of Community and Economic Development- Municipal Statistics 

Real Property Tax 

The real property tax (excluding delinquent collections) produced an unaudited $75,496,980 in 2011-12, or approximately 66.2% of 

total revenue. The tax is levied on July 1 of each year. The tax bills are dated July 1 and taxpayers who remit within 60 days of July 1 

receive a 2.0% discount, and those who remit subsequent to 120 days after July 1 are assessed a 10.0% penalty. Beginning with the 2008- 

09 fiscal year, eligible taxpayers could opt into the installment method of payment for their school taxes. Installment payments are based 

upon three (3) one-third payments of the base tax amount. 

The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. 

The last Lehigh County reassessment went into effect in 1991-92. Lehigh County has conducted a reassessment to be effective for the 

2013-14 fiscal year, which changes assessments from being on a 50% of value basis to a 100% basis. 

15

TABLE 8 


REAL PROPERTY ASSESSMENT DATA 

Market 

Assessed 

Year Value Value Ratio 

2007-08 ........................................................................... $3,649,200,700 $1,623,591,900 44.49% 

2008-09 ........................................................................... $4,110,399,577 $1,658,709,250 40.35% 

2009-10 ........................................................................... $4,208,763,197 $1,697,348,750 40.33% 

2010-11 ........................................................................... $4,545,388,265 $1,726,476,800 37.98% 

2011-12 ........................................................................... $4,566,243,319 $1,738,279,450 38.07% 

Compound Average Annual Percentage Change ............. 4.59% 1.37% 

Source: Pennsylvania State Tax Equalization Board. 

TABLE 9 


REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY 

2010 2010 2011 2011 

Market Assessed Market Assessed 

Value Value Value Value 

School District ........................................................... $4,545,388,265 $1,726,476,800 $4,566,243,319 $1,738,279,450 

Alburtis Borough ........................................................ 119,619,438 40,622,400 119,501,495 40,587,350 

Emmaus Borough ....................................................... 732,359,546 262,569,650 730,391,728 261,923,850 

Lower Macungie Township ........................................ 2,846,856,274 1,112,791,050 2,867,243,408 1,124,414,400 

Macungie Borough ..................................................... 185,785,743 67,533,600 186,605,987 67,701,700 

Upper Milford Township ............................................ 660,767,263 242,960,100 662,500,701 243,652,150 

Lehigh County ............................................................ 24,663,408,838 9,211,397,300 24,655,478,184 9,219,600,100 


TABLE 10 


ASSESSMENT BY LAND USE 

2007 2008 2009 2010 2011 

Residential ...................... $1,349,143,050 $1,382,882,250 $1,413,422,150 $1,430,972,450 $1,439,872,450 

Lots ................................. 24,004,700 24,482,600 23,245,200 20,111,550 17,368,950 

Industrial ........................ 41,450,250 40,724,150 49,811,850 62,583,950 69,234,100 

Commercial .................... 179,477,700 181,330,200 180,202,100 182,620,450 180,095,000 

Agriculture ..................... 29,516,200 29,290,050 30,667,450 30,188,400 31,047,350 

Total ............................... $1,623,591,900 $1,658,709,250 $1,697,348,750 $1,726,476,800 $1,738,279,450 


16

TABLE 11 


REAL PROPERTY TAX COLLECTION DATA 

Current Year 

Total 

Collections Total Collections 

Total as Percent Current as Percent 

Total Adjusted Current of Total Plus of Total 

Flat Flat Year Adjusted Delinquent Adjusted 

Year Billing Billing (1) Collections Flat Billing Collections (2) Flat Billing 

2007-08 ................... $65,875,834 $64,909,995 $63,224,805 97.40% $65,058,460 100.23% 

2008-09 (3) ................ $68,526,214 $67,477,678 $65,666,678 97.32% $67,558,132 100.12% 

2009-10 ................... $72,264,625 $71,127,842 $69,731,396 98.04% $71,527,583 100.56% 

2010-11 ................... $76,668,585 $75,483,496 $73,487,382 97.36% $75,218,577 99.65% 

2011-12 ................... $78,461,543 $77,259,129 $75,496,980 97.72% $77,295,121 100.05% 

(1) Flat billing plus penalties, less discounts and exonerations. 

(2) Includes delinquent realty taxes collected only. 

(3) Beginning in 2008-09 the amount of the Adjusted Levy is reduced by the amount of the Homestead/Farmstead Exemptions. The 

Adjusted levy shown excludes the amount payable from the Property Tax and Rent Rebate Program funded pursuant to Act 1 of the 

Commonwealth. 


The ten largest real property taxpayers, together with 2012-13 assessed values, are shown on Table 12. The aggregate assessed value 

of these ten taxpayers totals approximately 4.15% of total assessed value. 

TABLE 12 


TEN LARGEST REAL PROPERTY TAXPAYERS* 

2012-13 Assessed 

Owner Property Value 

Headlands Realty Corp (1) Real Estate $9,452,150 

JDN Development Company Inc. Real Estate 8,816,200 

Allen Distribution Real Estate 8,568,000 

Rodale Press Inc. Printing 8,220,850 

Cedar-Trexler LLC Shopping Center 7,192,900 

Liberty Property LP Real Estate 6,720,000 

Fieldstone Asso. Ltd Partnership Retail 6,578,000 

Lehigh Valley South Industrial LLC Retail 5,680,800 

HP Altman Colonial Crest Emmaus LP Apartments 5,621,250 

Emmaus Associates Construction & Apartments 5,337,750 

Total $72,187,900 

* The November Taxable Assessment data from the County still indicates a $1,299,550 increase in taxable total assessments over the 

previous November, while the top 10 assessed value has declined $864,800 and only makes up 4.19% of assessments as opposed to 4.24% 

in 2011-12. Therefore the School District is even less dependent on the 10 largest taxpayers. 

(1) 

Taxpayer appealing 2012 Assessed Value 

Source: Lehigh County Tax Assessors office. 

Other Taxes 

Under Act 511, the School District yielded $8,805,032 in other taxes in 2011-12. Among the taxes authorized by Act 511, the 

Earned Income and Real Estate Transfer taxes are levied by the School District. The Act 511 limit, equal to 12 mills on the market value 

of real property, was $54,794,920. 

Earned Income Tax. The School District levies a tax at an effective rate of 0.5% on earned income of residents. In 2011-12 the 

collected portion of this tax yielded $7,957,175 or 7.0% of the School District’s total revenue. 

Real Estate Transfer Tax. The School District levies a tax of 0.5% of the value of real estate transfer in 2011-12 yielded $847,857 or 

less than one percent of the School District’s total revenue. 

17

Commonwealth Aid to School Districts 

Pennsylvania school districts receive financial assistance from the Commonwealth in a number of forms, all subject to statutory 

provisions and annual appropriation by the Pennsylvania General Assembly. 

The largest subsidy, basic instructional subsidy, is allocated to all school districts based on factors such as: (1) the per pupil market 

value of assessable real property in the school district; (2) the per pupil earned income in the school district; (3) the school district's tax 

effort, as compared with the tax effort of other school districts in the Commonwealth; and (4) student count. School districts also receive 

subsidies for special education, pupil transportation, health service and debt service. 

Commonwealth law presently provides that the School District will receive reimbursement from the Commonwealth for a portion of 

debt service on the Bonds after the projects financed by the Bonds have received final approval of the Department of Education. 

Commonwealth reimbursement is based on the "Reimbursable Percentage" assigned to the Bonds and the School District's Capital Account 

Reimbursement Fraction (“CARF”). The School District officials have estimated that the "Reimbursable Percentage" of the Bonds will be 

a maximum of 25.05 percent. The School District CARF for the 2012-13 school year is currently 40.69 percent. The product of these two 

factors is 10.19 percent, which is the maximum potential percentage of debt service, which will be reimbursed by the Commonwealth on 

the Bonds. In future years, this percentage may change as the School District's CARF changes, or as a result of future legislation. CARF is 

a function of the market value per weighted average daily membership of the School District relative to that of other school districts of the 

Commonwealth. 

Debt Statement 

DEBT AND DEBT LIMITS 

Table 13 shows the debt of the School District as of December 10, 2012, including the issuance of the Bonds. 

TABLE 13 


DEBT STATEMENT 

(As of December 10, 2012)* 

Gross 

Outstanding 

NONELECTORAL DEBT 

General Obligation Bonds, Series of 2013 (last maturity 2018) .......................................................... $7,810,000 

General Obligation Bonds, Series A of 2012 (last maturity 2028) ...................................................... 9,900,000 

General Obligation Bonds, Series of 2012 (last maturity 2024) .......................................................... 9,500,000 






General Obligation Notes, Series A of 2008 (last maturity 2022) ....................................................... 12,328,176 

General Obligation Notes, Series B of 2008 (last maturity 2023) ....................................................... 10,746,702 

General Obligation Notes, Series C of 2008 (last maturity 2023) ....................................................... 10,577,892 

General Obligation Bonds, Series A of 2008 (last maturity 2015) ...................................................... 2,365,000 

General Obligation Notes, Series of 2007 (last maturity 2022) ........................................................... 12,000,000 


General Obligation Notes, Series A of 2004 (last maturity 2023) ....................................................... 10,400,000 

General Obligation Notes, Series A of 2003 (last maturity 2023) ....................................................... 10,300,000 

General Obligation Notes, Series of 1998 (last maturity 2019) ........................................................... 4,720,000 

Subtotal ............................................................................................................................................... $150,487,770 

Less Debt Subsidized (1) ....................................................................................................................... (32,700,000) 

TOTAL NONELECTORAL DEBT .................................................................................................... $117,787,770 

LEASE RENTAL 

TOTAL LEASE RENTAL .................................................................................................................. $0 

TOTAL PRINCIPAL OF DIRECT DEBT ........................................................................................ $117,787,770 

*Includes the Bonds offered through this Official Statement. Does not include the 2007 Bonds or the 2008 Bonds being refunded by the Bonds. 

(1) $32,700,000 is a credit from gross incurred nonelectoral debt in determining net nonelectoral debt pursuant to Section 8028(b)(1) and (7) of the 

Debt Act because the proceeds of the General Obligation Note, Series A, B, and C of 2008 will be advanced to pay the principal of and interest on 

the General Obligation Note, Series of 2007, General Obligation Note, Series A of 2004, and the General Obligation Note, Series A of 2003, 

respectively. 

18

Table 14 presents the overlapping indebtedness and debt ratios of the School District. After issuance of the Bonds, the principal of 

direct debt of the School District will total $117,787,770. After adjustment for available funds and estimated Commonwealth Aid, the 

local effort of direct debt will total $109,573,420. 

DIRECT DEBT 

TABLE 14 


BONDED INDEBTEDNESS AND DEBT RATIOS 

(As of December 10, 2012)* 

Local Effort 

or Net of 

Available Funds 

Gross 

and Estimated 

Outstanding Commonwealth Aid (1) 

Nonelectoral Debt ................................................................................................. $117,787,770 $109,573,420 

Lease Rental Debt ................................................................................................. 0 0 

TOTAL DIRECT DEBT ...................................................................................... $117,787,770 $109,573,420 

OVERLAPPING DEBT 

Lehigh County, General Obligation (2) .................................................................. $32,866,648 $32,866,648 

Municipal Debt ..................................................................................................... 9,306,527 9,306,527 

TOTAL OVERLAPPING DEBT ......................................................................... $42,173,175 $42,173,175 

TOTAL DIRECT AND OVERLAPPING DEBT ................................................ $159,960,945 $151,746,594 

DEBT RATIOS 

Per Capita ............................................................................................................. $2,931.24 $2,780.72 

Percent 2011-12 Assessed Value .......................................................................... 9.20% 8.73% 

Percent 2011-12 Market Value ............................................................................ 3.50% 3.32% 

*Includes the Bonds offered through this Official Statement. Does not include the 2007 Bonds and 2008 Bonds being refunded herein. 

(1) Gives effect to current appropriations for payment of debt service and expected future Commonwealth reimbursement of School District 

sinking fund payments based on current Aid Ratio. See “Commonwealth Aid to School Districts. 

(2) Pro rata 18.4 percent share of $177,463,805 of principal outstanding. 

19

Debt Limit and Remaining Borrowing Capacity 

Electoral debt, i.e., debt approved by the voters at a general or special election, may be incurred without limit. Nonelectoral debt and 

lease rental debt are subject to a statutory borrowing limit. 

The statutory borrowing limit of the School District under the Local Government Unit Debt Act is computed as a percentage of the 

School District's "Borrowing Base". The "Borrowing Base" is defined as the annual arithmetic average of "Total Revenues" (as defined by 

the Act), for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing 

base and borrowing capacity as follows: 

Total Revenues for 2009-10 ........................................................................................................................................................ $106,021,741 

Total Revenues for 2010-11 ........................................................................................................................................................ 110,726,743 

Total Revenues for 2011-12 ........................................................................................................................................................ 111,298,855 

Total ....................................................................................................................................................................................... $328,047,339 

Annual Arithmetic Average (Borrowing Base)............................................................................................................................ $109,349,113 

Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net 

principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net 

nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the 

School District's Borrowing Base produces the following product: 

Remaining 

Legal Net Debt Borrowing 

Net Nonelectoral Debt And Lease Rental Debt Limit Outstanding* Capacity 

225% of Borrowing Base ......................................................................... $246,035,504 $117,787,770 $128,247,734 

*Includes the Bonds described herein; does not reflect credits against gross indebtedness that may be claimed for a portion of principal of 

debt estimated to be reimbursed by Commonwealth Aid. 

Debt Service Requirements 

Table 15 presents the debt service requirements on the School District’s outstanding general obligation and lease rental indebtedness 

including debt service on the Bonds. 

Table 16 presents data on the extent to which Commonwealth Aid provides coverage for debt service and lease rental requirements. 

The School District has never defaulted on the payment of debt service. 

20

TABLE 15 


DEBT SERVICE REQUIREMENTS* 

Other 

General Series of 2013 

Obligation 

Year Debt Principal Interest Subtotal Requirements 

2012-13 $14,787,937 $0 $32,976 $32,976 $14,820,913 

2013-14 12,983,679 1,800,000 138,200 1,938,200 14,921,879 

2014-15 13,382,347 2,040,000 99,800 2,139,800 15,522,147 

2015-16 14,285,974 1,165,000 67,750 1,232,750 15,518,724 

2016-17 14,271,523 1,195,000 44,150 1,239,150 15,510,673 

2017-18 14,246,990 1,190,000 20,300 1,210,300 15,457,290 

2018-19 8,351,515 420,000 4,200 424,200 8,775,715 

2019-20 8,841,894 0 0 0 8,841,894 

2020-21 8,845,547 0 0 0 8,845,547 

2021-22 8,866,229 0 0 0 8,866,229 

2022-23 8,878,873 0 0 0 8,878,873 

2023-24 5,927,373 0 0 0 5,927,373 

2024-25 2,296,423 0 0 0 2,296,423 

2025-26 1,534,445 0 0 0 1,534,445 

2026-27 1,548,905 0 0 0 1,548,905 

2027-28 1,560,076 0 0 0 1,560,076 

2028-29 1,567,431 0 0 0 1,567,431 

$142,177,159 $7,810,000 $407,376 $8,217,376 $150,394,534 

Total 


TABLE 16 


COVERAGE OF DEBT SERVICE AND LEASE RENTAL 

REQUIREMENTS BY COMMONWEALTH AID* 

2011-12 Commonwealth Aid Received ................................................................................................................ $24,332,093 

2011-12 Debt Service Requirements .................................................................................................................... $14,197,277 

Maximum Future Debt Service Requirements after Issuance of Bonds................................................................ $15,518,724 

Coverage of 2011-12 Debt Service Requirements ................................................................................................ 

1.71 times 

Coverage of Maximum Future Debt Service Requirements after Issuance of Bonds ........................................... 

1.57 times 

*Assumes current Commonwealth Aid Ratio. See “Commonwealth Aid to School Districts". 

Future Financing 

The School District does not anticipate issuing any new, non-refunding, debt in the next three years. 

21

LABOR RELATIONS 

There are approximately 1,057 employees of the School District, including 531 teachers and 38 administrators, 488 support 

personnel including secretaries, custodial, maintenance, cafeteria employees and teacher aides. 

The East Penn Education Association, a Pennsylvania State Education Association affiliate, represents the teachers with a contract 

which expires June 30, 2015. Teamsters Local 773 represents the custodial and maintenance employees with a negotiated contract in place 

which expires June 30, 2016. The Foodcrafters Association ESP/PSEA/NEA represents the cafeteria employees with a negotiated contract 

which expires June 30, 2013. The Secretarial and Aides Association represents the secretaries and aides with a negotiated contract which 

expires June 30, 2014. All contracts are negotiated under Pennsylvania’s Act 195 of 1970, as amended, and are not subject to binding 

arbitration. 

No strikes have occurred during the past eighteen years. 

Pension Program 

School districts in Pennsylvania are required to participate in a statewide pension program administered by the State Public 

School Employees Retirement Board. All of the School District's full-time employees, part-time employees who work more than 80 days 

in a school year, and hourly employees who work over 500 hours a year participate in the program. 

The PSERS Board of Trustees has set the fiscal year 2012-13 employer retirement contribution rate at 12.36 percent of payroll. 

Both the School District and the Commonwealth are responsible for paying a portion of the employer's share. Employers are divided into 

two groups; school entities and non-school entities. School entities are responsible for paying 100 percent of the employer share of 

contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. Recent School District 

payments have been as follows: 

2007-08 $ 3,133,254 

2008-09 $ 2,204,689 

2009-10 $ 2,325,073 

2010-11 $ 2,876,686 

2011-12 $ 4,307,390 

2012-13 (budgeted) $ 6,483,363 

The School District is current in all payments. The PSERS complete report is available on the PSERS website on the Internet: 

www.psers.state.pa.us. 

Source: PSERS – Financial Highlights. 

Other Post-Employment Benefits 

The School District is obligated under collective bargaining agreements to provide in the future health insurance coverage for current 

and future retired employees, and to provide retirement severance pay for existing employees. The School District has become subject to 

the requirements of GASB Statements No. 43 and 45 commencing with the School District’s annual financial statements for the fiscal year 

ending June 30, 2009. See Appendix C – Audited Financial Statements for a full description. 

LITIGATION 

At the time of settlement, the School Board and the Solicitor will deliver a certificate stating that there is no litigation pending with 

respect to the Bonds, the Resolution or the right of the School District to issue the Bonds. 

DEFAULTS AND REMEDIES 

In the event of failure of the School District to pay or cause to be paid the interest on or principal of the Bonds, as the same becomes 

due and payable, the holders of the Bonds shall be entitled to certain remedies provided by the Act. Among the remedies, if the failure to 

pay shall continue for 30 days, holders of the Bonds shall have the right to recover the amount due by bringing an action in assumpsit. The 

Act provides that any judgment shall have an appropriate priority upon the funds next coming into the treasury of the School District. The 

Act also provides that upon a default of at least 30 days, holders of at least 25 percent of the Bonds may appoint a trustee to represent them. 

The Act provides certain other remedies in the event of default, and further qualifies the remedies hereinbefore described. 

22

TAX EXEMPTION AND OTHER TAX MATTERS 

Federal Income Tax Matters 

On the date of delivery of the Bonds, Rhoads & Sinon LLP, Harrisburg, Pennsylvania, as Bond Counsel to the School District, will 

issue an opinion to the effect that under existing statutes, regulations and judicial decisions, interest on the Bonds is excludable from gross 

income for purposes of federal income taxation and is not an item of tax preference for purposes of the federal alternative minimum tax imposed 

on individuals and corporations, although such interest is taken into account in determining adjusted current earnings of corporations (as 

defined for federal income tax purposes) for purposes of such alternative minimum tax. This opinion of Bond Counsel will assume the accuracy 

of representations made by the School District and will be subject to the condition that the School District will comply with all requirements of 

the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon 

be, and continue to be, excluded from gross income for federal income tax purposes. See the proposed text of the opinion of Bond Counsel 

appended to this Official Statement. The School District has covenanted to comply with all such requirements, which include, among others, 

restrictions upon the yield at which proceeds of the Bonds and other money held for the payment of the Bonds and deemed to be "proceeds" 

thereof may be invested and the requirement to calculate and rebate any arbitrage that may be generated with respect to investments allocable to 

the Bonds. Failure to comply with such requirements could cause the interest on the Bonds to be included in gross income retroactive to the 

date of issuance of the Bonds. 

Certain maturities of the Bonds may be sold to the public in the initial offering at a price less than the stated redemption price of 

such Bonds at maturity (that is, at less than par or the stated principal amount), the difference being “original issue discount”. Generally, 

original issue discount accruing on a tax-exempt obligation is treated as interest excludable from gross income for federal income tax 

purposes. In addition, original issue discount that has accrued on a tax-exempt obligation is treated as an adjustment to the issue price of 

the obligation for the purpose of determining taxable gain upon sale or other disposition of such obligation prior to maturity. The Internal 

Revenue Code of 1986, as amended, provides specific rules for the accrual of original issue discount on tax-exempt obligations for federal 

income tax purposes. Prospective purchasers of Bonds being sold with original issue discount should consult their tax advisors for further 

information. 

Ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without 

limitation, financial institutions, property and casualty insurance companies, certain subchapter S corporations with substantial passive 

income and Subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who 

may be deemed to have incurred or continued indebtedness to purchase or carry the Bonds. Bond Counsel will express no opinion as to 

such collateral tax consequences, and prospective purchasers of the Bonds should consult their tax advisors. 

No representation is made or can be made by the School District or any other party associated with the issuance of the Bonds as 

to whether or not any legislation now or hereafter introduced and enacted will be applied retroactively so as to subject interest on the 

Bonds to inclusion in gross income for Federal income tax purposes or so as to otherwise affect the marketability or market value of the 

Bonds. Enactment of any legislation that subjects the interest on the Bonds to inclusion in gross income for federal income tax purposes or 

otherwise imposes taxation on the Bonds or the interest paid thereon may have an adverse effect on the market value or marketability of the 

Bonds. 

Proposed Changes in Federal Tax Laws 

From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals in the 

Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the 

marketability or market value of the Bonds or otherwise prevent holders of the Bonds from realizing the full benefit of the tax exemption of 

interest on the Bonds. Further, such proposals may impact the marketability or market value of the Bonds simply by being proposed. It 

cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior 

to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced 

which, if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the 

Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will 

be resolved, or whether the Bonds would be impacted thereby. 

Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or 

litigation. The disclosures and opinions expressed herein are based upon existing legislation and regulations as interpreted by relevant 

judicial and regulatory authorities as of the date of issuance and delivery of the Bonds, and no opinion is expressed as of any date 

subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation. 

23

Pennsylvania Tax Matters 

On the date of delivery of the Bonds, Bond Counsel will issue an opinion to the effect that under the laws of the Commonwealth 

of Pennsylvania (the “Commonwealth”) as presently enacted and construed, the Bonds are exempt from personal property taxes within the 

Commonwealth and the interest on the Bonds is exempt from the Commonwealth’s Personal Income Tax and the Commonwealth’s 

Corporate Net Income Tax. See the proposed text of the opinion of Bond Counsel appended to this Official Statement. 

Profits, gains or income derived from the sale, exchange or other disposition of the Bonds are subject to state and local taxation 

within the Commonwealth, in accordance with Pennsylvania Act No. 1993-68. 

Certain maturities of the Bonds may be sold to the public in the initial offering at a price less than their stated redemption price at 

maturity (that is, at an “original issue discount”). For Pennsylvania Personal Income Tax purposes, original issue discount on publicly 

offered obligations is treated under current regulations of the Pennsylvania Department of Revenue as interest and, for purposes of 

determining taxable gain upon sale or other disposition of an obligation the interest on which is exempt from income taxation by the 

Commonwealth, as an adjustment to basis. For Pennsylvania Corporate Net Income Tax purposes, original issue discount is to be accorded 

similar treatment, according to a Private Letter Ruling issued by the Office of the Chief Counsel of the Pennsylvania Department of 

Revenue dated December 2, 1993, but such Private Letter ruling may be relied upon only by the taxpayer to whom it was addressed. 

Prospective purchasers of Bonds issued with original issue discount should consult with their tax advisors for further information 

and advice concerning the reporting of profits, gains or other income related to a sale, exchange or other disposition of such Bonds for 

Pennsylvania tax purposes. 

No representation is made or can be made by the School District, or any other party associated with the issuance of the Bonds, as to 

whether or not any legislation now or hereafter introduced and enacted in the Commonwealth will be applied, either prospectively or 

retroactively, so as to subject interest on such Bonds to taxation in the Commonwealth or so as to otherwise affect the marketability or market 

value of such bonds. Enactment of any legislation that subjects the interest on such bonds to state or local taxes in the Commonwealth or 

otherwise imposes taxation on such Bonds may have an adverse effect on the market value or marketability of such bonds. 

Federal Income Tax Interest Expense Deductions for Financial Institutions 

Under the Internal Revenue Code of 1986, as amended (the “Code”), financial institutions are disallowed 100 percent of their 

interest expense deductions that are allocable, by a formula, to tax-exempt obligations acquired after August 7, 1986. An exception, which 

reduces the amount of the disallowance, is provided for certain tax-exempt obligations that are designated or “deemed designated” by the 

issuer as “qualified tax-exempt obligations” under Section 265 of the Code. 

Each of the Bonds has been designated, or is "deemed designated", as a "qualified tax-exempt obligation" for purposes and effect 

contemplated by Section 265 of the Code (relating to expenses and interest relating to tax-exempt income of certain financial institutions). 

Financial institutions intending to purchase Bonds should consult with their professional tax advisors to determine the effect of the 

interest expense disallowance on their federal income tax liability. 

CONTINUING DISCLOSURE UNDERTAKING 

In accordance with the requirements of the Rule 15c2-12 (the “Rule”) promulgated by the Securities and Exchange Commission (the 

“SEC”), the School District (being an “obligated person” with respect to the Bonds, within the meaning of the Rule), will agree to provide the 

following to the Municipal Securities Rulemaking Board (the “MSRB”) in an electronic format as prescribed by the MSRB, either directly 

or indirectly through a designated agent: 

(A) Annually, not later than 180 days following the end of each fiscal year, beginning with the fiscal year ending June 30, 2013, 

the following financial information and operating information for the School District: 

financial statements for the most recent fiscal year, prepared in accordance with generally accepted accounting 

principles for local government units 

a summary of the budget for the current fiscal year 

the assessed value and market value of all taxable real estate for the current fiscal year 

the taxes and millage rates imposed for the current fiscal year 

the real property tax collection results for the most recent fiscal year, including (1) the real estate levy imposed 

(expressed both as a millage rate and an aggregate dollar amount), (2) the dollar amount of real estate taxes 

collected that represented current collections (expressed both as a percentage of such fiscal year’s levy and as an 

aggregate dollar amount), (3) the amount of real estate taxes collected that represented taxes levied in prior years 

24

(expressed as an aggregate dollar amount), and (4) the total amount of real estate taxes collected (expressed both 

as a percentage of the current year’s levy and as an aggregate dollar amount) 

a list of the ten (10) largest real estate taxpayers and, for each, the total assessed value of real estate for the current 

fiscal year 

pupil enrollment figures, including enrollment at the end of the most recent fiscal year, current enrollment and 

projected enrollment for the beginning of the next fiscal year, including a breakdown between elementary and 

secondary enrollment (to the extent reasonably feasible); 

(B) 

If not submitted as part of the annual financial information, then when and if available, audited financial statements for the 

School District; 

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

the following events with respect to the Bonds: (1) principal and interest payment delinquencies; (2) non-payment related 

defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on 

credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; 

(6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, 

Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax-exempt 

status of the Bonds, or other material events affecting the tax-exempt status of the Bonds; (7) modifications to rights of 

holders of the Bonds, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or 

sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership 

or similar event of the School District; (13) the consummation of a merger, consolidation, or acquisition involving the School 

District or the sale of all or substantially all of the assets of the School District, other than in the ordinary course of business, 

the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any 

such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the 

change of name of a trustee, if material; and 

(D) 

in a timely manner, notice of a failure of the School District to provide the required annual financial information specified 

above, on or before the date specified above. 

With respect to the filing of annual financial and operating information, the School District reserves the right to modify from time to 

time the specific types of information provided or the format of the presentation of such information to the extent necessary or appropriate as a 

result of a change in legal requirements or a change in the nature of the School District or its operations or financial reporting, but the School 

District will agree that any such modification will be done in a manner consistent with the Rule. 

The events listed in (C) above are those specified in the Rule, not all of which may be relevant to the Bonds. The School District may 

from time to time choose to file notice of the occurrence of other events, in addition to the events listed in (C) above, but the School District 

does not commit to provide notice of the occurrence of any events except those specifically listed in (C) above. 

The School District acknowledges that its undertaking pursuant to the Rule described herein is intended to be for the benefit of the 

holders and beneficial owners of the Bonds and shall be enforceable by the holders and beneficial owners of the Bonds, but the right of the 

holders and beneficial owners of the Bonds to enforce the provisions of the School District’s continuing disclosure undertaking shall be limited 

to a right to obtain specific enforcement, and any failure by the School District to comply with the provisions of the undertaking shall not be an 

event of default with respect to the Bonds. 

The School District’s obligations with respect to continuing disclosure described herein shall terminate upon the prior redemption or 

payment in full of all of the Bonds or if and when the School District is no longer an “obligated person” with respect to the Bonds, within the 

meaning of the Rule. 

The MSRB has been designated by the SEC to be the central and sole repository for continuing disclosure information flied by 

issuers of municipal securities since July 1, 2009. Information and notices filed by municipal issuers (and other “obligated persons” with respect 

to municipal securities issues) are made available through the MSRB’s Electronic Municipal Market Access (EMMA) System, which may be 

accessed on the internet at http://www.emma.msrb.org. 

During the past five (5) years, the School District has been in compliance with respect to all prior written undertakings under the 

Rule to provide continuing disclosure with respect to its outstanding securities, with the following exception(s): The School District failed 

to file in a timely manner certain portions of the required annual financial and operating information for fiscal year ending June 30, 2009 

and June 30, 2010; however, as of November 22, 2011 the School District had submitted such information to the MSRB and the same is 

now available through the MSRB’s EMMA System. Once the School District was in compliance for these fiscal years it put procedures in 

place which it believes will result in EMMA filings being made on a timely basis. For the School District’s fiscal year ending June 30, 2011, 

the required audited financial statements and financial and operating information were filed in a timely manner. 

25

RATING 

Moody’s Investors Service, Inc. which has assigned its municipal bond rating of “Aa2” to this issue of Bonds. Such rating 

reflects only the view of such organization and any desired explanation of the significance of such rating should be obtained from the rating 

agency furnishing the same, at the following address: Moody’s Investors Service, Inc., 7 World Trade Center at 250 Greenwich Street, 

New York, New York 10007. Generally, a rating agency bases its rating on the information and materials furnished to it and on 

investigations, studies and assumptions of its own. There is no assurance that any such rating will continue for any given period of time or 

that it will not be revised downward or withdrawn entirely by the rating agency, if circumstances so warrant. Any such downward revision 

or withdrawal of such rating may have an adverse effect on the market price of the Bonds. 

UNDERWRITING 

The Underwriter has agreed to purchase the Bonds from the School District, subject to certain conditions precedent, and will 

purchase all of the Bonds if any of such Bonds are purchased. The Bonds will be purchased by the Underwriter for a purchase price of 

$8,034,317.85, equal to the par value of the Bonds less an underwriters’ discount of $31,864.80 plus a net original issue premium of 

$256,182.65. 

