EAST WHITTIER CITY SCHOOL DISTRICT (Los Angeles County, … · 2018. 11. 7. · EAST WHITTIER CITY SCHOOL DISTRICT (Los Angeles County, California) ... Depository Trust Company, New

PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 7, 2018

Dated: November __, 2018 * Preliminary; subject to change. T

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NEW ISSUE – BOOK-ENTRY-ONLY RATING: Moody’s: “Aa3” (See “RATING” herein.)

In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See the caption “TAX MATTERS” with respect to tax consequences concerning the Bonds.

EAST WHITTIER CITY SCHOOL DISTRICT (Los Angeles County, California)

$19,000,000* Election of 2016 General Obligation Bonds, Series B

(Measure R)

$7,000,000* Election of 2016 General Obligation Bonds, Series B

(Measure Z)

Dated: Date of Delivery Due: August 1, as shown on inside cover The Election of 2016 General Obligation Bonds, Series B (Measure R) (the “Measure R Bonds”) and the Election of 2016 General

Obligation Bonds, Series B (Measure Z) (the “Measure Z Bonds” and together with the Measure R Bonds, the “Bonds”) offered hereunder by the East Whittier City School District (the “District”) are issued for the purposes of (i) financing the construction, acquisition, furnishing and equipping of District facilities, (ii) funding capitalized interest on the Bonds, which will be applied to pay interest due through _________ and (iii) paying certain costs of issuance associated with the sale of the Bonds, as more fully described herein under the caption “PLAN OF FINANCE.”

The Measure R Bonds were authorized at a bond election conducted in the District on November 8, 2016 (the “Election”) at which more than 55% of the voters within the District voting on the measure voted to approve the issuance by the District of $70,000,000 aggregate principal amount of its general obligation bonds (the “Measure R Authorization”). The Measure Z Bonds were also authorized at the Election at which more than 55% of the voters within the District voting on the measure voted to approve the issuance by the District of $24,000,000 aggregate principal amount of its general obligation bonds (the “Measure Z Authorization” and, together with the Measure R Authorization, the “Authorizations”). The Measure R Bonds are the second series of bonds issued pursuant to the Measure R Authorization, and the Measure Z Bonds are the second series of bonds issued pursuant to the Measure Z Authorization. Following the issuance of the Bonds, $32,000,000*

of the Measure R Authorization and $11,000,000* of the Measure Z Authorization under the Election will remain. The Bonds are issued on a parity with all other general obligation bonds of the District, including general obligation bonds issued pursuant to previous authorizations.

The Bonds will mature on the dates and in the amounts and bear interest at the rates shown on the inside cover hereof. Interest on the Bonds is payable commencing February 1, 2019, and semiannually thereafter on February 1 and August 1 of each year. The Bonds will be issued in denominations of $5,000 principal amount, or integral multiples thereof, and are payable as to principal amount or redemption price at the office of U.S. Bank National Association, as agent for the Treasurer and Tax Collector of the County of Los Angeles, the initial paying agent for the Bonds (the “Paying Agent”). See “THE BONDS” herein.

The Bonds are issued in fully registered form and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository of the Bonds as described herein under the caption “THE BONDS – Book-Entry-Only System” herein and in APPENDIX E – “THE BOOK-ENTRY-ONLY SYSTEM” hereto.

The Bonds are subject to redemption prior to maturity as described herein*. See “THE BONDS –Redemption of the Bonds” herein.

The Bonds are general obligations of the District only, and are not obligations of the County of Los Angeles, the State of California or any of its other political subdivisions. The Board of Supervisors of the County of Los Angeles has the power and is obligated to levy and collect ad valorem property taxes for each fiscal year upon the taxable property in the District in an amount at least sufficient, together with other moneys available for such purpose, to pay the principal of, premium, if any, and interest on each Bond as the same becomes due and payable.

MATURITY SCHEDULE On Inside Cover

THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT A

SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.

The Bonds will be offered when, as and if issued and received by RBC Capital Markets, LLC, the Underwriter, subject to the approval of legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, and certain other conditions. Nixon Peabody LLP, San Francisco, California, is acting as Disclosure Counsel for the issue. Certain matters will be passed upon for the Underwriter by Dannis Woliver Kelley, Long Beach, California. It is anticipated that the Bonds will be available for delivery in definitive form through the facilities of DTC on or about December _____, 2018.

MATURITY SCHEDULE

$19,000,000*

Election of 2016 General Obligation Bonds, Series B (Measure R)

$_______ Serial Bonds

Maturity Date (August 1) Principal Amount Interest Rate Yield

CUSIP No.†

(275875)

$_____, ____% Term Bonds Maturing August 1, 20__, Yield: _____% ; CUSIP No.† ________

$______, ____% Term Bonds Maturing August 1, 20__, Yield: _____% ; CUSIP No.† ________

* Preliminary; subject to change.

† CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard & Poor’s Financial Services LLC on behalf of The American Bankers Association. This information is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services Bureau. CUSIP numbers have been assigned by an independent company not affiliated with the District or the Underwriter and are included solely for the convenience of the registered owners of the applicable Bonds. Neither the District nor the Underwriter is responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the applicable Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

$7,000,000*

Election of 2016 General Obligation Bonds, Series B (Measure Z)

$________ Serial Bonds

Maturity Date (August 1) Principal Amount Interest Rate Yield

CUSIP No.†

(275875)


† CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard & Poor’s Financial Services LLC on behalf of The American Bankers Association. This information is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services Bureau. CUSIP numbers have been assigned by an independent company not affiliated with the District or the Underwriter and are included solely for the convenience of the registered owners of the applicable Bonds. Neither the District nor the Underwriter is responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the applicable Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

No dealer, broker, salesperson or other person has been authorized by the District to provide any information or to make any representations other than as contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by the District. 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 by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly described herein, are intended solely as such and are not to be construed as a representation of facts.

The information set forth herein, other than that provided by the District, has been obtained from sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the District.

This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.

The information and expressions of opinion herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District since the date hereof. The County of Los Angeles has not approved this Official Statement and is not responsible for the accuracy or completeness of the statements contained in this Official Statement.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS, INSTITUTIONAL INVESTORS, BANKS OR OTHERS AT PRICES LOWER OR HIGHER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

The Underwriter has provided the following sentence for inclusion in this Official Statement:

The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.

Statements included or incorporated by reference in the following information constitute “forward looking statements.” Such statements are generally identifiable by the terminology used such as “plan,” “project,” “expect,” “estimate,” “budget” or other similar words. The achievement of results or other expectations contained in forward looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Actual results may differ from the District’s forecasts. The District is not obligated to issue any updates or revisions to the forward looking statements in any event.

For purposes of compliance with Rule 15c2-12 of the United States Securities and Exchange Commission, as amended, and in effect on the date hereof, this Preliminary Official Statement constitutes an official statement of

the District that has been deemed final by the District as of its date except for the omission of no more than the information permitted by Rule 15c2-12.

The District maintains a website. However, the information presented on that website is not part of this Official Statement and should not be relied upon in making investment decisions with respect to the Bonds. The references to internet websites in this Official Statement are shown for reference and convenience only; unless explicitly stated to the contrary, the information contained within the websites is not incorporated herein by reference and does not constitute part of this Official Statement.

EAST WHITTIER CITY SCHOOL DISTRICT Los Angeles County, State of California

Board of Education

Christine Chacon Sullivan, President Armando Urteaga , Vice President

Dimitri Elbling, Clerk Paul Gardiner, Member

Carlos Aparicio, Member

District Administrators

Marc Patterson, Superintendent Ruben Hernandez, Assistant Superintendent, Business Services

Gabriela Tavitian, Assistant Superintendent, Educational Support Services Dr. Douglas Staine, Assistant Superintendent, Personnel Services

Santhasundari Rajiv, Director, Budgeting and Accounting

SPECIAL SERVICES

Bond Counsel

Stradling Yocca Carlson & Rauth Newport Beach, CA

Disclosure Counsel Financial Advisor

Nixon Peabody LLP San Francisco, CA

Fieldman, Rolapp & Associates, Inc. Irvine, CA

Paying Agent

U.S. Bank National Association, as agent for the Treasurer and Tax Collector of Los Angeles County

Los Angeles, CA

TABLE OF CONTENTS

i

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

General ............................................................................................................................................. 1The District ...................................................................................................................................... 2Description of the Bonds ................................................................................................................. 2Bond Owner’s Risks ........................................................................................................................ 2Continuing Disclosure ..................................................................................................................... 3Forward-Looking Statements ........................................................................................................... 3

THE BONDS ................................................................................................................................................ 3

Authority for Issuance...................................................................................................................... 3Security and Sources of Payment .................................................................................................... 3Description of the Bonds ................................................................................................................. 4Paying Agent .................................................................................................................................... 4Application and Investment of Bond Proceeds and Tax Revenues ................................................. 4Redemption of the Bonds................................................................................................................. 5Selection of Bonds for Redemption ................................................................................................. 6Notice of and Effect of Redemption ................................................................................................ 6Book-Entry Only System ................................................................................................................. 7Defeasance ....................................................................................................................................... 7Supplemental Resolutions ................................................................................................................ 8Unclaimed Moneys .......................................................................................................................... 9Estimated Sources and Uses .......................................................................................................... 10

PLAN OF FINANCE .................................................................................................................................. 11

DEBT SERVICE SCHEDULE ................................................................................................................... 12

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS .......................................................... 13

General ........................................................................................................................................... 13Assessed Valuations....................................................................................................................... 13Ad Valorem Property Taxes, Tax Rates, Levies, Collections and Delinquencies ......................... 18Unavailability of Teeter Plan ......................................................................................................... 19Tax Charges and Delinquencies ..................................................................................................... 19Tax Rates ....................................................................................................................................... 20Certain Existing Obligations .......................................................................................................... 21Direct and Overlapping Debt ......................................................................................................... 21

CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS ................................................................................................................................... 23

Article XIIIA of the California Constitution .................................................................................. 23Legislation Implementing Article XIIIA ....................................................................................... 23Article XIIIB of the California Constitution .................................................................................. 23Unitary Property ............................................................................................................................ 24Proposition 46 ................................................................................................................................ 24Proposition 39 ................................................................................................................................ 24Proposition 98 ................................................................................................................................ 25Propositions 1A and 22 .................................................................................................................. 25Proposition 30 ................................................................................................................................ 27Proposition 2 .................................................................................................................................. 28

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Proposition 51 ................................................................................................................................ 28Article XIIIC and XIIID of the California Constitution ................................................................ 29Future Initiatives ............................................................................................................................ 30

THE LOS ANGELES COUNTY TREASURY POOL .............................................................................. 30

LEGAL OPINION ...................................................................................................................................... 32

TAX MATTERS ......................................................................................................................................... 32

LEGAL MATTERS .................................................................................................................................... 34

Continuing Disclosure ................................................................................................................... 34Limitation on Remedies; Amounts Held in the County Treasury Pool ......................................... 34California Senate Bill 222 .............................................................................................................. 35Special Revenues ........................................................................................................................... 35

LEGALITY FOR INVESTMENT.............................................................................................................. 36

RATING ..................................................................................................................................................... 36

NO LITIGATION ....................................................................................................................................... 37

UNDERWRITING ..................................................................................................................................... 37

FINANCIAL ADVISOR ............................................................................................................................ 37

OTHER INFORMATION .......................................................................................................................... 38

APPENDIX A – THE DISTRICT .......................................................................................................... A-1

APPENDIX B – FORM OF BOND COUNSEL OPINIONS ................................................................ B-1

APPENDIX C – AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR FISCAL YEAR 2016-17 ............................................................................................. C-1

APPENDIX D – FORM OF CONTINUING DISCLOSURE AGREEMENT ...................................... D-1

APPENDIX E – BOOK-ENTRY-ONLY SYSTEM .............................................................................. E-1

1

EAST WHITTIER CITY SCHOOL DISTRICT (Los Angeles County, California)

$19,000,000*

Election of 2016 General Obligation Bonds, Series B (Measure R)

$7,000,000*

Election of 2016 General Obligation Bonds, Series B (Measure Z)

INTRODUCTION

General

The East Whittier City School District (the “District”), a school district of the State of California (the “State”), proposes to issue $19,000,000* aggregate principal amount of its Election of 2016 General Obligation Bonds, Series B (Measure R) (the “Measure R Bonds”), under and pursuant to a bond authorization for the issuance and sale of not more than $70,000,000 of general obligation bonds (the “Measure R Authorization”) approved by more than 55% of the voters of the District voting at an election held on November 8, 2016 (the “Election”). The District also proposes to issue $7,000,000* aggregate principal amount of its Election of 2016 General Obligation Bonds, Series B (Measure Z) (the “Measure Z Bonds” and, together with the Measure R Bonds, the “Bonds”), under and pursuant to a bond authorization for the issuance and sale of not more than $24,000,000 of general obligation bonds (the “Measure Z Authorization” and, together with the Measure R Authorization, the “Authorizations”) approved by more than 55% of voters of the District at the Election.

The Measure R Bonds are the second issue under the Measure R Authorization, after which $32,000,000* principal amount of the District’s general obligation bonds will remain for issuance under the Measure R Authorization. The Measure Z Bonds are the second issue under the Measure Z Authorization, after which $11,000,000* principal amount of the District’s general obligation bonds will remain for issuance under the Measure Z Authorization. All general obligation bonds of the District are payable from ad valorem property taxes, which may be levied upon all taxable property in the District. See the caption “– Proposition 39” under the heading “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” herein.

THE BONDS ARE GENERAL OBLIGATION BONDS OF THE DISTRICT, SECURED BY AND PAYABLE FROM AD VALOREM PROPERTY TAXES ASSESSED ON TAXABLE PROPERTIES WITHIN THE DISTRICT, WITHOUT LIMITATION AS TO RATE OR AMOUNT. THE BONDS ARE NOT AN OBLIGATION OF THE GENERAL FUND OF THE DISTRICT OR OF THE COUNTY OF LOS ANGELES (THE “COUNTY”). SEE “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” HEREIN.

Proceeds from the sale of the Measure R Bonds will be used for construction, acquisition, furnishing and equipping of District facilities included on the project list approved by the voters under the Measure R Authorization at the Election (the “Measure R Projects”) and the payment of costs of issuance of the Measure R Bonds. Proceeds from the sale of the Measure Z Bonds will be used for construction, acquisition, furnishing and equipping of certain District facilities included on the project list approved by the voters under the Measure Z Authorization at the Election (the “Measure Z Projects” and, collectively with the Measure R Projects, the “Projects”) and the payment of costs of issuance of the Measure Z Bonds. See “PLAN OF FINANCE” herein for more information about the Projects.