LEGAL OPINION 

The Bonds are offered when, as and if issued, subject to withdrawal or modification of the offer without notice, and subject to the 

approving legal opinion of Rhoads & Sinon LLP, of Harrisburg, Pennsylvania, Bond Counsel to the School District, to be furnished upon 

delivery of the Bonds. Certain other matters will be passed upon for the School District by Worth, Magee & Fisher, P.C., School District 

Solicitor. 

FINANCIAL ADVISOR 

The School District has retained Public Financial Management, Inc., Harrisburg, Pennsylvania, as financial advisor (the “Financial 

Advisor’’) in connection with the preparation, authorization and issuance of the Bonds. The Financial Advisor is not obligated to 

undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or 

fairness of the information contained in the Official Statement. Public Financial Management, Inc. is an independent advisory firm and is 

not engaged in the business of underwriting, trading, or distributing municipal securities or other public securities. 

MISCELLANEOUS 

This Official Statement has been prepared under the direction of the School District by Public Financial Management, Inc., 

Harrisburg, Pennsylvania, in its capacity as Financial Advisor to the School District. The information set forth in this Official Statement 

has been obtained from the School District and from other sources believed to be reliable. Insofar as any statement herein includes matters 

of opinion or estimates about future conditions, it is not intended as representation of fact, and there is no guarantee that it is, or will be, 

realized. Summaries or descriptions of provisions of the Bonds, the Resolution and all references to other materials not purporting to be 

quoted in full are only brief outlines of some of the provisions thereof. Reference is hereby made to the complete documents, copies of 

which will be furnished by the School District, or the Financial Advisor upon request. The information assembled in this Official Statement 

is not to be construed to be a contract with holders of the Bonds. 

Use of the words “shall,” “will,” must,” or other words of similar import or meaning in summaries of documents or law in this 

Official Statement to describe future events or continuing obligations is not intended as a representation that such event will occur or such 

obligations will be fulfilled, but only that the document or law requires or contemplates such event to occur or such obligation to be 

fulfilled. 

The School District has authorized the distribution of this Official Statement 


Lehigh County, Pennsylvania 

By: /s/ Charles H. Ballard 

President of the Board of School Directors 

26

APPENDIX A 

Demographic and Economic Information 

Relating to the East Penn School District

[THIS PAGE INTENTIONALLY LEFT BLANK]

Introduction 

The East Penn School District is located in eastern Pennsylvania in Lehigh County, approximately seven miles from 

Allentown, and ten miles from Bethlehem. 

Population 

Table A-1 which follows shows population trends for the School District, Lehigh County and the Commonwealth. The 

School District’s population increased from 42,578 to 54,571 between 2000 and 2010, a gain of 11,993 in that period. Table A-2 

shows 2010 age composition and average number of persons per household in Lehigh County and for the Commonwealth. 

Average household size for the County was larger than the statewide average. 

TABLE A-1 

POPULATION TRENDS 

Compound 

Average 

Annual 

Percentage 

2000 2010 Changes 

School District ................................... 42,578 54,571 2.51% 

County ............................................... 312,090 349,497 1.14% 

Pennsylvania ...................................... 12,281,054 12,702,379 0.34% 

Source: U.S. Bureau of the Census, and Pennsylvania State Data Center. 

TABLE A-2 

AGE COMPOSITION 

0-17 18-64 65+ Persons Per 

Years Years Years Household 

Lehigh County ............................................ 23.7 61.6 14.8 2.54 

Pennsylvania ............................................... 22.0 62.6 15.4 2.45 

Source: U.S. Bureau of the Census, 2010 Census Summary File 1. 

A-1

Employment 

Overall Nonfarm Jobs, Industry Employment data for the Allentown-Bethlehem-Easton Labor MSA (an area which 

includes the School District for September 2012. 

TABLE A-3 

DISTRIBUTION OF EMPLOYMENT* 

Allentown-Bethlehem-Easton Metropolitan Statistical Area 

NONFARM JOBS 

Industry Employment 

Net Change From: 

ESTABLISHMENT DATA Sep 2012 Aug 2012 Jul 2012 Sep 2011 Aug 2012 Sep 2011 

Total Nonfarm ....................................................... 342,400 342,200 343,900 337,400 200 5,000 

Total Private .......................................................... 302,500 305,700 307,000 297,400 -3,200 5,100 

Goods Producing ................................................... 49,600 48,800 49,300 48,500 800 1,100 

Mining, Logging, & Construction ......................... 12,800 12,700 12,800 12,800 100 0 

Manufacturing....................................................... 36,800 36,100 36,500 35,700 700 1,100 

Durable Goods ...................................................... 21,900 21,600 21,900 20,700 300 1,200 

Non Durable Goods ............................................... 14,900 14,500 14,600 15,000 400 -100 

SERVICE-PROVIDING ....................................... 292,800 293,400 294,600 288,900 -600 3,900 

PRIVATE SERVICE-PROVIDING .................... 252,900 256,900 257,700 248,900 -4,000 4,000 

Trade, Transportation, and Utilities ........................ 68,900 68,700 68,500 69,200 200 -300 

Wholesale trade ....................................................... 13,700 13,800 13,900 13,500 -100 200 

Retail trade .............................................................. 38,400 38,700 38,500 39,400 -300 -1,000 

Food and beverage stores ..................................... 9,800 10,000 10,000 9,800 -200 0 

General merchandise stores................................... 6,600 6,700 6,700 6,700 -100 -100 

Department stores ................................................ 4,300 4,400 4,400 4,300 -100 0 

Transportation, Warehousing and Utilities ............. 16,800 16,200 16,100 16,300 600 500 

Transportation and Warehousing ......................... 15,600 15,000 14,900 15,100 600 500 

Information ............................................................ 5,600 5,600 5,600 5,600 0 0 

Financial Activities ................................................ 15,100 15,200 15,200 15,100 -100 0 

Finance and Insurance ........................................... 12,500 12,600 12,600 12,500 -100 0 

Insurance carriers and related activities ................ 7,000 7,000 7,000 6,900 0 100 

Professional and Business Services ...................... 49,500 49,500 49,900 46,400 0 3,100 

Professional and technical services ...................... 13,200 13,300 13,400 12,400 -100 800 

Management of companies and enterprises ........... 10,500 10,700 10,700 10,000 -200 500 

Administrative and waste services ....................... 25,800 25,500 25,800 24,000 300 1,800 

Employment services ......................................... 14,000 13,100 12,800 10,900 900 3,100 

Educational and Health Services ......................... 66,300 65,700 65,400 66,900 600 -600 

Educational services ............................................. 11,300 9,800 9,900 12,400 1,500 -1,100 

Health care and social assistance ......................... 55,000 55,900 55,500 54,500 -900 500 

Hospitals ............................................................ 18,400 18,600 18,700 18,200 -200 200 

Leisure and Hospitality ........................................ 33,500 37,900 38,700 31,600 -4,400 1,900 

Accommodation and food service ........................ 24,800 26,900 27,500 24,800 -2,100 0 

Food services and drinking places........................ 22,600 23,000 23,000 22,500 -400 100 

Other Services ....................................................... 14,000 14,300 14,400 14,100 -300 -100 

Government ........................................................... 39,900 36,500 36,900 40,000 3,400 -100 

Federal Government ........................................... 2,200 2,300 2,300 2,300 -100 -100 

State Government ............................................... 2,800 2,900 2,900 2,900 -100 -100 

Local Government .............................................. 34,900 31,300 31,700 34,800 3,600 100 

Local government educational services ............. 21,200 17,200 17,300 21,200 4,000 0 

Other Local Government ................................... 13,700 14,100 14,400 13,600 -400 100 

Data benchmarked to March 2011 

***Data changes of 100 may be due to rounding*** 

Source: Pennsylvania Department of Labor and Industry – www.paworkstats.state.pa.us 

A-2

Employment 

Major employers within the Lehigh Valley region include Air Products & Chemicals, Inc., LSI (formerly Agere and 

Lucent Technologies), Binney & Smith (manufacturer of Crayola Crayon fame), Dun & Bradstreet, PPL Utilities, and Mack 

Trucks, Inc. Following is a listing of larger employers for the Lehigh Valley region: 

Name 

Product or Service 

Lehigh Valley Hospital Center and 

Muhlenberg Hospital Center 

Acute-care hospital 

LSI Corporation (formerly Agere) 

Electronics manufacturing 

Air Products & Chemicals Inc. 

Gas and chemical products and manufacturing 

St. Luke's Hospital 


Allentown School District 

Public schools 

Lehigh County 

Municipal government 

Mack Trucks Inc. 

Vehicle manufacturing 

Bethlehem Area School District 

Public schools 

Sodexho 

Food service 

Northampton County 

County government 

KidsPeace 

Children's services 

Pennsylvania Power & Light Co. 

Electric utility 

Guardian Life Insurance Co. of America Life insurance 

Victaulic Co. of America 

Pipe coupling, fitting and casting mfr. 

Easton Hospital 


B. Braun Medical Inc. Disposable surgical and medical supplies 

Lehigh University 

Private university research institution 

Dun & Bradstreet Corp. 

Business credit information 

Binney & Smith Inc. 

Art supplies manufacturer 

Rodale Press Inc. 

Book and periodical publishing 

Source: Chamber of Commerce 

Table A-4 shows recent trends in labor force, employment and unemployment for Lehigh County and the Commonwealth. 

TABLE A-4 

RECENT TRENDS IN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT 

(Lehigh County) 

Lehigh County 

Compound 

Average 

Annual % 

2007 2008 2009 2010 2011 2012 (1) Rate 

Civilian Labor Force (000) 174.5 177.1 178.0 176.3 179.4 184.0 1.07% 

Employment (000) 166.9 167.0 160.8 159.7 163.8 168.1 0.14% 

Unemployment (000) 7.6 10.1 17.2 16.6 15.6 16.0 16.05% 

Unemployment Rate 4.4 5.7 9.7 9.4 8.7 8.7 

Pennsylvania 

Civilian Labor Force (000) 6,297.0 6,395.0 6,310.0 6,340.0 6,386.0 6,505.0 0.65% 

Employment (000) 6,023.0 6,051.0 5,751.0 5,791.0 5,879.0 5,975.0 -0.16% 

Unemployment (000) 274.0 344.0 560.0 549.0 507.0 530.0 14.11% 

Unemployment Rate 4.4 5.4 8.9 8.7 7.9 8.2 

(1) As of September 2012. 

Source: Pennsylvania State Employment Service. 

A-3

Income 

The data on Table A-5 shows trends in per capita income for the School District, Lehigh County and Pennsylvania over the 

2000-2010 period. Per capita income in the School District income is higher than average per capita income in the County and 

the Commonwealth. 

TABLE A-5 

TRENDS IN PER CAPITA INCOME* 

Compound Average 

Annual 

Percentage Change 

2000 2010 2000-2010 

School District ...................................................... $27,686 $34,297 2.16% 

Lehigh County ....................................................... 21,897 27,301 2.23% 

Pennsylvania ......................................................... 20,880 26,678 2.48% 

*Income is defined by the Bureau of the Census as the sum of wage and salary income, non-farm self-employment income, net 

self-employment income, Social Security and Railroad retirement income, public assistance income, interest, dividends, 

pensions, etc. before deductions for personal income taxes, Social Security, etc. School District income is the populationweighted 

average for political subdivisions. 

Source: Pennsylvania State Data Center and U.S. Census Bureau, 2006-2010 American Community Survey. 

Industry 

Table A-6 shows retail sales over a five year period for Lehigh County and the MSA. The great diversity of industrial 

activity can be seen in even a partial list of products manufactured here: steel products, trucks, industrial equipment, food 

products, pet foods, electrical and mechanical equipment, electronic components, modular storage cabinets, storage systems, 

musical instruments, clothing and textiles, and chemical and mineral processing equipment. The increasingly important service 

sector is characterized by the rapid growth of computer service, software companies, and firms which deal in information 

processing. 

The stable industrial base, combined with the existing educational, research, and development facilities, has created an 

ideal environment for the development of advanced technology in the Lehigh Valley (Lehigh and Northampton Counties). 

Table A-6 shows retail sales for the years 2007 through 2011 for the County, the MSA and the Commonwealth. 

TABLE A-6 

TOTAL RETAIL SALES 

(Millions of Dollars) 

2007 2008 2009 2010 2011 

Lehigh County ............. $5,815,491 $5,879,583 $5,564,939 $5,339,862 $5,640,398 

MSA ............................ 12,559,536 13,002,924 11,687,167 11,106,517 11,972,180 

Pennsylvania ................ 195,558,005 NR 180,948,327 174,483,292 188,193,104 

Source: Sales and Marketing Management Magazine 

Transportation Facilities 

The School District is served by an excellent interlocking highway system. U.S. Route 22, Interstate 78 and State Routes 

191, 378, 412 and 512 traverse Allentown while U.S. 309 and the Northeast Extension of the Pennsylvania Turnpike to the west 

and U.S. 611 and State Route 33 to the east are easily accessible. 

The School District is also provided with air service by the Lehigh Valley International Airport. In addition to air freight 

and air express service, air passenger transportation services are provided by several major airlines. The area is also serviced by 

railroads linking to the national railroad system, and bus service provided by national and regional companies. 

Because of the vast network of transportation available to the School District residents, this area is becoming increasingly 

popular for those individuals wishing to commute to major East Coast business centers. In addition, the transportation systems 

available are well suited for receiving and distributing goods and services throughout the United States. 

A-4

Educational Institutions 

Area residents are provided with numerous higher education facilities in addition to many business and technical schools 

which complement the colleges and universities in the area. A listing of the major higher educational facilities are below: 

Allentown Business School 

Cedar Crest College 

DeSales University 

Lafayette College 

Lehigh Carbon Community College 

Lehigh University 

Northampton Community College 

Moravian College 

Muhlenberg College 

Penn State University (Lehigh Valley Campus) 

Kutztown University (Berks County) 

Allentown 

Allentown 

Center Valley 

Easton 

Schnecksville 

Bethlehem 

Bethlehem 

Bethlehem 

Allentown 

Fogelsville 

Kutztown 

Source: Eastern Pennsylvania Business Journal. 

Medical Facilities 

Utilities 

The area is served by the following medical institutions: 

Lehigh Valley Hospital Center and 

Muhlenberg Hospital Center 

St. Luke’s Hospital – Allentown 

St. Luke’s Hospital - Bethlehem 

Allentown State Hospital 

Cedarbrook County Home 

Sacred Heart Hospital 

Good Shepherd Rehabilitation Hospital 

Easton Hospital 

The School District is served by PPL Utilities, United Gas Improvement Company and Verizon. 

Communications 

The School District is served by two daily and one weekly newspaper, an educational television station, two commercial 

television stations and seven radio stations. 

A-5


APPENDIX B 

Form of Bond Counsel Opinion


[Letterhead of Bond Counsel] 

(Date of Closing) 

Re: East Penn School District 

Lehigh County, Pennsylvania 

$7,810,000 Aggregate Principal Amount 


Dated January 15, 2013 

OPINION 

We have acted as Bond Counsel, for the sale and issuance of its General Obligation 

Bonds, Series of 2013, in the aggregate principal amount of Seven Million Eight Hundred Ten 

Thousand Dollars ($7,810,000) (the “Bonds”), by East Penn School District, Lehigh County, 

Pennsylvania (the “School District”), a school district of the Commonwealth of Pennsylvania (the 

“Commonwealth”). 

The Board of School Directors of the School District, by a resolution (the 

“Resolution”), has authorized and secured the issuance of the Bonds. The Resolution provides that 

the proceeds of the Bonds are to be used to: (1) currently refund the School District’s outstanding 

General Obligation Bonds, Series of 2007, (2) currently refund the School District’s outstanding 

General Obligation Bonds, Series of 2008; and (3) pay related costs and expenses, all in 

accordance with the Local Government Unit Debt Act, 53 Pa.C.S. Chs. 80-82 (the “Act”), of the 

Commonwealth. 

The Resolution contains covenants of the School District to comply with applicable 

provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and applicable 

regulations promulgated thereunder, to preserve the Federal income tax exemption of the interest on 

the Bonds. The School District has taken appropriate action to qualify the Bonds as “qualified taxexempt 

obligations”, as defined in Section 265(b)(3)(B) of the Code. 

As Bond Counsel, we have examined, among other things: the proceedings related 

to the issuance and delivery of the Bonds, as filed with the Department of Community and 

Economic Development; an executed counterpart of the Resolution; a certificate of no litigation; a 

non-arbitrage and rebate compliance certificate of the School District; and usual closing certificates 

and documents. We have also examined the executed Bonds, and assume that the Bonds, and any 

separate Bonds that may, from time to time, be issued in exchange therefor, will at all times be 

issued in registered form as required by the Resolution. 

869458.2


Page 2 

As to questions of fact material to our opinion, we have relied upon the certified 

proceedings and other certifications of public officials furnished to us without undertaking to verify 

such facts by independent investigation. 

Based on the foregoing, we are of the opinion that: 

1. The Bonds are valid and binding general obligations of the School District 

enforceable in accordance with their terms. 

2. The School District has covenanted, in the Resolution, to and with 

registered owners, from time to time, of the Bonds that shall be outstanding, from time to time, 

pursuant to the Resolution, that the School District: (i) shall include the amount of the debt service 

for the Bonds, for each fiscal year of the School District in which such sum is payable, in its 

budget for that year, (ii) shall appropriate such amounts from its general revenues for the payment 

of such debt service, and (iii) shall duly and punctually pay or cause to be paid from the sinking 

fund established under the Resolution or any other of its revenues or funds the principal of and 

interest on the Bonds at the dates and place and in the manner stated in the Bonds, according to the 

true intent and meaning thereof; and, for such budgeting, appropriation and payment, the School 

District has pledged, irrevocably, its full faith, credit, and taxing power. 

3. Under the laws of the Commonwealth as presently enacted and construed, 

the Bonds are exempt from personal property taxes in the Commonwealth and the interest on the 

Bonds is exempt from the Commonwealth’s Personal Income Tax and the Commonwealth’s 

Corporate Net Income Tax. 

4. Assuming investment and application of the proceeds of the Bonds as set 

forth in the Resolution and the aforementioned non-arbitrage and rebate compliance certificate, the 

Bonds are not presently “arbitrage bonds” as described in Section 103(b)(2) and Section 148 of the 

Code and applicable regulations promulgated thereunder. 

5. Under present statutes, regulations and judicial decisions, interest on the 

Bonds is excluded from gross income for purposes of federal income taxation and is not an item of 

tax preference for purposes of the federal alternative minimum tax imposed on individuals and 

corporations, although it should be noted that in the case of corporations (as defined for federal 

income tax purposes) such interest is taken into account in determining adjusted current earnings for 

purposes of such alternative minimum tax. The opinions expressed in this paragraph are subject to 

the condition that the School District comply with all requirements of the Code that must be 

satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, or continue to 

be, excluded from gross income for federal income tax purposes, as the School District has 

covenanted to do in the Resolution and other aforementioned documents. Failure to comply with 

certain of such requirements may cause the inclusion of interest on the Bonds in gross income 

retroactive to the date of issuance of the Bonds. 

6. Each of the Bonds is a “qualified tax-exempt obligation” for purposes and 

effect contemplated by Section 265 of the Code (relating to expenses and interest relating to tax-


Page 3 

exempt income of certain financial institutions). The opinion expressed in the proceeding sentence 

is subject to the condition that interest on the Bonds is, and continues to be, excluded from gross 

income for federal income tax purposes under the Code. 

We express no opinion regarding other federal tax consequences arising with 

respect to the Bonds. 

It is to be understood that rights of holders of the Bonds and the enforceability 

thereof may be subject to bankruptcy, insolvency, reorganization, moratorium, and other similar 

laws affecting creditors’ rights heretofore or hereafter enacted and that their enforcement may be 

subject to the exercise of judicial discretion in accordance with general principles of equity.


APPENDIX C 


Audit Report for fiscal year ending June 30, 2011


REPORT ON 


SINGLE AUDIT REPORT 

FISCAL YEAR ENDED JUNE 30, 2011


Single Audit Report 

For the Fiscal Year Ended June 30, 2011 

TABLE OF CONTENTS (continued) 

PAGE (S) 

Introductory Section 

Transmittal Letter ........................................................................................................................... 1 

Letter to Governance/Management ........................................................................................... 2 - 5 

Report Distribution List ................................................................................................................... 6 

Financial Section 

Independent Auditor's Report ................................................................................................ …7 - 8 

Management's Discussion and Analysis ............................................................................ … 9 - 20 

Basic Financial Statements 

District-wide Financial Statements: 

Statement of Net Assets ................................................................................................. 21 

Statement of Activities ..................................................................................................... 22 

Fund Financial Statements: 

Balance Sheet - Governmental Funds ........................................................................... 23 

Reconciliation of the Governmental Funds Balance Sheet 

to the Statement of Net Assets ................................................................................... 24 

Statement of Revenues, Expenditures, and Changes in Fund 

Balances - Governmental Funds ................................................................................ 25 

Reconciliation of the Governmental Funds Statement of Revenues, 

Expenditures, and Changes in Fund Balances to the 

Statement of Activities ......................................................................................... 26 - 27 

Statement of Net Assets - Proprietary Funds ................................................................. 28 

Statement of Revenues, Expenses, and Changes in Net 

Assets - Proprietary Funds ......................................................................................... 29 

Statement of Cash Flows - Proprietary Funds ........................................................ 30 - 31 

Statement of Net Assets - Fiduciary Funds .................................................................... 32 

Statement of Changes in Net Assets - Fiduciary Funds ................................................ 33





PAGE (S) 

Statement of Revenues, Expenditures and Changes in Fund 

Balance - Budget and Actual - General Fund ............................................................ 34 

Notes to Basic Financial Statements ................................................................................. 35 – 80 

Required Supplemental Information: 

Schedule of Funding Progress ........................................................................................ 81 

Supplemental Information: 

Combining Balance Sheet - Non-Major Governmental Funds ...................................... 82 

Combining Statement of Revenues, Expenditures, and Changes in 

Fund Balances - Non-Major Governmental Funds .................................................... 83 

Combining Statement of Fiduciary Net Assets - Private Purpose 

Trust Funds ............................................................................................................... 84 

Combining Statement of Changes in Fiduciary Net Assets - Private 

Purpose Trust Funds ................................................................................................. 84 

Combining Balance Sheet - All Capital Project Funds ................................................... 85 

Combining Statement of Revenues, Expenditures, and Changes in Fund 

Balances - All Capital Project Funds ........................................................................ 86 

Combining Balance Sheet - All Agency Funds .............................................................. 87 

Combining Statement of Changes in Assets and Liabilities - All 

Agency Funds ............................................................................................................. 88 

General Fund - Schedule on Tax Collectors' Receipts .................................................. 89 

General Fund - Statement of Revenue, Expenditures, and Changes 

in Fund Balance ................................................................................................. 90 - 93 

Capital Reserve Fund - Statement of Revenues and Expenditures .............................. 94 

Food Service Fund - Statement of Revenues, Expenses, and 

Changes in Net Assets ............................................................................................... 95 

Agency Fund - Payroll Fund - Balance Sheet ................................................................ 96 

Memorial Fund - Statement of Additions and Deductions ............................................. 96





PAGE (S) 

Commencement Awards Fund - Statement of Additions and Deductions .................... 97 

2009A Bond Fund – Statement of Revenues and Expenditures ................................... 97 

2010 Bond Fund - Statement of Revenues and Expenditures ...................................... 98 

2011 Bond Fund – Statement of Revenues and Expenditures ..................................... 98 

2009 Construction Fund – Statement of Revenue and Expenditures ........................... 99 

2010 Construction Fund – Statement of Revenue and Expenditures ......................... 100 

General Long-Term Debt: 

Schedule on General Obligation Notes - Series of 1998 ............................................. 101 

Schedule on General Obligation Notes - Series A of 2003 .......................................... 101 

Schedule on General Obligation Notes - Series C of 2003 ......................................... 102 

Schedule on General Obligation Notes – Series A of 2004 ......................................... 102 

Schedule on General Obligation Bonds – Series AA of 2004 ..................................... 102 

Schedule on General Obligation Bonds – Series A of 2005 ........................................ 103 


Schedule on General Obligation Notes – Series A of 2007 ......................................... 104 

Schedule on General Obligation Bonds – Series of 2007 ........................................... 104 

Schedule on General Obligation Bonds – Series of 2008 ........................................... 105 

Schedule on General Obligation Bonds – Series A of 2008 ........................................ 105 





Schedule of General Obligation Bonds – Series of 2011 ............................................. 108





PAGE (S) 

Single Audit Section 

Schedule of Expenditures of Federal Awards ............................................................................ 109 

Notes to the Schedule of Expenditures of Federal ..................................................................... 110 

Independent Auditor’s Report on Internal Control Over Financial Reporting 

and on Compliance and Other Matters based on an Audit of Financial 

Statements Performed in accordance with Government Auditing Standards ................ 111 - 112 

Independent Auditor’s Report on Compliance with Requirements that could have a 

Direct and Material Effect on each Major Program and on Internal Control over 

Compliance in accordance with OMB Circular A-133 ................................................... 113 - 114 

Schedule of Findings and Questioned Costs .................................................................... 115 - 116 

Schedule of Prior Year Findings ................................................................................................. 117

INTRODUCTORY SECTION

REPORT DISTRIBUTION LIST 

The East Penn School District has distributed copies of the Single Audit Act Package to the following: 

ONE COPY: 

(Submitted Electronically) 

BUREAU OF THE CENSUS 

DATA PREPARATION DIVISION 

ONE COPY: 

(Submitted Electronically) 

COMMONWEALTH OF PENNSYLVANIA 

OFFICE OF THE BUDGET/BUREAU OF AUDITS 

ONE COPY TO : 

CARBON-LEHIGH INTERMEDIATE UNIT 

4210 INDEPENDENCE DRIVE 

SCHNECKSVILLE, PA 18078 

ONE COPY TO: 

MONTGOMERY COUNTY INTERMEDIATE UNIT 

1605 W. MAIN STREET 

NORRISTOWN, PA 19403-3268 

-6-

FINANCIAL SECTION


Emmaus, PA 

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) 

Required Supplementary Information (RSI) 

(UNAUDITED) 

For the Year Ended June 30, 2011 

The discussion and analysis of East Penn School District's financial performance provides an overall review of 

the District's financial activities for the fiscal year ended June 30, 2011. The intent of this discussion and 

analysis is to look at the District's financial performance as a whole; readers should also review the financial 

statements and notes to enhance their understanding of the District's financial performance. 

The Management Discussion and Analysis (MD&A) is an element of the new reporting model adopted by the 

Governmental Accounting Standards Board (GASB) in their Statement No. 34 Basic Financial Statements - and 

Management's Discussion and Analysis - for State and Local Governments issued June 1999. Certain 

comparative information between the current year and the prior year is required to be presented in the MD&A. 

FINANCIAL HIGHLIGHTS 

The 2010-2011 budget year had many special features. Willow Lane Elementary, the new school at 

Sauerkraut and Willow Lane underwent construction. Willow Lane Elementary is a 3-story, 84,872 square foot 

elementary school with an estimated maximum student capacity of 825 students. 

Four additional unbudgeted teachers were hired due to elementary and special education enrollment, two in 

regular education and two in special education. The number of special education students increased from 688 

in March of 2010 to 721 in March of 2011. Third day student enrollment for the 2010-2011 school year 

increased by 53 from the previous year. Seven Generations Charter School, which opened in September of the 

previous fiscal year within the district’s boundaries, added a grade level and we had approximately 22 more 

students attend there than in the previous school year. 

The real estate tax rate increased 3.85% over the previous year, which exceeded the 2.9% legal limit that we 

were allowed to go up without requesting any exceptions or referendums based on the Act 1, but is significantly 

less than the 5.02% that the Department of Education approved us for based on referendum exceptions 

submitted for special education and retirement contribution increases. The 5-year average real estate tax rate 

increase was 3.5% without subtracting the homestead/farmstead reduction. We continued the senior citizen 

property tax rebate program. We had eliminated the per capita tax for the 2002-2003 school year and have not 

reinstated it since then Actual real estate tax collected was 101.1% of budgeted real estate tax. Interim real 

estate tax collected was only 82.1% of budget and only slightly more than half of what was collected in the 

previous fiscal year. Real estate transfer tax collected was 97.1% of budget. Actual earned income tax 

collected was 102.3% of budget. Delinquent real estate tax collected was 85.0% of budget. Budgeted tax 

revenues reflected the local and national downturn in the housing market and the economy. Lower Macungie 

Township switched to a contracted service to collect earned income tax in September of 2009, which caused 

the creation of a delinquent earned income tax line item because previous collectors had not been separating 

current earned income tax from delinquent earned income tax. Berkheimer, who collects taxes for the Borough 

of Emmaus residents of East Penn School District, also started separating delinquent earned income tax from 

current earned income tax, so the Delinquent Earned Income Tax was 450.8% of the amount budgeted. 

Earnings on investments were only 19.8% of the budget amount because we did not lower our budgeted 

interest income enough to reflect interest rates on allowable investments that maintained unexpected lows. For 

the second of four years, we received a donation from Rodale toward the artificial track. Total revenue received 

was 99.9% of original budged revenue. 

-9-


Management’s Discussion and Analysis 

We refinanced some bond issues at lower interest rates, but did not transfer the savings to our capital reserve 

fund as we have often done in the past to be used for future capital improvements. The only amount 

transferred there was the $100,000 received from Rodale towards the track construction. 

The Series of 2011 refunded the Series of 2004A and 2006 saving $164,564.53 in 2010-11 and $322,191.34 in 

2011-12 with minor changes in future years and an overall savings of $484,128.64, which is net of the state 

reimbursement on debt service expenditures. The savings were reflected in lower debt service costs paid in 

2010-11 and a decrease in the 2011-12 debt service area of the general fund budget. 

General fund salaries and benefits spent were 97.6% of their original budget. There were some positions not 

filled until near the end of the fiscal year and some administrative positions filled at lower salaries. Intermediate 

Unit instructional costs were only 95.7% of their budget, but a $231,596 or 7% increase over the amount paid in 

the previous fiscal year. Charter School expenditures were 91.4% of their original budget, but the increase from 

the previous fiscal year was $377,715 or 15.7% due mainly to the addition of another grade at Seven 

Generation Charter School in Emmaus. The other purchased Prof. /Tech. Services area increased by 

$249,596 or 30.9% mainly due to the implementation of our own cyber alternative program to try to keep cyber 

charter school costs down. Approved Private Schools/Private Residential Rehabilitative Institutions were only 

59.0% of their original budget, and less than half as much as our previous year expenditure. Other Schools 

were 153.0% of their original budget and 28.9% more than what we spent in the previous fiscal year. The 

categories of special instructional expenses that we are required to pay to other entities keep growing rapidly. 

Fuel and utilities were only 83.2% of their budget due to implementation of some significant energy cost saving 

measures. This is a difficult area to estimate based on usage related to unpredictable weather. Debt service 

expenditures were 90.8% of their original budget due to savings from refinancing and low interest on our 

variable rate notes. Other, more controllable areas of the budget were kept to a minimum due to a freeze put 

on purchases early in the year. Actual total expenditures excluding transfers and budgetary reserve were 

96.4% of original budgeted expenditures. 

Total revenue for the fiscal year exceeded total expenditures by $1,690,328 in the General Fund. 

USING THE ANNUAL FINANCIAL REPORT 

This annual report consists of a series of financial statements and notes to those statements. These statements 

are organized so the reader can understand East Penn School District as a financial whole, an entire operating 

entity. The statements then proceed to provide an increasingly detailed look at specific financial activities. 

The first two statements are government-wide financial statements - the Statement of Net Assets and the 

Statement of Activities. These provide both long-term and short-term information about the District's overall 

financial status. 

The remaining statements are fund financial statements that focus on individual parts of the Districts operations 

in more detail than the government-wide statements. The governmental funds statements tell how general 

District services were financed in the short term as well as what remains for future spending. Proprietary fund 

statements offer short- and long-term financial information about the activities that the District operates like a 

business. For this District this is our Food Service Fund. Fiduciary fund statements provide information about 

financial relationships where the District acts solely as a trustee or agent for the benefit of others, to whom the 

resources in question belong. 

The financial statements also include notes that explain some of the information in the financial statements and 

provide more detailed data. 

Figure A-1 shows how the required parts of the Financial Section are arranged and relate to one another: 

-10-



Figure A-1 

Required components of 

East Penn School District's 

Financial Report 

Management 

Discussion and 

Analysis 

Basic 

Financial 

Statements 

Required 

Supplementary 

Information 

Governmentwide 

Financial 

Statements 

Fund 

Financial 

Statements 

Notes to the 

Financial 

Statements 

-11-



Figure A-2 summarizes the major features of the District's financial statements, including the portion of the 

District they cover and the types of information they contain. The remainder of this overview section of 

management discussion and analysis explains the structure and contents of each of the statements. 

Scope 

Required financial 

statements 

Accounting basis 

and measurement 

focus 

Type of 

asset/liability 

information 

Type of inflowoutflow 

information 

Figure A-2 

Major Features of East Penn School District's 

Government-wide and Fund Financial Statements 

Fund Statements 

Governmentwide 

Statements 

Governmental 

Funds 

Proprietary 

Funds 

Entire District 

(except fiduciary 

funds) 

Statement of net 

assets 

Statement of 

activities 

Accrual 

accounting and 

economic 

resources focus 

All assets and 

liabilities, both 

financial and 

capital, and 

short-term and 

long-term 

All revenues 

and expenses 

during year, 

regardless of 

when cash is 

received or paid 

The activities of the 

District that are not 

proprietary or 

fiduciary, such as 

education, 

administration and 

community services 

Balance Sheet 

Statement of 

revenues, 

expenditures, and 

changes in fund 

balance 

Modified accrual 


current financial 


Only assets 

expected to be used 

up and liabilities that 

come due during the 

year or soon 

thereafter; no capital 

assets included 

Revenues for which 

cash is received 

during or soon after 

the end of the year; 

expenditures when 

goods or services 

have been received 

and payment is due 

during the year or 

soon thereafter 

Activities the 

District operates 

similar to private 

business - Food 

Services 

Statement of net 

assets 

Statement of 

revenues, 

expenses and 

changes in net 

assets 

Statement of 

cash flows 

Accrual 


economic 




financial and 

capital, and 


long-term 

All revenues and 

expenses during 

year, regardless 

of when cash is 


Fiduciary Funds 

Instances in which 

the District is the 

trustee or agent to 

someone else's 

resources - 

Scholarship Funds 

Statement of 

fiduciary net assets 

Statement of 

changes in fiduciary 

net assets 

Accrual accounting 

and economic 




financial and 

capital, and 


long-term 

All revenues and 

expenses during 

year, regardless of 

when cash is 


-12-



OVERVIEW OF FINANCIAL STATEMENTS 

Government-wide Statements 

The government-wide statements report information about the District as a whole using accounting methods 

similar to those used by private-sector companies. The statement of net assets includes all of the government's 

assets and liabilities. All of the current year's revenues and expenses are accounted for in the statement of 

activities regardless of when cash is received or paid. 

The two government-wide statements report the Districts 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. 

Over time, increases or decreases in the District's net assets are an indication of whether its financial health is 

improving or deteriorating, respectively. 

To assess the overall health of the District, you need to consider additional factors, such as the increasing 

property tax base, outlook for future growth, strength of financial policies and planning, and student 

performance and achievement. 

The government-wide financial statements of the District are divided into two categories: 

Governmental activities - All of the District's basic services are included here, such as instruction, 

administration and community services. Property taxes and state and federal subsidies and grants finance 

most of these activities. 

Business type activities -The District operates a food service operation and charges fees to staff, students 

and visitors to help it cover the costs of the food service operation. 

Fund Financial Statements 

The District's fund financial statements provide detailed information about the most significant funds - not the 

District as a whole. Some funds are required by state law and by bond requirements. 

Governmental funds - Most of the District's activities are reported in governmental funds, which focus on 

the determination of financial position and change in financial position, not on income determination. They 

are reported using an accounting method called modified accrual accounting, which measures cash and 

all other financial assets that can readily be converted to cash. The governmental fund statements provide 

a detailed short-term view of the District's operations and the services it provides. Governmental fund 

information helps the reader determine whether there are more or fewer financial resources that can be 

spent in the near future to finance the District's programs. The relationship (or differences) between 

governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and 

governmental funds is reconciled in the financial statements. 

Proprietary funds - These funds are used to account for the District activities that are similar to business 

operations in the private sector; or where the reporting is on determining net income, financial position, 

changes in financial position, and a significant portion of funding through user charges. When the District 

charges customers for services it provides - whether to outside customers or to other units in the District - 

these services are generally reported in proprietary funds. The Food Service Fund is the District's 

proprietary fund and is the same as the business-type activities we report in the government-wide 

statements, but provide more detail and additional information, such as cash flows. 

-13-



Fiduciary funds - The District is the trustee, or fiduciary, for some scholarship funds. All of the District's 

fiduciary activities are reported in separate Statements of Fiduciary Net Assets. We exclude these 

activities from the District's other financial statement because the District cannot use these assets to 

finance its operations. 

FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE 

The District's total net assets were $47,641,153 at June 30, 2011. This is an increase in net assets of 

$7,494,209 from the net assets for the previous fiscal year. 

Table A-1 

Fiscal Year ended June 30, 2011 

Net Assets (In Millions) 

2011 2010 

Govern- Business- Total Govern- Business- Total 

mental Type Primary mental Type Primary 

Activities Activities Government Activities Activities Government 

Current assets $ 24.0 $ 0.4 $ 24.4 $ 23.3 $ 0.2 $ 23.5 

Non-Current assets 172.0 0.3 172.3 174.3 0.3 174.6 

Total Assets $ 196.0 $ 0.7 $ 196.7 $ 197.6 $ 0.5 $ 198.1 

Current and other liabilities 19.1 0.4 19.5 17.8 0.2 18.0 

Long-term liabilities 129.6 - 129.6 139.9 - 139.9 

Total Liabilities 148.7 0.4 149.1 157.7 0.2 157.9 

Net Assets 

Invested in capital assets, 

net of related debt 38.2 0.3 38.5 32.5 0.3 32.8 

Retirement of Long-Term Debt - - - - - - 

Other Restrictions - - - 1.2 - 1.2 

Unrestricted 9.1 - 9.1 6.2 - 6.2 

Total Net Assets $ 47.3 $ 0.3 $ 47.6 $ 39.9 $ 0.3 $ 40.2 

Total Liabilities 

and Net Assets $ 196.0 $ 0.7 $ 196.7 $ 197.6 $ 0.5 $ 198.1 

Most of the District's net assets are invested in capital assets (buildings, land, and equipment). The remaining 

unrestricted net assets are combined of designated and undesignated amounts. The designated balances are 

amounts set-aside to fund future purchases or capital projects as planned by the district. 

The results of this year's operations as a whole are reported in the Statement of Activities. All expenses are 

reported in the first column. Specific charges, grants, revenues and subsidies that directly relate to specific 

expense categories are represented to determine the final amount of the District's activities that are supported 

by other general revenues. The two largest general revenues are the Basic Education Subsidy provided by the 

State of Pennsylvania, and the local taxes assessed to community taxpayers. 

-14-



Table A-2 takes the information from that Statement and rearranges it slightly, so that you can see our total 

revenues for the year. 

Table A-2 


Changes in Net Assets (In Thousands) 

2011 2010 

Govern- Business- Total Govern- Business- Total 

mental Type Primary mental Type Primary 

Activities Activities Government Activities Activities Government 

REVENUES 

Program revenues 

Charges for services $ 284 $ 2,101 $ 2,385 $ 239 $ 2,039 $ 2,278 

Operating grants and contributions 14,053 1,002 15,055 13,118 976 14,094 

Capital grants and contributions 1,442 - 1,442 1,757 - 1,757 

General revenues 

Property taxes 75,945 - 75,945 72,437 - 72,437 

Other taxes 8,992 - 8,992 8,673 - 8,673 

Grants, subsidies and contributions, - - 

unrestricted 11,078 - 11,078 11,206 - 11,206 

Other 454 - 454 735 6 741 

TOTAL REVENUES $ 112,248 $ 3,103 $ 115,351 $ 108,165 $ 3,021 $ 111,186 

-------- ------- -------- -------- ------- -------- 

EXPENSES 

Instruction $ 63,170 $ - $ 63,170 $ 60,968 $ - $ 60,968 

Instructional student support 8,345 - 8,345 8,378 - 8,378 

Administrative and financial support 7,821 - 7,821 7,945 - 7,945 

Operation and maintenance of plant 10,349 - 10,349 11,282 - 11,282 

Pupil transportation 5,919 - 5,919 5,680 - 5,680 

Student activities 1,492 - 1,492 1,556 - 1,556 

Community services 10 - 10 4 - 4 

Interest on long-term debt 4,119 - 4,119 4,580 - 4,580 

Unallocated depreciation expense 3,588 - 3,588 3,267 - 3,267 

Food Services - 3,044 3,044 - 3,044 3,044 

TOTAL EXPENSES 104,813 3,044 107,857 103,660 3,044 106,704 

Increase (decrease) in net assets $ 7,435 $ 59 $ 7,494 $ 4,505 $ (23) $ 4,482 

The tables below present the expenses of both the Governmental Activities and the Business-type Activities of 

the District. 

Table A-3 shows the District's eight largest functions - instructional programs, instructional student support, 

administrative, operation and maintenance of plant, pupil transportation, student activities, community services, 

food service as well as each program's net cost (total cost less revenues generated by the activities). This table 

also shows the net costs offset by the other unrestricted grants, subsidies, and contributions to show the 

remaining financial needs supported by local taxes and other miscellaneous revenues. 

-15-


Management's Discussion and Analysis 

Table A-3 


Governmental Activities (In Thousands) 

2011 2010 

Total Cost Net Cost Total Cost Net Cost 

Functions/Programs of Services of Services of Services of Services 

Instruction $ 63,170 $ 51,928 $ 60,968 $ 50,717 

Instructional student support 8,345 7,618 8,378 7,493 

Administrative 7,821 7,493 7,945 7,388 

Operation and maintenance 10,349 10,069 11,282 11,280 

Pupil transportation 5,919 4,323 5,680 4,183 

Student activities 1,492 1,329 1,556 1,392 

Community services 10 9 4 3 

Interest on long-term debt 4,119 2,677 4,580 2,823 

Unallocated depreciation expense 3,588 3,589 3,267 3,267 

Total governmental activities $ 104,813 $ 89,035 $ 103,660 $ 88,546 

Less: 

Unrestricted grants, subsidies 11,078 11,206 

Total needs from local 

taxes and other revenues $ (77,957) 

$ (77,340) 

Table A-4 reflects the activities of the Food Service program, the only Business-type activity of the District. 

Table A 4 


Business – type 

Activities 

2011 2010 

Total Cost Net Cost Total Cost Net Cost 

Functions/Programs of Services of Services of Services of Services 

Food Services $ 3,044,856 $ (58,889) $ 3,044,190 $ (28,207) 

Less: 

Investment earnings & other misc. 366 5,511 

Total business-type activities $ (59,255) 

$ (22,696) 

The Statement of Revenues, Expenses and Changes in Fund Net Assets for this proprietary fund will 

provide further detail on the actual results of operations. 

THE DISTRICT FUNDS 

At June 30, 2011, the District governmental funds reported a combined fund balance of $15,493,985, an 

increase of $16,389, from the previous year. 

General fund revenues exceeded expenditures (not including transfers) by $1,790,328 but a $100,000 

transfer to the capital reserve fund caused the General Fund to show a final $1,690,328 increase in fund 

balance. 

-16-



With the implementation of GASB Statement #54, Capital Reserve Fund balances are now reported as 

part of the Capital Projects balances. The overall Capital Projects Fund balances have decreased by 

$1,670,302. 

The District utilizes the Capital Reserve Fund to actively prepare for unexpected and proposed capital 

projects each year. In order to fund these projects without the need for additional borrowing issues, the 

district has established this fund and makes transfers from available fund balance of the General Fund to 

this fund. Capital outlay projects and support costs of $52,232 were covered by the Capital Reserve Fund 

this year, while $100,000 was received from the General Fund, so the Capital Reserve Fund’s fund 

balance increased by $190,692. 

The Capital Projects Fund had a negative change in its fund balance since ongoing construction project 

expenditures amounted to $1,920,968. The Capital Project portion of fund balance decreased by 

$1,860,994. 

General Fund Budget 

During the fiscal year, the Board of School Directors (The Board) authorizes revisions to the original 

budget to accommodate differences from the original budget to the actual expenditures of the District. All 

adjustments are again confirmed at the time the annual audit is accepted, which is after the end of the 

fiscal year, which is not prohibited by state law. A statement showing the District's original and final budget 

amounts compared with amounts actually paid and received is provided in the Annual Financial Report. 

Local revenues were higher than budgetary figures due to conservative budgeting based on the recession 

and assessment appeals starting to come in. Real estate tax, interim real estate tax, and real estate 

transfer tax exceeded budgetary figures Total local revenue was $114,137 less than budgeted. State 

revenue was lower than budgetary figures by $2,709,529, but federal revenue was $2,279,978 higher than 

budgeted. This was due in part to the state using federal stimulus funds to provide a portion of basic 

education funding. The amount of basic subsidy coming from state funds declined by $129,542 from the 

previous fiscal year. We also received less charter school, social security and retirement reimbursement 

from the state than was budgeted. Rental and sinking fund reimbursements was lower than budgeted 

however we spent less than budgeted on debt service due to refinancing and lower variable rates than 

budgeted. 

Salaries and benefits, utility costs and debt service, were lower than originally budgeted, driving the total 

expenditures (excluding fund transfers and budgetary reserve) to be $4,869,893 lower than budgeted. 

See the “Highlights”: section near the beginning of this MD&A for further details. 

Further, there were no significant, unexpected expenditures during the year, so the budgeted reserve 

amount was not needed. While the District does prepare a budget with a reserve each year for 

unexpected emergencies, this expenditure is dependent upon actual experience during the fiscal year. 

Board policy is to include a budgetary reserve account appropriation equal to 5% of the annual budget 

appropriations. The Board is using this method of budgeting to control tax increases while also protecting 

the integrity of the fund balance. 

Transfers between specific categories of expenditures/financing uses occur during the year. The most 

significant transfers occur due to use of grant funds, whose amounts are not known at the time that the 

budget must be approved. 

-17-

CAPITAL ASSETS 



CAPITAL ASSET AND DEBT ADMINISTRATION 

At June 30, 2011, the District had $170,881,005 invested in a broad range of capital assets, including land, 

buildings, furniture and equipment. This amount represents a net decrease (including additions, deletions and 

depreciation) of $1,969,943, or 1.14% from last year. 

Table A-5 

Governmental Activities 

Fiscal Year Ended June 30, 2011 

Capital assets - net of depreciation 

2011 2010 

Land $ 11,235,048 $ 11,235,048 

Site Improvements 3,266,086 3,461,920 

Buildings 131,763,447 104,399,289 

Furniture & Equipment 2,462,181 2,564,804 

Construction in Progress 22,194,243 51,189,887 

DEBT ADMINISTRATION 

As of July 1, 2010, the District had total outstanding debt of $147,165,000. During the year, the District 

issued $15,395,000 in additional debt, but retired and repaid $25,570,000 resulting in ending outstanding 

debt as of June 30, 2011, of $136,990,000: 

Table A-6 

Outstanding Debt 

2011 2010 

General Obligation Notes/Bonds: 

- Bonds, Series of 2011 $ 15,395,000 $ 

- 

- Bonds, Series A of 2010 3,995,000 4,000,000 

- Bonds, Series of 2010 12,885,000 14,280,000 



- Bonds, Series A of 2008 6,070,000 7,395,000 

- Bonds, Series of 2008 7,095,000 8,220,000 




- Bonds, Series of 2006 - 7,380,000 


- Bonds, Series AA of 2004 3,945,000 4,360,000 

- Notes, Series A of 2004 11,800,000 12,500,000 

- Bonds, Series A of 2004 - 9,580,000 

- Notes, Series C of 2003 1,200,000 1,900,000 

- Notes, Series A of 2003 10,500,000 10,500,000 

- Bonds, Series of 2003 - 430,000 

- Notes, Series of 1998 5,290,000 5,835,000 

TOTAL $ 136,990,000 $ 147,165,000 

-18-



Other obligations include accrued vacation pay and sick leave for specific employees of the District. More 

detailed information about our long-term liabilities is included in the notes to the financial statements. 

ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES 

The District's most recent general obligation bond rating of Aa2 (with an underlying rating of Aa2), was 

issued on Moody’s Investor Service on January 21, 2011. The Aa2 rating reflects their “opinion of the 

District’s: 

 

 

 

Historically strong financial operations, resulting in satisfactory reserve levels. 

A large suburban Allentown area community with wealth levels that exceed state and national 

medians. 

An average debt profile that is expected to remain affordable as future capital and borrowing 

plans are minimal. 

They stated that in their opinion, “the district’ continues to demonstrate its trend of solid operating flexibility 

through prudent budgetary practices and a “history of structurally balanced, but notes that “management’s 

ability to maintain satisfactory financial flexibility by addressing rising expenditures and limited growth will 

be a key rating driver. 

The revenue budget for the 2011-2012 year is $1,194,777 lower than the original budget of 2010--2011. 

This represents a 1.1% decrease in budgeted revenues and includes a 0.83-mil or 1.8% real estate tax 

rate increase. With the passing of Act 1, the District was required to pass a preliminary budget in January 

and get approval for increasing taxes above an allowed index or pass a resolution stating that we would 

not exceed the index. For the 2011-2012 budget, this index was1.4%, and the District approved a 

preliminary budget and applied for exceptions from PDE to exceed the index for the 2011-2012 school 

year. We were granted exceptions for special education ($1,823,410) and retirement contributions 

($835,197) totaling $2,658,607, but only used $325,374 when we adopted the final budget. These 

exceptions based on tax data in the preliminary budget, would have allowed us to implement a real estate 

tax rate of 47.49 mils, which would have been a 4.79% real estate tax rate increase, but the actual final 

budget had a real estate tax rate of 46.15 mils, or a 1.8% rate increase. The expenditure budget for the 

2011-2012 year is $484,928 lower than the original budget for 2010-2011, or a 0.4% decrease. The 

budgetary reserve accounts for $5,729,499 of the total expenditure budget. 

The comparison of original budgeted revenue and expenditure categories is as follow: 

Table A-7 

BUDGETED REVENUES 

2011-2012 2010-2011 

Local 78.5% 77.5% 

State 20.7% 21.8% 

Federal/Other 0.8% 0.7% 

BUDGETED EXPENDITURES 

2011-2012 2010-2011 

Instruction 53.2% 53.3% 

Support Services 27.6% 27.9% 

Non-Instruction/Community 1.4% 1.4% 

Fund Transfers/Debt 17.8% 17.4% 

-19-



CONTACTING THE DISTRICT FINANCIAL MANAGEMENT 

Our financial report is designed to provide our citizens, taxpayers, parents, students, investors and 

creditors with a general overview of the District's finances and to show the Board's accountability for the 

money it receives. If you have questions about this report or wish to request additional financial 

information, please contact Debra A. Surdoval, Business Manager at East Penn School District, 800 Pine 

Street, Emmaus, PA 18049, (610) 966-8307 

-20-

BASIC FINANCIAL STATEMENTS


Statement of Net Assets 

As of June 30, 2011 

PRIMARY GOVERNMENT 

GOVERNMENTAL BUSINESS-TYPE 

ACTIVITIES ACTIVITIES TOTAL 

ASSETS 

CURRENT ASSETS: 

Cash and cash equivalents $ 18,998,382 $ 286,205 $ 19,284,587 

Investments 247,000 - 247,000 

Receivables, net 2,324,087 - 2,324,087 

Internal Balances 215,611 5,701 - (1) 

Due From Other Governments 1,999,076 52,436 2,051,512 

Other Receivables 177,755 3,923 181,678 

Inventories 101,726 56,990 158,716 

Prepaid Expenses - - - 

Other Current Assets - - - 

TOTAL CURRENT ASSETS 24,063,637 405,255 

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - 

24,247,580 

- - - - - - - - - - - - - - 

NON-CURRENT ASSETS: 

Other Long-Term Receivables 200,000 - 200,000 

Land 11,235,048 - 11,235,048 

Site Improvements (net of depreciation) 3,226,086 - 3,226,086 

Building and Bldg. Improvements (net of depreciation) 131,763,447 - 131,763,447 

Furniture and Equipment (net of depreciation) 2,177,670 284,511 2,462,181 

Construction in Progress 22,194,243 - 22,194,243 

Bond Issue Costs (net of amortization) 1,214,834 - 1,214,834 

TOTAL NON-CURRENT ASSETS 172,011,328 284,511 172,295,839 

TOTAL ASSETS $ 196,074,965 $ 689,766 $ 196,543,419 

LIABILITIES 

CURRENT LIABILITIES: 

Internal Balances $ 5,701 $ 215,611 $ - (1) 

Due to other governments 378,761 - 378,761 

Accounts Payable 1,460,880 57,787 1,518,667 

Current Portion of Long-Term Obligations 11,816,530 - 11,816,530 

Accrued Salaries and Benefits 4,836,876 - 4,836,876 

Payroll Deductions and Withholdings - - - 

Deferred Revenue 6,487 73,911 80,398 

Other Current Liabilities 583,271 - 583,271 

TOTAL CURRENT LIABILITIES 19,088,506 347,309 19,214,503 

NON-CURRENT LIABILITIES: 

Bonds and Notes Payable 124,616,252 - 124,616,252 

Extended Term Financing Agreements Payable - - - 

Lease Purchase Obligations - - - 

Long-Term Portion of Compensated Absences 1,480,169 40,982 1,521,151 

Net OPEB Obligation 1,063,544 - 1,063,544 

Other Retirement Benefits 2,486,816 - 2,486,816 

TOTAL LIABILITIES 148,735,287 388,291 148,902,266 

NET ASSETS 

Invested in capital assets, net of related debt 38,180,088 284,511 38,464,599 

RESTRICTED FOR: 

Retirement of Long-Term Debt - - - 

Capital Projects - - - 

Other Restrictions - - - 

Unrestricted (deficit) 9,159,590 16,964 9,176,554 

TOTAL NET ASSETS 47,339,678 301,475 47,641,153 

TOTAL LIABILITIES AND NET ASSETS $ 196,074,965 $ 689,766 $ 196,543,419 

The Accompanying Notes are an integral part of these financial statements. 

(1) Internal balances represent the amount owed to or from the two types of activities within the Primary Government. Since internal balances do not represent assets 

or liabilities of the total Primary Government, their balances are eliminated in the "total" column (GASB Statement No. 34, para. 58). 

-21-


Statement of Activities 


PROGRAM REVENUES 

OPERATING 

CAPITAL 

NET (EXPENSE) REVENUE 

AND CHANGES IN NET ASSETS 

CHARGES FOR GRANTS AND GRANTS AND GOVERNMENTAL BUSINESS-TYPE 

FUNCTIONS/PROGRAMS EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONS ACTIVITIES ACTIVITIES TOTAL 

GOVERNMENTAL ACTIVITIES: 

Instruction $ 63,169,955 $ 164,594 $ 11,077,119 $ - $ (51,928,242) $ - $ (51,928,242) 

Instructional Student Support 8,345,306 - 727,497 - (7,617,809) - (7,617,809) 

Admin. & Fin'l Support Services 7,820,865 - 328,284 - (7,492,581) - (7,492,581) 

Oper. & Maint. of Plant Svcs. 10,348,797 - 279,776 - (10,069,021) - (10,069,021) 

Pupil Transportation 5,918,946 - 1,596,320 - (4,322,626) - (4,322,626) 

Student activities 1,492,459 119,562 43,342 - (1,329,555) - (1,329,555) 

Community Services 10,248 - 603 - (9,645) - (9,645) 

Interest on Long-Term Debt 4,119,248 - - 1,442,644 (2,676,604) - (2,676,604) 

Unallocated Depreciation Expense 3,588,613 - - - (3,588,613) - (3,588,613) 

TOTAL GOVERNMENTAL ACTIVITIES 104,814,437 284,156 14,052,941 1,442,644 (89,034,696) - (89,034,696) 

BUSINESS-TYPE ACTIVITIES: 

Food Services 3,044,856 2,100,897 1,002,848 - - 58,889 58,889 

Other Enterprise Funds - - - - - - - 

TOTAL PRIMARY GOVERNMENT $ 107,859,293 $ 2,385,053 $ 15,055,789 $ 1,442,644 $ (89,034,696) $ 58,889 $ (88,975,807) 

----------------------- ------------------------ ------------------------ 

GENERAL REVENUES: 

Property taxes. Levied for general purposes, net $ 75,944,973 $ - $ 75,944,973 

Taxes levied for specific purposes 8,992,767 - 8,992,767 

Grants, subsidies, & contributions not restricted 11,077,926 - 11,077,926 

Investment Earnings 157,659 366 158,025 

Miscellaneous Income 296,325 - 296,325 

Special item - Gain (Loss) on sale of capital assets - - - 

Extraordinary Items - - 

Transfers - - - 

TOTAL GENERAL REVENUES, SPECIAL ITEMS, 

EXTRAORDINARY ITEMS, AND TRANSFERS 96,469,650 366 96,470,016 

CHANGE IN NET ASSETS 7,434,954 59,255 7,494,209 

NET ASSETS - BEGINNING 39,904,724 242,220 40,146,944 

NET ASSETS - ENDING $ 47,339,678 $ 301,475 $ 47,641,153 


-22-


Balance Sheet 

Governmental Funds 


NON-MAJOR 

TOTAL 

CAPITAL GOVERNMENTAL GOVERNMENTAL 

GENERAL PROJECTS FUNDS FUNDS 

ASSETS 

Cash and cash equivalents $ 15,365,748 $ 3,632,633 $ - $ 18,998,381 

Investments 247,000 - - 247,000 

Taxes Receivable, net 2,353,940 - - 2,353,940 

Due from other funds 217,087 - - 217,087 

Due from Other Governments 1,991,880 - - 1,991,880 

Other Receivables 38,778 137,500 - 176,278 

Inventories - - - - 

Prepaid Expenditures - - - - 

Other Current Assets - - - - 

TOTAL ASSETS $ 20,214,433 $ 3,770,133 $ - $ 23,984,566 

LIABILITIES AND FUND BALANCES 

LIABILITIES: 

Due to Other Funds $ 5,701 $ - $ - $ 

5,701 

Due to Other Governments 378,761 - - 378,761 

Accounts Payable 1,374,786 86,094 - 1,460,880 

Current Portion of Long-Term Debt 266,480 - - 266,480 

Accrued Salaries and Benefits 4,836,876 - - 4,836,876 

Payroll Deductions and Withholdings - - - - 

Deferred Revenues 1,502,813 - - 1,502,813 

Other Current Liabilities 39,070 - - 39,070 

TOTAL LIABILITIES 8,404,487 86,094 - 8,490,581 

-------------- -------------- ------------ --------------- 

FUND BALANCES: 

Nonspendable Fund Balance - - - - 

Restricted Fund Balance 398 3,684,039 - 3,684,437 

Committed Fund Balance - - - - 

Assigned Fund Balance 8,813,072 - - 8,813,072 

Unassigned Fund Balance 2,996,476 - - 2,996,476 

TOTAL FUND BALANCES 11,809,946 3,684,039 - 15,493,985 

TOTAL LIABILITIES AND FUND BALANCES $ 20,214,433 $ 3,770,133 $ - $ 23,984,566 


-23-


Reconciliation of the Governmental Funds Balance Sheet 

to the Statement of Net Assets 


TOTAL FUND BALANCES - GOVERNMENTAL FUNDS $ 15,493,985 

Amounts reported for governmental activities in the statement 

of net assets are different because: 

Capital assets used in governmental activities are not financial 

resources and therefore are not reported as assets in governmental 

funds. The cost of the assets is $216,338,257 and the accumulated 

depreciation is $45,741,763. 170,596,494 

Additional receivables established that do not meet the availability 

criteria reflected in the fund financial statements. This amount 

represents the difference between the prior year receivables and the 

current year receivables established under the accrual basis of 

accounting. 207,197 

Property taxes receivable will be collected this year, but are not 

available soon enough to pay for the current period's expenditures 

and therefore are deferred in the funds. 1,466,474 

The governmental funds follow the purchase method of inventory; 

therefore no inventory is reflected on the balance sheet. However, 

the statement of net assets uses the consumption method of 

inventory. 101,726 

Long-term liabilities, including bonds payable, are not due and 

payable in the current period and therefore are not reported as 

liabilities in the funds. Long-term liabilities at year end consist of: 

Bonds payable $ (134,206,418) 

Accrued interest on the bonds (544,201) 

Compensated absences (1,480,169) 

Other Retirement Benefits (3,033,355) 

Net Pension Obligation (198,511) 

Net OPEB Obligation (1,063,544) (140,526,198) 

TOTAL NET ASSETS - GOVERNMENTAL ACTIVITIES $ 47,339,678 


-24-


Statement of Revenues, Expenditures, and Changes in Fund Balances 

Governmental Funds 


NON-MAJOR 

TOTAL 

CAPITAL GOVERNMENTAL GOVERNMENTAL 

GENERAL PROJECTS FUNDS FUNDS 

REVENUES 

Local Sources $ 87,192,660 $ 203,898 $ - $ 87,396,558 

State Sources 21,878,697 - - 21,878,697 

Federal Sources 3,096,291 - - 3,096,291 

TOTAL REVENUES 112,167,648 203,898 - 112,371,546 

----------- ------------ ------------ ------------ 

EXPENDITURES 

Instruction 62,809,896 6,574 - 62,816,470 

Support Services 32,040,798 33,693 201,270 32,275,761 

Operation of Non-Instructional Services 1,487,952 - - 1,487,952 

Capital Outlay - 1,933,933 - 1,933,933 

Debt Service 14,069,238 - 8,835 14,078,073 

TOTAL EXPENDITURES 110,407,884 1,974,200 210,105 112,592,189 

EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 1,759,764 (1,770,302) (210,105) (220,643) 

OTHER FINANCING SOURCES (USES) 

Proceeds from Bond Issues - - - - 

Refunding Bond Proceeds - - 15,395,000 15,395,000 

Bond Premiums - - 413,577 413,577 

Insurance Recoveries 30,602 30,602 

Interfund Transfers In - 100,456 - 100,456 

Sale/Compensation for Fixed Assets 465 - - 465 

Payment to bond refunding escrow agent - - (15,590,423) (15,590,423) 

Bond Discounts - - (11,686) (11,686) 

Refunds of Prior Year Receipts (503) - - (503) 

Operating Transfers Out (100,000) (456) - (100,456) 

TOTAL OTHER FINANCING SOURCES (USES) (69,436) 100,000 206,468 237,032 

SPECIAL/EXTRAORDINARY ITEMS 

Special Items - - - - 

Extraordinary Items - - - - 

NET CHANGE IN FUND BALANCES 1,690,328 (1,670,302) (3,637) 16,389 

FUND BALANCES - BEGINNING 10,119,618 5,354,341 3,637 15,477,596 

FUND BALANCES - ENDING $ 11,809,946 $ 3,684,039 $ - $ 15,493,985 


-25-


Reconciliation of the Governmental Funds 

Statement of Revenues, Expenditures, and Changes In Fund Balances 

to the Statement of Activities 


NET CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS $ 16,389 

Amounts reported for governmental activities in the statement of 

activities are different because: 

Governmental funds report capital outlays as expenditures. However, in 

the statement of activities, the cost of those assets is allocated over their 

estimated useful lives as depreciation expense. This is the amount by 

which capital outlays exceeded depreciation in the current period. 