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The District

The District was established in 1902. The District is comprised of an area of approximately 20 square miles located in the County. The District serves students in grades kindergarten through 8th grade. The District currently operates ten (10) elementary schools and three (3) middle schools. See APPENDIX A – “THE DISTRICT.”

The District has certain existing lease financing obligations as set forth in APPENDIX A and direct and overlapping bonded indebtedness as set forth under “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Direct and Overlapping Debt.” The District’s audited financial statements for fiscal year 2016-17 are attached hereto as APPENDIX C. For further information concerning the District, see APPENDIX A – “THE DISTRICT.”

Description of the Bonds

Form and Registration. The Bonds will be issued in fully registered form only, and will be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), who will act as securities depository for the Bonds. See “THE BONDS – Book-Entry-Only System” herein and APPENDIX E – “BOOK-ENTRY-ONLY SYSTEM” hereto. Purchasers of the Bonds (the “Beneficial Owners”) will not receive physical certificates representing their interests in the Bonds purchased. In the event that the book-entry-only system described herein is no longer used with respect to the Bonds, the Bonds will be registered in accordance with the Resolutions.

So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references herein to the “Owners,” “Bondowners,” or “Holders” of the Bonds (other than under the caption “TAX MATTERS” will mean Cede & Co. and will not mean the Beneficial Owners of the Bonds.

Denominations. Individual purchases of interests in the Bonds will be available to purchasers of the Bonds in the denominations of $5,000 principal amount, or any integral multiple thereof.

Redemption. The Bonds are subject to redemption prior to their stated maturity as further described herein. See “THE BONDS –Redemption of the Bonds”.

Payments. The Bonds will be dated as of their initial date of delivery (the “Date of Delivery”), and interest on the Bonds will accrue from the Date of Delivery, and is payable semiannually on each February 1 and August 1 of each year (each, a “Bond Payment Date”), commencing February 1, 2019. The principal amount of the Bonds is payable at maturity or at earlier redemption upon surrender of the applicable Bond for payment. Payments of the principal of and interest on the Bonds will be made by U.S. Bank, National Association as agent for the Treasurer and Tax Collector of the County, the initial paying agent for the Bonds, (the “Paying Agent”) to DTC for subsequent distribution through DTC Participants to the Beneficial Owners of the Bonds.

Bond Owner’s Risks

The Bonds are general obligations of the District, payable from ad valorem property taxes which may be levied upon all taxable property in the District, without limitation as to rate or amount (except with respect to certain personal property which is taxable at limited rates). For more complete information regarding taxation of property within the District, see “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.”

3

Continuing Disclosure

Pursuant to that certain Continuing Disclosure Agreement relating to the Bonds, the District will covenant for the benefit of the Owners and Beneficial Owners of the Bonds to make available certain financial information and operating data relating to the District and to provide notices of the occurrence of certain listed events, in compliance with Rule 15c2-12 (the “Rule”) promulgated by the Securities and Exchange Commission. The specific nature of the information to be made available and of the notices of listed events is summarized under “LEGAL MATTERS – Continuing Disclosure” herein and in APPENDIX D – “FORM OF CONTINUING DISCLOSURE AGREEMENT” attached hereto.

Forward-Looking Statements

Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “intend,” “expect,” “estimate,” “project,” “budget,” or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information regarding the District herein.

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED FROM SUCH FORWARD-LOOKING STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.

THE BONDS

Authority for Issuance

The Bonds are issued pursuant to the provisions of Article 4.5 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code commencing with Section 53506 (the “Act”) and other applicable law, and pursuant to resolutions (one for each Series of Bonds) of the Board of Education of the District adopted on October 22, 2018 (the “Resolutions”) and pursuant to resolutions (one for each Series of Bonds) adopted by the Board of Supervisors of the County of Los Angeles (the “Board of Supervisors”) on November 7, 2018. Pursuant to its resolutions, the Board of Supervisors of the County has agreed that it will levy ad valorem taxes for the payment of the principal of and interest on the Bonds. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein.

Security and Sources of Payment

The Bonds are general obligation bonds of the District payable solely from amounts in the applicable Debt Service Fund (as defined herein) established under the Resolutions consisting of ad valorem property taxes and other amounts on deposit in the applicable Debt Service Fund. Such taxes will be levied annually by the County in addition to all other taxes during the period that the Bonds are outstanding in an amount sufficient to pay the principal of and interest on the Bonds when due. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS”. Such taxes, when collected, will be placed by the County in the applicable Debt Service Funds, each of which fund is segregated and

4

maintained by the County. All amounts in the Debt Service Funds are irrevocably pledged for the payment of principal of and interest on the Bonds when due. Although the County is obligated to levy ad valorem taxes for the payment of the Bonds, and will maintain the Debt Service Funds pledged to the repayment of the Bonds, the Bonds are not a debt of the County.

Moneys in the Debt Service Funds, to the extent necessary to pay the principal of and interest on the Bonds as such principal and interest becomes due and payable, will be transferred to the Paying Agent. The Paying Agent will, in turn, transfer the funds to DTC, which is to distribute the principal and interest payments due on the Bonds to DTC participants for subsequent disbursement to the Beneficial Owners of the Bonds. See “THE BONDS—Book-Entry Only System.”

Description of the Bonds

The Bonds will be dated their date of delivery. Interest on the Bonds accrues from their dated date, and is payable semiannually on each Bond Payment Date, commencing February 1, 2019, at the annual interest rates shown on the pages following the cover page of this Official Statement. The Bonds are issuable in denominations of $5,000 or any integral multiple thereof. Interest will accrue on the Bonds on the basis of a 360-day year comprised of twelve 30 day months.

Payment of interest on any Bond Payment Date shall be made to the person appearing on the registration books of the Paying Agent as the Owner thereof as of the Record Date immediately preceding such Bond Payment Date. For purposes of the foregoing, ‘Record Date’ means the close of business on the fifteenth (15th) day of the month preceding each Bond Payment Date.

Paying Agent

U.S. Bank National Association will act as agent of the Treasurer and Tax Collector of Los Angeles County, as the designated paying agent, authenticating agent and transfer agent (the “Paying Agent”) for the Bonds.

If the Paying Agent resigns or is removed by the District, a successor Paying Agent will be appointed by the District. Any successor Paying Agent selected by the District, other than the Treasurer, may be any bank, trust company, national banking association or other financial institution doing business in the State of California and with at least $50,000,000 in net assets.

Application and Investment of Bond Proceeds and Tax Revenues

The Bonds are being issued to: (i) finance the Projects, (ii) fund capitalized interest on the Bonds, which will be applied to pay interest due through________ and (ii) pay the costs of issuing the Bonds.

A portion of the proceeds from the sale of the Measure R Bonds and a portion of the proceeds from the sale of the Measure Z Bonds shall be deposited in the East Whittier City School District Election of 2016 (Measure R) General Obligation Bonds, Series B Building Fund (the “Measure R Building Fund”) and the East Whittier City School District Election of 2016 (Measure Z) General Obligation Bonds, Series B Building Fund (the “Measure Z Building Fund” and, together with the Measure R Building Fund, the “Building Funds”) established under the Resolutions, as applicable, and shall be kept separate and distinct from all other District and County funds. Interest earned on the investment of monies held in each Building Fund shall be retained in the applicable Building Fund. The proceeds in each Building Fund shall be disbursed as directed by the District to pay for the applicable Projects.

5

In accordance with the Resolutions, on the date of delivery of the Bonds, a portion of the amount to be deposited to each Building Fund will be transferred to U.S. Bank National Association for deposit to the applicable Costs of Issuance Fund to pay the costs of issuing the Bonds.

Any net original issue premium received from the sale of the Bonds and the ad valorem property taxes securing the payment of the Bonds, when received, shall be kept separate and apart in the East Whittier City School District Election of 2016 (Measure R) General Obligation Bonds, Series B Debt Service Fund (the “Measure R Debt Service Fund”) and the East Whittier City School District Election of 2016 (Measure Z) General Obligation Bonds, Series B Debt Service Fund (the “Measure Z Debt Service Fund” and, together with the Measure R Debt Service Fund, the “Debt Service Funds”) established under the Resolutions, as applicable, and used only for payments of principal and interest on the respective series of Bonds. Interest earned on the investment of monies held in each Debt Service Fund shall be retained in the applicable Debt Service Fund and used to pay principal and interest on the Bonds when due.

Any excess proceeds of the Bonds not needed for the purpose for which the Bonds are issued shall be transferred from the applicable Building Fund to the applicable Debt Service Fund and applied to the payment of principal of and interest on the Bonds. If after payment in full of the Measure R Bonds there remains excess proceeds, any such excess amounts shall be transferred to the District’s General Fund. Similarly, if after payment in full of the Measure Z Bonds there remains excess proceeds, any such excess amounts shall be transferred to the District’s General Fund. Amounts which the District determines are required to be rebated to the federal government will be deposited in the East Whittier City School District Election of 2016 (Measure R) General Obligation Bonds, Series B Rebate Fund (the “Measure R Rebate Fund”) and the East Whittier City School District Election of 2016 (Measure Z) General Obligation Bonds, Series B Rebate Fund (the “Measure Z Rebate Fund” and, together with the Measure R Rebate Fund, the “Rebate Funds”) established under the Resolutions, as applicable.

Investment of Bond Proceeds. Monies held in the Building Funds, the Debt Service Funds and the Rebate Funds established under the Resolutions may be invested in any investment permitted by law. It is anticipated that monies in the Building Funds, the Debt Service Funds and the Rebate Funds will be invested in the Los Angeles County Treasury Pool (the “Treasury Pool”). All funds held by the County Treasurer in the Building Funds and the Debt Service Funds are expected to be invested at the sole discretion of the County Treasurer, on behalf of the District, in investment pools of the County into which the District may lawfully invest its funds or in any other investment authorized pursuant to the California Government Code, all in accordance with the investment policy of the County, as such statutes and investment policy may be amended or supplemented from time to time. Under existing law, amounts in the Building Funds are required to be invested in the County Treasury and will be invested in the Treasury Pool. See “LOS ANGELES COUNTY TREASURY POOL” herein.

Redemption of the Bonds*

Optional Redemption. The Bonds maturing on or before August 1, 20__ are not subject to optional redemption. The Bonds maturing on or after August 1, 20__ may be redeemed before maturity at the option of the District on any date on or after August 1, 20__ as a whole, or in part by lot from such maturities as are selected by the District, at a redemption price equal to the principal amount of the Bonds selected for redemption, together with interest accrued thereon to the date of redemption, without premium.


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Mandatory Sinking Fund Redemption. The Measure ___ Bonds maturing on August 1, 20__ are subject to redemption prior to maturity from mandatory sinking fund payments on August 1 of each year, on and after August 1, 20__ at a redemption price equal to the principal amount thereof, together with accrued interest to the date fixed for redemption, without premium. The principal amount represented by such Measure ___ Bonds to be so redeemed and the date therefor and the final principal payment date is as indicated in the following table:

Mandatory Sinking Fund Payment Date

(August 1) Mandatory Sinking

Fund Payment

(1) Maturity.

Selection of Bonds for Redemption

Whenever provision is made in the Resolutions for the optional redemption of the Bonds outstanding thereunder and less than all the Bonds of a Series are to be redeemed, the Paying Agent, upon written instruction from the District, shall select Bonds of that Series for redemption as directed by the District. Within a maturity, the Paying Agent shall select the Bonds for redemption by lot. The portion of any Bond to be redeemed in part shall be in the Principal Amount of $5,000 or any integral multiple thereof.

Notice of and Effect of Redemption

So long as the Bonds are registered to DTC or its nominee, notices of redemption will be sent only to DTC in the manner provided for in its procedures and will not be sent by the Paying Agent to the Beneficial Owners.

At least 30 but not more than 60 days prior to the redemption date, a redemption notice shall be given to the owners of the Bonds designated for redemption by first class mail, postage prepaid, at their addresses appearing on the registration books of the Paying Agent or, so long as the Bonds are registered to DTC or its nominee, in such manner as complies with the requirements of DTC. Neither failure to receive any redemption notice nor any defect in any such redemption notice so given shall affect the sufficiency of the proceedings for the redemption of the Bonds being redeemed.

Any redemption notice for an optional redemption of the Bonds delivered may be conditional, and, if any condition stated in the redemption notice shall not have been satisfied on or prior to the redemption date: (i) the redemption notice shall be of no force and effect, (ii) the District shall not be required to redeem such Bonds, (iii) the redemption shall not be made, and (iv) the Paying Agent shall within a reasonable time thereafter give notice to the persons in the manner in which the conditional redemption notice was given that such condition or conditions were not met and that the redemption was canceled.

If on a redemption date moneys for the redemption of the Bonds to be redeemed, together with interest accrued to such redemption date, are held in the applicable Debt Service Fund or an escrow

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account as provided in the applicable Resolution, and if a Redemption Notice thereof shall have been given as set forth in the Resolutions, then from and after such redemption date, interest with respect to the Bonds to be redeemed shall cease to accrue and become payable. When any Bonds (or portions thereof) which have been duly called for redemption prior to maturity, or with respect to which irrevocable instructions to call for redemption prior to maturity at the earliest redemption date have been given to the Paying Agent and sufficient moneys are held by the Paying Agent or an escrow agent appointed by the District irrevocably in trust for the payment of the redemption price of such Bonds or portions thereof, then such Bonds shall no longer be deemed outstanding and shall be surrendered to the Paying Agent for cancellation at maturity or on the applicable redemption date.

Book-Entry Only System

One fully registered bond without coupons for each maturity of the Bonds will be issued and, when issued, will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository of the Bonds. Individual purchases may be made in book-entry form only, in the principal amount of $5,000 and integral multiples thereof for each maturity. Purchasers will not receive certificates representing their interest in the Bonds purchased. Principal and interest will be paid to DTC, which will in turn remit such principal and interest to DTC participants for subsequent dispersal to the Beneficial Owners of the Bonds as described herein. See Appendix E—“BOOK ENTRY ONLY SYSTEM” herein.

Defeasance

All or any portion of the Bonds may be defeased prior to maturity in any one or more of the following ways:

(1) Cash: by irrevocably depositing with the Paying Agent or an independent escrow agent selected by the District an amount of cash which together with amounts then on deposit in the applicable Debt Service Fund is sufficient to pay all Bonds designated for defeasance, including all principal and interest and premium, if any; or

(2) Government Obligations: by irrevocably depositing with the Paying Agent or an independent escrow agent selected by the District noncallable Government Obligations (as defined below), together with cash, if required, in such amount as will, in the opinion of an independent certified public accountant, together with the interest to accrue thereon and moneys then on deposit in the applicable Debt Service Fund together with interest to accrue thereon, be fully sufficient to pay and discharge all Bonds designated for defeasance (including all principal and interest represented thereby and redemption premium, if any) at or before their maturity date or redemption date, as applicable.