Depreciation expense $ 3,907,320 

less - capital outlays 1,977,561 (1,929,759) 

In the statement of activities, only the gain on the sale of the capital assets 

is reported, whereas in the governmental funds, the proceeds from the 

sale increase financial resources. Thus, the change in net assets differs 

from the change in fund balance by the cost of fixed assets sold. - 

Because some property taxes will not be collected for several months after 

the District's fiscal year ends, they are not considered as "available" 

revenues in the governmental funds. Deferred revenues increased by this 

amount this year. (53,222) 

Repayment of bond and lease principal is an expenditure in the 

governmental funds, but the repayment reduces long-term liabilities in the 

statement of net assets. 10,250,000 

In the statement of activities, certain operating expenses--compensated 

absences (vacations) and special termination benefits (early retirement) - 

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. This amount represents the 

difference between the amount earned versus the amount used. (110,567) 

In the statement of activities, certain operating revenues are recognized 

when earned versus the revenues using the modified accrual basis of 

accounting in the fund statements that are recognized when the funds are 

available. As such, the amount shown here represents the difference 

between earned revenues and revenues that are earned, but not available. (100,000) 

SUB-TOTAL IN CHANGES BETWEEN BASIS OF ACCOUNTING 8,072,841 

-26-

Statement of Revenues, Expenditures, and Changes In Fund Balances 

to the Statement of Activities 


SUB-TOTAL IN CHANGES BETWEEN BASIS OF ACCOUNTING 

(cont'd) $ 8,072,841 

Interest on long-term debt in the statement of activities differs from the 

amount reported in the governmental funds because interest is recognized 

as an expenditure in the funds when it is due, and thus requires the use of 

current financial resources. In the statement of activities, interest expense 

is recognized as the interest accrues, regardless of when it is due. This 

would include accumulated interest accreted on capital appreciation 

bonds. The additional interest accrued in the statement of activities over 

the amount due is shown here. (568,076) 

Bond proceeds provide current financial resources to governmental funds, 

but issuing debt increases long-term liabilities in the statement of assets. 

Refunding bond issues becomes a use of current financial resources in 

governmental funds, but refundings represent payments of long-term debt 

in the statement of net assets. This figure represents the difference 

between bond proceeds and refunding payments made to paying agents. (5,197) 

The governmental funds use the purchase method of inventory, where all 

items purchased are charged to expenditures. However, the statement of 

activities is reflected on the consumption method of recording inventory 

type items; therefore, this adjustment reflects the inventory difference. (64,614) 

Change in net assets of governmental activities $ 7,434,954 


-27-


Statement of Net Assets - Proprietary Funds 


FOOD NON-MAJOR 

SERVICE FUNDS TOTAL 

ASSETS 

CURRENT ASSETS: 

Cash and cash equivalents $ 286,205 $ - $ 286,205 

Investments - - - 

Due from other funds 5,701 - 5,701 

Due From Other Governments 52,436 - 52,436 

Other Receivables 3,923 - 3,923 

Inventories 56,990 - 56,990 

Prepaid expenses - - - 


TOTAL CURRENT ASSETS 405,255 - 405,255 

----------- ----------- ----------- 

NON-CURRENT ASSETS: 

Building & Bldg. Improvements (net) - - - 

Machinery & Equipment (net) 284,511 - 284,511 

Other Long-Term Receivables - - - 

TOTAL NON-CURRENT ASSETS 284,511 - 284,511 

TOTAL ASSETS $ 689,766 $ - $ 689,766 

LIABILITIES 

CURRENT LIABILITIES: 

Due to Other Funds $ 215,611 $ - $ 215,611 

Due to Other Governments - - - 

Accounts Payable 57,787 - 57,787 

Compensated Absences - - - 

Accrued Salaries and Benefits - - - 

Payroll Deductions and Withholdings - - - 

Deferred Revenue 73,911 - 73,911 

TOTAL CURRENT LIABILITIES 347,309 - 347,309 

----------- ----------- ----------- 

NON-CURRENT LIABILITIES: 

Long-Term Portion of Compensated Absences 40,982 - 40,982 

Net OPEB Obligation - - - 

TOTAL NON-CURRENT LIABILITIES 40,982 - 40,982 

TOTAL LIABILITIES 388,291 - 388,291 

----------- ----------- ----------- 

NET ASSETS 

Invested in capital assets, with no related debt 284,511 - 284,511 

Restricted for Legal Purposes - - - 

Unrestricted 16,964 - 16,964 

TOTAL NET ASSETS 301,475 - 301,475 

TOTAL LIABILITIES AND NET ASSETS $ 689,766 $ - $ 689,766 


-28-


Statement of Revenues, Expenses, and Changes in Net Assets - Proprietary Funds 


FOOD NON-MAJOR 


OPERATING REVENUES: 

Food Service Revenue $ 2,100,897 $ - $ 2,100,897 

Charges for Services - - - 

Other Operating Revenues - - - 

TOTAL OPERATING REVENUES 2,100,897 - 2,100,897 

------------ ------------ ------------ 

OPERATING EXPENSES: 

Salaries 1,026,966 - 1,026,966 

Employee Benefits 245,440 - 245,440 

Purchased Professional and Technical Services 200 - 200 

Purchased Property Service 500 - 500 

Other Purchased Services 1,476,131 - 1,476,131 

Supplies 195,437 - 195,437 

Depreciation 40,182 - 40,182 

Dues and Fees - - - 

Claims and Judgments - - - 

Other Operating Expenses 60,000 - 60,000 

TOTAL OPERATING EXPENSES 3,044,856 - 3,044,856 

OPERATING INCOME (LOSS) (943,959) - (943,959) 

------------ ------------ ------------ 

NON-OPERATING REVENUES (EXPENSES) 

Earnings on investments 366 - 366 

Contributions and Donations - - 

Gain/Loss on Sale of Fixed Assets - - - 

State Sources 187,873 - 187,873 

Federal Sources 814,975 - 814,975 

TOTAL NON-OPERATING REVENUES (EXPENSES) 1,003,214 - 1,003,214 

INCOME (LOSS) BEFORE CONTRIBUTIONS 59,255 - 59,255 

Capital Contributions - - - 

Transfers in (out) - - - 

CHANGES IN NET ASSETS 59,255 - 59,255 

NET ASSETS - BEGINNING 242,220 - 242,220 

NET ASSETS - ENDING $ 301,475 $ - $ 301,475 


-29-


Statement of Cash Flows - Proprietary Funds 


FOOD 

NON-MAJOR 


CASH FLOWS FROM OPERATING ACTIVITIES 

Cash Received from Users $ 2,098,172 $ - $ 2,098,172 

Cash Received from Assessments made to Other Funds - - - 

Cash Received from Earnings on Investments - - - 

Cash Received from Other Operating Revenue - - - 

Cash Payments to Employees for Services (1,268,145) - (1,268,145) 

Cash Payments for Insurance Claims - - - 

Cash Payments to Suppliers for Goods and Services (1,506,561) - (1,506,561) 

Cash Payments to Other Operating Expenses - - - 

NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (676,534) - (676,534) 

------------ ------------ ------------ 

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES 

Local Sources - - - 

State Sources 188,306 - 188,306 

Federal Sources 660,614 - 660,614 

Notes and Loans Received - - - 

Interest Paid on Notes/Loans - - - 

Operating Transfers In (Out) - - - 

NET CASH PROVIDED BY (USED FOR) NON-CAPITAL FINANCING ACTIVITIES 848,920 - 848,920 

------------ ------------ ------------ 

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES 

Purchase of Equipment - - - 

Gain/Loss on Sale of Fixed Assets (Proceeds) - - - 

NET CASH PROVIDED BY (USED FOR) CAPITAL AND RELATED FINANCING ACTIVITIES - - - 

------------ ------------ ------------ 

CASH FLOWS FROM INVESTING ACTIVITIES 

Earnings on Investments 366 - 366 

Purchase of Investment Securities/Deposits to Investment Pools - - - 

Withdrawals from Investment Pools - - - 

Proceeds from Sale and Maturity of Investment Securities - - - 

NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 366 - 366 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 172,752 - 172,752 

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 113,453 - 113,453 

CASH AND CASH EQUIVALENTS - END OF YEAR $ 286,205 $ - $ 286,205 

-30-


Statement of Cash Flows - Proprietary Funds 


RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 

FOOD 

NON-MAJOR 


OPERATING INCOME (LOSS) $ (943,959) 

------------ 

$ - 

------------ 

(943,959) 

------------ 

ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS) TO NET CASH 

PROVIDED BY (USED FOR) OPERATING ACTIVITIES 

Depreciation and Net Amortization 40,182 - 40,182 

Provision for Uncollectible Accounts - - - 

Donated Commodities Used 168,479 - 168,479 

CHANGE IN ASSETS AND LIABILITIES: 

(Increase) Decrease in Accounts Receivable (441) - (441) 

(Increase) Decrease in Advances from Other Funds (2,284) - (2,284) 

(Increase) Decrease in Inventories - - - 

(Increase) Decrease in Prepaid Expenses (23,764) - (23,764) 

(Increase) Decrease in Other Current Assets - - - 

Increase (Decrease) in Accounts Payable 57,787 - 57,787 

Increase (Decrease) in Accrued Salaries and Benefits 5,285 - 5,285 

Increase (Decrease) in Advances to Other Funds 9,734 - 9,734 

Increase (Decrease) in Net OPEB Obligations (1,024) (1,024) 

Increase (Decrease) in Other Current Liabilities 13,471 - 13,471 

TOTAL ADJUSTMENTS 267,425 - 267,425 

NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 

$ (676,534) $ - $ (676,534) 


-31-


Statement of Net Assets - Fiduciary Funds 


PENSION AND 

PRIVATE OTHER EMPLOYEE 

PURPOSE BENEFIT AGENCY 

TRUST TRUST FUNDS 

ASSETS 

Cash and cash equivalents $ 116,273 $ - $ 628,038 


Due from Other Funds - - - 

Other Receivables - - 109 

Prepaid Expenses - - - 


TOTAL ASSETS $ 116,273 $ - $ 628,147 

LIABILITIES 

Accounts Payable $ - $ - $ 

- 

Due to Other Funds - - 1,476 

Due to Student Clubs - - 294,367 

Other Current Liabilities - - 332,304 

TOTAL LIABILITIES - - 628,147 

NET ASSETS 

Restricted - - - 

Unrestricted 116,273 - - 

TOTAL NET ASSETS $ 116,273 $ - $ 

- 


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Statement of Changes in Net Assets - Fiduciary Funds 


PENSION AND 

OTHER EMPLOYEE 

PRIVATE-PURPOSE BENEFIT 

TRUST FUND TRUST FUNDS 

ADDITIONS 

Contributions $ 38,696 $ 

- 

Transfers from other funds - - 

INVESTMENT EARNINGS: 

Interest and Dividends 1,613 - 

Net increase (decrease) in fair value of investments - - 

Less investment expense - - 

TOTAL ADDITIONS 40,309 - 

--------------- ---------------- 

DEDUCTIONS 

Transfers to other funds - - 

Administrative charges - - 

Scholarships 32,494 - 

TOTAL DEDUCTIONS 32,494 - 

CHANGE IN NET ASSETS 7,815 - 

NET ASSETS - BEGINNING OF YEAR 108,458 - 

NET ASSETS - END OF YEAR $ 116,273 $ 

- 

-33-


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

General Fund 


VARIANCE WITH 

FINAL BUDGET BUDGET TO ACTUAL 

BUDGET AMOUNTS 

ACTUAL POSITIVE GAAP AMOUNTS 

ORIGINAL FINAL (BUDGETARY BASIS) (NEGATIVE) DIFFERENCE GAAP BASIS 

REVENUES 

Local Sources $ 87,306,797 $ 87,306,797 $ 87,192,660 $ (114,137) $ - $ 87,192,660 

State Sources 24,588,226 24,588,226 21,878,697 (2,709,529) - 21,878,697 

Federal Sources 805,052 805,052 3,096,291 2,291,239 - 3,096,291 

TOTAL REVENUES 112,700,075 112,700,075 112,167,648 (532,427) - 112,167,648 

EXPENDITURES 

------------ ------------ --------------- ------------ ------------ ------------ 

Regular Instruction 45,447,634 44,568,903 44,542,938 25,965 - 44,542,938 

Special Programs 14,133,246 14,377,246 13,662,050 715,196 - 13,662,050 

Vocational Programs 3,181,280 3,181,280 3,105,628 75,652 - 3,105,628 

Other Instructional Programs 572,791 622,791 520,997 101,794 - 520,997 

Nonpublic School Programs - 17,462 17,462 - 17,462 

Adult Education Programs 90,654 81,923 58,424 23,499 - 58,424 

Community/Junior College Ed. Programs 917,877 917,877 902,397 15,480 - 902,397 

Pupil Personnel Services 4,383,517 4,383,517 3,801,484 582,033 - 3,801,484 

Instructional Staff Services 3,290,451 3,592,423 3,410,226 182,197 - 3,410,226 

Administrative Services 5,425,959 5,431,959 5,137,335 294,624 - 5,137,335 

Pupil Health 1,129,173 1,198,173 1,057,309 140,864 - 1,057,309 

Business Services 946,409 946,409 844,853 101,556 - 844,853 

Operation & Maintenance of Plant Services 11,023,111 10,989,111 10,195,764 793,347 - 10,195,764 

Student Transportation Services 5,852,771 5,932,771 5,914,362 18,409 - 5,914,362 

Central Support Services 1,556,522 1,706,550 1,537,457 169,093 - 1,537,457 

Other Support Services 141,700 143,700 142,008 1,692 - 142,008 

Student Activities 1,653,120 1,653,120 1,486,149 166,971 - 1,486,149 

Community Services 770 2,704 1,803 901 - 1,803 

Facilities, Acquisition and Construction - - - - - - 

Debt Service 15,531,295 15,490,361 14,069,238 1,421,123 - 14,069,238 

TOTAL EXPENDITURES 115,278,280 115,238,280 110,407,884 4,830,396 - 110,407,884 

Excess (deficiency) of revenues over expenditures (2,578,205) (2,538,205) 1,759,764 4,297,969 - 1,759,764 

------------ ------------ --------------- ------------ ------------ ------------ 


Interfund Transfers In - - - - - - 

Sale/Compensation for Fixed Assets 1,100 1,100 465 (635) - 465 

Insurance Recoveries - - 30,602 30,602 - 30,602 

Refund of Prior Year Receipts - (40,000) (503) 39,497 (503) 

Fund Transfers Out (100,000) (100,000) (100,000) - - (100,000) 

Budgetary Reserve (5,426,118) (5,426,118) - 5,426,118 - - 

TOTAL OTHER FINANCING SOURCES (USES) (5,525,018) (5,565,018) (69,436) 5,495,582 - (69,436) 

Special Items - - - - - - 

Extraordinary Items - - - - - - 

NET CHANGE IN FUND BALANCES (8,103,223) (8,103,223) 1,690,328 9,793,551 - 1,690,328 

FUND BALANCE - JULY 1, 2010 8,106,635 $ 8,106,635 $ 10,119,618 $ 2,012,983 $ - $ 10,119,618 

FUND BALANCE - JUNE 30, 2011 $ 3,412 $ 3,412 $ 11,809,946 $ 11,806,534 $ - $ 11,809,946 


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Notes To Basic Financial Statements 


Note 1 - Description of the School District and Reporting Entity 

School District 

The East Penn School District is located in eastern Pennsylvania in the southern portion of Lehigh 

County, approximately seven miles to the south and west of Allentown, the county seat of Lehigh 

County. Encompassing 45.4 square miles in Lehigh County, the School District is comprised of 

Alburtis, Emmaus, and Macungie Boroughs, and Lower Macungie and Upper Milford Townships. 

Prior to 1966 and pursuant to law, the former School Districts of the Boroughs of Emmaus, Alburtis, 

and Macungie, and the Townships of Lower Macungie and Upper Milford, Lehigh County, formed the 

East Penn Union School District. Pursuant to Act 299 of the 1963 Pennsylvania Legislature requiring a 

consolidation of school districts, effective July 1, 1966, the East Penn Union School District formed the 

East Penn School District. The reorganized School District has assumed all rights and obligations of 

the predecessor school district. 

The East Penn School District is a unit established, organized and empowered by the Commonwealth 

of Pennsylvania for the express purpose of carrying out, on the local level, the Commonwealth's 

obligation to public education, as established by the constitution of the Commonwealth and by the 

School Law Code of the same (Article II; Act 150, July 8, 1968). 

As specified under the School Law Code of the Commonwealth of Pennsylvania, this and all other 

school districts of the state "shall be and hereby are vested as, bodies corporate, with all necessary 

powers to carry out the provisions of this act." (Article II, Section 211). 

Board of School Directors 

The public school system of the Commonwealth shall be administered by a board of school directors, 

to be elected or appointed, as hereinafter provided. At each election of school directors, each qualified 

voter shall be entitled to cast one vote for each school director to be elected. 

The East Penn School District is governed by a board of nine School Directors who are residents of the 

School District and who are elected every two years, on a staggered basis, for a four-year term. 

The Board of School Directors has the power and duty to establish, equip, furnish, and maintain a 

sufficient number of elementary, secondary, and other schools necessary to educate every person, 

residing in such district, between the ages of six and twenty-one years, who may attend. 

In order to establish, enlarge, equip, furnish, operate, and maintain any schools herein provided, or to 

pay any school indebtedness which the school district is required to pay, or to pay any indebtedness 

that may at any time hereafter be created by the school district, the board of school directors are vested 

with all the necessary authority and power annually to levy and collect the necessary taxes required 

and granted by the legislature, in addition to the annual State appropriation, and are vested with all 

necessary power and authority to comply with and carry out any or all of the provisions of the Public 

School Code of 1949. 

Administration 

The Superintendent of Schools shall be the executive officer of the Board of School Directors and, in 

that capacity shall administer the School District in conformity with Board policies and the School Laws 

of Pennsylvania. The Superintendent shall be directly responsible to, and therefore appointed by, the 

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Board of School Directors. The Superintendent shall be responsible for the overall administration, 

supervision, and operation of the School District. 

The Director of Operations, recommended by the Superintendent and appointed by the Board of 

School Directors, shall supervise and coordinate all business and operational aspects of the School 

District. In this capacity, he or she shall be responsible to insure that all work accomplished by him/her, 

or by persons under his/her supervision, is in the best interests of the East Penn School District. The 

Director of Operations is directly responsible to the Superintendent. 

Reporting Entity 

A reporting entity is comprised of the primary government, component units, and other organizations 

that are included to insure that the financial statements of the School District are not misleading. The 

primary government consists of all funds, departments, boards, and agencies that are not legally 

separate from the School District. For East Penn School District, this includes general operations, food 

service, and student related activities of the School District. 

East Penn School District is a municipal Corporation governed by an elected nine-member board. As 

required by generally accepted accounting principles, these financial statements are to present East 

Penn School District (the primary government) and organizations for which the primary government is 

financially accountable. The School District is financially accountable for an organization if the School 

District appoints a voting majority of the organization's governing board and (1) the School District is 

able to significantly influence the programs or services performed or provided by the organization; or (2) 

the School District is legally entitled to or can otherwise access the organization's resources; the School 

District is legally obligated or has otherwise assumed the responsibility to finance the deficits of, or 

provide financial support to, the organization; or the School District is obligated for the debt of the 

organization. Component units may also include organizations that are financially dependent on the 

School District in that the School District approved the budget, the issuance of debt, or the levying of 

taxes. The East Penn School District does not have any component units. 

Joint Ventures 

Lehigh Career and Technical Institute 

The School District is a participating member of the Lehigh Career and Technical Institute (LCTI). The 

LCTI is run by a joint committee consisting of members from each participating district. No participating 

district appoints a majority of the joint committee. The board of directors of each participating district 

must approve the LCTI's annual operating budget. Each participating district pays a pro-rata share of 

the LCTI's operating costs based on the number of students attending the LCTI for each District. The 

District's share of the LCTI operating costs for 2010-11 was $2,339,595. 

On dissolution of the Lehigh Career and Technical Institute, the net assets of LCTI will be shared on a 

pro-rata basis of each participating district's current market value of taxable real property as certified by 

the Pennsylvania State Tax Equalization Board. However, the District does not have an equity interest 

in LCTI as defined by GASB Statement No. 14, except a residual interest in the net assets upon 

dissolution that should not be reflected on the basic financial statements. Complete financial 

statements for the LCTI can be obtained from the LCTI's administrative office at 2300 Main Street, 

Schnecksville, PA. 

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Lehigh-Carbon Community College 

The District is a participating member of the Lehigh-Carbon Community College (LCCC). The LCCC is 

run by a Board of Trustees elected by the participating member districts' boards of directors. No 

participating district appoints a majority of the Board of Trustees. A vote of two-thirds of all member 

districts shall be required for approval of the LCCC's annual operating budget. The amount of the 

annual operating costs of the LCCC shall be apportioned among the member districts on the basis of 

the number of full-time equivalent students enrolled in LCCC and residing in the respective 

geographical areas of each of the member districts. The District's share of LCCC's operating costs for 

2010-11 was $902,397. 

On dissolution of the Lehigh-Carbon Community College, the net assets of LCCC will be shared on a 

pro-rata basis of each member district's current market value of taxable real property as certified by the 

Pennsylvania State Tax Equalization Board. However, the District does not have an equity interest in 

LCCC as defined by GASB Statement No. 14, except a residual interest in the net assets upon 

dissolution that should not be reflected on the basic financial statements. Complete financial 

statements for the LCCC can be obtained from the LCCC's administrative office at 2300 Main Street, 

Schnecksville, PA. 

Jointly Governed Organizations 

Carbon-Lehigh Intermediate Unit 

The School District is a participating member of the Carbon-Lehigh Intermediate Unit (CLIU). The 

CLIU is run by a joint committee consisting of members from each participating district. No participating 

district appoints a majority of the joint committee. The board of directors of each participating district 

must approve the CLIU's annual operating budget. The CLIU is a self-sustaining organization that 

provides services for fees to participating districts. As such, the District has no on-going financial 

interest or financial responsibility in the CLIU. The CLIU contracts with participating districts to supply 

special education services, computer services, and acts as a conduit for certain federal programs. 

Note 2 - Summary of significant accounting policies 

The financial statements of the District have been prepared in accordance with generally accepted 

accounting principles (GAAP) as applied to governmental units. The Governmental Accounting 

Standards Board (GASB) is the standard-setting body for governmental accounting and financial 

reporting. On June 15, 1987, the GASB issued a codification of the existing Governmental Accounting 

and Financial Reporting Standards which, along with subsequent GASB pronouncements (Statements 

and Interpretations), constitutes GAAP for governmental units. The School District also applies 

Financial Accounting Standards Board (FASB) statements and interpretations issued on or before 

November 30, 1989, to its business-type activities and to its proprietary funds, provided they do not 

conflict with or contradict GASB pronouncements. The more significant of these accounting policies 

are described below and, where appropriate, subsequent pronouncements will be referenced. 

A. Basis of Presentation 

The School District's basic financial statements consist of government-wide statements, including a 

statement of net assets, a statement of activities, and fund financial statements which provide a more 

detailed level of financial information. 

Government-wide Financial Statements The statement of net assets and the statement of activities 

display information about the School District as a whole. These statements include the financial 

activities of the primary government, except for fiduciary funds. The statements distinguish between 

those activities of the School District that are governmental and those that are considered businesstype 

activities. 

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The statement of net assets presents the financial condition of the governmental and business-type 

activities of the School District at year-end. The statement of activities presents a comparison between 

direct expenses and program revenues for each program or function of the School District's 

governmental activities and for one business-type activity of the School District. Direct expenses are 

those that are specifically associated with a service, program, or department and therefore clearly 

identifiable to a particular function. Program revenues include charges paid by the recipient of the 

goods or services offered by the program, grants, and contributions that are restricted to meeting the 

operational or capital requirements of a particular program and interest earned on grants that is 

required to be used to support a particular program. Revenues which are not classified as program 

revenues are presented as general revenues of the School District, with certain limited exceptions. The 

comparison of direct expenses with program revenues identifies the extent to which each business 

activity or governmental function is self-financing or draws from the general revenues of the School 

District. 

Fund Financial Statements During the year, the School District segregates transactions related to 

certain School District functions or activities in separate funds in order to aid financial management and 

to demonstrate legal compliance. Fund financial statements are designed to present financial 

information of the School District at this more detailed level. The focus of governmental and enterprise 

fund financial statements is on major funds. Each major fund is presented in a separate column. Nonmajor 

funds are aggregated and presented in a single column. The fiduciary funds are reported by 

type. 

B. Fund Accounting 

The School District uses funds to maintain its financial records during the year. A fund is defined as a 

fiscal and accounting entity with a self balancing set of accounts. There are three categories of funds: 

governmental, proprietary and fiduciary. 

Governmental Funds Governmental funds are those through which most governmental functions 

typically are financed. Governmental fund reporting focuses on the sources, uses, and balances of 

current financial resources. Expendable assets are assigned to the various governmental funds 

according to the purposes for which they may or must be used. 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 School District's major governmental funds: 

General Fund 

The General Fund should be used to account for and report all financial resources not accounted 

for and reported in another fund. 

Special Revenue Fund 

Special revenue funds are used to account for and report the proceeds of specific revenue 

sources that are restricted or committed to expenditure for specified purposes other than debt 

service or capital projects. The term proceeds of specific revenue sources establish that one or 

more specific restricted or committed revenues should be the foundation for a special revenue 

fund. The restricted or committed proceeds of specific revenue sources should be expected to 

continue to comprise a substantial portion of the inflows reported in the fund. Other resources 

also may be reported in the fund if those resources are restricted, committed, or assigned to the 

specified purpose of the fund. 

Under this new definition, effective for this year, the District does not have any special revenue 

funds. 

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Capital Project Funds 

Capital Project Funds are used to account for and report financial resources that are restricted, 

committed, or assigned to expenditure for capital outlays, including the acquisition or construction of 

capital facilities and other capital assets. Capital project funds exclude those types of capital-related 

outflows financed by proprietary funds or for assets that will be held in trust for individuals, private 

organizations, or other governments. 

The District has the following Capital Project Funds: 

a) 2009 Construction Fund 

This fund received the proceeds of $9,615,000 from the General Obligation Bonds – 

Series of 2009. The proceeds will be used for designing, acquiring, constructing, 

furnishing, and equipping the Willow Lane Elementary School and other facilities of the 

District. The issuance costs were expended in the year paid. 

b) 2010 Construction Fund 

This fund received the proceeds of $4,000,000 from the General Obligation Bonds – 

Series A of 2010. The proceeds will be used for capital improvements to facilities owned 

and operated by the school district, and to pay costs of issuance. 

c) Capital Reserve Fund 

This fund was created in accordance with Section 1432 of the Municipal Code. Because 

of a change in accounting principles, it is being restated as a Capital Projects Fund. The 

Municipal Code restricts how the resources are spent within this fund. 

Proprietary Funds Proprietary funds focus on the determination of changes in net assets, financial 

position and cash flows and are classified as enterprise funds. 

Enterprise Funds Enterprise funds may be used to account for any activity for which a fee is charged 

to external users for goods or services. The School District's major enterprise fund is: 

Food Service Fund - This fund accounts for the financial transactions related to the food 

service operations of the School District. 

Fiduciary Funds Fiduciary funds 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 funds and agency funds. Trust funds are used to account for assets held by the 

School District under a trust agreement for individuals, private organizations, or other governments and 

are therefore not available to support the School District's own programs. The School District has two 

private purpose trust funds. Agency funds are custodial in nature (assets equal liabilities) and do not 

involve measurement of results of operations. 

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C. Measurement Focus 

Government-wide Financial Statements The government-wide financial statements are prepared 

using the economic resources measurement focus. All assets and all liabilities associated with the 

operation of the School District are included on the statement of net assets. 

Fund Financial Statements All governmental funds are accounted for using a flow of current financial 

resources measurement focus. 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 balances reports on the sources (i.e., revenues and other financing sources) and uses (i.e., 

expenditures and other financing uses) of current financial resources. This approach differs from the 

manner in which the governmental activities of the government-wide financial statements are prepared. 

Governmental fund financial statements therefore include reconciliations with brief explanations to better 

identify the relationship between the government-wide statements and the statements for governmental 

funds. 

Like the government-wide statements, all enterprise funds are accounted for on a flow of economic 

resources measurement focus. All assets and all liabilities associated with the operation of these funds 

are included on the statement of net assets. The statement of revenues, expenses, and changes in 

fund net assets presents increases (i.e., revenues) and decreases (i.e., expenses) in total net assets. 

The statement of cash flows provides information about how the School District finances and meets the 

cash flow needs of its enterprise activities. 

D. Basis of Accounting 

Basis of accounting determines when transactions are recorded in the financial records and reported 

on the financial statements. Government-wide financial statements are prepared using the accrual 

basis of accounting. Government funds use the modified accrual basis of accounting. Proprietary and 

fiduciary funds also use the accrual basis of accounting. Differences in the accrual and the modified 

accrual basis of accounting arise in the recognition of revenue, the recording of deferred revenue, and 

in the presentation of expenses versus expenditures. 

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. 

Non-exchange transactions, in which the School District receives value without directly giving equal 

value in return, include property taxes, grants, entitlements, and donations. Revenue from property 

taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements 

and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. 

Eligibility requirements include timing requirements, which specify the year when the resources are 

required to be used or the fiscal year when use is first permitted, matching requirements, in which the 

School District must provide local resources to be used for a specified purpose, and expenditure 

requirements, in which the resources are provided to the School District on a reimbursement basis. On 

a modified accrual basis, revenue from non-exchange transactions must also be available before it can 

be recognized. 

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E. Budgetary Process 

An operating budget is adopted prior to the beginning of each year for the General Fund on the 

modified accrual basis of accounting. The General Fund is the only fund for which a budget is legally 

required. 

In accordance with Act 1 of 2006, the Board shall annually, but not later than the first business meeting 

of January, decide the budget option to be used for the following fiscal year. The Board shall approve 

either the Accelerated Budget Process Option or the Board Resolution Option. 

Accelerated Budget Process Option 

Under this option, a preliminary budget must be prepared 150 days prior to the primary election. Under 

this Option, the preliminary budget must be available for public inspection at least 110 days prior to the 

primary election. The Board shall give public notice of its intent to adopt the preliminary budget at least 

10 days prior to the adoption. The adoption must occur at least 90 days prior to the primary election. 

If the preliminary budget exceeds the increase authorized by the Index, an application for an exception 

may be filed with either a Court of Common Pleas with jurisdiction or PDE and made available for 

public inspection. The Board may opt to forego applying for an exception by submitting a referendum 

question seeking voter approval for a tax increase, in accordance with Act 1. 

The final budget shall include any necessary changes from the adopted preliminary budget. Any 

reduction required as the result of the failure of referendum shall be clearly stated. The final budget 

shall be made available for public inspection at least 20 days prior to final adoption. The Board shall 

annually adopt the final budget by a majority vote of all members of the Board prior to June 30. 

Board Resolution Option 

Under the Board Resolution Option, the Board shall adopt a resolution that it will not raise the rate of 

any tax for the following fiscal year by more than the Index. Such resolution shall be adopted no later 

than 110 days prior to the primary election. At least 30 days prior to adoption of the final budget the 

Board shall prepare a proposed budget. The proposed budget shall be available for public inspection 

at least 20 days prior to adoption of the budget. The Board shall give public notice of its intent to adopt 

at least 10 days prior to adoption of the proposed budget. The Board shall annually adopt the final 

budget by a majority vote of all members of the Board by June 30. 

Legal budgetary control is maintained at the sub-function/major object level. The PA School Code 

allows the School Board to make budgetary transfers between major function and major object codes 

only within the last nine months of the fiscal year, unless there is a two-thirds majority of the Board 

approving the transfer. Appropriations lapse at the end of the fiscal period. Budgetary information 

reflected in the financial statements is presented at or below the level of budgetary control and includes 

the effect of approved budget amendments. 

The amounts reported as the original budgeted amounts in the budgetary statements reflect the 

amounts in the PDE 2028 when the original appropriations were adopted. The amounts reported as 

the final budgeted amounts in the budgetary statements reflect the amounts after all 2010-11 budget 

transfers. 

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F. Change in Accounting Principles 

During this past fiscal year, the District was required to implement the provisions of GASB Statement 

No. 54 on Fund Balance Classifications and Definitions. The revised definition for Special Revenue 

Funds and Capital Project Funds has caused two previous governmental funds to be reclassified or 

eliminated. The new definitions for governmental funds used by the District can be found in Note 1-B to 

the financial statements. 

In past years, the District reflected the Athletic Fund, which controlled athletic receipts and costs, as a 

Special Revenue Fund. As a result of a change in accounting principle this fund is being eliminated 

and is being reclassified as part of the General Fund. Thus, the prior year ending fund balance in the 

general fund of $10,009,397 has increased by $110,221. 

In addition, the Capital Reserve Fund, which was previously categorized as a Special Revenue Fund, 

is being reclassified as a Capital Project Fund because of this change in accounting principle. As a 

result, the prior year Combined Capital Project Fund’s fund balance of $3,651,006 is increased by 

$1,703,335. 

Since both of these funds are governmental funds, there is no change in the prior year’s 

governmental activities net asset balances. 

G. Use of Estimates 

The preparation of financial statements in conformity with generally accepted accounting principles 

requires management to make estimates and assumptions that affect certain reported amounts and 

disclosures. Accordingly, actual results could differ from those estimates. 

H. Assets, Liabilities, and Net Assets 

Cash and Cash Equivalents 

For purposes of the Statement of Cash Flows, the Proprietary Fund type considers all highly liquid 

investments with a maturity of three months or less, when purchased, to be cash equivalents. 

Investments 

In accordance with GASB Statement 31, investments are stated at fair value, except: 

a) Non-participating interest earning investment contracts are recorded at amortized cost; 

b) Money market investments and participating interest earning investment contracts that 

mature within one year of acquisition are recorded at amortized cost; and, 

c) Investments held in 2a7-like pools (Pennsylvania Local Government Investment Trust and 

Pennsylvania Treasurer's Invest Program), are recorded at the pool’s share price. 

Receivables and Payables 

Activities between funds that are representative of lending/borrowing arrangements outstanding at the 

end of the fiscal year are referred to as "due to/from other funds". Any residual balances outstanding 

between the governmental activities and business-type activities are reported in the government-wide 

financial statements as "internal balances". 

-42-




Property Tax Levy 

Property taxes, which were levied during the fiscal year ended June 30, 2011, are recognized as 

revenue in the fund financial statements when received by the District during the fiscal year and also 

estimated to be received by the District within sixty (60) days after the fiscal year ended. 

Property taxes that were levied during the current fiscal year, which are not estimated to be received 

within sixty (60) days after the fiscal year-end, are recorded as receivable and deferred revenue in the 

fund financial statements. 

In the government-wide financial statements, all property taxes levied during the fiscal year are 

recognized as revenue, net of estimated uncollectible amount. 

Inventories 

On government-wide financial statements, inventories are presented at the lower of cost or market on a 

first-in, first-out basis, and are expensed when used. As of June 30, 2011, the inventory shown in the 

governmental activities column of the government-wide statement of net assets is $101,726 and 

$56,990 is shown as inventory in the business-type activities column of the government-wide statement 

of net assets. 

Inventory type items in governmental funds utilize the purchase method, that is, they are charged to 

expenditures when purchased. There was no physical inventory taken as of June 30, 2011; therefore, 

there is no offsetting nonspendable fund balance in the General Fund. 

Inventory type items in Proprietary Funds use the consumption method, in which items are purchased 

for inventory and charged to expenses when used. The only Proprietary Fund of the District is the 

Food Service Fund. Inventory within this fund consists of supplies purchases, food and donated 

commodities, which are valued at U.S.D.A.'s approximate costs. Inventories on hand at June 30, 2011, 

consist of: 

Donated Commodities $ 33,226 

Supplies 7,461 

Food 16,303 

TOTAL $ 56,990 

Prepaid Expenses 

In both the government-wide and fund financial statements, prepaid expenses are recorded as assets 

in the specific governmental fund in which future benefits will be derived. 

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Capital Assets 

General capital assets are those assets not specifically related to activities reported in the proprietary 

funds. These assets generally result from expenditures in the governmental funds. These assets are 

reported in the governmental activities column of the government-wide statement of net assets, but are 

not reported in the fund financial statements. Capital assets utilized by the enterprise funds are 

reported both in the business-type activities column of the government-wide statement of net assets 

and in the respective funds. 

All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and 

retirements during the year. Donated fixed assets are recorded at their fair market values as of the 

date received. The School District maintains a capitalization threshold of two thousand-five hundred 

($2,500) dollars. The School District does not possess any infrastructure. Improvements are 

capitalized; 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. Interest incurred during the construction of capital assets 

utilized by the enterprise funds is also capitalized. 

All reported capital assets, except land, certain land improvements, and construction in progress, are 

depreciated. Improvements are depreciated over the remaining useful lives of the related capital 

assets. Depreciation is computed using the straight-line method over the following useful lives: 

Description 

Governmental 

Activities 

Estimated Lives 

Business-Type 

Activities 

Estimated Lives 

Buildings and Improvements 10 -50 years 10 - 50 years 

Furniture and Equipment 5 - 20 years 5 -20 years 

Vehicles 8 years 8 years 

Compensated Absences 

The School District reports compensated absences in accordance with the provisions of GASB No. 16, 

"Accounting for Compensated Absences". Vacation benefits are accrued as a liability as the benefits 

are earned if the employees' rights to receive compensation are attributable to services already 

rendered and it is probable that the School District will compensate the employees for the benefits 

through paid time off or some other means. 

Sick leave benefits are accrued as a liability using the termination method. An accrual for earned sick 

leave is made to the extent that it is probable that benefits will result in termination payments. The 

liability is an estimate based on the School District's past experience of making termination payments. 

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 using expendable available financial resources. In enterprise funds, the 

entire amount of compensated absences is reported as a fund liability. 

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Long-Term Obligations 

In the government-wide financial statements, and proprietary fund types in the fund financial 

statements, long-term debt and other long-term obligations are reported as liabilities in the applicable 

governmental activities or proprietary fund type statement of net assets. Bond premiums and 

discounts, bond issuance costs, and deferred amounts on refundings are deferred and amortized over 

the life of the bonds using modification of the effective interest method. Bonds payable are reported net 

of the applicable bond premium or discount and any deferred amount on refundings. Bond issuance 

costs are reported as deferred charges and amortized over the term of the related debt. 

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as 

well as bond issuance costs, during the current period. The face amount of debt issued is reported as 

other financing sources while discounts and premiums on debt issuances are reported as other 

financing uses and other financing sources, respectively. Issuance costs, whether or not withheld from 

the actual debt proceeds received, are reported as support service expenditures. 

Reclassification 

Certain amounts have been reclassified to conform to the June 30, 2011, presentation of governmentwide 

financial statements on the accrual basis of accounting versus the governmental fund financial 

statements reported on the modified accrual basis of accounting. 

Net Assets 

Net assets represent the difference between assets and liabilities. Net assets invested in capital 

assets, net of 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 a higher governmental authority or through external 

restrictions imposed by creditors, grantors or laws or regulations of other governments. 

The School District applies restricted resources first when an expense is incurred for purposes for 

which both restricted and unrestricted net assets are available. 

Fund Balance Categories 

Fund balance for governmental funds should be reported in classifications that comprise a hierarchy 

based primarily on the extent to which the government is bound to honor constraints on the specific 

purposes for which amounts in those funds can be spent. Below are the potential categories of fund 

balance the government may use with their definitions, the actual categories used is explained in Note 

7 to the financial statements: 

Nonspendable Fund Balance 

This category includes amounts that cannot be spent because they are either (a) not in 

spendable form or (b) legally or contractually required to be maintained intact. 

-45-




Restricted Fund Balance 

Fund balance should be reported as restricted when constraints placed on the use of 

resources are externally imposed by creditors, grantors, contributors, or other government laws 

or regulations, or the constraint is imposed by enabling legislation or constitutional provisions. 

Committed Fund Balance 

This category pertains to amounts that can only be used for specific purposes pursuant to 

constraints imposed by formal action of the government’s highest level of decision-making 

authority. The committed amounts cannot be used for any other purpose unless the 

government removes or changes the specified use by taking the same type of action. 

This government’s governing body is the School Board and the formal action taken to commit 

resources is done by resolution. 

Assigned Fund Balance 

This category includes all remaining amounts that are reported in governmental funds, except 

the general fund, that are not classified in one of the above-mentioned categories. In the 

general fund, this category represents the District’s intent to use resources for a specific 

purpose, which does not require formal action by the governing body. The District’s policy 

dictates the business manager is responsible to make these assignments. 

Unassigned Fund Balance 

This category of fund balance represents the residual classification for the general fund after 

segregating resources used in the other categories listed above. Unassigned fund balance will 

only be shown in other governmental funds if those governmental funds have a negative net 

fund balance. 

The District’s policy on fund balance does not dictate which category of unrestricted fund balance is 

spent first, when resources are available to be spent in various categories. As such, committed 

amounts will be reduced first, followed by assigned amounts, and then unassigned amounts. The 

District’s policy also does not dictate whether restricted (nonspendable or restricted) or unrestricted 

(committed, assigned, and unassigned) is spent first when resources are available in both categories. 

As such, in these circumstances, restricted will be assumed to have been spent first followed by the 

unrestricted categories. 

Contributions of Capital 

Contributions of capital in proprietary fund financial statements arise from outside contributions of fixed 

assets, or from grants or outside contributions of resources restricted to capital acquisition and 

construction. The proprietary funds received no capital contributions during this fiscal year. 

Note 3 - Reconciliation of government-wide and fund financial statements 

A. Explanation of certain differences between the governmental fund balance sheet and the 

government-wide statement of net assets. 

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The governmental fund balance sheet includes reconciliation between "fund balance -total 

governmental funds" and "net assets - governmental activities" as reported in the government-wide 

statement of net assets. One element of that reconciliation explains that "long-term liabilities, including 

bonds payable, are not due and payable in the current period and therefore are not reported in the 

funds". The details of this $140,526,198 differences are: 

Bonds payable $ 136,990,000 

Less: Deferred charge on refunding (to be amortized as (2,484,615) 

interest expense) 

Less: Deferred charge for issuance costs (to be amortized (1,214,834) 

over life of debt) 

Less: Issuance discount (to be amortized as interest expense) (145,653) 

Add: Issuance premium (to be amortized as a contra to 

interest expense) 1,061,520 

Accrued interest payable 544,201 

Other Retirement Benefits 3,033,355 

Net Pension Obligation 198,511 

Net OPEB Obligation 1,063,544 

Compensated absences 1,480,169 

Net adjustment to reduce "fund balance - total governmental funds" 

to arrive at "net assets - governmental activities" $ 140,526,198 

B. Explanation of Differences between Governmental Funds Statement of Revenues, Expenditures 

and Changes in Fund Balances and the Statement of Activities 

Due to the differences in the measurement focus and basis of accounting used on the government fund 

statements and district-wide statements certain financial transactions are treated differently. The basic 

financial statements contain a full reconciliation of these items. Differences between the governmental 

funds statement of revenues, expenditures, and changes in fund balance and the statement of 

activities fall into one of three broad categories. The amounts shown in the columns on the following 

page represent: 

a) Long-term revenue differences arise because governmental funds report revenues only 

when they are considered "available", whereas the statement of activities reports revenues 

when earned. Differences in long-term expenses arise because governmental funds 

report on a modified accrual basis whereas the accrual basis of accounting is used on the 

statement of activities. The long-term expenses reported below recognize the change in 

vested employee benefits. 

b) Capital related differences include (1) the difference between proceeds for the sale of 

capital assets reported on governmental fund statements and the gain or loss on the sale 

of assets as reported on the statement of activities, and (2) the difference between 

recording an expenditure for the purchase of capital items in the governmental fund 

statements, and capitalization and recording of depreciation expense on those items as 

recorded in the statement of activities. 

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c) Long-term debt transaction differences occur because long-term debt proceeds are 

recorded as revenue and both interest and principal payments are recorded as 

expenditures in the governmental fund statements. In the statement of activities, long-term 

debt proceeds are recorded as a liability; principal payments are recorded as a reduction of 

liabilities. 

TOTAL LONG-TERM TOTAL FOR 

GOVERN- LONG-TERM CAPITAL DEBT STATEMENT 

MENTAL REVENUES/ RELATED TRANS- OF 

FUNDS EXPENSES ITEMS ACTIONS ACTIVITIES 

REVENUES AND OTHER SOURCES 

LOCAL SOURCES: 

Property Taxes $ 75,998,196 $ (53,223) $ - $ - $ 75,944,973 

Taxes levied for specific purposes 8,992,767 - - - 8,992,767 

Interest and investment earnings 157,659 - - - 157,659 

Miscellaneous 286,033 - - - 286,033 

Contributions and Donations 110,292 (100,000) - - 10,292 

Charges for Services 284,156 - - - 284,156 

Grants, subsidies & contributions not restricted 11,077,926 - - - 11,077,926 

Bond Premium 413,576 - - (413,576) - 

Proceeds from Bond Issues - - - - - 

Proceeds from Refunding of Bonds 15,395,000 - - (15,395,000) - 

INTERMEDIATE SOURCES: - - - 

Charges for Services - - - - - 

Capital grants and contributions - - - - - 

STATE SOURCES: - - - 

Operating & Capital grants and contributions 10,825,771 - - - 10,825,771 

FEDERAL SOURCES: - - - 

Operating & Capital grants and contributions 4,669,814 - - - 4,669,814 

SPECIAL AND EXTRAORDINARY SOURCES: - - 

Gain or (Loss) on disposal of assets - - - - - 

TOTAL REVENUES 128,211,190 

------------ 

(153,223) 

------------ 

- 

------------ 

(15,808,576) 

------------ 

112,249,391 

------------ 

EXPENDITURES/EXPENSES 

Instruction 62,816,471 206,323 147,161 - 63,169,955 

Instructional Student Support 8,272,379 28,797 44,130 - 8,345,306 

Admin. & Fin'l Support Services 7,882,895 (105,556) (32,608) 76,134 7,820,865 

Oper. & Maint. Of Plant Svcs. 10,305,599 40,108 3,090 - 10,348,797 

Pupil Transportation 5,914,362 - 4,584 - 5,918,946 

Student activities 1,486,149 (1,745) 8,055 - 1,492,459 

Community Services 1,803 7,256 1,189 - 10,248 

Capital Outlay 1,834,456 - (1,834,456) - - 

Debt Service 29,680,685 - - (25,561,437) 4,119,248 

Transfers Out - - - - - 

Depreciation - unallocated - - 3,588,613 - 3,588,613 

Impairment Loss - - - - - 

TOTAL EXPENDITURES/EXPENSES 128,194,799 175,183 1,929,758 (25,485,303) 104,814,437 

NET CHANGE FOR THE YEAR $ 16,391 $ (328,406) $ (1,929,758) $ 9,676,727 $ 7,434,954 

Note 4 - Stewardship, Compliance, and Accountability 

A. Compliance with finance related legal and contractual provisions 

The District has no material violations of finance related legal and contractual provisions. During this 

past fiscal year the District violated the Clean Streams Law and Erosion Control. As such, fines paid by 

the District totaled $81,988. 

B. Deficit fund balance or net assets of individual funds 

No individual fund contains a deficit fund balance or net assets at June 30, 2011. 

-48-




C. Excess of expenditures over appropriations in individual funds 

No individual fund, which had a legally adopted budget, had an excess of expenditures over 

appropriations. 

D. Budgetary compliance 

The District's only legally adopted budget is for the General Fund. All budgetary transfers were made 

within the last nine months of the fiscal year. The District cancels all purchase orders open at year-end; 

therefore, it does not have any outstanding encumbrances at June 30, 2011. In addition, the District 

includes a portion of the prior year's fund balance represented by unappropriated liquid assets 

remaining in the fund as budgeted revenue in the succeeding year. The results of operations on a 

GAAP basis do not recognize the fund balance allocation as revenue as it represents prior period's 

excess of revenues over expenditures. 

Note 5 - Detailed notes on all funds and account groups 

Custodial Credit Risk - Deposits 

Custodial credit risk is the risk that, in the event of a bank failure, the government's deposits may not be 

returned to it. The District does not have a policy for custodial credit risk. As of June 30, 2011, 

$6,702,697 of the District's bank balance of $7,456,328 exposed to custodial credit risk as follows: 

Uninsured and uncollateralized $ 

- 

Collateralized with securities held by the pledging financial institution - 

Uninsured and collateral held by the pledging bank's trust department not in 

the District's name 6,702,697 

TOTAL $ 6,702,697 

Reconciliation to Financial Statements 

Uncollateralized Amount above $ 6,702,697 

Plus: Insured Amount 753,631 

Less: Outstanding Checks (45,763) 

Carrying Amount - Cash Balances 7,410,565 

Plus: Petty Cash 1,890 

Deposit in Pooled Investments Considered Cash Equivalents 4,418,979 

Deposit in Money Market Mutual Funds Considered Cash Equivalents 8,444,464 

Less: Certificates of Deposit considered Investments by School Code (247,000) 

TOTAL CASH PER FINANCIAL STATEMENTS $ 20,028,898 

Investments 

Permitted investments for Pennsylvania School Districts are defined in the Public School Code of 

1949 as: 

1. United States Treasury Bills; 

2. Short-term obligations of the United States Government or its agencies or 

instrumentalities; 

-49-




3. Deposits in savings accounts or time deposits or share accounts of institutions insured 

by the F.D.I.C; and, 

4. Obligations of the United States of America or any of its agencies or instrumentalities, 

the Commonwealth of Pennsylvania or any of its agencies or instrumentalities or any 

political subdivision of the Commonwealth of Pennsylvania or any of its agencies or 

instrumentalities. 

As of June 30, 2011, the District had the following investments: 

Investment Maturities Fair Value 

PLGIT $ 2,556,487 

PLGIT-ARM 1,862,492 

First Star Banking 6,674,323 

US Bank 1,770,141 

Certificates of Depost 247,000 

TOTAL $ 13,110,443 

Interest Rate Risk 

The District has a formal investment policy that limits investment maturities as a means of managing its 

exposure to fair value losses arising from increasing interest rates. 

Credit Risk 

The District has no investment policy that would limit its investment choices to certain credit ratings. As 

of June 30, 2011 the District’s investment in PLGIT was rated AAA by Standard & Poor’s. The 

District’s investment in the PA Treasurer’s Invest Program was rated AAA by Standard & Poor’s and 

Moodys. The District’s investment in First Start Banking and US Bank Money Market accounts was 

rated AAA by Standard & Poor’s Investors Service. 

Concentration of Credit Risk 

The District places no limit on the amount the District may invest in any one issuer. 

Reconciliation to Financial Statements 

Total Investments Above $ 13,110,443 

Less: Deposits in Investment Pool Considered Cash Equivalents (4,418,979) 

Deposits in Money Market Funds Considered Cash Equivalents (8,444,464) 

Total Investments Per Financial Statements $ 247,000 

-50-




Property Taxes 

Property taxes are levied on July 1, on the assessed value listed, as of that date, for all taxable real 

property located in the District. Assessed values are established by the County Board of Assessments. 

All taxable real property was assessed at $1,731,332,100. The tax rate for the year was $4.532 per 

$100 of assessed valuation or 45.32 mills. In accordance with Act 1 of 2006, the District received 

$1,793,925 in property tax reduction funds for the 2010-11 fiscal year. 

The property tax calendar is: 

July 1 - Full year tax assessed for current year. 

July 1 - August 31 - Discount period during which a 2% discount is allowed. 

September 1 - October 31 - Face amount of tax is due 

November 1 - January 15 - A 10% penalty is added to all payments. 

January 15 - - All unpaid taxes become delinquent and are turned over to the 

County Tax Claim Bureau for Collection. 

The School District, in accordance with GAAP, recognized the delinquent and unpaid taxes receivable 

reduced by an allowance for uncollectible taxes was determined by the administration. A portion of the 

net amount estimated to be collectible, which was measurable and available within 60 days, was 

recognized as revenue and the balance deferred in the financial statements. 

Receivables 

Receivables, as of year end, for the government's individual major funds and non-major and fiduciary 

funds, in the aggregate, including the applicable allowances for uncollectible accounts, are: 

CAPITAL FOOD NON- 

GENERAL PROJECT SERVICE MAJOR FIDUCIARY 

FUND FUNDS FUND FUNDS FUNDS TOTAL 

RECEIVABLES: 

Interest $ 1,730 $ - $ - $ - $ - $ 1,730 

Taxes 2,353,940 - - - - 2,353,940 

Accounts 37,048 137,500 3,923 - 109 178,580 

Intergovernmental 1,991,880 - 52,436 - - 2,044,316 

GROSS RECEIVABLES 4,384,598 137,500 56,359 - 109 4,578,566 

Less: Allowance for 

Uncollectibles - - - - - - 

NET RECEIVABLES $ 4,384,598 $ 137,500 $ 56,359 $ - $ 109 $ 4,578,566 

Governmental funds report deferred revenue in connection with receivables for revenues that are not 

considered to be available to liquidate liabilities of the current period. Governmental funds also defer 

revenue recognition in connection with resources that have been received, but not yet earned. At the 

end of the current fiscal year, the various components of deferred revenue and unearned revenue 

reported in the governmental funds are: 

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UNAVAILABLE UNEARNED 

Delinquent Property Taxes - General Fund $ 1,496,326 $ 

- 

Overpayment from Tax Collector 3 

Summer School Tuition - 3,450 

Summer Fitness 2,200 

Grants drawdowns prior to meeting 

eligibility requirements - 834 

TOTAL $ 1,496,326 $ 6,487 

Capital Assets 

Capital asset balances and activity for the year ending June 30, 2011, were: 

BEGINNING 

ENDING 

BALANCE INCREASES DECREASES BALANCE 

GOVERNMENTAL ACTIVITIES: 

Capital Assets not being depreciated: 

Land $ 11,235,048 $ - $ - $ 11,235,048 

Construction in Progress 51,189,887 1,794,838 (30,790,482) 22,194,243 

Total Capital Assets not being depreciated 62,424,935 1,794,838 (30,790,482) 33,429,291 

Capital Assets being depreciated: - 

Site Improvements 6,304,829 - - 6,304,829 

Buildings and Improvements 140,961,571 30,756,735 - 171,718,306 

Furniture and Equipment 4,669,362 216,469 - 4,885,831 

TOTAL CAPITAL ASSETS BEING DEPRECIATED 151,935,762 30,973,204 - 182,908,966 

Less accumulated depreciation for: 

Site Improvements (2,842,909) (235,834) - (3,078,743) 

Buildings and Improvements (36,562,282) (3,392,577) - (39,954,859) 

Furniture and Equipment (2,429,251) (278,910) - (2,708,161) 

TOTAL ACCUMULATED DEPRECIATION (41,834,442) (3,907,321) - (45,741,763) 

TOTAL CAPITAL ASSETS BEING DEPRECIATED 

NET OF ACCUMULATED DEPRECIATION 110,101,320 27,065,883 - 137,167,203 

GOVERNMENTAL ACTIVITIES CAPITAL ASSETS, 

NET OF ACCUMULATED DEPRECIATION $ 172,526,255 $ 28,860,721 $ (30,790,482) $ 170,596,494 

BUSINESS-TYPE ACTIVITIES: 

Capital Assets being depreciated: 

Furniture and Equipment $ 1,169,174 $ - $ - $ 1,169,174 

Less accumulated depreciation (844,481) (40,182) - (884,663) 

BUSINESS-TYPE ACTIVITIES CAPITAL ASSETS, 

NET OF ACCUMULATED DEPRECIATION $ 324,693 $ (40,182) $ - $ 284,511 

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* DEPRECIATION EXENSE WAS CHARGED TO GOVERNMENTAL FUNCTIONS AS FOLLOWS: 

Regular Instruction $ 146,190 

Special Instruction 971 

Vocational Instruction - 

Other Instruction - 

Adult Instruction - 

Community College Instruction - 

Pupil Services 116 

Instructional Staff Svcs. 53,515 

Administrative Services 3,455 

Health Services 334 

Business Services 1,494 

Operation & Maintenance of Plant Svcs. 49,196 

Pupil Transportation 4,584 

Central Services 49,609 

Other Support Services - 

Student Activities 8,055 

Community Services 1,189 

Depreciation - unallocated 3,588,613 

TOTAL DEPRECIATION FOR GOVERNMENTAL ACTIVITIES $ 3,907,321 

The governmental activities did not dispose of any capital assets during the year. The business-type 

activities did not dispose of any capital assets during the year. 

Commitments 

Encumbrances 

Any encumbrances outstanding at year-end do not represent GAAP expenditures or liabilities but 

represent budgetary accounting controls. The General Fund Budget is maintained on the modified 

accrual basis of accounting, except that budgetary basis expenditures include any encumbrances 

issued for goods or services not received at year-end and not terminated. 

The actual results of operations are presented in accordance with GAAP and the District's accounting 

policies do not recognize encumbrances as expenditures until the period in which the goods or services 

are actually received and a liability is incurred. If budgetary encumbrances exist at year-end, they are 

included in the fund financial statements to reflect actual revenues and expenditures on a budgetary 

basis consistent with the District's legally adopted budget. 

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Long-term construction commitments 

The District has the following construction commitments in the Capital Project Funds: 

CONTRACT EXPENDED OUTSTANDING 

AMOUNT TO 6/30/11 COMMITMENTS 

PROJECT MANAGEMENT 

URS/O'Brien Kreitzberg, Inc. - Project Management Willow Lane ES $ 764,927 $ 724,198 $ 40,729 

TOTAL 764,927 724,198 40,729 

WILLOW LANE ELEMENTARY 

General Contractor- Perrotto Builders 13,944,952 13,325,204 619,748 

HVAC Contractor- Worth & Company 2,665,063 2,598,436 66,627 

Plumbing Contractor- JBM Mechanical 1,107,318 1,049,848 57,470 

Electrical Contractor- Wind Gap Electric 2,885,173 2,885,173 - 

TOTAL 20,602,506 19,858,661 743,845 

GRAND TOTAL $ 21,367,433 $ 20,582,859 $ 784,574 

Short-term debt 

Interfund receivables and payables 

The following interfund receivables and payables were in existence on June 30, 2011: 

INTERFUND 

RECEIVABLES 

INTERFUND 

PAYABLES 

General Fund $ 217,087 $ 5,701 

Special Revenue (Captial Reserve) Fund - - 

Capital Project (2004AA Construction) Fund - - 

Enterprise (Food Service) Fund 5,701 215,611 

Agency (Payroll) Fund - 30 

Agency (Activity) Fund - 1,446 

TOTAL $ 222,788 $ 222,788 

The District also made the following interfund transfers during the fiscal year ended June 30, 2011 

TRANSFER IN TRANSFER OUT 

General Fund $ - $ 100,000 

Capital Project (Captial Reserve) Fund 100,000 - 

Capital Project (2010 Construction) Fund 456 - 

Capital Project (2009 GOB Construction) Fund - 456 

Agency (Activity) Fund - - 

TOTAL $ 100,456 $ 100,456 

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Long-term liabilities 

Long-term liability balances and activity for the year ended June 30, 2011, were: 

Changes in Long-Term Liabilities 

AMOUNTS 

BEGINNING ENDING DUE WITHIN 

BALANCE ADDITIONS REDUCTIONS BALANCE ONE YEAR 

GOVERNMENTAL ACTIVITIES 

General Obligation Debt: 

Bonds and notes payable: 

Capital Projects $ 145,153,083 $ 17,033,111 $ 26,764,942 $ 135,421,252 $ 10,805,000 

Other than capital projects - - - - - 

Total general obligation debt 145,153,083 17,033,111 26,764,942 135,421,252 10,805,000 

Other liabilities: 

Vested employee benefits: 

Vacation pay 726,856 11,670 - 738,526 117,188 

Sick pay 947,242 - 22,774 924,468 65,637 

Net OPEB Obligation 770,416 293,128 - 1,063,544 - 

Net Pension Obligation 148,063 50,448 - 198,511 - 

Other retirement benefits 3,275,664 - 158,654 3,117,010 828,705 

Total other liabilities 5,868,241 355,246 181,428 6,042,059 1,011,530 

TOTAL GOVERNMENTAL ACTIVITY 

LONG-TERM LIABILITIES $ 151,021,324 $ 17,388,357 $ 26,946,370 $ 141,463,311 $ 11,816,530 

BUSINESS TYPE ACTIVITIES 

Other liabilities: 

Vested employee benefits: 

Vacation pay 2,432 72 - 2,504 - 

Sick pay 33,265 5,213 - 38,478 - 

TOTAL BUSINESS-TYPE ACTIVITY 

LONG-TERM LIABILITIES $ 35,697 $ 5,285 $ - $ 40,982 $ 

- 

Payments on bonds and notes are made by the general fund. Vested employee benefits will be 

liquidated by governmental and proprietary funds. The School District currently does not have any 

bonds or notes payable in business-type activities. 

Total Interest paid and accrued during the year: 

GOVERNMENTAL ACTIVITIES: EXPENSE PAID 

General obligation debt $ 4,118,745 $ 3,828,073 

Refund of Prior Year Receipts 503 503 

Short-term borrowings - - 

TOTAL INTEREST PAID BY GOVERNMENTAL ACTIVITIES $ 4,119,248 $ 3,828,576 

-55-




General Obligation Notes - Series of 1998 

On December 30, 1998, the District issued $10,215,000 of General Obligation Notes - Series of 1998. The 

purpose of this issue was to provide funds needed to refund the General Obligation Notes - Series A of 

1997, capitalized interest, and paying the costs of issuance. A sinking fund has been established with the 

paying agent in accordance with the Local Governmental Unit Debt Act. The Notes mature from February 

1, 2001, to February 1, 2020. The Notes shall bear interest at a variable rate based on the issuer's weekly 

rate, not to exceed 25% per annum. Interest shall be paid on the third day prior to the end of each month. 