If a Bond is defeased as described above, then, notwithstanding that any of such Bonds shall not have been surrendered for payment, all obligations of the District under the Resolutions with respect to such Bonds shall cease and terminate, except only (i) the obligation of the District and the Paying Agent, or an independent escrow agent selected by the District, to pay or cause to be paid to the Owners of such designated Bonds not so surrendered and paid, all sums due with respect thereto.

In the Resolutions, Government Obligations are defined as:

Direct and general obligations of the United States of America (which may consist of obligations of the Resolution Funding Corporation that constitute interest strips), or obligations that are unconditionally guaranteed as to principal and interest by the United States of America. In the case of direct and general obligations of the United States of America, Government Obligations shall include

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evidences of direct ownership of proportionate interests in future interest or principal payments of such obligations. Investments in such proportionate interests must be limited to circumstances where (i) a bank or trust company acts as custodian and holds the underlying direct and general obligations of the United States of America; (ii) the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor of the underlying direct and general obligations of the United States of America; and (iii) the underlying direct and general obligations of the United States of America are held in a special account, segregated from the custodian’s general assets, and are not available to satisfy any claim of the custodian, any person claiming through the custodian, or any person to whom the custodian may be obligated; provided that such obligations are rated by S&P Global Ratings, a Standard & Poor’s Financial Services, LLC business, and Moody’s Investors Service in the same rating category as the underlying direct and general obligations of the United States of America.

Supplemental Resolutions

Each Resolution and the rights and obligations of the District and of the Owners of the Bonds outstanding thereunder may be modified or amended at any time by a supplemental resolution adopted by the District with the written consent of Owners owning at least 60% in aggregate principal amount of such Bonds then Outstanding exclusive of any such Bonds owned by the District; provided, however, that no such modification or amendment shall, without the express consent of the Owner of each Bond affected, reduce the principal amount of any such Bond, reduce the interest rate payable thereon, advance the earliest redemption date thereof, extend its maturity or the times for paying interest thereon or change the monetary medium in which principal and interest is payable, nor shall any modification or amendment reduce the percentage of consents required for amendment or modification. No such supplemental resolution shall change or modify any of the rights or obligations of any Paying Agent without its written assent thereto.

(b) Each Resolution and the rights and obligations of the District and of the Owners of the Bonds may be modified or amended at any time by a supplemental resolution adopted by the District, without the written consent of the Owners:

(1) To add to the covenants and agreements of the District in such Resolution other covenants and agreements to be observed by the District which are not contrary to or inconsistent with such resolution as theretofore in effect;

(2) To add to the limitations and restrictions in such Resolution, other limitations and restrictions to be observed by the District which are not contrary to or inconsistent with the such resolution as theretofore in effect;

(3) To confirm as further assurance any pledge under, and the subjection to any lien or pledge created or to be created by such Resolution, of any moneys, securities or funds, or to establish any additional funds or accounts to be held under such resolution;

(4) To cure any ambiguity, supply any omission, or cure to correct any defect or inconsistent provision in such Resolution; or

(5) To amend or supplement such Resolution in any other respect, provided such supplemental resolution does not adversely affect the interests of the Owners of the Bonds outstanding under such Resolution.

(c) Any act done pursuant to a modification or amendment so consented to shall be binding upon the Owners of all the Bonds outstanding under the Resolution so modified or amended and shall not

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be deemed an infringement of any of the provisions of such Resolution, whatever the character of such act may be, and may be done and performed as fully and freely as if expressly permitted by the terms of such resolution, and after consent relating to such specified matters has been given, no Owner shall have any right or interest to object to such action or in any manner to question the propriety thereof or to enjoin or restrain the District or any officer or agent of either from taking any action pursuant thereto.

Unclaimed Moneys

Anything in the Resolutions to the contrary notwithstanding, any moneys held by the Paying Agent in trust for the payment and discharge of any of the Bonds which remain unclaimed for one year after the date when such Bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the Paying Agent at such date, or for one year after the date of deposit of such moneys if deposited with the Paying Agent after said date when such bonds become due and payable, shall be repaid by the Paying Agent to the District, as its absolute property and free from trust, and the Paying Agent shall thereupon be released and discharged with respect thereto and the Owners of such Bonds shall look only to the District for the payment of such Bonds; provided, however, that before being required to make such payment to the District, the Paying Agent shall, at the expense of District, cause to be mailed to the Owners of all such Bonds at their respective addresses appearing on the registration books, a notice that said moneys remain unclaimed and that, after a date in said notice, which date shall not be less than 30 days after the date of mailing such notice, the balance of such moneys then unclaimed will be returned to the District.

[Remainder of Page Intentionally Left Blank]

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Estimated Sources and Uses

The proceeds of the Measure R Bonds are expected to be applied as follows:

Sources of Funds

Principal Amount Net Original Issue Premium

Total Sources

Uses of Funds

Deposit to Measure R Building Fund Deposit to Measure R Debt Service Fund Costs of Issuance allocable to Measure R Bonds(1)

Total Uses

(1) Includes Underwriter’s discount, payment of Bond and Disclosure Counsel fees, Financial Advisor fees, Paying Agent fees, rating agency fees, Preliminary Official Statement and Official Statement printing and other costs of issuance.

The proceeds of the Measure Z Bonds are expected to be applied as follows:

Sources of Funds

Principal Amount Net Original Issue Premium

Total Sources

Uses of Funds

Deposit to Measure Z Building Fund Deposit to Measure Z Debt Service Fund Costs of Issuance allocable to Measure Z Bonds(1)

Total Uses

(1) Includes Underwriter’s discount, payment of Bond and Disclosure Counsel fees, Financial Advisor fees, Paying Agent fees, rating agency fees, Preliminary Official Statement and Official Statement printing and other costs of issuance.

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PLAN OF FINANCE

The District submitted a project list to the voters at the Election for the Measure R Bonds (the “Measure R Project List”) and a project list to the voters at the Election for the Measure Z Bonds (the “Measure Z Project List,” and, together with the Measure R Project List, the “Project Lists”), specifying the Measure R Projects and the Measure Z Projects, respectively, a portion of which will be financed with the proceeds of the Bonds. The District intends to deposit a portion of the proceeds of sale of the Measure R Bonds into the District’s Measure R Building Fund to finance various capital improvements included on the Measure R Project List and to pay the costs of issuance of the Measure R Bonds. The District intends to deposit a portion of the proceeds of sale of the Measure Z Bonds into the District’s Measure Z Building Fund to finance various capital improvements included on the Measure Z Project List and to pay the cost of issuance of the Measure Z Bonds.

That portion of the proceeds deposited into the Building Funds, and interest earned thereon, will be invested in the Treasury Pool of the County of Los Angeles (see “LOS ANGELES TREASURY POOL” herein) until expended for qualified costs of the District’s Projects included in the Project Lists. The Board of Education retains the ability to set priorities among listed Projects, in order to meet the needs of the District and its students.


4847-3289-2018.1

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DEBT SERVICE SCHEDULE

The following table summarizes the debt service requirements for the Bonds and other outstanding general obligation bonds of the District, assuming no optional redemption:

Measure R Bonds Measure Z Bonds

Period EndingAugust 1

Outstanding Bonds Principal Interest Principal Interest

Total Debt Service

2019 $3,568,350.02 2020 1,089,900.02 2021 991,300.02 2022 1,018,800.02 2023 1,060,300.02 2024 1,095,300.02 2025 1,134,800.02 2026 1,170,300.02 2027 1,208,300.02 2028 1,253,550.02 2029 1,294,750.02 2030 1,344,300.02 2031 1,391,100.02 2032 1,439,975.02 2033 1,485,675.00 2034 1,543,025.00 2035 1,595,275.00 2036 1,652,937.50 2037 1,706,081.26 2038 1,234,637.50 2039 1,276,112.50 2040 1,324,212.50 2041 1,368,487.50 2042 1,413,937.50 2043 1,465,337.50 2044 1,518,387.50 2045 1,570,400.00 2046 1,626,112.50 2047

Total $ 38,520,168.04

4847-3289-2018.1

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SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

General

The Bonds are general obligations of the District payable solely from amounts in the applicable Debt Service Fund consisting of ad valorem property taxes levied on taxable property within the District and other amounts on deposit in the applicable Debt Service Fund. The Board of Supervisors of the County, on behalf of the District, is empowered and obligated annually to levy ad valorem taxes, without limitation of rate or amount, for the payment of the principal and interest on the Bonds due and payable in the next succeeding bond year (less amounts on deposit in the Debt Service Funds established under the Resolutions), upon all property subject to taxation by the District (except certain personal property which is taxable at limited rates). The Resolutions pledge as security for the Bonds outstanding thereunder all revenues received from the levy and collection of the ad valorem taxes and all amounts on deposit in the applicable Debt Service Fund.

The amount of the annual ad valorem tax levied to repay the Bonds will be determined by the relationship between the assessed valuation of taxable property in the District and the amount of debt service due on the Bonds in any year. Fluctuations in the annual debt service on the Bonds and the assessed value of taxable property in the District may cause the annual tax rate to fluctuate. Economic and other factors beyond the District’s control could cause a reduction in the assessed value of taxable property within the District and necessitate a corresponding increase in the annual tax rate. These factors include a general market decline in real property values, reclassification of property to a class exempt from taxation, whether by ownership or use (such as exemptions for property owned by the federal government, the State and local agencies and property used for qualified educational, hospital, charitable or religious purposes), or the complete or partial destruction of taxable property caused by a natural or manmade disaster, such as earthquake, fire, flood or toxic contamination.

The total assessed valuation of property in the District is $8,084,211,957 for fiscal year 2018-19. While the assessed valuations in the District have increased over recent years, future declines in real estate values in southern California, natural disasters, the departure of major taxpayers or other factors could result in lower assessed values in the District and in both a higher annual tax rate within the District and a higher level of delinquencies in tax payments. The County has not adopted the Teeter Plan (defined below). As a result, the District’s receipt of property taxes is subject to delinquencies. See “– Unavailability of Teeter Plan” below.

THE BONDS ARE GENERAL OBLIGATION BONDS OF THE DISTRICT AND DO NOT CONSTITUTE A DEBT, LIABILITY OR OBLIGATION OF THE COUNTY. NO PART OF ANY FUND OF THE COUNTY IS PLEDGED OR OBLIGATED TO THE PAYMENT OF THE BONDS.

Assessed Valuations

The assessed valuation of property in the District is established by the County Assessor, except for public utility property which is assessed by the State Board of Equalization. Assessed valuations are reported at 100% of the full value of the property, as defined in Article XIIIA of the California Constitution. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” herein.

The State-reimbursed exemption currently provides a credit of $7,000 of the full value of an owner-occupied dwelling for which application has been made to the County Assessor. The revenue estimated to be lost to local taxing agencies due to the exemption is reimbursed from State sources.

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Reimbursement is based upon total taxes due upon such exempt value and is not reduced by any amount for estimated or actual delinquencies.

In addition, certain classes of property such as churches, colleges, not-for-profit hospitals and charitable institutions are exempt from property taxation and do not appear on the tax rolls. No reimbursement is made by the State for such exemptions.

The District’s fiscal year 2018-19 total assessed valuation of property within its boundaries is $8,084,211,957. Shown in the following tables are the assessed valuations of property in the District during the past nine fiscal years including the current fiscal year, fiscal year 2018-19 assessed valuation and parcels by land use, per parcel 2018-19 assessed valuation of single family homes, fiscal year 2018-19 assessed valuation by jurisdiction, and the twenty largest secured taxpayers in the District for fiscal year 2018-19.


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EAST WHITTIER CITY SCHOOL DISTRICT SUMMARY OF ASSESSED VALUATIONS

FISCAL YEARS 2009-10 THROUGH 2018-19

Fiscal Year Local Secured Utility Unsecured Total

2009-10 $5,741,685,060 $1,425,626 $82,052,313 $5,825,162,999 2010-11 5,705,863,139 1,002,263 76,037,607 5,782,903,009 2011-12 5,851,968,098 999,014 75,933,135 5,928,900,247 2012-13 5,895,892,521 999,014 76,644,246 5,973,535,781 2013-14 6,163,045,707 999,014 75,713,378 6,239,758,099 2014-15 6,481,965,677 1,421,869 73,634,238 6,557,021,784 2015-16 6,847,976,053 1,421,869 74,350,331 6,923,748,253 2016-17 7,191,645,663 3,870,037 72,108,049 7,267,623,749 2017-18 7,558,754,916 3,929,936 74,464,816 7,637,149,668 2018-19 7,997,663,697 3,914,691 82,633,569 8,084,211,957

Sources: California Municipal Statistics, Inc.


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EAST WHITTIER CITY SCHOOL DISTRICT PER PARCEL 2018-19 ASSESSED VALUATION OF SINGLE FAMILY HOMES

No. of Parcels

2018-19 Assessed Valuation

Average Assessed Valuation

Median Assessed Valuation

Single Family Residential 17,831 $ 6,331,576,314 $ 355,088 $ 316,329

2018-19 Assessed Valuation

No. of Parcels(1)

% of Total

Cumulative

% of Total Total

Valuation % of Total

Cumulative% of Total

$0 - $24,999 3 0.017% 0.017% $ 60,141 0.001% 0.001% $25,000 - $49,999 33 0.185 0.202 1,386,067 0.02 0.023 $50,000 - $74,999 1,039 5.827 6.029 68,946,486 1.089 1.112 $75,000 - $99,999 1,101 6.175 12.203 94,331,924 1.490 2.602

$100,000 - $124,999 537 3.012 15.215 59,996,925 0.948 3.549 $125,000 - $149,999 545 3.056 18.272 75,047,580 1.185 4.735 $150,000 - $174,999 553 3.101 21.373 90,030,223 1.422 6.156 $175,000 - $199,999 605 3.393 24.766 113,726,159 1.796 7.953 $200,000 - $224,999 875 4.907 29.673 186,840,495 2.951 10.904 $225,000 - $249,999 1,111 6.231 35.904 263,655,590 4.164 15.068 $250,000 - $274,999 978 5.485 41.389 256,624,354 4.053 19.121 $275,000 - $299,999 998 5.597 46.986 286,793,729 4.530 23.650 $300,000 - $324,999 795 4.459 51.444 248,316,879 3.922 27.572 $325,000 - $349,999 792 4.442 55.886 267,341,120 4.222 31.795 $350,000 - $374,999 741 4.156 60.042 268,473,430 4.240 36.035 $375,000 - $399,999 748 4.195 64.236 290,194,392 4.583 40.618 $400,000 - $424,999 677 3.797 68.033 279,159,117 4.409 45.027 $425,000 - $449,999 768 4.307 72.340 335,698,452 5.302 50.329 $450,000 - $474,999 718 4.027 76.367 332,404,032 5.250 55.579 $475,000 - $499,999 656 3.679 80.046 319,668,244 5.049 60.828 $500,000 and greater 3,558 19.954 100.000 2,492,880,975 39.372 100.000

Total 17,831 100.000% $6,331,576,314 100.000%

(1) Improved single family residential parcels. Excludes condominiums and parcels with multiple family units. Source: California Municipal Statistics, Inc.