The outstanding principal and interest requirements at June 30, 2011, are based on the interest rate of 

0.13% at year end: 

FISCAL YEAR PRINCIPAL INTEREST 

2011-12 $ 570,000 $ 6,591 

2012-13 595,000 5,820 

2013-14 620,000 5,033 

2014-15 645,000 4,214 

2015-16 670,000 3,370 

2016-19 2,190,000 4,611 

TOTAL OUTSTANDING $ 5,290,000 $ 29,639 

General Obligation Notes - Series A of 2003 

On November 3, 2003, the District issued $10,500,000 of General Obligation Notes - Series A of 

2003. The purposes of this issue are: (1) to provide a portion of the funds needed for the planning, 

designing, acquiring, constructing, equipping and furnishing of renovations to (a) the existing Alburtis 

Elementary School, (b) the existing Shoemaker Elementary School; (c) the existing Emmaus Senior 

High School; and (d) various other existing school buildings and facilities and, (2) paying the 

remarketing costs. In accordance with the Local Governmental Unit Debt Act, a sinking fund has 

been established with the paying agent. The notes mature from August 1, 2012 to August 1, 2023. 

Interest rate is variable equal to the Issuer's weekly rate plus 0.55% not to exceed 15.55%. In the 

event of a default, the Credit Note-Series B of 2003 of $10,760,112 becomes effective. The 

outstanding debt service requirements at June 30, 2011, using the year end interest rate of 0.11% 

are: 


2011-12 $ - $ 11,582 

2012-13 200,000 11,349 

2013-14 800,000 10,527 

2014-15 800,000 9,647 

2015-16 800,000 28,736 

2016-21 4,700,000 8,791 

2021-24 3,200,000 3,938 


-56-




General Obligation Notes - Series C of 2003 

On November 3, 2003, the District issued $5,000,000 of General Obligation Notes - Series C of 2003. The 

purposes of this issue are: (1) to provide a portion of the funds needed for the planning, designing, acquiring, 

constructing, equipping and furnishing of renovations to (a) the existing Alburtis Elementary School; (b) the 

existing Shoemaker Elementary School; (c) the existing Emmaus Senior High School; and (d) various other 

existing school buildings and facilities and (2) paying the remarketing costs. In accordance with the Local 

Governmental Unit Debt Act, a sinking fund has been established with the paying agent. The notes mature 

from August 1, 2005 to August 1, 2012. Interest rate is variable equal to the Issuer's weekly rate plus 0.55% 

not to exceed 15.55%. In the event of a default, the Credit Note-Series B of 2003 of $5,123,863 becomes 

effective. The outstanding debt service requirements at June 30, 2011, using the interest rate of 0.11% are: 


2011-12 $ 700,000 $ 619 

2012-13 500,000 48 

TOTAL OUTSTANDING $ 1,200,000 $ 667 

General Obligation Bonds - Series A of 2004 

On May 4, 2004, the District issued $13,800,000 of General Obligation Bonds - Series A of 2004. The 

purposes of this issue are to provide funds for: (1) the advance refunding of the Emmaus General 

Authority Guaranteed School Revenue Bonds Series of 1998, and (2) paying the costs of issuing the 

bonds. In accordance with the Local Governmental Unit Debt Act, a sinking fund has been established 

with the paying agent. The bonds mature from May 1. 2004 to May 1, 2020. Interest rates range from 

2.00% to 4.00%. On March 1, 2011, the District refunded the Series A of 2004 ($8,755,000), and the 

Series of 2006 ($6,565,000), with interest rates ranging from 2.8% to 4.0%, with new debt in the amount of 

$15,395,000 with interest rates ranging from 2.0% to 3.25%. 

-57-




PORTION PERTAINING 

TO THE SERIES 2004 A 

BONDS REFUNDED 

57.15% 

Gross Proceeds of Bonds $ 8,797,861 

Plus: Accrued Interest 

Premium 236,349 

Less: Original Issue Discount (6,678) 

Underwriter's Discount (57,010) 

TOTAL SOURCES $ 8,970,522 

USES 

2001A & 2002 AAA Escrow Deposit $ 8,909,540 

Issuance Cost 58,011 

Sinking Fund Deposit 2,971 

TOTAL USES $ 8,970,522 

DIFFERENCE IN CASH FLOW REQUIREMENTS 

Old Deb Service Cash Flows $ 10,464,415 

Cash Flows From New Debt: 

New Debt Service Cash Flow 9,983,147 

Less: Excess Funds Deposited in Sinking Fund (2,971) 

Net Cash Flows From New Debt $ 9,980,177 

Net Difference in Cash Flows $ 484,238 

ECONOMIC GAIN/LOSS $ 9,462,301 

Present Value of Old Dept Service Cash Flows 

Present Value of New Debt Service Cash Flows $ 9,085,171 

Less Excess Funds Deposited in Sinking fund (2,971) 

TOTAL $ 9,082,200 

ECONOMIC GAIN $ 380,101 

General Obligation Notes - Series A of 2004 

On October 1, 2004, the District issued $15,000,000 of General Obligation Notes – Series A of 2004. The 

purpose of this issue is to provide funds for: (1) the cost of planning, designing, acquiring, constructing, 

equipping and furnishing additions and renovations to (a) the existing Shoemaker Elementary School and 

to (b) the existing Alburtis Elementary School; (2) planning, designing, acquiring, constructing, equipping 

and furnishing alterations, additions and renovations or improvements to existing school buildings and 

facilities, or acquiring related land, fixtures, furnishings or equipment for school purposes; (3) capitalizing 

the interest on the Note; and (4) paying the remarketing costs. In accordance with the Local 

Governmental Unit Debt Act, a sinking fund has been established with the paying agent. The notes 

mature from August 1, 2005, to August 1, 2023. Interest rates are variable equal to the issuer’s weekly 

rate plus 0.55% not to exceed 15.55%. In the event of a default, the Credit Note – Series B of 2004 of 

$15,388,480 becomes effective. 

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The outstanding debt service requirements at June 30, 2011, using the year end interest rate of 0.11% 

are: 


2011-12 $ 700,000 $ 12,611 

2012-13 700,000 11,508 

2013-14 800,000 10,637 

2014-15 800,000 9,757 

2015-16 800,000 29,286 

2016-21 4,700,000 8,901 

2021-24 3,300,000 3,948 


General Obligation Bonds – Series AA of 2004 

On October 4, 2004, the District issued $10,000,000 of General Obligation Bonds – Series AA of 2004. 

The purpose of this issue is to provide funds for: (a) the cost of planning, designing, acquiring, 

constructing, furnishing and equipping alterations, additions, and improvements to: (1) Eyer Middle 

School; (2) various school buildings and facilities of the School District; and (b) paying the costs and 

expenses of issuing the bonds. In accordance with the Local Governmental Unit Debt Act, a Sinking Fund 

has been established with the paying agent. Interest rates range from 3.00% to 4.75% with total interest 

indebtedness of $5,261,614. The bonds mature from November 15, 2005, to November 15, 2024. 

On December 30, 2006, the District advance refunded a portion of the Series AA of 2004 General 

Obligation Bonds ($3,985,000) with interest rates ranging from 4.2% to 4.75%. 

Remaining debt service requirements on this bond issue at June 30, 2011, are: 


2011-12 $ 430,000 $ 146,417 

2012-13 445,000 131,086 

2013-14 465,000 114,024 

2014-15 480,000 96,305 

2015-16 500,000 77,305 

2016-20 1,625,000 106,102 

SUB-TOTAL 3,945,000 $ 671,239 

Unamortized Premium 15,116 

TOTAL OUTSTANDING $ 3,960,116 

General Obligation Bonds – Series A of 2005 

On August 1, 2005, the District issued $16,245,000 of General Obligation Bonds – Series A of 2005. The 

purpose of this issue is to advance refund the General Obligation Bonds – Series A of 2001, to advance 

refund the General Obligation Bonds – Series AAA of 2002, and to pay the costs and expenses of issuing 

the bonds. In accordance with the Local Government Unit Debt Act, a sinking fund has been established 

with the paying agent. The bonds mature from December 15, 2005 to December 15, 2017. Interest rates 

range from 3.00% to 4.00% with total interest indebtedness of $6,026,838.33. The outstanding debt 

service requirements at June 30, 2011, are: 

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2011-12 $ 685,000 $ 533,675 

2012-13 715,000 505,525 

2013-14 750,000 468,900 

2014-15 1,595,000 410,275 

2015-16 2,580,000 318,800 

2016-18 6,680,000 240,600 

SUB-TOTAL 13,005,000 $ 2,477,775 


Unamortized Deferred Amt. (298,284) 


General Obligation Bonds – Series of 2006 

On February 15, 2006, the District issued $10,000,000 of General Obligation Bonds – Series of 

2006. The purpose of this issue is to advance refund a portion of the General Obligation Bonds – 

Series of 2001, and to pay the costs and expenses of issuing the bonds. In accordance with the 

Local Governmental Unit Debt Act, a sinking fund has been established with the paying agent. The 

bonds mature from November 15, 2006 to November 15, 2017. Interest rates range from 3.00% to 

3.75% with total interest indebtedness of $2,393,981.88. On March 1, 2011, the District refunded 

the Series A of 2004 ($8,755,000) and the Series of 2006 ($6,565,000), with interest rates ranging 

from 2.8% to 4.0%, with new debt in the amount of $15,395,000 with interest rates ranging from 

2.0% to 3.25%. 

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PORTION PERTAINING 

TO THE SERIES 2006 

BONDS REFUNDED 

42.85% 

SOURCES 

Gross Proceds of Bonds $ 6,597,139 

Plus: Accrued Interest - 

Premium 177,228 

Less: Original Issue Discount (5,007) 

Underwriter's Discount (42,749) 

TOTAL SOURCES $ 6,726,611 

USES 

Escrow Deposit $ 6,680,883 

Issuance Costs 43,500 

Sinking Fund Deposit 2,228 

TOTAL USES $ 6,726,611 

DIFFERENCE IN CASH FLOW REQUIREMENTS 

Old Debt Service Cash Flows $ 7,538,573 

Cash Flows From New Debt: 

New Debt Service Cash flow $ 7,485,935 


Net Cash Flows From New Debt 7,483,707 

Net Difference in Cash Flows $ 54,866 

ECONOMIC GAIN/LOSS 

Present Value of Old Debt Service Cash Flows $ 6,962,625 

Present Value of New Debt Service Cash Flows $ 6,812,581 


Total 6,810,353 

Economic Gain $ 152,272 

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On December 15, 2006, the District issued $9,575,000 of General Obligations Bonds – Series A of 

2006. The proceeds will be used: (1) to advance refund a portion of the General Obligation Bonds – 

Series of 2003 ($5,115,000); (2) to advance refund a portion of General Obligation Bonds – Series 

AA of 2004 ($3,985,000); and (3) to pay the costs and expenses of issuing the bonds. In 

accordance with the Local Governmental Debt Act, a sinking fund has been established with the 

paying agent. The bonds mature from January 1, 2008 to January 1, 2025. Interest rates range 

from 3.50% to 4.05% with total interest indebtedness of $5,407,003. The outstanding debt service 

requirements at June 30, 2011 are: 


2011-12 $ 40,000 

$ 372,710 

2012-13 40,000 371,290 

2013-14 45,000 369,782 

2014-15 45,000 368,162 

2015-16 45,000 366,497 

2016-21 4,325,000 1,489,347 

2021-25 4,905,000 359,602 

SUB-TOTAL 9,445,000 $ 3,697,390 

Unamortized Discount (10,681) 

Unamortized Deferred Amt. (161,608) 


General Obligation Note – Series A of 2007 

On July 2, 2007, the District issued $12,400,000 of General Obligation Note – Series A of 2007. The 

proceeds will be used: (1) For the planning, designing, constructing, equipping & furnishing 

additions, alterations and for renovations to existing Eyer Middle School; (2) Planning, designing, 

acquiring, constructing, equipping, and furnishing alterations, additions and renovations or 

improvements to existing school buildings and facilities or acquiring related land, fixtures, 

furnishings, or equipment for school purposes; (3) Paying design/architect fees for a new elementary 

school; (4) Capitalizing the interest on the Note; (5) Paying the remarketing costs. In accordance 

with the Local Governmental Unit Debt Act, a sinking fund has been established with the paying 

agent. The Note matures from August 1, 2009 to August 1, 2022. In the event of default, the Credit 

Note Series B of 2007 of $12,721,150 becomes effective. Interest rate is variable equal to the 

weekly rate plus .55% per annum. The outstanding debt service requirements at June 30, 2011, 

using the year end interest rate of 0.11% are: 


2011-12 $ 100,000 

$ 13,356 

2012-13 100,000 13,210 

2013-14 100,000 13,100 

2014-15 100,000 12,990 

2015-16 100,000 50,233 

2016-21 6,200,000 12,915 

2021-23 5,500,000 3,610 

SUB-TOTAL $ 12,200,000 

$ 119,414 

Unamortized Discount 

Unamortized Deferred Chgs. 

- 

- 


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On November 29, 2007, the District issued $10,000,000 of General Obligation Bonds – Series of 

2007. The proceeds will be used: (1) to provide funds for and toward planning, designing, acquiring, 

constructing, furnishing, and equipping a new elementary center; and (2) paying the costs and 

expenses of this issue. In accordance with the Local Governmental Unit Debt Act, a sinking fund 

has been established with the paying agent. The bonds mature from November 15, 2008 to 

November 15, 2028. Interest rates range from 3.30% to 4.30% with total interest indebtedness of 

$5,316,835. The outstanding debt service requirements at June 30, 2011 are: 


2011-12 $ 325,000 

$ 367,418 

2012-13 350,000 354,793 

2013-14 375,000 342,106 

2014-15 390,000 328,621 

2015-16 405,000 314,307 

2016-21 2,345,000 1,318,134 

2021-26 2,950,000 786,217 

2026-29 2,170,000 142,760 

SUB-TOTAL 9,310,000 $ 3,954,356 



General Obligation Bonds – Series of 2008 

On April 15, 2008, the District issued $10,000,000 of General Obligation Bonds – Series of 2008. 

The proceeds will be used: (1) to currently refund a portion ($610,000) of the Series AA of 2001 

bonds; (2) to currently refund the outstanding ($6,180,000) Series of 2002 bonds; (3) to currently 

refund a portion ($2,990,000) of the Series of AA 2002 bonds; and (4) to pay the costs of the issue. 

In accordance with the Local Governmental Unit Debt Act, a sinking fund has been established with 

the paying agent. The bonds mature from October 1, 2008 to October 1, 2017. Interest rates range 

from 3.00% to 3.500%, with total interest indebtedness of $1,493,682. The outstanding debt service 

requirements at June 30, 2011, are: 


2011-12 $ 850,000 

$ 202,500 

2012-13 870,000 179,913 

2013-14 1,505,000 145,375 

2014-15 1,605,000 98,725 

2015-16 730,000 63,243 

2016-18 1,535,000 53,219 

SUB-TOTAL 7,095,000 $ 742,975 


Unamortized Deferred Chgs. (237,964) 


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General Obligation Bonds – Series A of 2008 

On August 14, 2008, the District issued $9,845,000 of General Obligation Bonds – Series A of 2008. 

The proceeds will be used: (1) to refund a portion of Series 2003 bonds, (2) to refund series 2001 A 

Bond, (3) to refund series 2002 AA Bonds, and (4) to pay related costs, fees, and expenses. In 

accordance with the Local Governmental Unit Debt Act, a sinking fund has been established with the 

paying agent. The bonds mature from September 15, 2008 to September 15, 2015. Interest rates 

range from 3.25% to 3.50% with total interest indebtedness of $1,058,529.17. The outstanding debt 

service requirements at June 30, 2011, are: 


2011-12 $ 1,825,000 $ 173,531 

2012-13 1,880,000 113,326 

2013-14 1,330,000 59,500 

2014-15 510,000 27,299 

2015-16 525,000 9,188 

SUB-TOTAL $ 6,070,000 $ 382,844 


Unamortized Deferered Chgs. (98,518) 



On June 1, 2009, the district issued $9,615,000 of General Obligation Bonds – Series of 2009. The 

proceeds will be used to provide funds for designing, acquiring, constructing, furnishing and 

equipping (1) a new Willow Lane Elementary School, (2) capital improvements to buildings and 

facilities owned and operated by the School District, and (3) to pay the costs of issuing the bonds. In 

accordance with the Local Governmental Unit Debt Act, a sinking fund has been established with 

the paying agent. Interest rates range from 2.0% to 4.375% with total interest indebtedness of 

$4,437,160.89. The outstanding debt service requirements at June 30, 2011, are 


2011-12 $ 345,000 

$ 329,230 

2012-13 350,000 322,280 

2013-14 355,000 315,053 

2014-15 375,000 306,638 

2015-16 395,000 296,519 

2016-21 2,290,000 1,278,270 

2021-26 2,990,000 783,519 

2026-28 2,185,000 145,471 

SUB-TOTAL $ 9,285,000 

$ 3,776,980 


Unamortized Deferered Chgs. - 


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On December 30, 2009, the District issued $6,105,000 of General Obligation Bonds – Series A of 

2009. The proceeds will be issued to (1) currently refund GOB Series of 2004 (2) and to pay related 

costs and expenses of issuance. In accordance with the Local Governmental Unit Debt Act, a sinking 

fund has been established with the paying agent. The bonds mature from November 15, 2010 to 

November 15, 2017. Interest rates range from 2.0% to 2.5% with total interest indebtedness of 

$609,085,94. The outstanding debt service requirements at June 30, 2011, are: 


2011-12 $ 750,000 

$ 110,213 

2012-13 765,000 95,062 

2013-14 780,000 79,612 

2014-15 790,000 63,913 

2015-16 810,000 47,912 

2016-18 1,675,000 41,157 

SUB-TOTAL $ 5,570,000 

$ 437,869 



Unamortized Premiums 55,844 



On March 1, 2010, the District issued $14,280,000 of General Obligation Bonds – Series of 2010. 

The proceeds will be used (1) to currently refund GOB Series A of 2002 (2) to currently refund GOB 

Series 2005 (3) to pay related costs, fees, and expenses. In accordance with the Local 

Governmental Unit Debt Act, a sinking fund has been established with the paying agent. The bonds 

mature from October 1, 2010 to October 1, 2017. Interest rates range from 2.00% to 2.75% with total 

indebtedness of $1,416,857,29. The outstanding debt service requirements at June 30, 2011, are: 


2011-12 $ 2,045,000 

$ 313,763 

2012-13 2,095,000 261,887 

2013-14 2,160,000 198,062 

2014-15 2,215,000 132,437 

2015-16 2,280,000 76,413 

2016-18 2,090,000 55,957 

SUB-TOTAL $ 12,885,000 

$ 1,038,519 






On March 1, 2010, the District issued $4,000,000 of General Obligation Bonds – Series A of 2010. 

The proceeds will be used (1) toward capital improvements to facilities owned and operated by the 

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School District (2) to pay related costs, fees, and expenses. In accordance with the Local 


mature from October 1, 2010 to October 1, 2023. Interest rates range from 2.00% to 3.6% with total 

indebtedness of $1,448,724,79. The outstanding debt service requirements at June 30, 2011, are: 


2011-12 $ 5,000 

$ 129,958 

2012-13 5,000 129,857 

2013-14 5,000 129,757 

2014-15 5,000 129,658 

2015-16 5,000 129,557 

2016-21 1,915,000 550,250 

2021-25 2,055,000 108,788 

SUB-TOTAL $ 3,995,000 

$ 1,307,825 


Unamortized Deferered Chgs. - 

Unamortized Premiums 429 



On March 1, 2011, the District issued $15,395,000 of General Obligation Bonds – Series of 2011. 

The proceeds will be used (1) to currently refund GOB Series A of 2004 (2) to currently refund GOB 

Series of 2006, (3) to pay related costs, fees, and expenses. In accordance with the Local 


mature from November 15, 2011 to November 15, 2019. Interest rates range from 2.00% to 3.25% 

with total indebtedness of $2,074,082. The outstanding debt service requirements at June 30, 2011, 

are: 


2011-12 $ 1,435,000 

$ 417,838 

2012-13 1,815,000 385,337 

2013-14 1,865,000 339,212 

2014-15 1,925,000 282,362 

2015-16 1,980,000 223,788 

2016-19 6,375,000 336,707 

SUB-TOTAL $ 15,395,000 

$ 1,985,244 



Unamortized Deferred Chgs. (870,867) 


Lease Rental Debt 

The Lehigh Career and Technical Institute (LCTI), with authority of the nine participating school districts, 

have agreed to borrow up to $53,715,000 to improve the Institute's facilities. The participating districts, 

such as East Penn School District, will be required to pay their proportionate shares of the incurred debt 

under the Articles of Agreement in subsequent years as "Capital Costs" under Section 4.2 of the Articles. 

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Specifically, Lehigh Career and Technical Institute issued $32,000,000 of revenue bonds - Series of 2003 

dated March 15, 2003, and $21,715,000 of revenue bonds - Series of 2001 dated September 15, 2001, 

through the State Public School Building Authority (SPSBA). The bonds are special limited obligations of 

the SPSBA. During the 2005-06 fiscal year, these issues have been refunded with new issues. 

The LCTI financing translates into an ongoing obligation of the participating districts for credit 

purposes; however, for purposes of the Local Governmental Unit Debt Act, this borrowing is not 

considered general obligation debt of the school districts; therefore, the future obligations of debt 

service are not recorded as a liability on East Penn's financial statements. 

Combined Long-Term Debt 

The combined general long-term debt obligations for subsequent years, except for Compensated 

absences and retirement benefits are: 

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SUMMARY OF PRINCIPAL REQUIREMENTS 

G.O.N. G.O.N. G.O.N. G.O.N. G.O.B. G.O.B G.O.B G.O.N. G.O.B 

SERIES SERIES A SERIES C SERIES A SERIES AA SERIES A SERIES A SERIES A SERIES 

FISCAL YEAR OF 1998 OF 2003 OF 2003 OF 2004 OF 2004 OF 2005 OF 2006 OF 2007 OF 2007 

2011-12 $ 570,000 $ - $ 700,000 $ 700,000 $ 430,000 $ 685,000 $ 40,000 $ 100,000 $ 325,000 

2012-13 595,000 200,000 500,000 700,000 445,000 715,000 40,000 100,000 350,000 

2013-14 620,000 800,000 - 800,000 465,000 750,000 45,000 100,000 375,000 

2014-15 645,000 800,000 - 800,000 480,000 1,595,000 45,000 100,000 390,000 

2015-16 670,000 800,000 - 800,000 500,000 2,580,000 45,000 100,000 405,000 

2016-21 2,190,000 4,700,000 - 4,700,000 1,625,000 6,680,000 4,325,000 6,200,000 2,345,000 

2021-26 - 3,200,000 - 3,300,000 - - 4,905,000 5,500,000 2,950,000 

2026-29 - - - - - - - - 2,170,000 

TOTAL 5,290,000 10,500,000 1,200,000 11,800,000 3,945,000 13,005,000 9,445,000 12,200,000 9,310,000 

LESS PAYABLE WITH- 

IN ONE YEAR 570,000 - 700,000 700,000 430,000 685,000 40,000 100,000 325,000 

LONG-TERM PRINC. 

DUE AFTER 

ONE YEAR $ 4,720,000 $ 10,500,000 $ 500,000 $ 11,100,000 $ 3,515,000 $ 12,320,000 $ 9,405,000 $ 12,100,000 $ 8,985,000 

SUMMARY OF PRINCIPAL AND INTEREST REQUIREMENTS 

G.O.N. G.O.N. G.O.N. G.O.N. G.O.B. G.O.B G.O.B G.O.N. G.O.B 

SERIES SERIES A SERIES C SERIES A SERIES AA SERIES A SERIES A SERIES A SERIES 

FISCAL YEAR OF 1998 OF 2003 OF 2003 OF 2004 OF 2004 OF 2005 OF 2006 OF 2007 OF 2007 

2011-12 $ 576,591 $ 11,582 $ 700,619 $ 712,611 $ 576,417 $ 1,218,675 $ 412,710 $ 113,356 $ 692,418 

2012-13 600,820 211,349 500,048 711,508 576,086 1,220,525 411,290 113,210 704,793 

2013-14 625,033 810,527 - 810,637 579,024 1,218,900 414,782 113,100 717,106 

2014-15 649,214 809,647 - 809,757 576,305 2,005,275 413,162 112,990 718,621 

2015-16 673,370 808,791 - 808,901 577,305 2,898,800 411,497 112,915 719,307 

2016-21 2,194,611 4,728,736 - 4,729,286 1,731,102 6,920,600 5,814,347 6,250,233 3,663,134 

2021-26 - 3,203,938 - 3,303,948 - - 5,264,602 5,503,610 3,736,217 

2026-29 - - - - - - - - 2,312,760 

TOTAL 

$ 5,319,639 $ 10,584,570 $ 1,200,667 $ 11,886,648 $ 4,616,239 $ 15,482,775 $ 13,142,390 $ 12,319,414 $ 13,264,356 

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G.O.B G.O.B G.O.B G.O.B G.O.B G.O.B G.O.B TOTAL 

SERIES SERIES A SERIES SERIES A SERIES SERIES A SERIES PRINCIPAL 

OF 2008 OF 2008 OF 2009 OF 2009 OF 2010 OF 2010 OF 2011 PAYMENTS 

$ 850,000 $ 1,825,000 $ 345,000 $ 750,000 $ 2,045,000 $ 5,000 $ 1,435,000 $ 10,805,000 

870,000 1,880,000 350,000 765,000 2,095,000 5,000 1,815,000 11,425,000 

1,505,000 1,330,000 355,000 780,000 2,160,000 5,000 1,865,000 11,955,000 

1,605,000 510,000 375,000 790,000 2,215,000 5,000 1,925,000 12,280,000 

730,000 525,000 395,000 810,000 2,280,000 5,000 1,980,000 12,625,000 

1,535,000 - 2,290,000 1,675,000 2,090,000 1,915,000 6,375,000 48,645,000 

- - 2,990,000 - - 2,055,000 - 24,900,000 

- - 2,185,000 - - - - 4,355,000 

7,095,000 6,070,000 9,285,000 5,570,000 12,885,000 3,995,000 15,395,000 136,990,000 

850,000 1,825,000 345,000 750,000 2,045,000 5,000 1,435,000 10,805,000 

$ 6,245,000 $ 4,245,000 $ 8,940,000 $ 4,820,000 $ 10,840,000 $ 3,990,000 $ 13,960,000 $ 126,185,000 

G.O.B G.O.B G.O.B G.O.B G.O.B G.O.B G.O.B TOTAL 

SERIES SERIES A SERIES SERIES A SERIES SERIES A SERIES DEBT SVC. 

OF 2008 OF 2008 OF 2009 OF 2009 OF 2010 OF 2010 OF 2011 PAYMENTS 

$ 1,052,500 $ 1,998,531 $ 674,230 $ 860,213 $ 2,358,763 $ 134,958 $ 1,852,838 $ 13,947,012 

1,049,913 1,993,326 672,280 860,062 2,356,887 134,857 2,200,337 14,317,291 

1,650,375 1,389,500 670,053 859,612 2,358,062 134,757 2,204,212 14,555,680 

1,703,725 537,299 681,638 853,913 2,347,437 134,658 2,207,362 14,561,003 

793,243 534,188 691,519 857,912 2,356,413 134,557 2,203,788 14,582,506 

1,588,219 - 3,568,270 1,716,157 2,145,957 2,465,250 6,711,707 54,227,609 

- - 3,773,519 - - 2,163,788 - 26,949,622 

- - 2,330,471 - - - - 4,643,231 

$ 7,837,975 $ 6,452,844 $ 13,061,980 $ 6,007,869 $ 13,923,519 $ 5,302,825 $ 17,380,244 $ 157,783,954




Compensated Absences 

Sick-Pay 

Under the District's various bargaining agreements and plans, professional and eligible support 

personnel accumulate unused sick days from year to year based on their classification. These 

accumulated sick days are non-vesting during the employee's tenure. Only administrators employed 

prior to 7-1-04 who have opted to retain this benefit are eligible for payment. Upon retirement, these 

employees except for administrators are eligible for remuneration for unused sick days under the 

following bargaining agreements: 

1. East Penn Education Association Members - $25 per day 

2. Teamsters Union Members - $22 per day 

3. Food Crafters Association Members - $20 per day 

4. Secretarial & Aide Members - $20 per day 

5. Administrative Plan Members - $25 per day 

The District maintains records of each employee's accumulated sick days that are vested with employees 

who are eligible to retire, and for those under the administrative plan. In accordance with GASB 

Statement No. 16, $38,478, including FICA tax (net of reimbursement), has been recorded in the Food 

Service (Enterprise) Fund for sick leave termination benefits earned by Cafeteria employees at June 30, 

2011. This amount is also included as a long-term liability in the business-type activity column of the 

government-wide statement of net assets. The amount recorded in the General Fund for governmental 

employees, which will use currently available financial resources, is $65,637, including FICA tax (net of 

reimbursement). This amount is reflected as a current liability in the governmental activities column of the 

government-wide statement of net assets. The remaining sick leave termination benefit of $858,831, 

including FICA tax (net of reimbursement), is recorded as a long-term liability in the governmental 

activities column of the government-wide statement of net assets. 

Vacation Leave 

Unused vacation leave is paid upon an employee's termination. The District maintains records of each 

employee's accumulated vacation days. In accordance with GASB Statement No. 16, the portion of 

vacation pay earned at June 30, 2011, that will use currently available financial resources is $117,188, 

including fica tax and retirement contributions (net of reimbursement), which has been recorded in the 

General Fund. This amount is also shown as a current liability in the governmental activities column of the 

government-wide statement of net assets. The Enterprise (Food Service) Fund has recorded $2,504, 

including fica tax and retirement contributions (net of reimbursement), which is also reflected as a longterm 

liability in the business-type activity column of the government-wide statement of net assets. The 

remaining vacation pay earned at June 30, 2011, of $621,338, including FICA tax and retirement 

contributions (net of reimbursement), is recorded as a long-term liability in the governmental activities 

column of the government-wide statement of net assets. 

Defined benefit pension plans 

Plan Description 

Name of plan: The Public School Employees’ Retirement System (the System). 

Type of Plan: Governmental cost sharing multiple-employer defined benefit plan. 

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Benefits: Retirement and disability legislatively mandated ad hoc cost-of-living adjustments, healthcare 

insurance premium assistance to qualifying annuitants. 

Authority: The Public School Employees’ Retirement Code (Act No. 96 of October 2, 1975, as amended) 

(24 PA C.S. 8101-8535). 

Annual Financial Report: The System issues a comprehensive annual financial report that includes 

financial statements and required supplementary information for the plan. A copy of the report may be 

obtained by writing to Diane J. Wert, Office of Financial Management, Public School Employees’ 

Retirement System, P. O. Box 125, Harrisburg, PA 17108-0125. The report is also available in the 

publications section of the PSERS website at www.psers.state.pa.us. 

Funding Policy 

Authority: The contribution policy is established in the Public School Employees’ Retirement Code and 

requires contributions by active members, employers, and the Commonwealth. 

Contribution Rates 

Member Contributions: Active members, who joined the System prior to July 22, 1983, contributed at 5.25 

percent (Membership Class TC) or at 6.50 percent (Membership Class TD) of the member's qualifying 

compensation. Members who joined the System on or after July 22, 1983 and who were active or inactive 

as of July 1, 2001, contribute at 5.4 percent (Membership Class TC) or at 7.50 percent (Membership Class 

TD) of the member's qualifying compensation. Members who joined the System after June 30, 2001, 

contribute at 7.50 percent (automatic Membership Class TD). For all new hires and for members who 

elected Class TD membership, the higher contribution rates began with service rendered on or after 

January 1, 2002. 