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EAST WHITTIER CITY SCHOOL DISTRICT 2018-19 Assessed Valuation and Parcels by Land Use

2018-19 Assessed

Valuation(1)

% of Total

No. of Parcels

% of Total

Non-Residential: Commercial $730,124,838 9.13% 426 2.12% Vacant Commercial 6,840,726 0.09 40 0.20 Industrial 32,180,357 0.40 27 0.13 Vacant Industrial 1,028,665 0.01 3 0.01 Recreational 20,527,082 0.26 23 0.11 Government/Social/Institutional 50,936,540 0.64 174 0.87 Miscellaneous/Water Company 58,220,723 0.73 93 0.46

Subtotal Non-Residential $899,858,931 11.25% 786 3.92%

Residential: Single Family Residence $6,331,576,314 79.17% 17,831 88.86% Condominium/Townhouse 177,854,521 2.22 568 2.83 Mobile Homes 801,591 0.01 19 0.09 Mobile Home Park 2,461,808 0.03 4 0.02 2-4 Residential Units 164,966,972 2.06 412 2.05 5+ Residential Units/Apartments 376,447,521 4.71 191 0.95 Vacant Residential 43,696,039 0.55 256 __1.28__

Subtotal Residential $7,097,804,766 88.75% 19,281 96.08%

Total $7,997,663,697 100.00% 20,067 100.00%

(1) Local Secured Assessed Valuation, excluding tax-exempt property. Source: California Municipal Statistics, Inc.

EAST WHITTIER CITY SCHOOL DISTRICT 2018-19 Assessed Valuation by Jurisdiction

Jurisdiction:

Assessed Valuation

in School District

% of School District

Assessed Valuation of Jurisdiction

% of Jurisdiction in School District

City of La Habra Heights $ 126,712,913 1.57% $1,462,259,761 8.67% City of La Mirada 469,669,718 5.81 6,690,574,916 7.02% City of Whittier 5,171,711,786 63.97 9,901,960,799 52.23% Unincorporated Los Angeles County

2,316,117,540 28.65 107,666,068,683 2.15%

Total District $8,084,211,957 100.00%

Los Angeles County $8,084,211,957 100.00% $1,518,401,584,349 0.53%

Source: California Municipal Statistics, Inc.

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EAST WHITTIER CITY SCHOOL DISTRICT 2018-19 Largest Local Secured Taxpayers

Property Owner Primary Land Use2018-19

Assessed Valuation% of

Total(1)

1. BRE DDR BR Whittwood CA LLC Shopping Center $166,393,112 2.08%

2. GMS Five LLC Shopping Center 64,363,746 0.80 3. Suburban Water Systems Water Company 46,267,398 0.58 4. WBCMT 2007 C31 Office 15111 Office Building 25,102,715 0.31 5. KTJ 259 LLC Shopping Center 24,719,710 0.31 6. Stanley A. Sirott Apartments 21,483,708 0.27 7. Tam Stockton LLC Apartment 20,355,751 0.25 8. Oakmont of Whittier LLC Retirement Home 19,592,640 0.24 9. Whittier Calmed Investment LP Medical Building 16,882,074 0.21 10. Countywide Mediterranean Apartments 15,758,355 0.20 11. Jehan Shahid Apartments 14,711,222 0.18 12. Regatta Investors LLC Apartments 14,447,116 0.18 13. Whittier Friendly Hills LLC Shopping Center 14,400,000 0.18 14. Fresh and Easy Neighborhood Shopping Center 13,527,206 0.17 15. Matsu LLC Apartments 12,952,386 0.16 16. 15801 Whittier Investors LLC Commercial 12,550,000 0.16 17. Mulberry Drive LLC Commercial 12,413,400 0.16 18. La Mirada Center LLC Shopping Center 12,197,648 0.15 19. 11717 Lakewood Apartments LLC Apartments 10,700,470 0.13 20. Schwarzblatt and Sirebrenik Commercial 10,496,382 0.13

$549,315,039 6.87%

(1) 2018-19 Local Secured Assessed Valuation: $7,997,663,697 Source: California Municipal Statistics, Inc.

Ad Valorem Property Taxes, Tax Rates, Levies, Collections and Delinquencies

Taxes are levied for each fiscal year on taxable real and personal property which is situated in the County as of the preceding January 1. However, upon a change in ownership of property or completion of new construction, State law permits an accelerated recognition and taxation of increases in real property assessed valuation (known as a “floating lien date”). For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State assessed property secured by a lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.”

The County levies a 1% property tax on behalf of all taxing agencies in the County. The taxes collected are allocated on the basis of a formula established by State law enacted in 1979. Under this formula, the County and all other taxing entities receive a base year allocation plus an allocation on the basis of “situs” growth in assessed value (new construction, change of ownership, inflation) prorated among the jurisdictions which serve the tax rate areas within which the growth occurs. Tax rate areas are specifically defined geographic areas which were developed to permit the levying of taxes for less than county-wide or less than city-wide special and school districts. In addition, the County levies and collects additional approved property taxes and assessments on behalf of any taxing agency within the County.

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Property taxes on the secured roll are due in two installments, on November 1 and February 1. If unpaid, such taxes become delinquent after December 10 and April 10, respectively, then a ten percent penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared tax-defaulted on or about June 30. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus costs and redemption penalty of one and one-half percent per month to the time of redemption. If taxes are unpaid for a period of five years or more, the tax-defaulted property is subject to sale by the Treasurer.

Property taxes on the unsecured roll are currently due as of the January 1 lien date prior to the commencement of a fiscal year and become delinquent, if unpaid, on August 31. A ten percent penalty attaches to delinquent taxes on property on the unsecured roll and an additional penalty of one and one-half percent per month begins to accrue on November 1. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for recordation in the County Recorder’s office in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements, bank accounts or possessory interests belonging or assessed to the taxpayer.

The County levies and collects all property taxes for property falling within its taxing boundaries.

Unavailability of Teeter Plan

Certain counties in the State operate under a statutory program entitled “Alternate Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds” (the “Teeter Plan”). For those counties operating under the Teeter Plan, local taxing entities receive 100% of their tax levies net of delinquencies, but do not receive interest or penalties on delinquent taxes collected by such counties. The County has not adopted the Teeter Plan, and consequently, the Teeter Plan is not available to local taxing entities within the County, such as the District. The District’s receipt of property taxes is therefore subject to delinquencies.

Tax Charges and Delinquencies

Taxes will be collected by the Treasurer for property falling within the District’s taxing boundaries. Taxes and assessments on the secured roll are payable in two installments on November 1 and February 1 of each fiscal year, and become delinquent on December 10 and April 10, respectively. Taxes on unsecured property are assessed and payable on March 1 and become delinquent the following August 31. The following table lists the secured tax charges and delinquencies for the District for the five-year period from fiscal years 2013-14 through 2017-18.


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EAST WHITTIER CITY SCHOOL DISTRICT Secured Tax Charges and Delinquencies

Fiscal Years 2013-14 through 2017-18

Fiscal Year Secured

Tax Charge(1)

Amt. Del. June 30

% Del. June 30

2013-14 $3,913,241.17 $57,775.90 1.48% 2014-15 4,128,643.97 59,568.44 1.44 2015-16 4,377,634.89 62,210.86 1.42 2016-17 4,590,576.03 54,623.85 1.19 2017-18 4,859,910.60 60,472.92 1.24

Fiscal Year Secured

Tax Charge(2)

Amt. Del. June 30

% Del. June 30

2013-14 $2,372,878.56 $27,077.70 1.14% 2014-15 2,493,161.47 26,341.39 1.06 2015-16 2,594,959.88 24,986.98 0.96 2016-17 1,214,059.82 13,105.13 1.08 2017-18 2,768,047.00 31,947.89 1.15

(1) 1% General Fund apportionment. Excludes redevelopment agency impounds. Reflects county-wide delinquency rate.

(2) Bond debt service levy only. Source: California Municipal Statistics, Inc.

Tax Rates

The following table sets forth typical tax rates levied in Tax Rate Area (TRA 3561), a typical tax rate area within the District, for fiscal years 2014-15 through 2018-19.

EAST WHITTIER CITY SCHOOL DISTRICT Typical Tax Rates per $100 of Assessed Valuation (TRA 3561)(1)

2014-15 2015-16 2016-17 2017-18 2018-19

General $1.000000 $1.000000 $1.000000 $1.000000 $1.000000

East Whittier City School District .038783 .038258 .016951 .036888 .035010 Whittier Union High School District .052699 .050633 .060354 .057814 .058221 Rio Hondo Community College District .028214 .027116 .028083 .027483 .025544

Metropolitan Water District .003500 .003500 .003500 .003500 .003500

Total $1.123196 $1.119507 $1.108888 $1.125685 $1.122275

(1) 2018-19 assessed valuation of TRA 3561 is $1,579,038,006 which is 19.53% of the District’s total assessed valuation. Source: California Municipal Statistics, Inc.

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Certain Existing Obligations

On August 1, 1997 and June 1, 1998, the District sold $12,998,810 and $7,000,000 of general obligation bonds, respectively. The bonds were the first and second issues of an authorization of $20,000,000 of general obligation bonds approved by the voters in the District on June 3, 1997 to finance various capital improvements.

On November 1, 2013, the District entered into a capital lease with option to purchase for a mower, with monthly payments beginning January 2014, with principal maturing through December 2019.

In April 2017, the District issued its Election of 2016 General Obligation Bonds, Series A (Measure R) (the “2017 Measure R Bonds”) in the aggregate principal amount of $19,000,000 and its Election of 2016 General Obligation Bonds, Series A (Measure Z) (the “2017 Measure Z Bonds”) in the aggregate principal amount $6,000,000 for financing the construction, acquisition, furnishing and equipping of District facilities. The 2017 Measure R Bonds were the first issue under the Measure R Authorization and the 2017 Measure Z Bonds were the first issue under the Measure Z Authorization.

For more information on the District’s existing obligations, see the audited financial statements for fiscal year 2016-17 included in APPENDIX C.

A schedule of the District’s changes in long-term debt for the year ended June 30, 2017 is shown below:

Balance July 1, 2016 Additions Deductions

Balance June 30, 2017

Amounts Due Within One Year

General obligation bonds $ 3,860,000 $25,000,000 $2,570,000 $26,290,000 $1,290,000

Unamortized premium 132,304 2,206,955 66,152 2,273,107 142,812

Total general obligation bonds 3,992,304 27,206,955 2,636,152 28,563,107 1,432,812

Capital leases 51,618 - 20,592 31,026 21,667 Early retirement incentive 585,000 - 292,500 292,500 292,500

Compensated absences 311,969 - 41,003 270,966 - Net OPEB obligation 291,688 - 2,248 289,440 - Net pension liability 66,850,724 17,274,247 - 84,124,971 -

Total $72,083,303 $44,481,202 $2,992,495 $113,572,010 $1,746,979

Source: The District.

Direct and Overlapping Debt

Numerous local agencies which provide public services overlap the District’s service area. These local agencies have outstanding debt in the form of general obligation, lease revenue and special assessment bonds. The following table shows the District’s estimated direct and overlapping bonded debt. The statement excludes self-supporting revenue bonds, tax allocation bonds and non-bonded capital lease obligations. The District has not reviewed this table and there can be no assurance as to the accuracy of the information contained in the table; inquiries concerning the scope and methodology of procedures carried out to compile the information presented should be directed to California Municipal Statistics, Inc.

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The following table is a statement of the District’s direct and estimated overlapping bonded debt as of October 1, 2018:

EAST WHITTIER CITY SCHOOL DISTRICT DIRECT AND OVERLAPPING BONDED INDEBTEDNESS

2018-19 Assessed Valuation: $8,084,211,957

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:

% Applicable Debt 10/1/18

Metropolitan Water District 0.277% $ 169,970 Rio Hondo Community College District 20.840 29,640,279 Whittier Union High School District 32.595 34,630,099 East Whittier City School District 100.000 22,335,333 (1)Los Angeles County Regional Park and Open Space Assessment District

0.532 72,458

TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT

$86,845,806

OVERLAPPING GENERAL FUND DEBT: Los Angeles County General Fund Obligations 0.532% $11,665,480 Los Angeles County Superintendent of Schools Certificates of Participation

0.532 31,004

City of La Mirada General Fund Obligations 7.020 559,845 Los Angeles County Sanitation District No. 18 Authority 19.121 923,976

TOTAL OVERLAPPING GENERAL FUND DEBT $13,180,305

OVERLAPPING TAX INCREMENT DEBT (Successor Agencies): $16,949,766

COMBINED TOTAL DEBT $116,975,877 (2)

(1) Excludes Bonds to be sold. (2) Excludes tax and revenue anticipation notes, revenue, mortgage

revenue bonds and non-bonded capital lease obligations.

Ratios to 2018-19 Assessed Valuation: Direct Debt ($22,335,000) ..................................................... 0.28% Total Direct and Overlapping Tax and Assessment Debt ........ 1.07% Combined Direct Debt ............................................................. 1.45%

Ratio to Redevelopment Successor Agencies Incremental Valuation ($571,607,487): Total Overlapping Tax Increment Debt ................................... 2.97%

Source: California Municipal Statistics, Inc.

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CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS

Article XIIIA of the California Constitution

Article XIIIA of the California Constitution limits the amount of any ad valorem tax on real property, to one percent (1%) of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978 and on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July 1, 1978 by two-thirds of the voters on such indebtedness. Article XIIIA defines full cash value to mean “the county assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value,” or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership have occurred after the 1975 assessment.” The full cash value may be increased at a rate not to exceed two percent per year to account for inflation.

Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster and in other minor or technical ways.

Legislation Implementing Article XIIIA

Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The one percent (1%) property tax is automatically levied by the county and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1989.

Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the two percent annual adjustment are allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation in future years.

All taxable property is shown at full market value on the tax rolls, with tax rates expressed as $1 per $100 of taxable value. All taxable property value included in this Official Statement is shown at 100% of market value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value.

Prospective purchasers of the Bonds should be aware that, notwithstanding any decrease in assessed valuation for any fiscal year, the County is required to levy sufficient taxes to pay debt service on the Bonds. The consequence of any decrease in assessed valuation is a corresponding increase in the tax rate on taxable property so that sufficient tax revenues may be collected from taxpayers to cover debt service on the Bonds in full.

Article XIIIB of the California Constitution

Under Article XIIIB of the California State Constitution state and local government entities have an annual “appropriations limit” and are not permitted to spend certain moneys which are called “appropriations subject to limitation” (consisting of tax revenues, state subventions and certain other funds) in an amount higher than the “appropriations limit.” Article XIIIB does not affect the appropriations of moneys which are excluded from the definition of “appropriations subject to limitation,” including debt service on indebtedness existing or authorized as of January 1, 1979, or bonded

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indebtedness subsequently approved by the voters. In general terms, the “appropriations limit” is to be based on certain 1978-79 expenditures, and is to be adjusted annually to reflect changes in consumer prices, populations, and services provided by these entities. Among other provisions of Article XIIIB, if these entities’ revenues in any year exceed the amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years.

Unitary Property

Assembly Bill 454 (Chapter 921, Statutes of 1986) (“AB 454”) provides that revenues derived from most utility property assessed by the State Board of Equalization (“Unitary Property”) are allocated as follows: (1) each jurisdiction will receive up to 102% of its prior year State-assessed revenue; and (2) if county-wide revenues generated from Unitary Property are less than the previous year’s revenues or greater than 102% of the previous year’s revenues, each jurisdiction will share the burden of the shortfall or excess revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas.

The State electric utility industry has experienced significant changes in its structure and in the way in which components of the industry are regulated and owned. Sale of electric generation assets to largely unregulated, nonutility companies may affect how those assets are assessed, and which local agencies are to receive the property taxes. The District is unable to predict the impact of these changes on its utility property tax revenues, or whether legislation may affect ownership of utility assets or the State’s methods of assessing utility property and the allocation of assessed value to local taxing agencies, including the District. So long as the District is not a basic aid district, taxes lost through any reduction in assessed valuation will be compensated by the State as equalization aid under the State’s school financing formula. See “Funding of School Districts in California” in Appendix A hereto.

Proposition 46

On June 3, 1986, California voters approved Proposition 46, which added an additional exemption to the 1% tax limitation imposed by Article XIIIA. Under this amendment to Article XIIIA, local governments and school and community college districts may increase the property tax rate above 1% for the period necessary to retire new, general obligation bonds, if two-thirds of those voting in a local election approve the issuance of such bonds and the money raised through the sale of the bonds is used exclusively to purchase or improve real property.

Proposition 39

On November 7, 2000, California voters approved Proposition 39, called the “Smaller Classes, Safer Schools and Financial Accountability Act” (the “Smaller Classes Act”) which amends Section 1 of Article XIIIA, Section 18 of Article XVI of the California Constitution and Section 47614 of the California Education Code and allows an alternative means of seeking voter approval for bonded indebtedness by 55% of the vote, rather than the two-thirds majority required under Section 18 of Article XVI of the Constitution. The 55% voter requirement applies only if the bond measure submitted to the voters includes, among other items: (1) a restriction that the proceeds of the bonds may be used for “the construction, reconstruction, rehabilitation, or replacement of school facilities, including the furnishing and equipping of school facilities, or the acquisition or lease of real property for school facilities,” (2) a list of projects to be funded and a certification that the school district board has evaluated “safety, class size reduction, and information technology needs in developing that list” and (3) that annual, independent performance and financial audits will be conducted regarding the expenditure and use of the bond proceeds.

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Section 1(b)(3) of Article XIIIA has been added to exempt the one percent (1%) ad valorem tax limitation that Section 1(a) of Article XIIIA of the Constitution levies, to pay bonds approved by 55% of the voters, subject to the restrictions explained above.

The State Legislature enacted AB 1908, Chapter 44, which became effective upon passage of Proposition 39 and amends various sections of the Education Code. Under amendments to Section 15268 and 15270 of the Education Code, the following limits on ad valorem taxes apply in any single election: (1) for an elementary and high school district, indebtedness shall not exceed $30 per $100,000 of taxable property, (2) for a unified school district, indebtedness shall not exceed $60 per $100,000 of taxable property, and (3) for a community college district, indebtedness shall not exceed $25 per $100,000 of taxable property. Finally, AB 1908 requires that a citizens’ oversight committee must be appointed who will review the use of the bond funds and inform the public about their proper usage.

Proposition 98

On November 8, 1988, voters approved Proposition 98, a combined initiative, constitutional amendment and statute called the “Classroom Instructional Improvement and Accountability Act” (“Proposition 98”). Proposition 98 guarantees K-14 schools a minimum share of the State General Fund revenues. Under Proposition 98 (as modified by Proposition 111, which was enacted on June 5, 1990), K-14 schools are guaranteed the greater of (a) 40.9% of State General Fund revenues (the “first test”), or (b) the amount appropriated to K-14 schools in the prior year, adjusted for changes in the cost-of-living (measured as in Article XIIIB by reference to per capita personal income) and enrollment (the “second test”), or (c) a “third test” which would replace the second test in any year when the percentage growth in per capita State General Fund revenues from the prior year plus 1/2 of 1% is less than the percentage growth in the State per capita personal income. Under the third test, schools would receive the amount appropriated in the prior year adjusted for changes in enrollment and per capita State General Fund revenues, plus an additional small adjustment factor. If the third test is used in any year, the difference between the third test and the second test would become a “credit” to schools which would be paid in future years when State General Fund revenue growth exceeds personal income growth.

Proposition 98 permits the Legislature by two-thirds vote of both houses, with the Governor’s concurrence, to suspend this minimum funding formula for a one-year period, and any corresponding reduction in funding for that year will not be paid in subsequent years. However, in determining the funding level for the succeeding year, the formula base for the prior year will be reinstated as if such suspension had not taken place. The Legislature has suspended payment on a number of occasions since voters approved Proposition 98.

Proposition 98 also changes how tax revenues in excess of the State Appropriations Limit are distributed. “Excess” tax revenues are determined based on a two-year cycle, so that the State could avoid having to return to taxpayers excess tax revenues in one year if its appropriations in the next fiscal year were under its limit. After any two-year period, if there are excess State tax revenues, 50% of the excess would be transferred to K-14 schools, with the balance returned to taxpayers. Further, any excess State tax revenues transferred to K-14 schools are not built into the school districts’ base expenditures for calculating their entitlement for State aid in the next year, and the State’s appropriations limit will not be increased by this amount.

Propositions 1A and 22

Proposition 1A (SCA 4), proposed by the State Legislature in connection with the 2004-05 State budget and approved by the voters in November 2004, provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of

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local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibits the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the State Legislature. Proposition 1A provides, however, that beginning in Fiscal Year 2008-09, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved by two-thirds of both houses of the State Legislature and certain other conditions are met. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Pursuant to Proposition 1A, if the State reduces the Vehicle License Fee rate below 0.65 percent of vehicle value, the State must provide local governments with equal replacement revenues. Further, Proposition 1A required the State, beginning March 1, 2006, to suspend mandates affecting cities, counties and special districts, schools or community colleges, excepting mandates relating to employee rights, in any year that the State does not fully reimburse local governments for their costs of compliance with such mandates.

Prohibitions on Diverting Local Revenues for State Purposes. Beginning in fiscal year 1992-93, the State satisfied a portion of its Proposition 98 obligations by shifting part of the property tax revenues otherwise belonging to cities, counties, special districts, and redevelopment agencies, to school and college districts through a local Educational Revenue Augmentation Fund (“ERAF”) in each county. Local agencies, objecting to invasions of their local revenues by the State, sponsored a statewide ballot initiative intended to eliminate the practice. In response, the State Legislature proposed an amendment to the State Constitution, which the State’s voters approved as Proposition 1A at the November 2004 election. That measure was generally superseded by the passage of a new initiative constitutional amendment at the November 2010 election, known as “Proposition 22.”

The effect of Proposition 22 is to prohibit the State, even during a period of severe fiscal hardship, from delaying the distribution of tax revenues for transportation, redevelopment, or local government projects and services. It prevents the State from redirecting redevelopment agency property tax increment to any other local government, including school districts, or from temporarily shifting property taxes from cities, counties and special districts to schools, as in the ERAF program. This is intended to, among other things, stabilize local government revenue sources by restricting the State’s control over local property taxes. One effect of this amendment will be to deprive the State of fuel tax revenues to pay debt service on most State bonds for transportation projects, reducing the amount of State general fund resources available for other purposes, including education.

Prior to the passage of Proposition 22, the State invoked Proposition 1A to divert $1.935 billion in local property tax revenues in fiscal year 2009-10 from cities, counties, and special districts to the State to offset State general fund spending for education and other programs, and included another diversion in the adopted fiscal year 2009-10 State budget of $1.7 billion in local property tax revenues from local redevelopment agencies. Because Proposition 22 reduces the State’s authority to use or reallocate certain revenue sources, fees and taxes for State general fund purposes, the State will have to take other actions to balance its budget, such as reducing State spending or increasing State taxes, and school and college districts that receive Proposition 98 or other funding from the State will be more directly dependent upon the State’s General Fund.

On December 30, 2011, the California Supreme Court issued its decision in the case of California Redevelopment Association v. Matosantos, finding ABx1 26, a trailer bill to the 2011-12 State Budget, to be constitutional. As a result, all redevelopment agencies in California were dissolved as of February 1, 2012, and all net tax increment revenues, after payment of redevelopment bonds debt service and

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administrative costs, will be distributed to cities, counties, special districts and K-14 school districts. The Court also found that ABx1 27, a companion bill to ABx1 26, violated the California Constitution, as amended by Proposition 22. ABx1 27 would have permitted redevelopment agencies to continue operations provided their establishing cities or counties agreed to make specified payments to K-14 school districts and county offices of education, totaling $1.7 billion statewide. The District is unable to predict what affect the implementation of ABx1 26 will have on the District’s future receipt of tax increment revenues.

As a result of the dissolution of California redevelopment agencies and ABx1 26, the tax increment previously paid to redevelopment agencies shall first be used to pay pass-through payments to other taxing entities and second to pay the redevelopment agencies enforceable obligations; with the remaining revenue (if any) paid to the taxing entities by the County Auditor-Controller in the same proportion as other tax revenue. The District does not expect to have any of its property tax payments deferred as a result of the dissolution of area redevelopment agencies.

Proposition 30

The passage of the Governor’s November Tax Initiative (“Proposition 30”) on November 6, 2012, resulted in an increase in the State sales tax by a quarter-cent for four years and, for seven years, and raises taxes on individuals after their first $250,000 in income and on couples after their first $500,000 in earnings. These increased tax rates affect approximately one percent of California personal income tax filers and will be in effect until the conclusion of the 2018 tax year. Proposition 30 also places into the State Constitution certain requirements related to the transfer of certain State program responsibilities to local governments, mostly counties, including incarcerating certain adult offenders, supervising parolees, and providing substance abuse treatment services.

Proposition 30 also provides additional tax revenues aimed at balancing the State’s budget through fiscal year 2018-19, providing several billion dollars annually through fiscal year 2018-19 available for funding existing State programs, ending K-14 education payment delays, and paying other State debts. The State Office of Legislative Analyst (the “LAO”) estimates that as a result of Proposition 30 and Proposition 55, which extends the temporary tax as described below, additional state tax revenues of about $7 billion annually from 2017-18 through 2019-20 will be received by the State, with that figure increasing to about $8 billion between 2020-21 and 2021-22. Future actions of the State Legislature and the Governor will determine the use of these funds. According to the LAO, revenues raised by Proposition 30 could be subject to multibillion-dollar swings, above or below the revenues projections, due to the majority of the additional revenue coming from the personal income tax rate increases on upper-income taxpayers. These fluctuations in incomes of upper-income taxpayers will impact potential State revenue and could complicate State budgeting in future years. After the tax increases expire, the loss of the associated tax revenues could create additional budget pressure in subsequent years.

Revenues generated from the temporary tax increases are included in the calculation of the Proposition 98 minimum funding guarantee for school districts and community college districts and deposited into the Education Protection Account created pursuant to Proposition 30 (the “EPA”). See “– Proposition 98” above. Pursuant to Proposition 30, funds in the EPA are allocated quarterly, with approximately 89% of such funds provided to school districts and approximately 11% to community college districts, before distribution to school districts and community college districts in the same manner as existing unrestricted per-student funding, except that no school district receives less than $200 per unit of ADA and no community college district receives less than $100 per full-time equivalent student. The governing board of each school district and community college district is granted sole authority to determine how moneys received from the EPA are spent, provided that such board may not use any of such funds for salaries or benefits of administrators or any other administrative costs.

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On November 8, 2016, voters approved Proposition 55, which extends the temporary tax increases created by Proposition 30 from the 2016 tax year through the 2030 tax year. The District cannot predict the effect the loss of the revenues generated from such temporary tax increases will have on total State revenues and the effect on the Proposition 98 formula for funding schools should the tax not be extended further.

Proposition 2

On November 4, 2014, voters approved Proposition 2, also referred to as the “Rainy Day Budget Stabilization Fund Act.” Proposition 2 changed the State’s existing requirements for the Budget Stabilization Account (“BSA”) and establishes a Public School System Stabilization Account (“PSSSA”).

Proposition 2 limits the ability of the Governor to suspend or reduce transfers to the BSA. Specifically, the Governor would have to declare a “budget emergency,” defined in Article XIIB of the State Constitution or determine that there are insufficient resources to maintain general fund expenditures for the current year, at the highest level of spending in the three most recent fiscal years. Any such declaration must be followed by a legislative bill passed by a majority vote of each house.

Proposition 2 also requires the State Controller to deposit annually 1.5% of general fund revenues and an amount equal to revenues derived from capital gains-related taxes in situations where such tax revenues are in excess of 8% of general fund revenues. Deposits to the BSA are expected to begin no later than October 1, 2015, and such deposits will be made until the BSA balance reaches an amount equal to 10% of general fund revenues. Additionally, from 2015-16 to 2029-30, half of any required transfers to the BSA must be allocated to reduce certain state liabilities, such as unfunded state-level pension plans and making certain payments owed to K-14 school districts.