Contributions required of employers are based upon an actuarial valuation. For fiscal year ended June 30, 

2011, the rate of employer contribution was 5.64 percent of covered payroll. The 5.64 percent rate is 

comprised of a pension contribution rate of 5.00 percent for pension benefits and 0.64 for healthcare 

insurance premium assistance. 

The employer’s current year covered payroll was $51,226,413 and total payroll was $53,775,205. 

The total employee and employer contributions for this current year were $3,824,661 and $2,929,405, 

respectively. 

Other Employee Benefits 

Special Termination Benefits 

The East Penn School District's Board of School Directors has established an early retirement incentive 

program (ERIP) for those employees who meet certain qualifications. All professional employees will 

select, in writing, one of two financial options. 

Option 1 

Upon meeting the requirements explained later, the District shall pay to the employee a total 

payment equal to his/her final base salary, at the time of application for ERIP, multiplied by the 

percentage appearing in the chart below. Such payment will be made during the first calendar year 

of ERIP at a time stipulated, in writing, by the retiree. The employee may opt to receive these 

monies in either one or two installments. 

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Option 2 

AGE OF PERSON ON JULY 1 OF ERIP YEAR PERCENTAGE 

54 50% 

55 50% 

56 40% 

57 35% 

58 30% 

59 25% 

60 20% 

Upon receipt of a letter of request and letter of intent to retire, the Board will approve the applicant's 

request for a sabbatical leave, if the employee is eligible by law, and waives the return-to-work 

provision. Under this option, the employee would not begin receiving PSERS benefits until the 

conclusion of the year's sabbatical leave. 

The plan is on a voluntary basis. To be eligible to receive this retirement incentive, the employee 

must meet all of the following qualifications: 

The employee must be an active (not on leave) member of the instructional or administrative 

staff at the time of request. 

The employee must choose to begin the ERIP program on July 1, and must be at least the age 

of 54 or not older than 60 on the preceding June 30. 

The employee must have a minimum of fifteen (15) consecutive years of service in the East 

Penn School District prior to the commencement of ERIP. 

The employee must qualify for retirement under provisions of the Public School Employees 

Retirement System (PSERS). 

A letter of resignation, application to PSERS for benefits, and an application for ERIP must be 

received in the Superintendent's office on or before May 1, of the school year preceding the 

July 1, start date of ERIP. 

In accordance with GASB Statement No. 47, an employer that provides voluntary termination 

benefits shall recognize a liability and an expense when the employees accept the offer and the 

amount can be reasonably estimated. The amount recognized shall include any lump-sum 

payments and the present value of any expected future payments. The District records a liability 

when an employee accepts the offer. As of June 30, 2011, there were no eligible persons that 

accepted the offer that were not paid or recorded as a liability. 

Under the provisions of Board Policy 450, the East Penn School District will pay, for those employees 

electing the Early Retirement Incentive Program explained in the preceding note, the premium for the 

retiring employee in an early retiree’s hospitalization/medical plan. Such coverage will continue until the 

employee becomes eligible for government sponsored hospitalization/medical insurance or reaches age 

65. Such insurance plan will be substantially equivalent to the plan offered to regular employees, but will 

have a mandatory reduction in major medical benefits. In accordance with GASB Statement No. 47, the 

portion of the ERIP liability at June 30, 2011, that will use currently available financial resources is 

$83,655, which has been recorded in the General Fund, while $828,705 is shown as a current liability in 

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the governmental activities column of the government-wide statement of net assets. The remaining ERIP 

liability at June 30, 2011, of $2,288,305 is recorded as a long-term liability in the government activities 

column of the government-wide statement of net assets. 

Retirement Incentive Benefits 

In an effort to retain administrative employees the East Penn School District adopted Board Policy 

Number 350.1. This policy establishes a Retention Incentive Program applicable to administrative 

employees. To qualify for this program the employee must be a member of the administrative staff at the 

time of request, be an employee of the District for at least five years and qualify for retirement under the 

provisions of the Public School Retirement System. Those employees meeting the qualifications and 

proper request procedures will receive health insurance benefits at the District’s expense until the 

employee becomes eligible for government sponsored hospitalization or reaches age 65. In addition, the 

retiring employee is entitled to a payment determined as a percentage of his/her final base salary as: 

% of Base Salary for 

Age 

Each Yr of Svc at that Age 

49 and below 1% 

50 to 54 2% 

55 and Over 3% 

Employees hired prior to 7-1-04 were given the option to elect to participate in this plan or remain eligible 

for the early retirement incentive plan discussed previously. Employees electing to participate in this plan 

waive their right to reimbursement of unused accumulated sick leave days. 

In accordance with Government Accounting Standards Board Statement No. 27, this benefit is considered 

a pension plan. 

Funding Policy and Annual Pension Cost 

This benefit is determined by contractual agreement between the Board of School Directors and each 

eligible class of employees. The District’s annual pension cost is calculated based on the annual required 

contribution of the employer (ARC), amount actuarially determined in accordance with the parameters of 

GASB Statement 27. The ARC represents a level of funding that, if paid on an ongoing basis, is projected 

to cover the normal cost, each year, and to amortize any unfunded actuarial liabilities (or funding excess) 

over a period not to exceed thirty years. The District’s annual pension cost for the current year and the 

related information is as follows: 

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Contribution Rates: 

Retirement 

Incentive 

Pension 

Benefit 

Actuarially 

Determined 

Interest Rate 4.5% 

Plan Members 38 

Annual Required Contribution $ 101,309 

Interest on net Pension obligation 6,663 

Adjustment to annual required contribution (9,090) 

Annual Pension Cost 98,882 

Contributions made (48,434) 

Increase in net Pension obligation 50,448 

Net Pension obligation - beginning of year 148,063 

Net Pension obligation - end of year $ 198,511 

The District’s annual pension cost, the percentage of annual Pension cost contributed to the plan and the 

net Pension obligation for the three fiscal years ending June 30 th , for the benefits were as follows: 

Annual Percentage 

Year Pension of Pension Cost Net Pension 

ended Cost Contributed Obligation 

6/28/2011 $ 98,882 49.0% $ 198,511 

6/29/2010 102,209 56.8% 148,063 

6/30/2009 103,912 0.0% 103,912 

Funded Status and Funding Process. The funded status of the benefits as of June 30, 2011, were as 

follows: 

Retirement 

Incentive Benefit 

Governmental Activity 

Actuarial accrued liability (a) $ 

454,389 

Actuarial value of plan assets (b) - 

Unfunded actuarial accrued liability (a) - (b) $ 

454,389 

Funded Ratio (b) / (a) 0.0% 

Covered payroll $ 

3,747,744 

Unfunded actuarial accrued liability (funding 

excess) as a percentage of covered payroll. 12.1% 

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Actuarial valuations involve estimates of the value of reported amounts and assumptions about the 

probability of events in the future. Amounts determined regarding the funded status of the benefits and the 

annual required contributions of the employer are subject to continual revision, actual results are 

compared to past expectations, and new estimates are made about the future. The required schedule of 

funding progress presented as required supplementary information provides multiyear trend information 

that shows whether the actuarial value of plan Net Assets is increasing or decreasing over time relative to 

the actuarial accrued liabilities for benefits. 

Actuarial Methods and Assumptions. Projections of benefits are based on substantive plan (the plan as 

understood by the employer and plan members) and include the types of benefits in force at the valuation 

date and the pattern of sharing benefit costs between the district and the plan members to that point. 

Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are 

designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. 

Significant methods and assumptions were as follows: 

Actuarial Valuation Date 

Actuarial Cost Method 

Amortization Method 

Remaining amortization period 

Asset Valuation Method 

Actuarial Assumptions: 

Investment rate of return 

Projected salary increases 

Healthcare inflation rate 

Retirement 

Incentive 

Benefit 

7/1/2010 

Entry Age Normal 

Level dollar method 

over a 30 year 

period 

27 years 

pay as you go basis 

4.5% 

4.25% to 7.25% 

2011 N/A 

2012 N/A 

2013 

2014 

2015 

N/A 

N/A 

N/A 

2016 + N/A 

Other Post Employment Benefits 

Plan Description: East Penn School District has one single-employer defined benefit plan. 

1. In accordance with the PA School Code of 1949, as amended, medical coverage is provided to 

eligible retirees and spouses with the retiree paying the full active premium rate for coverage until 

age 65. This benefit has an implicit rate subsidy based upon GASB Statement No. 45, since the 

retiree pays the premium at the insurance carrier’s global rate charged to the School District 

versus an age-adjusted rate, as defined in the GASB Statement. 

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Summary of Plan Provisions 

Group Eligibility Coverage And Premium Sharing Duration 

I. ADMINISTRATORS Retention Incentive Program – (RIP) – 

must complete 5 years with the district 

and retire through PSERS. 

Other – must attain age 55 and retire 

through PSERS. 

 

 

Coverage: Medical, Prescription Drug, and Dental. 

Premium Sharing: If the member retires under the ERIP 

or the RIP, the district will pay for the amount of the 

Classic Blue retiree medical and prescription drug plan for 

the member only. Any difference in premiums must be 

paid for by the individual. Spouses may elect coverage 

by paying the full premiums. Member and spouse may 

also elect dental coverage by paying the full premiums. 

Member –Benefits cease upon Medicare age. 

 

Spouse - Benefits cease upon Medicare 

age. 

 

If the member does not meet the requirements for the 

district subsidy but requirements are met to retire 

through PSERS, the member and spouse may 

continue coverage by paying the full premiums. 

 

Upon death of active employee or retiree, the spouse 

may continue coverage until Medicare Age. 

 

Dependents: Spouses included. 

II. TEACHERS 

Early Retirement Incentive Program 

(ERIP) – must attain age 54, but not 

exceed age 60, and complete 15 

consecutive years with the district and 

retire through PSERS. 

Other – must attain age 55 and retire 

through PSERS. 

 

 

Coverage: Medical, Prescription Drug, and Dental. 

Premium Sharing: If the member retires under the ERIP, 

the district will pay for the amount of the Classic Blue 

retiree medical and prescription drug plan for the member 

only. Any difference in premiums must be paid for by the 

individual. Spouses may elect coverage by paying the full 

premiums. Member and spouse may also elect dental 

coverage by paying the full premiums. 

Same as I 

 

If the member does not meet the requirements for the 

district subsidy but requirements are met to retire through 

PSERS, the member and spouse may continue coverage 

by paying the full premiums. 

 

Upon the death of a retiree, the spouse may continue 

coverage until Medicare age. 

 

Dependents: Family included. 

-75-




Summary of Plan Provisions 

Group Eligibility Coverage And Premium Sharing Duration 

III. SUPPORT STAFF 

Must attain age 55 and 

retire through PSERS. 

 

 

 

 

Coverage: Medical, Prescription Drug and Dental. 

Premium Share: Retiree pays 100% of the cost. 

Upon death of active employee or retiree, the spouse may continue 

coverage until Medicare Age. 

Dependents: Spouse Included. 

Same as I. 

Notes: Act 10/43 Benefit: All employees are eligible for this benefit upon retirement with 30 years of PSERS service or upon superannuation retirement (age 60 with 30 

years of service, age 62 with 1 year of service, or 35 years of service regardless of age). Retired employees are allowed to continue coverage for themselves 

and their dependents in the employer’s group health plan until the retired employee reaches Medicare age. In order to obtain coverage, retired employees must 

provide payment equal to the premium determined for the purposes of COBRA. 

Cash Payments: Cash payments are not GASB 45 liabilities 

- Financial Incentives under the ERIP are valued under GASB 47. 

- Financial Incentives under the RIP are valued under GASB 27. 

* The first schedule of this valuation contains supplemental calculations under GASB 27. The benefit provision is as follows: 

- Administrators who qualify for PSERS retirement and have worked for the district are entitled to a one-time payment equal to the individual’s base salary times 

a percentage which is the sum of A) 1% times services prior to age 49, plus B) 2% times service for ages between 50-54, plus C) 3% times service for ages 

greater than 55. 

-76-




Funding Policy and Annual OPEB Cost. This benefit is state mandated via the School Code statue. The 

District’s annual other post-employment benefit (OPEB) cost (expense) for the plan is calculated based on 

the annual required contribution of the employer (ARC), an the amount actuarially determined in 

accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if 

paid on an ongoing basis, is projected to cover the normal cost, each year, and to amortize any unfunded 

actuarial liabilities (or funding excess) over a period not to exceed thirty years. The District’s annual OPEB 

cost for the current year and the related information is as follows: 

Contribution Rates: 

OPEB Benefit 

Actuarially 

Determined 

Interest Rate 4.5% 

Plan Members 877 

Annual Required Contribution $ 1,600,598 

Interest on net OPEB obligation 34,715 

Adjustment to annual required contribution (47,360) 

Annual OPEB cost 1,587,953 

Contributions made (1,297,422) 

Increase in net OPEB obligation 290,531 

Net OPEB obligation - beginning of year 771,440 

Net OPEB obligation - end of year $ 1,061,971 

The following table shows the benefit separated by fund: 

-77-




Actuarial Valuation by Fund 

Other Post Employment Benefit Plan 

Food Service 

General Fund Fund 

Total 

Demographic Information: 

Active Participants 732 12 744 

Retired Participants 132 1 133 

Total 864 13 877 

Annual Payroll of Active Participants $ 46,433,473 $ 200,299 $ 46,633,772 

Annual Required Contributions 1,599,404 1,194 1,600,598 

Interest on Net OPEB Obligation 34,669 46 34,715 

Adjustment to Annual Required Contribution (47,297) (63) (47,360) 

Annual OPEB Cost 1,586,776 1,177 1,587,953 

Contributions made (1,293,648) (3,774) (1,297,422) 

Increase in Net OPEB Obligation 293,128 (2,597) 290,531 

Net OPEB Obligation - beginning of year 770,416 1,024 771,440 

Net OPEB Obligation - end of year $ 1,063,544 $ (1,573) $ 1,061,971 

The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net 

OPEB obligation for the three fiscal years ending June 30 th , for the benefits were as follows: 

Annual Percentage 

Year OPEB of OPEB Cost Net OPEB 

ended Cost Contributed Obligation 

6/30/2011 $ 1,587,953 81.7% $ 1,061,971 

6/30/2010 1,515,843 81.7% 771,440 

6/30/2009 1,522,986 71.4% 435,823 

Funding Status and Funding Process. The funded status of the benefits as of June 30, 2011, was as 

follows: 

Healthcare 

Healthcare 

Benefit 

Benefit 

Governmental Activity Business-Type Activity 

Actuarial accrued liability (a) $ 13,135,046 $ 

12,013 

Actuarial value of plan assets (b) - - 

Unfunded actuarial accrued liability (a) - (b) $ 13,135,046 $ 

12,013 

Funded Ratio (b) / (a) 0.0% 0.0% 

Covered payroll $ 46,433,473 $ 

200,299 

Unfunded actuarial accrued liability (funding 

excess) as a percentage of covered payroll. 28.3% 6.0% 

Actuarial valuations involve estimates of the value of reported amounts and assumptions about the 

probability of events in the future. Amounts determined regarding the funded status of the benefits and the 

annual required contributions of the employer are subject to continual revision, actual results are 

-78-




compared to past expectations, and new estimates are made about the future. The required schedule of 

funding progress presented as required supplementary information provides multiyear trend information 

that show whether the actuarial value of plan Net Assets is increasing or decreasing over time relative to 

the actuarial accrued liabilities for benefits. 

Actuarial Methods and Assumptions. Projections of benefits are based on the substantive plan (the plan 

as understood by the employer and plan members) and include the types of benefits in force at the 

valuation date and the pattern of sharing benefit costs between the district and the plan members to that 

point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that 

are designed to reduce short-term volatility in actual accrued liabilities and the actuarial value of assets. 

Significant methods and assumptions were as follows: 

Actuarial Valuation Date 

Actuarial Cost Method 

Amortization Method 

Remaining amortization period 

Asset Valuation Method 

Healthcare 

Benefit 

7/1/2010 

Entry Age Normal 

Level dollar method 

over a 30 year 

period 

27 years 

pay as you go basis 

Actuarial Assumptions: 

Investment rate of return 

Projected salary increases 

Healthcare inflation rate 

4.5% 

4.25% to 7.25% 

2011 7.0% 

2012 6.5% 

2013 6.0% 

2014 5.5% 

2015 5.0% 

2016 + 5.0% 

Note 6 - Risk Management 

The District is subject to risk of loss from employee acts, property damage, personal injury auto accidents, 

theft, etc. The District covers those risks through the purchase of commercial insurance. The District’s 

Workmen’s compensation policy is a retrospectively rated policy; the final total premium is based on the 

actual payroll for the policy year and is determined by the insurance company. Any settlements received 

by the District or its employees did not exceed insurance coverage in any of the last three years. 

-79-




Note 7 – Fund Balance Allocations 

Restricted Fund Balance 

The two Capital Project Funds have restrictions on the use of the resources at year end. The Capital 

Reserve Fund’s $1,894,027 fund balance at year end is restricted because of enabling legislation under 

the Municipal Code in Pennsylvania. Section 1432 of this Code restricts the use of resources for limited 

purposes. 

In addition, the debt covenant on the District’s Bond issues restricts the proceeds shown in the 2010 

Construction Fund for the purposes outlined in the bond resolution. As such, the $1,790,012, in fund 

balance at year end within this fund is considered restricted. 

The General Fund has $398 in restricted fund balance as a result of the grants received. 

Assigned Fund Balance 

The General Fund has $8,813,072, assigned for appropriations in the 2011-12 budget. 

Note 8 - Net Asset Restrictions 

The portion of net assets for governmental activities, shown on the government-wide statement of net 

assets invested in capital assets, net of related debt is $38,180,088. The business-type activities column 

reflects $284,511 invested in capital assets with no related debt. 

Note 9 – Contingencies 

Grants 

The School District received financial assistance from federal and state agencies in the form of grants. The 

expenditure of funds received under these programs generally requires compliance with terms and a 

condition specified in the grant agreements, and is subject to audit by the grantor agencies. Any 

disallowed claims resulting from such 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 School District as of June 30, 2011. 

Litigation 

In accordance with management, there are no legal matters that could materially affect the financial 

position of the District as of June 30, 2011. 

. 

-80-

REQUIRED SUPPLEMENTAL INFORMATION


Schedule of Funding Progress 


Healthcare benefit 

Actuarial 

Accrued 

UAAL as a 

Actuarial Liability Unfunded Percentage of 

Actuarial Value of (AAL)- AAL Funded Covered Covered 

Valuation Assets Unit Credit (UALL) Ratio Payroll Payroll 

Date (a) (b) (b - a) (a / b) ( c ) ((b - a) / c) 

7/1/2010 $ - $ 13,147,059 $ 13,147,059 

0.0% $ 46,633,772 28.19% 

7/1/2008 - 12,566,485 12,566,485 0.0% 41,208,304 30.50% 

7/1/2006 - - - 0.0% - 0.00% 

Retention Incentive Benefit 

Actuarial 

Accrued 

UAAL as a 

Actuarial Liability Unfunded Percentage of 

Actuarial Value of (AAL)- AAL Funded Covered Covered 

Valuation Assets Unit Credit (UALL) Ratio Payroll Payroll 

Date (a) (b) (b - a) (a / b) ( c ) ((b - a) / c) 

7/1/2010 $ - $ 433,789 $ 433,789 

0.0% $ 3,675,020 11.80% 

7/1/2008 - 433,789 433,789 0.0% 3,675,021 11.80% 

7/1/2006 - - - 0.0% - 0.00% 

-81-

SUPPLEMENTAL INFORMATION SECTION


Combining Balance Sheet 

Non-Major Governmental Funds 


DEBT SERVICE FUNDS 

TOTAL 

2009 A 2010 2011 NON-MAJOR 

BOND BOND BOND GOVERNMENTAL 

FUND FUND FUND FUNDS 

ASSETS 

Cash and cash equivalents $ - $ - $ - $ 

- 

Investments - - - - 

Other Receivables - - - - 

Due from other funds - - - - 

Receivables from other governments - - - - 

Other Recoverable Disbursements - - - - 

Prepaid Expenditures - - - - 

Inventories - - - - 

TOTAL ASSETS $ - $ - $ - $ 

- 

LIABILITIES AND FUND BALANCES 

LIABILITIES: 

Accounts Payable $ - $ - $ - $ 

- 

Due to other funds - - - - 

Interest Payable - - - - 

Payable to other governments - - - - 

Deferred Revenue - - - - 

Compensated Absences - - - - 

TOTAL LIABILITIES - - - - 

--------- --------- --------- ------------ 



Restricted Fund Balance - - - - 


Assigned Fund Balance - - - - 

TOTAL FUND BALANCES - - - - 

TOTAL LIABILITIES AND FUND BALANCES $ - $ - $ - $ 

- 

-82-


Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 

Non-Major Governmental Funds 


DEBT SERVICE FUNDS 

TOTAL 

2009 A 2010 2011 NON-MAJOR 

BOND BOND BOND GOVERNMENTAL 

FUND FUND FUND FUNDS 

REVENUES 

Local Sources $ - $ - $ - $ 

- 

State Sources - - - - 

Federal Sources - - - - 

TOTAL REVENUES - - - - 

------------ ------------ ------------ -------------- 

EXPENDITURES 

Instruction - - - - 

Support Services - - 201,270 201,270 

Operation of Non-Instructional Services - - - - 

Capital Outlay - - - - 

Debt Service 2,312 1,325 5,198 8,835 

TOTAL EXPENDITURES 2,312 1,325 206,468 210,105 

EXCESS (DEFICIENCY) OF REVENUES 

OVER EXPENDITURES (2,312) (1,325) (206,468) (210,105) 


Proceeds from Refunding Bond Issues - - 15,395,000 15,395,000 

Bond Premium - - 413,577 413,577 

Payment to bond refunding escrow agent - - 15,590,423 15,590,423 

Bond Discount - - 11,686 11,686 

Sale/Compensation for Fixed Assets - - - - 

Transfers in - - - - 

Transfers out - - - - 

TOTAL OTHER FINANCING SOURCES AND USES - - 206,468 206,468 

NET CHANGE IN FUND BALANCES (2,312) (1,325) - (3,637) 

FUND BALANCES - BEGINNING 2,312 1,325 - 3,637 

FUND BALANCES - ENDING $ - $ - $ - $ 

- 

-83-


Combining Statement of Fiduciary Net Assets 

Private Purpose Trust Funds 


COMMENCEMENT 

MEMORIAL AWARDS 

FUND FUND TOTAL 

ASSETS 

Cash $ 114,835 $ 1,438 $ 116,273 


Interest Receivable - - 

Due from Other Funds - - - 

TOTAL ASSETS $ 114,835 $ 1,438 $ 116,273 

LIABILITIES 

Accounts Payable $ - $ - $ 

- 

Interfund Payables - - - 

TOTAL LIABILITIES - - - 

NET ASSETS 

Held in Trust for future recipients $ 114,835 $ 1,438 $ 116,273 

Combining Statement of Changes in Fiduciary Net Assets 

Private Purpose Trust Funds 


COMMENCEMENT 

MEMORIAL AWARDS 


ADDITIONS: 

Contributions $ 2,898 $ 35,798 $ 38,696 

Transfers from Other Funds - - - 

INVESTMENT EARNINGS: 

Interest and dividends 1,613 - 1,613 

TOTAL ADDITIONS 4,511 35,798 40,309 

DEDUCTIONS: 

Administrative Charges - - - 

Transfers to Other Funds - - - 

Awards 5,501 26,993 32,494 

TOTAL DEDUCTIONS 5,501 26,993 32,494 

CHANGES IN NET ASSETS (990) 8,805 7,815 

NET ASSETS - BEGINNING OF THE YEAR 115,825 (7,367) 108,458 

NET ASSETS - END OF THE YEAR $ 114,835 $ 1,438 $ 116,273 

-84-


Combining Balance Sheet - All Capital Project Funds 


CAPITAL 2009 2010 

RESERVE CONSTRUCTION CONSTRUCTION 

FUND FUND FUND TOTAL 

ASSETS 

Cash $ 1,770,141 $ - $ 1,862,492 $ 3,632,633 


Accounts Receivable 137,500 - - 137,500 

Accrued Interest Receivable - - - - 

Other Recoverable Disbursements - - - - 

Due from Other Funds - - - - 

TOTAL ASSETS $ 1,907,641 $ - $ 1,862,492 $ 3,770,133 

LIABILITIES 

Accounts Payable $ 13,614 $ - $ 72,480 $ 86,094 

Due to Other Funds - - - - 

Other Liabilities - - - - 

Deferred Revenue - - - - 



Restricted Fund Balance 1,894,027 - 1,790,012 3,684,039 


Assigned Fund Balance - - - - 

TOTAL LIABILITIES AND FUND EQUITY $ 1,907,641 $ - $ 1,862,492 $ 3,770,133 

-85-


Combining Statement of Revenues, Expenditures, and 

Changes in Fund Balances - All Capital Project Funds 


CAPITAL 2009 2010 

RESERVE CONSTRUCTION CONSTRUCTION 

FUND FUND FUND TOTAL 

REVENUES 

Local Sources $ 143,924 $ 74 $ 59,900 $ 203,898 

OTHER FINANCING SOURCES 

Bond Proceeds - - - - 

Bond Premium - - - - 

Interfund Transfers In 100,000 - 456 100,456 

TOTAL REVENUES AND OTHER FINANCING 

SOURCES 243,924 74 60,356 304,354 

-------------- -------------- -------------- ------------ 

EXPENDITURES AND OTHER FINANCING USES 

Instructional Services - - 6,574 6,574 

Support Services - - 33,693 33,693 

Capital Outlay 53,232 - 1,880,701 1,933,933 

Debt Service - - - - 

Bond Discount - - - - 

Interfund Transfers Out - 456 - 456 

TOTAL EXPENDITURES AND OTHER 

FINANCING USES 53,232 456 1,920,968 1,974,656 

EXCESS OF REVENUES AND OTHER FINANCING 

SOURCES OVER (UNDER) EXPENDITURES 

AND OTHER FINANCING USES 190,692 (382) (1,860,612) (1,670,302) 

FUND BALANCE - JULY 1, 2010 1,703,335 382 3,650,624 5,354,341 

FUND BALANCE - JUNE 30, 2011 $ 1,894,027 $ - $ 1,790,012 $ 3,684,039 

-86-


Combining Balance Sheet 

All Agency Funds 


ACTIVITY PAYROLL 


ASSETS 

Cash $ 303,322 $ 324,716 $ 628,038 


Other Receivables 109 - 109 

Due from General Fund - - - 

TOTAL ASSETS $ 303,431 $ 324,716 $ 628,147 

LIABILITIES 

Federal Income Tax $ - $ 104,345 $ 104,345 

PA State Income Tax Withholding - 15,818 15,818 

Due Student Organizations 294,367 - 294,367 

Due to General Fund 1,446 30 1,476 

Annuities - - - 

Wage Taxes - 173,673 173,673 

Retirement-Buy Backs - 16,842 16,842 

Union Dues - - - 

OPT - 14,008 14,008 

Accounts Payable 7,618 7,618 

Other - - - 

TOTAL LIABILITIES $ 303,431 $ 324,716 $ 628,147 

-87-


Combining Statement of Changes in Assets and 

Liabilities - All Agency Funds 


BALANCE 

BALANCE 

ACTIVITY FUND 7/1/10 ADDITIONS DELETIONS 6/30/11 

ASSETS 

Cash $ 335,897 $ 1,182,757 $ 1,215,332 $ 303,322 



Other Receivable - 109 - 109 

TOTAL ASSETS $ 335,897 $ 1,182,866 $ 1,215,332 $ 303,431 

LIABILITIES 

Due to the General Fund $ - $ 1,446 $ - $ 1,446 

Accounts Payable - 7,618 - 7,618 

Due to Student Organizations 335,897 1,173,802 1,215,332 294,367 

TOTAL LIABILITIES $ 335,897 $ 1,182,866 $ 1,215,332 $ 303,431 

PAYROLL FUND 

ASSETS 

Cash $ 513,241 324,716 513,241 $ 324,716 


Other Receivables - - - - 

Due from General Fund - - - - 

TOTAL ASSETS $ 513,241 $ 324,716 $ 513,241 $ 324,716 

LIABILITIES 

Due to General Fund $ 216 $ 30 $ 216 $ 30 

Payroll Deductions 513,025 324,686 513,025 324,686 

TOTAL LIABILITIES $ 513,241 $ 324,716 $ 513,241 $ 324,716 

ALL AGENCY FUNDS 

ASSETS 

Cash $ 849,138 $ 1,507,473 $ 1,728,573 $ 628,038 



Accounts Receivable - 109 - 109 

TOTAL ASSETS $ 849,138 $ 1,507,582 $ 1,728,573 $ 628,147 

LIABILITIES 

Due to Student Organizations $ 335,897 $ 1,173,802 $ 1,215,332 $ 294,367 

Accounts Payable - 7,618 - 7,618 

Payroll Deductions 513,025 324,686 513,025 324,686 

Due to Other funds 216 1,476 216 1,476 

TOTAL LIABILITIES $ 849,138 $ 1,507,582 $ 1,728,573 $ 628,147 

-88-


General Fund 

Schedule on Tax Collectors' Receipts 


LOWER 

UPPER 

ALBURTIS EMMAUS MACUNGIE MACUNGIE MILFORD 

BOROUGH BOROUGH TOWNSHIP BOROUGH TOWNSHIP TOTAL 

CURRENT REAL ESTATE TAXES 

Assessed Value $ 40,602,700 $ 262,633,900 $ 1,117,434,000 $ 67,701,400 $ 242,960,100 $ 1,731,332,100 

Millage Rate 0.04532 0.04532 0.04532 0.04532 0.04532 0.04532 

TOTAL TAX PER DUPLICATE 1,840,105 11,902,527 50,641,976 3,068,227 11,011,009 78,463,844 

Less: Act 1 Deduction 72,791 324,983 1,048,097 85,662 263,726 1,795,259 

TOTAL TAX TO BE COLLECTED 1,767,314 11,577,544 49,593,879 2,982,565 10,747,283 76,668,585 

------------- ------------- ------------- ------------- ------------- ------------- 

. 

PLUS - Additions 5,334 2,829 2,755 - 10,080 20,998 

- Penalties 5,460 31,232 75,937 4,137 27,395 144,161 

CURRENT REAL ESTATE TAXES TO BE COLLECTED 1,778,108 11,611,605 49,672,571 2,986,702 10,784,758 76,833,744 

------------ ------------ ------------- ------------ ------------ ------------- 

LESS - Discount 31,072 200,238 870,704 52,817 174,419 1,329,250 

- Reductions 6,338 3,028 6,833 - 13,535 29,734 

- Refunds - 11,137 332,999 435 1,254 345,825 

- Rebates 8,712 67,434 65,056 8,286 21,960 171,448 

- Returned to County 43,693 229,128 805,697 74,883 316,704 1,470,105 

- Exonerations - - - - - - 

NET CURRENT REAL ESTATE TAXES COLLECTED $ 1,688,293 $ 11,100,640 $ 47,591,282 $ 2,850,281 $ 10,256,886 $ 73,487,382 

CURRENT INTERIM REAL ESTATE TAXES COLLECTED $ 312 $ 19,961 $ 698,208 $ 1,764 $ 59,374 $ 779,619 

-89-


General Fund 

Statement of Revenue, Expenditures, and Changes in Fund Balance 


REVENUES 

LOCAL SOURCES: 

Current Real Estate Taxes $ 73,487,382 

Interim Real Estate Taxes 779,619 

Public Utility 111,987 

Payment in Lieu of Taxes 11,705 

Current Per Capita Taxes - 511 - 

Current Per Capita Taxes - 679 - 

Occupational Privilege Tax - 

Earned Income Tax 7,514,663 

Real Estate Transfer Tax 1,129,003 

Amusement Taxes - 

Delinquent Real Estate Taxes 1,731,195 

Delinquent EIT Taxes 225,409 

Admissions 71,485 

Fees 40,697 

Other Student Activity Income 7,380 

Interest 148,505 

State Revenue from Other Public Schools 25,000 

I/U Services - Federal 1,099,976 

I/U Services - ARRA Federal 473,547 

Rentals 43,468 

Contributions 10,292 

Capital Contributions 100,000 

Summer School 54,787 

Adult Education Tuition 65,996 

Receipts from Other LEA's - Education 20,445 

Other Tuition From Patrons 23,366 

Other Services Provided Other Governments - 

Miscellaneous 11,293 

Revenue from Community Service Activities - 

Refunds of Prior Yr. Expenditures 5,460 

TOTAL LOCAL SOURCE REVENUE $ 87,192,660 

STATE SOURCES: 

Basic Subsidy - ESBE 9,284,001 

Read to Succeed - 

Charter Schools 555,208 

School Performance - 

Orphan Tuition 4,531 

Homebound - 

Alternative Education - 

Driver Education 10,115 

Special Education 3,118,944 

SUB-TOTAL 12,972,799 

-90-


General Fund 



REVENUE (CONT'D) 

SUB-TOTAL (CARRIED FORWARD) $ 12,972,799 

Transportation 1,596,320 

Rentals 1,442,644 

Health Services 154,203 

Migratory Children - 

State Property Tax Reduction Allocation 1,793,925 

Accountability Grants 546,765 

Classrooms for the Future - 

FICA Revenue 1,936,593 

Retirement Revenue 1,435,448 

Other State Grants - 

TOTAL STATE SOURCE REVENUE $ 21,878,697 

FEDERAL SOURCES: 

Title I 403,840 

Title IIA, IID 209,484 

Title III 41,326 

Title IV 19,208 

Education Jobs Funds 761,579 

ARRA - State Fiscal Stabilization Fund 1,286,592 

Medical Access 368,351 

Medical Assistance 5,911 

TOTAL FEDERAL SOURCE REVENUE 3,096,291 

TOTAL REVENUE 112,167,648 

EXPENDITURES 

Regular Programs - Elem./Secondary 44,033,308 

Federally Funded Regular Programs 509,630 

Special Education - 

Life Skills Support - Public 380,156 

Life Skills Support - PRRI - 

Deaf or Hearing Impaired Support 312,568 

Blind or Visually Impaired Support 34,853 

Speech & Language Impaired 1,049,586 

Emotional Support - Public 1,137,130 

Autistic Support 1,138,557 

Learning Support - Public 6,137,125 

Gifted Support 617,736 

Physical Support - 

Multi-Handicapped Support 256,882 

Development Delay Support 10,336 

Early Intervention Support - 

Other Support 2,587,121 

SUB-TOTAL 58,204,988 

-91-


General Fund 




Business Education 766,033 

Other Vocational Education Programs 2,339,595 

Drivers' Education 228,421 

Summer School 63,147 

Homebound Instruction 88,752 

Adjudicated/Court Placed Programs - 

Alternative Education Program 140,677 

Additional Other Instructional Program - 

Other Adult Education Programs 58,424 

Nonpublic School Programs 17,462 

Community College Programs 902,397 

Supervision of Pupil Personnel Services 354,716 

Guidance Services 2,654,644 

Attendance Services - 

Psychological Services 680,764 

Social Work Services 111,360 

Other Pupil Personnel Services - 

Support Services - Instructional Staff - 

Technology Support Services 766,456 

Educational Television Services 13,914 

Computer Assisted Instruction Services 211,917 

School Library Services 1,226,974 

Instructional & Curriculum Dev. Service 962,225 

Instructional Staff Development Services - 

Instructional Staff Development 167,101 

Instructional Staff Development - Non-certified 1,737 

Non-Public Support Services - 

Other Instructional Staff Services 59,902 

Board Services 49,328 

Board Treasurer Services 8,573 

Tax Assessment & Collection Service 325,306 

Staff Relations 316,388 

Legal Services 105,000 

Office of the Superintendent Services 588,997 

Community Relations Services 99,022 

Office of the Principal Services 3,644,721 

Other Administration Services - 

Supervision of Health Services - 

Medical Services 10,711 

Dental Services 803 

Nursing Services 947,227 

Non-Public Health Services 98,568 

Support Services - Business 844,853 

SUB-TOTAL 77,061,103 

-92-


General Fund 




Operation and Maintenance of Plant Services 10,195,764 

Vehicle Operation and Maint. Services 4,532,779 

Non-Public Transportation 1,381,583 

Support Services - Central - 

Planning, Research, Development & Evaluation Svcs. 208,625 

System-Wide Technology Services 1,036,316 

Staff Development Services 11,723 

Health Services 661 

Staff Development-Non-Instruction 7,658 

Data Processing Services 232,871 

State and Federal Agency Liaison Services 39,603 

Other Support Services 142,008 

Pass-Thru Funds - 

Student Activities - 

School Sponsored Student Activities 293,451 

School Sponsored Athletics 1,192,698 

Community Services 1,803 

Existing Building Improvement Services - 

Debt Service 14,069,238 

Refund of Prior Yr. Receipts 503 

TOTAL EXPENDITURES $ 110,408,387 

EXCESS (DEFICIENCY) OF REVENUES 

OVER EXPENDITURES $ 1,759,261 


Proceeds from Extended Term Financing - 

Debt Service Fund Transfers In - 

Transfer from Activity Funds - 

Sale of Fixed Assets 465 

Insurance Recoveries 30,602 

Special Revenue Fund Transfers Out - 

Capital Projects Funds Transfers Out (100,000) 

Debt Service Fund Transfers Out - 

Food Service Fund Transfers Out - 

Activity Fund Transfers Out - 

TOTAL OTHER FINANCING SOURCES (USES) (68,933) 

Special Items - 

Extraordinary Items - (68,933) 

NET CHANGE IN FUND BALANCE 1,690,328 

FUND BALANCE - JULY 1, 2010 10,119,618 

FUND BALANCE - JUNE 30, 2011 $ 11,809,946 

-93-


Capital Reserve Fund 

Statement of Revenues and Expenditures 


FUND BALANCE - JULY 1, 2010 $ 1,703,335 

REVENUES AND OTHER FINANCING SOURCES 

Interest $ 6,424 

Refund of Prior Year Expenditures 137,500 

Transfer from General Fund 100,000 243,924 

TOTAL FUNDS AVAILABLE 1,947,259 

EXPENDITURES 

INSTRUCTIONAL SERVICES: 

Equipment - 

SUPPORT SERVICES: 

Professional Services - 

Miscellaneous - 

CAPITAL OUTLAY: 

Rentals - 

Professional Services 13,614 

Construction Services - 

Land & Improvements - 


Equipment 39,618 53,232 


-94-


Food Service Fund 

Statement of Revenues, Expenses, and Changes in Net Assets 


REVENUES 

Sales $ 2,054,807 

Donated Commodities 154,976 

Special Events 43,212 

Over or (Short) 85 

State Subsidies 187,873 

Federal Subsidies 659,999 

Interest 366 

Rebates 2,793 

Gain (Loss) on Sale of Fixed Assets - 


Transfer from General Fund - 

TOTAL REVENUES $ 3,104,111 

COST OF COMMODITIES 

Beginning Inventory - 7/1 46,729 

Purchases 154,976 

Ending Inventory - 6/30 (33,226) 

TOTAL COST OF COMMODITIES SOLD 168,479 

GROSS PROFIT 2,935,632 

------------ 

SALARY AND BENEFIT EXPENSES 

Cafeteria Aides 913,814 

Clerical 32,021 

Overtime 1,974 

Custodial/Maintenance 67,711 

Technology Assistants 6,877 

Other 4,569 

Benefits 245,440 1,272,406 

OPERATING EXPENSES 


Food Service Management Costs 1,476,107 

Professional Services 200 

Repairs and Maintenance 500 

Advertising - 

Software 8,283 

Small Tools 2,344 

Electricity 60,000 

Periodicals - 

Travel 24 

Depreciation 40,182 

Dues and Fees - 1,603,971 

TOTAL EXPENSES 2,876,377 

CHANGES IN NET ASSETS 59,255 

NET ASSETS - JULY 1, 2010 242,220 

NET ASSETS - JUNE 30, 2011 $ 301,475 

-95-


Agency Fund 

Payroll Fund - Balance Sheet 


ASSETS 

Cash $ 324,716 

Investments - 

Other Receivables - 

Due from General Fund 

TOTAL ASSETS $ 324,716 

LIABILITIES 

Sec. 125 Withholding $ 104,345 

Other Payroll Deductions 15,818 

Annuity - 

Dues - 

Unemployment 14,008 

Local Wage Tax 173,673 

OPT 16,842 

Dental Insurance - 

Due to General Fund 30 

Other - 

TOTAL LIABILITIES $ 324,716 


Memorial Fund 

Statement of Additions and Deductions 


NET ASSETS - JULY 1, 2010 $ 115,825 

ADDITIONS 

Contributions $ 2,898 

Transfers from Commencement Awards Fund - 

Interest 1,613 4,511 

TOTAL FUNDS AVAILABLE 120,336 

DEDUCTIONS 

Awards 5,501 

Trasfers to Activity Fund - 5,501 


-96-


Commencement Awards Fund 

Statement of Additions and Deductions 


NET ASSETS - JULY 1, 2010 $ (7,367) 

ADDITIONS 

Transfers from Memorial Fund $ 

- 

Transfers from Activity Fund - 

TOTAL TRANSFERS FROM OTHER FUNDS - 

Contributions 35,798 

TOTAL ADDITIONS 35,798 


DEDUCTIONS 

Transfer to Memorial Fund - 

Scholarships - Awards 26,993 26,993 


2009 A Bond Fund 



FUND BALANCE - JULY 1, 2010 $ 2,312 


Interest $ 

- 

Bond Premium - 

Proceeds from Refunded Bond Issues - - 




Insurance - 

Printing - 

Bond Discount - 

Debt Service - Interest 2,312 

Payment to Refunded Bonds Escrow Agent - 

Transfer to General Fund - 2,312 

FUND BALANCE - JUNE 30, 2011 $ 

- 

-97-


2010 Bond Fund 



FUND BALANCE - JULY 1, 2010 $ 1,325 


Interest $ 

- 

Bond Premium - 

Proceeds from Refunded Bond Issues - - 




Insurance - 

Printing - 



Payment to Refunded Bonds Escrow Agent - 

Transfer to General Fund - 1,325 


- 

2011 Bond Fund 



FUND BALANCE - JULY 1, 2010 $ 

- 


Interest earnings $ 

- 

Bond Premium 413,577 

Proceeds from Refunded Bond Issues 15,395,000 15,808,577 




Insurance - 

Printing 2,148 

Bond Discount 11,686 


Payment to Refunded Bonds Escrow Agent 15,590,423 

Transfer to General Fund - 15,808,577 


- 

-98-


2009 Construction Fund 



FUND BALANCE - JULY 1, 2010 $ 

382 


Proceeds from Bond Issues $ 

- 

Transfers In - 

Refund of Prior Year Expenditures - 

Interest 74 74 

TOTAL FUNDS AVAILABLE 456 


INSTRUCTIONAL: 

Equipment - 


Printing - 

Claims & Judgments - 

Equipment - 



Rentals - 

Other Purchased Services - 

Construction Costs - 

Project Manager - 

Equipment - 

Municipal Fees - 

DEBT SERVICE: 


INTERFUND TRANSFERS: 

Transfers Out 456 456 


- 

-99-


2010 Construction Fund 



FUND BALANCE - JULY 1, 2010 $ 3,650,624 


Refund of Prior Year Expenditures $ 57,245 

Transfer from Other Construction Fund 456 

Interest 2,655 60,356 



INSTRUCTIONAL: 

Equipment 5,444 



Printing 64 

Supplies 603 





Construction Costs 1,566,576 

Municipal Fees 52,800 

Dues & Fees 2,807 

Fines 81,988 

DEBT SERVICE: 


INTERFUND TRANSFERS: 

Transfers Out - 1,920,968 


-100-


Schedule on General Obligation Notes - Series of 1998 

Dated as of December 30, 1998 


FISCAL YEAR INTEREST PRINCIPAL 

2011-12 $ 6,591 $ 570,000 

2012-13 5,820 595,000 

2013-14 5,033 620,000 

2014-15 4,214 645,000 

2015-16 3,370 670,000 

2016-17 2,476 700,000 

2017-18 1,550 730,000 

2118-19 585 760,000 

TOTAL OUTSTANDING $ 29,639 $ 5,290,000 

Schedule on General Obligation Notes - Series A of 2003 

Dated as of November 3, 2003 



2011-12 $ 11,582 $ 

- 

2012-13 11,349 200,000 

2013-14 10,527 800,000 

2014-15 9,647 800,000 

2015-16 8,791 800,000 

2016-17 7,787 900,000 

2017-18 6,797 900,000 

2018-19 5,807 900,000 

2019-20 4,729 1,000,000 

2020-21 3,616 1,000,000 

2021-22 2,516 1,000,000 

2022-23 1,316 1,100,000 

2023-24 106 1,100,000 


-101-


Schedule on General Obligation Notes - Series C of 2003 




2011-12 $ 619 $ 700,000 

2012-13 48 500,000 

TOTAL OUTSTANDING $ 667 $ 1,200,000 


Dated as of October 1, 2004 



2011-12 $ 12,611 $ 700,000 

2012-13 11,508 700,000 

2013-14 10,637 800,000 

2014-15 9,757 800,000 

2015-16 8,901 800,000 

2016-17 7,897 900,000 

2017-18 6,907 900,000 

2018-19 5,917 900,000 

2019-20 4,839 1,000,000 

2020-21 3,726 1,000,000 

2021-22 2,526 1,100,000 

2022-23 1,316 1,100,000 

2023-24 106 1,100,000 


Schedule on General Obligation Bonds - Series AA of 2004 

Dated as of October 1, 2004 



2011-12 $ 146,417 $ 430,000 

2012-13 131,086 445,000 

2013-14 114,024 465,000 

2014-15 96,305 480,000 

2015-16 77,305 500,000 

2016-17 57,165 520,000 

2017-18 36,225 540,000 

2018-19 12,712 565,000 


-102-


Schedule on General Obligation Bonds - Series A of 2005 

Dated as of August 1, 2005 



2011-12 $ 533,675 $ 685,000 

2012-13 505,525 715,000 

2013-14 468,900 750,000 

2014-15 410,275 1,595,000 

2015-16 318,800 2,580,000 

2016-17 187,100 4,005,000 

2017-18 53,500 2,675,000 

TOTAL OUTSTANDING $ 2,477,775 $ 13,005,000 





2011-12 $ 372,710 $ 40,000 

2012-13 371,290 40,000 

2013-14 369,782 45,000 

2014-15 368,162 45,000 

2015-16 366,497 45,000 

2016-17 354,633 580,000 

2017-18 332,062 600,000 

2018-19 308,325 625,000 

2019-20 272,055 1,235,000 

2020-21 222,272 1,285,000 

2021-22 169,972 1,330,000 

2022-23 115,572 1,390,000 

2023-24 58,972 1,440,000 

2024-25 15,086 745,000 


-103-



Dated as of July 2, 2007 



2011-12 $ 13,356 $ 100,000 

2012-13 13,210 100,000 

2013-14 13,100 100,000 

2014-15 12,990 100,000 

2015-16 12,915 100,000 

2016-17 12,770 100,000 

2017-18 11,656 1,100,000 

2018-19 10,446 1,100,000 

2019-20 9,060 1,300,000 

2020-21 6,301 2,600,000 

2021-22 3,340 2,700,000 

2022-23 270 2,800,000 


Schedule on General Obligation Bonds - Series of 2007 




2011-12 367,418 325,000 

2012-13 354,793 350,000 

2013-14 342,106 375,000 

2014-15 328,621 390,000 

2015-16 314,307 405,000 

2016-17 299,054 425,000 

2017-18 282,737 445,000 

2018-19 264,981 465,000 

2019-20 245,781 495,000 

2020-21 225,581 515,000 

2021-22 204,581 535,000 

2022-23 182,330 560,000 

2023-24 158,716 585,000 

2024-25 133,630 620,000 

2025-26 106,960 650,000 

2026-27 78,475 690,000 

2027-28 48,052 725,000 

2028-29 16,233 755,000 


-104-


Schedule on General Obligation Bonds - Series of 2008 

Dated as of April 15, 2008 



2011-12 $ 202,500 $ 850,000 

2012-13 179,913 870,000 

2013-14 145,375 1,505,000 

2014-15 98,725 1,605,000 

2015-16 63,243 730,000 

2016-17 39,569 755,000 

2017-18 13,650 780,000 


Schedule on General Obligation Bonds - Series A of 2008 

Dated as of August 1, 2008 



2011-12 $ 173,531 $ 1,825,000 

2012-13 113,326 1,880,000 

2013-14 59,500 1,330,000 

2014-15 27,299 510,000 

2015-16 9,188 525,000 


-105-



Dated as of June 1, 2009 



2011-12 $ 329,230 $ 345,000 

2012-13 322,280 350,000 

2013-14 315,053 355,000 

2014-15 306,638 375,000 

2015-16 296,519 395,000 

2016-17 284,863 415,000 

2017-18 271,786 435,000 

2018-19 257,230 460,000 

2019-20 241,213 475,000 

2020-21 223,178 505,000 

2021-22 203,063 540,000 

2022-23 181,367 565,000 

2023-24 158,067 600,000 

2024-25 133,568 625,000 

2025-26 107,454 660,000 

2026-27 79,352 690,000 

2027-28 49,275 725,000 

2028-29 16,844 770,000 






2011-12 $ 110,213 $ 750,000 

2012-13 95,062 765,000 

2013-14 79,612 780,000 

2014-15 63,913 790,000 

2015-16 47,912 810,000 

2016-17 30,532 825,000 

2017-18 10,625 850,000 


-106-



Dated as of March 1, 2010 



2011-12 $ 313,763 $ 2,045,000 

2012-13 261,887 2,095,000 

2013-14 198,062 2,160,000 

2014-15 132,437 2,215,000 

2015-16 76,413 2,280,000 

2016-17 41,382 1,030,000 

2017-18 14,575 1,060,000 






2011-12 $ 129,958 $ 5,000 

2012-13 129,857 5,000 

2013-14 129,757 5,000 

2014-15 129,658 5,000 

2015-16 129,557 5,000 

2016-17 129,448 5,000 

2017-18 122,170 550,000 

2018-19 113,601 90,000 

2019-20 102,642 615,000 

2020-21 82,389 655,000 

2021-22 60,270 680,000 

2022-23 36,458 705,000 

2023-24 12,060 670,000 


-107-






2011-12 $ 417,838 $ 1,435,000 

2012-13 385,337 1,815,000 

2013-14 339,212 1,865,000 

2014-15 282,362 1,925,000 

2015-16 223,788 1,980,000 

2016-17 163,488 2,040,000 

2017-18 101,387 2,100,000 

2018-19 53,388 1,100,000 

2019-20 18,444 1,135,000 


-108-

SINGLE AUDIT SECTION


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 

FISCAL YEAR ENDED JUNE 30, 2011 

ACCRUED 

ACCRUED 

GRANTOR OR OR PROGRAM 

FEDERAL GRANTOR SOURCE CFDA PASS-THROUGH AWARD TOTAL (DEFERRED) EXPENDI- (DEFERRED) DISCLOSURE 

PROJECT TITLE CODE NUMBER NUMBER GRANT PERIOD AMOUNT RECEIVED AT 7/01/10 REVENUE TURES AT 6/30/11 FOOTNOTES 

PASSED THROUGH THE PA 

DEPT. OF EDUCATION 

TITLE I IMPROVING BASIC PROGRAMS I 84.010 013-100127 07/01/09-09/30/10 $ 457,893 $ 122,105 $ 27,893 $ 94,212 $ 94,212 $ 

- 

TITLE I IMPROVING BASIC PROGRAMS I 84.010 013-110127 07/01/10-09/30/11 $ 389,209 

259,473 - 309,628 309,628 50,155 

TITLE I ACADEMIC ACHIEVEMENT I 84.010 077-100127 07/01/09-09/30/10 $ 5,400 

4,680 4,680 - - - 

TITLE IIA IMPROVING TEACHER QUALITY I 84.367 020-010127 07/01/09-09/30/10 $ 190,923 

63,641 32,740 30,901 30,901 - 

TITLE IIA IMPROVING TEACHER QUALITY I 84.367 020-110127 07/01/10-09/30/11 $ 190,963 

153,287 - 178,583 178,583 25,296 

TITLE III LEP/IMMIGRANT I 84.365 010-090127 07/01/08-09/30/09 $ 30,932 

13,257 13,257 - - - 


31,682 - 31,682 31,682 - 


10,478 - 9,644 9,644 (834) 

DRUG FREE I 84.186 100-100127 07/01/09-09/30/10 $ 24,254 

15,502 (3,706) 19,208 19,208 - 

ARRA - STATE FISCAL STABILIZATION FUND I 84.394 126-100127 07/01/09-06/30/10 $ 1,268,984 

105,749 105,749 - - - 7 

ARRA - STATE FISCAL STABILIZATION FUND I 84.394 126-110127 07/01/10-06/30/11 $ 1,286,592 1,286,592 - 1,286,592 1,286,592 - 7 

ARRA - EDUCATION JOB FUND I 84.410 140-110127 08/10/10-06/30/11 $ 761,579 

761,579 - 761,579 761,579 - 7 

PASSED THROUGH CARBON-LEHIGH I.U. 

IDEA I 84.027 N/A 07/01/09-06/30/10 $ 1,061,692 

265,423 265,423 - - - 1,2 

IDEA I 84.027 N/A 07/01/10-06/30/11 $ 1,089,514 

553,217 - 1,089,514 1,089,514 536,297 1,2 

ARRA - IDEA I 84.391A N/A 07/01/09-09/30/11 $ 1,373,547 

848,233 469,396 473,547 473,547 94,710 1,2,7 

PASSED THROUGH MONTGOMERY COUNTY I.U. 

IDEA I 84.027 N/A 7/1/09-6/30/10 $ 64,049 

64,049 64,049 - - - 1,2 

TOTAL U.S. DEPT. OF EDUCATION 4,558,947 979,481 4,285,090 4,285,090 705,624 

-------------------------- ----------------------------- --------------------------- ------------------------------ -------------------------------- 

U.S DEPARTMENT OF HEALTH & HUMAN SERVICES 

PASSED THROUGH THE PA. 

DEPARTMENT OF PUBLIC WELFARE 

TITLE 19 - MEDICAL REIMBURSMENT I 93.778 N/A 10/01/09-09/30/10 NA 5,911 - 5,911 5,911 - 

U.S. DEPARTMENT OF AGRICULTURE 


DEPARTMENT OF EDUCATION 

NATIONAL SCHOOL LUNCH I 10.555 N/A 07/01/09-06/30/10 N/A-F 40,543 40,543 - - - 6 

NATIONAL SCHOOL LUNCH S N/A N/A 07/01/09-06/30/10 N/A 6,741 6,741 - - - 

LUNCH NUTRITIONAL STANDARDS INCENTIVE S N/A N/A 07/01/09-06/30/10 N/A 1,110 1,110 

NATIONAL SCHOOL LUNCH I 10.555 N/A 07/01/10-06/30/11 N/A-F 563,904 - 603,476 603,476 39,572 6 

NATIONAL SCHOOL LUNCH S N/A N/A 07/01/10-06/30/11 N/A 91,876 - 98,178 98,178 6,302 

LUNCH NUTRITIONAL STANDARDS INCENTIVE S N/A N/A 07/01/10-06/30/11 N/A 15,171 - 16,216 16,216 1,045 

BREAKFAST PROGRAM I 10.553 N/A 07/01/09-06/30/10 N/A-F 4,495 4,495 - - - 6 

BREAKFAST PROGRAM S N/A N/A 07/01/09-06/30/10 N/A 541 541 - - - 

BREAKFAST NUTRITIONAL STANDARDS INCENTIVE S N/A N/A 07/01/09-06/30/10 N/A 54 54 - - - 

BREAKFAST PROGRAM I 10.553 N/A 07/01/10-06/30/11 NA-F 51,671 - 56,522 56,522 4,851 6 

BREAKFAST PROGRAM S N/A N/A 07/01/10-06/30/11 N/A 6,374 - 6,979 6,979 605 

BREAKFAST NUTRITIONAL STANDARDS INCENTIVE S N/A N/A 07/01/10-06/30/11 N/A 637 - 698 698 61 


DEPARTMENT OF AGRICULTURE 

USDA COMMODITIES I 10.550 N/A 07/01/10-06/30/11 N/A 154,976 (46,729) 168,478 168,478 (33,227) 4,5,6 

TOTAL U.S. DEPARTMENT OF AGRICULTURE 938,093 6,755 950,547 950,547 19,209 

TOTAL FINANCIAL AWARDS $ 5,502,951 $ 986,236 $ 5,241,548 $ 5,241,548 $ 

724,833 

LESS - STATE SHARE (122,504) (8,446) (122,071) (122,071) (8,013) 

TOTAL FEDERAL FINANCIAL AWARDS $ 5,380,447 $ 977,790 $ 5,119,477 $ 5,119,477 $ 

716,820 

SOURCE: D - DIRECT; I - INDIRECT; F- FEDERAL SHARE; S- STATE SHARE 

-109-


Notes to the Schedule of Expenditures of Federal Awards 


Note 1 - Significant Accounting Policies 

The accompanying Schedule of Expenditures of Federal Awards is presented on the modified accrual 

basis of accounting for all federal awards charged to governmental funds and on the accrual basis of 

accounting for all federal awards charged to proprietary funds, as contemplated by generally accepted 

accounting principles. 

Note 2- Organization and Scope 

The District recognized 4.2 % of its total general fund revenue in federal awards, and 26.3% of its total 

enterprise fund revenue. 

Note 3 - Program Disclosure – Footnotes 

1. The federal awards, passed through the Carbon-Lehigh I. U. and Montgomery County I. U., under 

the U.S. Department of Education heading, is part of a consortium of participating school districts. 

In accordance with directions from the Commonwealth of Pennsylvania, these awards are 

reported on the basic financial statements as local source revenue. 

2. Under the U.S. Department of Education, IDEA grants using CFDA No. 84.027, are part of a 

cluster program, in accordance with OMB Circular A-133 Compliance Supplement, with ARRA- 

IDEA grant, using CFDA No. 84.391. 

3. The Medical Access grant passed through the PA Department of Education is reflected as federal 

source revenue on the basic financial statements; however, pursuant to instructions from the 

Commonwealth of PA, it is not reported as revenue on the Schedule of Federal Awards. 

4. The District received non-monetary assistance from the U.S. Department of Agriculture of 

$154,976 in the form of commodities. These commodities are valued at U.S.D.A.’s approximate 

costs. During the 2010-11 fiscal year, the District used $168,478 in commodities and established 

a year end inventory of $33,227 at June 30, 2011. 

5. The amount recognized as revenue in the Schedule of Expenditures of Federal Awards, under the 

U.S. Department of Agriculture heading, represents the commodities used versus the 

commodities received, which are recognized as revenue in the basic financial statements. 

6. The National School Lunch, National School Breakfast , and Donated Commodities programs, 

under the U.S. Department of Agriculture heading, are considered a cluster program in 

accordance with OMB Circular A-133 Compliance Supplement. 

7. The programs reporting this footnote are grants received using funds from the American Recovery 

and Reinvestment Act. 

FINANCIAL STATEMENT RECONCILIATION 

General Fund Federal Source Revenues $ 3,096,291 

Federal Grants in Local Sources 1,573,523 

Food Service Fund Federal Revenue 814,975 

Total Federal Revenue, per financial statements 5,484,789 

Less - Medical Access Grant (368,351) 

Less - Transportaton Access (10,462) 

Change in Donated Commodities 13,501 

Federal Revenue on SEFA $ 5,119,477 

-110-


Schedule of Findings and Questioned Costs 


Financial Statements 

Type of auditor's report issued: Unqualified 

Internal control over financial reporting: 

Section I - Summary of Auditor Results 

Material weakness(es) Identified? yes no 

 

Significant Deficiencies identified that 

are not considered to be material 

weaknesses? yes none reported 

Noncompliance material to financial 

statements noted? 

Federal Awards 

Internal control over major programs: 

yes 

Material weakness(es) Identified? yes no 

no 

 

Significant Deficiencies identified that 

are not considered to be material 

weaknesses? yes none reported 

Type of auditor's report issued on compliance for major programs: Unqualified 

Any audit findings disclosed that are required 

to be reported in accordance with section 

510(a) of OMB Circular A-133? yes no 

Identification of major program: 

CFDA Number(s) 

Name of Federal Program or Cluster 

84.394 State Fiscal Stabilization Fund 

84.027, 84.391 IDEA Cluster 

84.410 Education Job Fund 

Percentage of programs tested to total awards 70.5% 

Dollar threshold used to distinguish between 

type A and type B program: $ 300,000 

Auditee qualified as low-risk auditee? yes no 

-115-


Schedule of Findings and Questioned Costs 


Section II – Financial Statement Findings 

There were no findings discovered, relating to the financial statements, which are required to be reported 

in accordance with generally accepted government auditing standards. 

Section III – Findings and Questioned Costs for Federal Awards 

There were no findings discovered, relating to the federal awards, which are required to be reported in 

accordance with OMB Circular A-133, Section 510. 

Audit Follow-up Procedures 

We performed follow-up procedures on the findings reported last year, which are shown in the 

accompanying schedule of prior year findings. 

-116-


Schedule of Prior Year Findings 


Prior Year Findings 2009-10 

Significant Deficiency 2010-1 

Criteria: 

Condition: 

Cause: 

Effect 

Status: 

(Food Service Fund - Bank Reconciliation) 

The District should reconcile their monthly bank statements to the cash 

balance reported in their bookkeeping system. 

During our review of cash balances, we discovered discrepancies in the 

reconcilement process and recording process that went undetected 

during the year. 

The reason for this condition was created by an employee, assigned to 

the process that had limited understanding of the function. 

The failure to properly reconcile cash can cause an understatement or 

overstatement of the District’s financial positions. 

Corrective Action was taken. 

Significant Deficiency 2010-2 

Criteria: 

Condition: 

Cause: 

Effect: 

Status: 

(Food Service Fund – POS System) 

The District should establish controls that will enable the POS system to 

properly record deposits applied to a student’s account as a liability. 

During our review of revenues received in the Food Service Fund, we 

discovered that when deposits are being applied to a student’s account, 

the computer system is recording the transaction to sales. In addition, 

when the student purchases a meal the computer system is recording the 

transaction to sales. 

The reason for this condition, is that the personnel responsible has not 

assigned the correct account coding to the POS system. 

The failure to correct the coding in the POS system has resulted in 

revenues being overstated by over $375,000, which also means the 

monthly treasurer reports submitted to the Board may have been 

incorrect. 

Corrective Action was taken. 

-117-

EAST PENN SD_OS_2008 - East Penn School District

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