The PSSSA will be funded by the capital gains-related tax revenues in excess of 8% of general fund revenues. The State may deposit amounts into the PSSSA only after certain conditions are met, including the payment of all amounts owing to school districts under the Proposition 98 maintenance factor and the existence of a “Test 1” year under Proposition 98.

Proposition 51

At the November 8, 2016 Election, voters in the State approved the California Public School Facility Bonds Initiative, (“Proposition 51”). Proposition 51 authorizes the sale and issuance of $9 billion in general obligation bonds to fund the construction and modernization of school facilities for both community colleges and K-12 schools within the state.

Specifically, the $9 billion will be stored between a State School Facilities Fund and a California Community College Capital Outlay Bond Fund. The funds can then be used to allocate bond revenue in the following manner:

$3 billion for construction of new K-12 school district facilities; Another $3 billion for the modernization of K-12 public school sites, which includes

repairs to outdated facilities to increase earthquake and fire safety, removing asbestos, technology upgrades and other health and safety improvements;

$500 million for various charter school facilities; $500 million for career technical education facilities; $2 billion for California community college facility construction and modernization.

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The State issues general obligation bonds for facility projects. Typically, K-12 schools can submit proposals for such projects to the State Office of Public School Construction for both modernization and new construction. If the project is approved, the school district will receive State grant funding and in turn the school district must contribute local funding to such projects. If sufficient local funding is unavailable, the school district may potentially receive the full project cost via State grant funding. Career technical education and charter school facilities face a similar approval process. Community college districts, on the other hand, must submit requests for facility projects to the Chancellor of the community college system. Selected projects are eventually approved and funded as part of the annual State budget. A scoring system is used to determine the State and local contributions for these community college sites.

The impact that Proposition 51 will have on school district behavior is unclear. Some school districts may spend less local funds given the greater support of state funding. However, school districts may decide to spend more local funds by proposing an increased number of facility projects with the knowledge that additional state funding could be available. It is also possible that school districts make no changes to their number of proposals for construction and modernization projects. Currently, the District cannot confirm whether or not it will pursue project funding under Proposition 51.

Article XIIIC and XIIID of the California Constitution

On November 5, 1996, an initiative to amend the State Constitution known as the “Right to Vote on Taxes Act” (“Proposition 218”) was approved by a majority of California voters. Proposition 218 added Articles XIIIC and XIIID to the State Constitution and requires majority voter approval for the imposition, extension or increase of general taxes and 2/3 voter approval for the imposition, extension or increase of special taxes by a local government, which is defined in Proposition 218 to include counties. Proposition 218 also provides that any general tax imposed, extended or increased without voter approval by any local government on or after January 1, 1995, and prior to November 6, 1996 shall continue to be imposed only if approved by a majority vote in an election held within two years following November 6, 1996. All local taxes and benefit assessments which may be imposed by public agencies will be defined as “general taxes” (defined as those used for general governmental purposes) or “special taxes” (defined as taxes for a specific purpose even if the revenues flow through the local government’s general fund) both of which would require a popular vote. New general taxes require a majority vote and new special taxes require a two-thirds vote. Proposition 218 also extends the initiative power to reducing or repealing local taxes, assessments, fees and charges, regardless of the date such taxes, assessments or fees or charges were imposed, and lowers the number of signatures necessary for the process. In addition, Proposition 218 limits the application of assessments, fees and charges and requires them to be submitted to property owners for approval or rejection, after notice and public hearing.

The District has no power to impose taxes except property taxes associated with a general obligation bond election, following approval by 55% or 2/3 of the District’s voters, depending upon the Article of the Constitution under which it is passed. Under previous law, the District could apply provisions of the Landscape and Lighting Act of 1972 to create an assessment district for specified purposes, based on the absence of a majority protest. Proposition 218 significantly reduces the ability of the District to create such special assessment districts.

Proposition 218 has no effect upon the District’s ability to pursue approval of a general obligation bond issue under Proposition 46 or a Mello-Roos Community Facilities District bond issue in the future, which have special Constitutional authority or are already subject to a 2/3 vote, although certain procedures and burdens of proof may be altered slightly. Any assessments, fees or charges levied or imposed by any assessment district created by the District will become subject to the election requirements of Proposition 218 as described above, a more elaborate notice and balloting process and

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other requirements. The District is unable to predict the nature of any future challenges to Proposition 218 or the extent to which, if any, Proposition 218 may be held to be unconstitutional.

Future Initiatives

Article XIIIA, Article XIIIB, Article XIIIC, Article XIIID and Propositions 98, 46 and 39 were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time, other initiative measures could be adopted, further affecting the District’s revenues or their ability to expend revenues.

THE LOS ANGELES COUNTY TREASURY POOL

The Treasurer and Tax Collector (the “Treasurer”) of the County of Los Angeles (the “County”) manages, in accordance with California Government Code Section 53600 et seq., funds deposited with the Treasurer by County school and community college districts, various special districts and some cities. State law generally requires that all moneys of the County, school districts and certain special districts be held in the County’s Treasury Pool (the “Treasury Pool”) as described below. The composition and value of investments under management in the Treasury Pool vary from time to time, depending on the cash flow needs of the County and the other public agencies invested in the Treasury Pool, the maturity or sale of investments, purchase of new securities and fluctuations in interest rates generally. The Treasurer maintains a website, the address of which is http://ttc.lacounty.gov, on which the Treasurer periodically places information relating to the Treasury Pool. However, the information presented there is not part of this Official Statement, is not incorporated by reference herein and should not be relied upon in making an investment decision with respect to the purchase of Bonds.

Los Angeles County Pooled Surplus Investments

The Treasurer has the delegated authority to invest funds on deposit in the County treasury (the “Treasury Pool”). As of September 30, 2018, investments in the Treasury Pool were held for local agencies including school districts, community college districts, special districts and discretionary depositors such as cities and independent districts in the following amounts:

Local Agency Invested Funds

(in billions)

County of Los Angeles and Special Districts $10.338 Schools and Community Colleges 14.412

Discretionary Participants 2.671

Total $27.421

The Treasury Pool participation composition is as follows:

Non-discretionary Participants 90.26% Discretionary Participants:

Independent Public Agencies 9.24%

County Bond Proceeds and Repayment Funds 0.50%

Total 100.00%

Decisions on the investment of funds in the Treasury Pool are made by the County Investment Officer in accordance with established policy, with certain transactions requiring the Treasurer’s prior

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approval. In Los Angeles County, investment decisions are governed by Chapter 4 (commencing with Section 53600) of Part 1 of Division 2 of Title 5 of the California Government Code, which governs legal investments by local agencies in the State of California, and by a more restrictive Investment Policy developed by the Treasurer and adopted by the County Board of Supervisors (“Board of Supervisors”) on an annual basis. The Investment Policy adopted on March 20, 2018, reaffirmed the following criteria and order of priority for selecting investments:

1. Safety of Principal

2. Liquidity

3. Return on Investment

The Treasurer prepares a monthly Report of Investments (the “Investment Report”) summarizing the status of the Treasury Pool, including the current market value of all investments. This report is submitted monthly to the Board of Supervisors. According to the Investment Report dated October 31, 2018, the September 30, 2018 book value of the Treasury Pool was approximately $27.421 billion and the corresponding market value was approximately $26.961 billion.

An internal controls system for monitoring cash accounting and investment practices is in place. The Treasurer’s Compliance Auditor, who operates independently from the Investment Officer, reconciles cash and investments to fund balances daily. The Compliance Auditor’s staff also reviews each investment trade for accuracy and compliance with the Board adopted Investment Policy. On a quarterly basis, the County’s outside auditor (the “External Auditor”) reviews the cash and investment reconciliations for completeness and accuracy. Additionally, the External Auditor reviews investment transactions on a quarterly basis for conformance with the approved Investment Policy and annual accounts for all investments.

The following table identifies the types of securities held by the Treasury Pool as of September 30, 2018:

Type of Investment % of Pool

U.S. Government and Agency Obligations 74.71

Certificates of Deposit 5.47

Commercial Paper 19.42

Bankers Acceptances 0.00

Municipal Obligations 0.09

Corporate Notes & Deposit Notes 0.31

Asset Backed Instruments 0.00

Repurchase Agreements 0.00

Other 0.00

100.00

The Treasury Pool is highly liquid. As of September 30, 2018, approximately 29.23% of the investments mature within 60 days, with an average of 657 days to maturity for the entire portfolio.

. None of the District, the Financial Advisor, or the Underwriter has made an independent

investigation of the investments in the Treasury Pool nor have they made an assessment or investigation of the current County Investment Policy. The value of the various investments in the Treasury Pool will fluctuate on a daily basis as a result of a multitude of factors, including generally prevailing interest rates and other economic conditions. Additionally, the Treasurer, with the consent of the Treasury Oversight

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Committee and the County Board of Supervisors, may change the County Investment Policy at any time. Therefore, there can be no assurance that the values of the various investments in the Treasury Pool will not vary significantly from the values described herein.

LEGAL OPINION

The legal opinions of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel to the District (“Bond Counsel”), attesting to the validity of the Bonds, will be supplied to the Underwriter without charge. The form legal opinions that will be delivered with the Bonds are attached hereto as APPENDIX B. Bond Counsel will receive compensation contingent upon the sale and delivery of the Bonds.

TAX MATTERS

In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax.

The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to the Bond (to the extent the redemption price at maturity is greater than the issue price) constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Beneficial Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Beneficial Owner will increase the Beneficial Owner’s basis in the applicable Bond. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the Beneficial Owner of a Bond is excluded from gross income of such Beneficial Owner for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the Beneficial Owners of the Bonds is exempt from State of California personal income tax.

Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Bonds is based upon certain representations of fact and certifications made by the District and is subject to the condition that the District complies with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds to assure that interest (and original issue discount) on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District will covenant to comply with all such requirements.

The amount by which a Beneficial Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable bond premium reduces the Beneficial Owner’s basis in the applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a Beneficial Owner realizing a taxable gain when a Bond is sold by the Beneficial Owner for an amount equal to or

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less (under certain circumstances) than the original cost of the Bond to the Beneficial Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium.

Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Resolutions and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of a bond counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income for federal income tax purposes of interest (or original issue discount) on any Bond if any such action is taken or omitted based upon the advice of counsel other than Bond Counsel.

Although Bond Counsel will render an opinion that interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes provided that the District continues to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest (and original issue discount) with respect to the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds.

The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of similar bonds). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the Bonds to the extent that it adversely affects the exclusion from gross income of interest (and original issue discount) on the Bonds or their market value.

SUBSEQUENT TO THE ISSUANCE OF THE BONDS THERE MIGHT BE FEDERAL, STATE, OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR INTERPRETATIONS OF FEDERAL, STATE, OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE, OR LOCAL TAX TREATMENT OF THE BONDS INCLUDING THE IMPOSITION OF ADDITIONAL FEDERAL INCOME OR STATE TAXES ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE BONDS. THESE CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE BONDS. NO ASSURANCE CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE BONDS STATUTORY CHANGES WILL NOT BE INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF THE BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE BONDS.

Copies of the proposed forms of the opinion of Bond Counsel for the Measure R Bonds and the Measure Z Bonds, respectively, are attached in APPENDIX B.

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LEGAL MATTERS

Continuing Disclosure

In accordance with the requirements of the Rule, the District will enter into a Continuing Disclosure Undertaking (the “Continuing Disclosure Undertaking”) in the form of APPENDIX D hereto, on or prior to the sale of the Bonds in which the District will undertake, for the benefit of the Beneficial Owners of the Bonds, to provide certain information as set forth therein. The covenants contained in the Continuing Disclosure Undertaking have been made to assist the Underwriter in complying with the Rule. See APPENDIX D – “FORM OF CONTINUING DISCLOSURE AGREEMENT” hereto.

During the five-year period preceding the offering of the Bonds, the District failed to timely file certain notices of rating changes relating to the ratings of providers of municipal bond insurance policies guaranteeing the District’s outstanding bond issues.

Limitation on Remedies; Amounts Held in the County Treasury Pool

The opinions of Bond Counsel, the proposed forms of which are attached hereto as APPENDIX B, are qualified by reference to bankruptcy, insolvency and other laws relating to or affecting creditor’s rights. The rights of the Owners of the Bonds are subject to certain limitations. Enforceability of the rights and remedies of the Owners of the Bonds, and the obligations incurred by the District, are limited by applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect, equity principles that may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose, and the limitations on remedies against school and community college districts in the State. Bankruptcy proceedings, if initiated, could subject the beneficial owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation, or modification of their rights.

Under Chapter 9 of the Federal Bankruptcy Code (Title 11, United States Code) (the “Bankruptcy Code”), which governs the bankruptcy proceedings for public agencies, no involuntary petitions for bankruptcy relief are permitted. While current State law precludes school districts from voluntarily seeking bankruptcy relief under Chapter 9 of the Bankruptcy Code without the concurrence of the State, such concurrence could be granted or State law could be amended.

The Resolutions and the Act require the County to annually levy ad valorem taxes upon all property subject to taxation by the District, without limitation as to rate or amount (except as to certain personal property which is taxable at limited rates), for the payment of the principal of, premium, if any, and interest on the Bonds. The County on behalf of the District is thus expected to be in possession of the annual ad valorem taxes and certain funds to repay the Bonds and may invest these funds in the County’s Investment Pool, as described in “THE LOS ANGELES COUNTY TREASURY POOL” herein. In the event the District or the County were to go into bankruptcy, a federal bankruptcy court might hold that the Owners of the Bonds are unsecured creditors with respect to any funds received by the District or the County prior to the bankruptcy, where such amounts are deposited into the County Treasury Pool, and such amounts may not be available for payment of the principal of and interest on the Bonds unless the Owners of the Bonds can “trace” those funds. There can be no assurance that the Owners could successfully so “trace” such taxes on deposit in the Debt Service Fund where such amounts are invested

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in the County Treasury Pool. Under any such circumstances, there could be delays or reductions in payments on the Bonds.

California Senate Bill 222

On July 13, 2015, the Governor signed Senate Bill 222 (“SB 222”) into law, effective January 1, 2016. SB 222 was introduced on February 12, 2015, initially to amend Section 15251 of the California Education Code to clarify the process of lien perfection for general obligation bonds issued by or on behalf of California school and community college districts. Subsequently, on April 15, 2015, SB 222 was amended to include an addition to the California Government Code to similarly clarify the process of lien perfection for general obligation bonds issued by cities, counties, authorities and special districts, including the District.

SB 222, applicable to general obligations bonds issued after its effective date, removes the extra step between (a) the issuance of general obligation bonds by cities, counties, cities and counties, school districts, community college districts, authorities and special districts; and (b) the imposition of a lien on the future ad valorem property taxes that are the source of repayment of the general obligation bonds. By clarifying that the lien created with each general obligation bond issuance is a “statutory” lien (consistent with bankruptcy statutory law and case precedent), SB 222, while it does not prevent default, should reduce the ultimate bankruptcy risk of non-recovery on local general obligation bonds, and thus potentially improve ratings, interest rates and bond cost of issuance.

Special Revenues

If the District were to become a debtor in a Chapter 9 proceeding, because the Bonds are for the financing of specific capital projects and are supported by a consensual lien on ad valorem property taxes that are use-restricted under State law to the repayment of the Bonds, the District believes that those taxes are “special revenues” as defined in the Bankruptcy Code, and thus there is a special revenue lien in favor of owners of the Bonds in addition to, and separate and independent of, the statutory lien created by SB 222. In comparison to other consensual pledges and liens arising by agreement (that are all made ineffective post-bankruptcy by Section 552 of the Bankruptcy Code), special revenues acquired by a municipality during a Chapter 9 case will remain subject to the lien that arose from the security agreement entered into prior to the beginning of the case, and will survive the conclusion of the Chapter 9 proceeding. In addition, the automatic stay arising upon the filing of the bankruptcy petition has historically been understood not to stay the application of special revenues to payment of the bonds secured by such special revenues. Thus, regularly scheduled payments of principal of and interest to owners of the Bonds likely would continue under 11 U.S.C. §922(d) throughout any bankruptcy proceeding.

Based on the foregoing, if the District were to become a debtor in a Chapter 9 proceeding, the District believes that: the ad valorem property taxes could not be used for any other purpose other than repayment of the Bonds; the ad valorem property taxes should be determined to be special revenues in a Chapter 9 proceeding, and thus owners of the Bonds would ordinarily continue to be paid post-petition; and the ad valorem property taxes are also protected by a statutory lien in favor of the bondholders. However, bankruptcy courts are courts of equity and as such have broad discretionary powers, and there is no binding judicial precedent dealing with the treatment in bankruptcy proceedings of ad valoremproperty tax revenues collected for the payments of bonds in California, so no assurance can be given that a bankruptcy court would not hold otherwise. If the District were to become the debtor in a proceeding under Chapter 9 of the Bankruptcy Code, the bankruptcy court could find that the automatic stay exception for special revenues does not apply, and the parties to the proceedings may thus be prohibited from taking any action to collect any amount from the District (including ad valorem tax revenues), or to

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enforce any obligation of the District, without the bankruptcy court’s permission. It is also possible that the bankruptcy court may not enforce the state law use restriction imposed on ad valorem property taxes.

Even if the ad valorem property tax revenues are determined to be “special revenues,” the Bankruptcy Code provides that special revenues can be applied to necessary operating expenses of the project or system, before they are applied to other obligations. This rule applies regardless of the provisions of the transaction documents. Thus, a bankruptcy court could determine that the District is entitled to use the ad valorem property tax revenues to pay necessary operating expenses of the District and its schools, before the remaining revenues are paid to the owners of the Bonds. It should also be noted that it is possible – in the context of confirming a Plan of Adjustment (the “Plan”) in a Chapter 9 case where the Plan has not received the requisite consent of the holders of the Bonds – a bankruptcy court may confirm a Plan that adjusts the timing of payments on the Bonds or the interest rate or other terms of the Bonds provided that (a) the bondholders retain their lien on the revenues subject to the statutory and/or special revenues lien, (b) the payment stream has a present value equal to the value of the revenues subject to the lien(s) and (c) the bankruptcy court finds that these and any other adjustments to the Bonds’ terms are fair and equitable.

The Resolutions and the Act require the County to annually levy ad valorem taxes upon all property subject to taxation by the District, without limitation as to rate or amount (except as to certain personal property which is taxable at limited rates), for the payment of the principal of and premium, if any, and interest on the Bonds. The County on behalf of the District is thus expected to be in possession of the annual ad valorem taxes and certain funds to repay the Bonds and may invest these funds in the County’s Investment Pool, as described in “THE LOS ANGELES COUNTY TREASURY POOL” herein. In the event the District or the County were to file for bankruptcy relief, a bankruptcy court might hold that the owners of the Bonds are unsecured creditors with respect to any funds received by the District or the County prior to the bankruptcy, which might include taxes that have been collected and deposited in the Debt Service Fund, where such amounts are deposited into the County Treasury Pool, and such amounts may not be available for payment of the principal and interest on the Bonds unless the owners of the Bonds can “trace” those funds. There can be no assurance that the owners could successfully so “trace” such taxes on deposit in the Debt Service Funds where such amounts are invested in the County Treasury Pool. Further, it is not entirely clear what procedures the owners of the Bonds would have to follow to attempt to obtain possession of such tax revenues, or what amount of time would be required for such procedures to be completed. Under any such circumstances, there could be delays or reductions in payments on the Bonds.

LEGALITY FOR INVESTMENT

Under provisions of the California Financial Code, the Bonds are legal investments for commercial banks in California to the extent that the Bonds, in the informed opinion of the investing bank, are prudent for the investment of funds of depositors. Under provisions of the California Government Code, the Bonds are eligible to secure deposits of public moneys in California.

RATING

The Bonds have been assigned a municipal bond rating of “Aa3” from Moody’s Investors Service (“Moody’s”). Such rating reflects only the views of Moody’s and an explanation of the significance of such rating may be obtained as follows: Moody’s, at 7 World Trade Center at 250 Greenwich Street, New York, New York 10007, tel. (212) 553-0300. The District furnished such rating agency with certain information and materials relating to the Bonds that have not been included in this Official Statement. Generally, rating agencies base their ratings on the information and materials so furnished and on investigations, studies and assumptions by rating agencies. There is no assurance that such rating will

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continue for any given period of time or that it will not be revised downward or withdrawn entirely if, in the judgment of the rating agency, circumstances so warrant. The District has not undertaken any responsibility to bring to the attention of the owners of the Bonds a proposed revision or withdrawal of a rating of the Bonds or to oppose any such proposed revision or withdrawal. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.

NO LITIGATION

No litigation is pending concerning the validity of the Bonds. The District is not aware of any litigation pending or threatened questioning the political existence of the District or contesting the District’s ability to receive ad valorem taxes or to collect other revenues or contesting the District’s ability to issue the Bonds.

UNDERWRITING

RBC Capital Markets, LLC (the “Underwriter”) has agreed to purchase (i) the Measure R Bonds at the purchase price of $______ (reflecting the aggregate principal amount of the Measure R Bonds of $_______, plus a net original issue premium of $_______, and less an Underwriter’s discount of $________) and (ii) the Measure Z Bonds at the purchase price of $_________ (reflecting the aggregate principal amount of the Measure Z Bonds of $_________, plus a net original issue premium of $_______ and less an Underwriter’s discount of $_______).

The Underwriter may offer and sell the bonds to certain dealers and others at prices lower than the offering prices stated on the inside cover page. The Underwriter may offer and sell the bonds to certain dealers and others at prices or yields different from the initial public offering prices or yields stated on the inside cover page of this official statement. The initial public offering prices or yields may be changed from time to time by the Underwriter.

The Underwriter and its respective affiliates are full-service financial institutions engaged in various activities that may include securities trading, commercial and investment banking, municipal advisory, brokerage, and asset management. In the ordinary course of business, the Underwriter and its respective affiliates may actively trade debt and, if applicable, equity securities (or related derivative securities) and provide financial instruments (which may include bank loans, credit support or interest rate swaps). The Underwriter and its respective affiliates may engage in transactions for their own accounts involving the securities and instruments made the subject of this securities offering or other offering of the District. The Underwriter and its respective affiliates may make a market in credit default swaps with respect to municipal securities in the future. The Underwriter and its respective affiliates may also communicate independent investment recommendations, market color or trading ideas and publish independent research views in respect of this securities offering or other offerings of the District.

FINANCIAL ADVISOR

Fieldman, Rolapp & Associates, Inc., is employed as Financial Advisor to the District in connection with the issuance of the Bonds. The Financial Advisor’s fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. Fieldman, Rolapp & Associates, Inc., in its capacity as Financial Advisor, does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income status of the Bond, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies.

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OTHER INFORMATION

References are made herein to certain documents, reports, statutes, and constitutional provisions which are brief summaries thereof, and which do not purport to be complete, comprehensive or definitive, and are qualified in their entireties by reference each such document, report, statute and constitutional provision. Reference is made to such documents, reports, statutes, and constitutional provisions for full and complete statements of the contents thereof. Additional information concerning the District and copies of the most recent and subsequent audited financial statements of the District and the Resolutions may be obtained by contacting: East Whittier City School District, East Whittier City School District, 14535 East Whittier Blvd., Whittier, California 90605, Attention: Superintendent. The District may impose a fee for copying, shipping and handling.

Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not be construed as a contract or agreement between the District and the purchasers or Owners of any of the Bonds.

The execution and delivery of this Official Statement has been duly authorized by the District.

EAST WHITTIER CITY SCHOOL DISTRICT

By: Superintendent

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APPENDIX A

THE DISTRICT

Prospective purchasers of the Bonds should be aware that the following discussion of the financial condition of the East Whittier City School District (the “District”), its fund balances, budgets and obligations, is intended as general information only, and no implication is made that the payment of principal of or interest on the Bonds is dependent in any way upon the District’s financial condition. The District neither receives nor accounts for ad valorem property tax revenues collected by the County of Los Angeles (the “County”) to pay debt service on the Bonds (or its other general obligation bonds) in the following tables or in its annual financial statements. Pursuant to Section 15251 of the California Education Code, all tax revenues collected for payment of debt service on the Bonds must be deposited into the debt service fund of the District. The Bonds are and will continue to be payable solely from ad valorem taxes levied and collected by the County within the boundaries of the District. See the body of this Official Statement under the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.”

This Appendix A provides information concerning the operations and finances of the District. The Bonds are general obligation bonds of the District, secured and payable from ad valorem property taxes assessed on taxable properties within the District. The Bonds are not an obligation of the County, the State of California (the “State”) or any of its other political subdivisions or of the general fund of the District. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” in the forepart of this Official Statement.

District General Information

The District was established in 1902 and is comprised of an area of approximately 20 square miles located in the County extending generally from Hacienda Heights and Rowland Heights on the north; La Habra Heights and La Habra City on the east; La Mirada and Santa Fe Springs on the south and the City of Whittier on the west. The District operates ten elementary schools and three middle schools. The District projects an average daily attendance for fiscal year 2018-19 of 8,338 students and the District has a fiscal year 2018-19 assessed valuation of $8,084,211,957.

Unless otherwise indicated, the following financial, statistical and demographic data has been provided by the District. Additional information concerning the District and copies of the most recent and subsequent audited financial statements of the District may be obtained by contacting: Superintendent, East Whittier City School District, 14535 East Whittier Blvd., Whittier, California 90605.

District Organization

The District is governed by a Board of Education (the “Governing Board”) consisting of five members. Members are elected to overlapping four-year terms. Elections are held every two years, alternating between two and three available positions. Current members of the Governing Board, together with their offices and the dates their terms expire, are listed below:

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EAST WHITTIER CITY SCHOOL DISTRICT BOARD OF EDUCATION

Name Office Term Expires

Christine Chacon Sullivan President November 2018Armando Urteaga Vice President November 2018

Dimitri Elbling Clerk November 2020

Paul Gardiner Member November 2018Carlos Aparicio Member November 2020

Key Personnel

The following is a listing of the key administrative personnel of the District:

Name Title

Marc Patterson Superintendent Ruben Hernandez Assistant Superintendent, Business Services Gabriela Tavitian Assistant Superintendent, Educational Support Services Dr. Douglas Staine Assistant Superintendent, Personnel Services Santhasundari Rajiv Director, Budget and Accounting

The Superintendent of the District is responsible for administering the affairs of the District in accordance with the policies of the Governing Board.

Brief biographies of the Superintendent, Assistant Superintendent, Business Services and the Director, Budget and Accounting follow:

Marc Patterson, Superintendent. Mr. Patterson attended Fullerton Junior College (now Fullerton College), received his Bachelor’s Degree in History at California State University, Fullerton and later earned his Master’s in Educational Leadership at California State University, Long Beach. Mr. Patterson’s career began as a 4th- and 5th-grade teacher, a Middle School Teacher on Special Assignment, an Assistant Principal and a Middle School Principal in the Westminster School District. He then moved to the Garden Grove Unified School District where he served as a High School Assistant Principal and an Elementary Principal. Prior to joining the District, Mr. Patterson served as a High School Principal, an Executive Director of Secondary Schools and finally as the Assistant Superintendent of Secondary Schools, K-8 and Adult Education in the Capistrano Unified School District. Mr. Patterson is entering his second year as the Superintendent of the District.

Ruben Hernandez, Assistant Superintendent, Business Services. Mr. Hernandez joined the District as Assistant Superintendent, Business Services in August 2018. Prior to joining the District, Mr. Hernandez was the Director of Fiscal Services for Whittier City School District for the past 4 years. During that time Mr. Hernandez completed the Chief Business Official Certificate Program through University of Southern California (USC), which is also connected to California Association of School Business Officials (CASBO), Mr. Hernandez holds a CBO certificate from both. During that time Mr. Hernandez also completed his Leadership Program through CASH (coalition for adequate school housing), a leadership program focused on new construction and modernization of school facilities. Mr. Hernandez has over 7 years of experience in the area of budgeting, financial analysis, and accounting. He received his Bachelor of Science in Business Administration with a concentration in Economics in 2003

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from the University of La Verne and then in 2008 he received a Master of Business Administration with a concentration in Finance from University of La Verne.

Santhasundari Rajiv, Director, Budget and Accounting. Mrs. Rajiv joined the District as Director of Budget and Accounting in June of 2018. Mrs. Rajiv has over 25 years of experience both in public and private sector. Prior to joining the District, she worked for Los Angeles County Office of Education for four years working with school districts and nonprofit organizations. In her prior private experience, she was responsible for overseeing financial reporting and controls, accounting, cash flow projections and merger & acquisitions. She received her Bachelor of Science degree from Madras University (India). She is a Chartered Accountant and a Certified Public Accountant.

District Enrollment

The table below sets forth the average daily attendance (“ADA”) for the District for fiscal years 2013-14 through 2017-18 and a projection for fiscal year 2018-19.

EAST WHITTIER CITY SCHOOL DISTRICT TOTAL AVERAGE DAILY ATTENDANCE

Fiscal Year Total ADA

2013-14 8,938 2014-15 8,938 2015-16(1) 8,744 2016-17(1) 8,583 2017-18 8,510 2018-19(2) 8,338

(1) Represents funded ADA. Due to the declines in enrollment in fiscal years

2015-16 and 2016-17, the District’s funded ADA for each year is based on the prior year’s ADA. (2) Projected. Source: The District.

District Employees

As of September 17, 2018, the District employed approximately 419 full-time equivalent certificated academic professionals, as well as approximately 265 full-time equivalent classified employees. The District’s collective bargaining units are the California School Employees Association (“CSEA”), which represents most classified personnel, and the East Whittier Education Association (“EWEA”) which represents most certificated personnel. The certificated employees’ contract with EWEA expires on June 30, 2020. The classified employees contract with CSEA expires on June 30, 2020. Management, supervisory, and confidential employees are not represented by any formal bargaining unit.

Pension Plans

The District participates in the State Teachers’ Retirement System (“STRS”). This plan basically covers all full-time certificated employees. The District’s employer contribution to STRS was $5,190,458 for fiscal year 2016-17 and estimated as $5,975,548 for fiscal year 2017-18. The District has budgeted its contribution to STRS to be $7,284,551 for fiscal year 2018-19.

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The District also participates in the State Public Employees’ Retirement System (“PERS”). This plan covers all classified personnel who are employed four or more hours per day. The District’s employer contribution to PERS was $1,345,091 for fiscal year 2016-17 and estimated as $1,496,218 for fiscal year 2017-18. The District has budgeted its contribution to PERS to be $1,930,367 for fiscal year 2018-19.

The information set forth below regarding STRS and PERS has been obtained from publicly available sources and has not been independently verified by the District or the Financial Advisor, is not guaranteed as to the accuracy or completeness of the information and is not to be construed as a representation by the District or the Financial Advisor. Furthermore, the summary data below should not be read as current or definitive, as recent gains or losses on investments made by the retirement systems generally may have changed the unfunded actuarial accrued liabilities.

Both PERS and STRS are operated on a statewide basis. The PERS and STRS defined benefit programs are funded through a combination of investment earnings and contributions by members, employees and the State. Both PERS and STRS have substantial State unfunded actuarial liabilities. PERS may issue certain pension obligation bonds to reach funded status. Additional funding of STRS by the State and the inclusion of adjustments to such State contributions based on consumer price changes were provided for in 1979 Statutes, Chapter 282. The amounts of the pension/award benefit obligation (PERS) or actuarially accrued liability (STRS) will vary from time to time depending upon actuarial assumptions, rates of return on investments, salary scales, and levels of contribution. The District is unable to predict what the amount of liabilities will be in the future, or the amount of the contributions which the District may be required to make.

District contribution rates to PERS can vary annually depending on changes in actuarial assumption and other factors, such as liability. Unlike typical defined benefit programs, prior to fiscal year 2014-15, neither the STRS employer nor the State contribution rate varied annually to make up funding shortfalls or assess credits for actuarial surpluses. As a result, in recent years, the combined employer, employee and State contributions to STRS have not been sufficient to pay actuarially required amounts. As a result, and due to significant investments losses, the unfunded actuarial liability of STRS increased significantly. The District is unable to predict what the STRS program liabilities will be in the future.

In order to address STRS funding inadequacies, the 2014-15 State Budget set forth a plan of shared responsibility among the State, school districts and teachers to shore up STRS. The first year’s increased contributions from all three entities were approximately $275 million. The contributions would increase in subsequent years, reaching more than $5 billion annually. Governor Brown expects that this will eliminate the unfunded liability in approximately 30 years. The 2018-19 State Budget includes $3.1 billion for state contributions to STRS and includes $6.2 billion for state contributions to PERS.

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STATE OF CALIFORNIA ACTUARIAL VALUE OF STATE RETIREMENT SYSTEMS

Name of Plan

Market Value of Assets

Actuarial Value of Assets(4)

Actuarial Obligation

Unfunded Actuarial Accrued Liability

Funded Ratio

(Market Value)

Funded Ratio

(Actuarial Value)

Public Employees’ Retirement Fund Schools Pool (PERS)(1)(2)

$60.865 billion

— $84.416 billion

$23.551 billion

72.1% —

State Teachers’ Retirement Fund Defined Benefit Program (STRS)(1)(3)

$197.718 billion

$179.689 billion

$286.950 billion

$107.261 billion

63.9% 62.6%

(1) Figures as of June 30, 2017(2) As of June 30, 2017, the PERS provided pension benefits to 1,259,123 active and inactive program members and 670,347 retirees,

beneficiaries, and survivors. (3) As of June 30, 2017, the STRS Defined Benefit Program had approximately 638,536 active and inactive program members and

294,874 retirees and benefit recipients. (4) PERS no longer uses an actuarial value of assets and only uses the market value of assets. Source: PERS State and Schools Actuarial Valuation, STRS Defined Benefit Program Actuarial Valuation, PERS Comprehensive Annual Financial Report 2016-17 and STRS Comprehensive Annual Financial Report 2016-17.

California State Teachers’ Retirement System. STRS is a defined benefit program and member benefits are determined pursuant to the Education Code and are generally determined based on a member’s age, final compensation and years of credited service. Members are 100% vested in retirement benefits after five years of credited service and are eligible for “normal” retirement at age 60 and for early retirement at age 55 or at age 50 with 30 years of credited service. The normal retirement benefit is 2% of final compensation (as defined in the Education Code) for each year of credited service (up to 2.4% of final compensation for members retiring after age 60), and members who retire on or after January 1, 2011 with 30 or more years of service by December 31, 2010 receive monthly bonus payments of up to $400 per month. Members hired on or after January 1, 2013 who retire at age 62 are eligible for a benefit equal to 2% of final compensation for each year of credited service (up to 2.4% of final compensation for members retiring after age 62). Benefits include a 2% cost of living increase (computed on a simple, non-compounded, basis based on the initial allowance) on each September 1 following the first anniversary of the effective date of the benefit.

Prior to fiscal year 2014-15, neither the STRS employer nor the State contribution rate varied annually to make up funding shortfalls or assess credits for actuarial surpluses. As a result, the combined employer, employee and State contributions to STRS were not sufficient to pay actuarially required amounts. Assembly Bill 1469 (“A.B. 1469”), enacted in connection with the adoption of the 2014-15 State budget authorizes shared contribution increases among the program’s three contributors – STRS members, employers and the State. Defined Benefit Program contribution rate increases for all contributing parties will be incrementally phased-in over the next several years, with the first increases having taken effect July 1, 2014. The rate increases authorized by A.B. 1469 are projected to fund the STRS Defined Benefit Program fully in 32 years.

Employer contribution rates, including those of the District, will increase through fiscal year 2020-21 as shown in the following table. Beginning fiscal year 2021-22, employer contribution rates will

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be set each year by the STRS board to reflect the contribution required to eliminate unfunded liabilities by June 30, 2046.

Effective Date Prior Rate

AB 1469 Increases

Increase Total

July 1, 2018 8.25% 8.03% 16.28% July 1, 2019 8.25 9.88 18.13 July 1, 2020 8.25 10.85 19.10

The State contributions are set pursuant to the Education Code. For fiscal year 2018-19, the State will contribute 7.328% of members’ annual earnings to the defined benefit plan. The employee contribution rate for STRS members first hired on or before December 31, 2012 to perform STRS creditable activities (i.e., STRS 2% at 60 members) is 10.25% for fiscal year 2018-19. The employee contribution rate for STRS members first hired on or after January 1, 2013 to perform STRS creditable activities (i.e., STRS 2% at 62 members) is 10.205% for fiscal year 2018-19.

The State Teachers' Retirement Board has sole authority to determine the actuarial assumptions and methods used for the valuation of the defined benefit plan. The STRS actuarial consultant determines the actuarial value of the defined benefit plan’s assets by using a one-third smoothed recognition method of the difference between the actual market value of assets to the expected actuarial value of assets. Accordingly, the actuarial value of assets will not reflect the entire impact of certain investment gains or losses on an actuarial basis as of the date of the valuation or legislation enacted subsequent to the date of the valuation.

In February 2017, the State Teacher’s Retirement Board voted to revise the actuarial methods and assumptions beginning with the STRS Defined Benefit Program for fiscal year 2016. The actuarial assumptions set forth in the 2017 STRS actuarial valuation use a 7.00% investment rate of return for measurements as of June 30, 2017, 3.00% interest on member accounts, 3.50% wage growth, and 2.75% inflation. The STRS unfunded liability will vary based on actuarial assumptions, actual returns on investments and contribution rates.

The 2017 STRS Actuarial Valuation states that, as of June 30, 2017, the future revenues from contributions and appropriations for the defined benefit program are projected to be sufficient to finance its obligations, except for obligations relating to service rendered after June 30, 2014 and not otherwise included in the funding formula (calculated in the 2017 STRS Actuarial Valuation to be $369 million as of June 30, 2017) and post-2014 service that is not actuarially funded. The 2017 STRS Actuarial Valuation reflects a decrease in overall funded ratio of its defined benefit program from 63.7% to 62.6%. However, the 2017 STRS Actuarial Valuation projects that the funded ratio will improve over the longer term assuming all actuarial assumptions are met.

California Public Employees’ Retirement System. PERS is a defined benefit program and member benefits are determined pursuant to the Public Employees’ Retirement Law and are generally determined based on a member’s age, final compensation and years of credited service.

Member contribution rates are determined by the Public Employees’ Retirement Law and depend on the respective employer’s benefit formulas. Employer contribution rates are determined by periodic actuarial valuations or by statute. For fiscal year 2018-19, the employee contribution rate for classic plan members is 7.0% of monthly salary and the estimated employee contribution rate for PEPRA (defined

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below) members is 7.0% of monthly salary. The employer contribution rate increased from 15.531% of covered payroll for fiscal year 2017-18, to 18.062% of covered payroll for fiscal year 2018-19.

At its April 17, 2013 meeting, the PERS Board of Administration approved a recommendation to change the PERS amortization and smoothing policies. Prior to this change, PERS employed an amortization and smoothing policy which spread investment returns over a 15-year period with experience gains and losses paid for over a rolling 30-year period. After this change, PERS will employ an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-year period with the increases or decreases in the rate spread directly over a 5-year period. The new amortization and smoothing policy was used for the first time in the June 30, 2014 actuarial valuations. These valuations were performed in early 2015 and set employer contribution rates for the fiscal year 2015-16.

At its February 13, 2018 meeting, the PERS Board of Administration approved a recommendation to change the PERS amortization policy once again. Prior to this change, PERS employed an amortization and smoothing policy which spread investment returns over a 30-year period with the increases or decreases in the rate spread directly over a 5-year period. After this change, PERS will employ an amortization and smoothing policy that will pay for all gains and losses over a fixed 20-year period rather than a 30-year period. The new amortization policy will be used for the first time in the June 30, 2019 actuarial valuations.

The actuarial methods and assumptions used for determining the rates are based on those adopted by Board of Administration of PERS. In February 2014, the PERS Board of Administration adopted new actuarial demographic assumptions that take into account public employees living longer and modified the asset allocation. These new assumptions were applied beginning with the June 30, 2015 valuation for the schools pool, setting employer contribution rates for fiscal year 2016-17.

The actuarial funding method used in the PERS Schools Pool Actuarial Valuation as of June 30, 2017 (the “2017 PERS Actuarial Valuation”) is the “Individual Entry Age Normal Cost Method.” The PERS Schools Pool Actuarial Valuation as of June 30, 2017 assumes, among other things, a 7.375% investment rate of return (net of administrative expenses), projected 2.75% inflation, and projected payroll growth of 3.00% compounded annually. The prescribed discount rate will reduce to 7.25% compounded annually (net of administrative expenses) as of the June 30, 2018 actuarial valuation, and 7.0% compounded annually (net of administrative expenses) as of the June 30, 2019 actuarial valuation. The first reduction in the investment rate of return will impact the District's employer contribution rates beginning in fiscal year 2018-19.

At its December 21, 2016 meeting, the PERS Board of Administration approved a discount rate assumption decrease from its current rate of 7.50% to 7.00% over the next three years. For the School Pool, the discount rate was lowered for the first time to 7.375% effective for the June 30, 2017 actuarial valuation, impacting the Schools Pool employer contribution rates beginning in fiscal year 2018-19. The discount rate will be lowered further over the following two valuations. Lowering the discount rate will result in increases in both the normal cost and the accrued liabilities which will result in higher required employer contributions. The District cannot predict how these changes will affect its contribution levels.

Both PERS and STRS are operated on a statewide basis and, based on available information, STRS and PERS both have unfunded liabilities. PERS may issue certain pension obligation bonds to reach funded status. Additional funding of STRS by the State and the inclusion of adjustments to such State contributions based on consumer price changes were provided for in 1979 Statutes, Chapter 282. The amounts of the pension/award benefit obligation (PERS) or actuarially accrued liability (STRS) will vary from time to time depending upon actuarial assumptions, rates of return on investments, salary scales, and levels of contribution.

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STRS and PERS each issue separate comprehensive annual financial reports that include financial statements and required supplementary information. Copies of the STRS annual financial report may be obtained from www.calstrs.com or by written request mailed to STRS, P.O. Box 15275, Sacramento, California 95851-0275, and copies of the PERS annual financial report may be obtained from www.calpers.ca.gov or by written request mailed to the CalPERS Financial Services Division, P.O. Box 942703, Sacramento, California 94229-2703. The information presented in those reports is not incorporated by reference in this Official Statement.

Pension Reform Act of 2013 (Assembly Bill 340)

On September 12, 2012, Governor Brown signed AB 340, a bill that will enact the California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) which amended various sections of the California Education and Government Codes. AB 340 (i) increases the retirement age for new State, school, and city and local agency employees depending on job function, (ii) caps the annual PERS and STRS pension benefit payouts, (iii) addresses abuses of the system, and (iv) requires State, school, and certain city and local agency employees to pay at least half of the costs of their PERS pension benefits. PEPRA will apply to all public employers except the University of California, charter cities and charter counties (except to the extent they contract with PERS.)

The provisions of AB 340 went into effect on January 1, 2013 with respect to new State, school, and city and local agency employees hired on that date and after; existing employees who are members of employee associations, including employee associations of the District, had a five-year window to negotiate compliance with AB 340 through collective bargaining. A city, public agency or school district could require employees to pay their half of the costs of PERS pension benefits, up to 8 percent of pay for civil workers and 11 percent or 12 percent for public safety workers.

PERS has predicted that the impact of AB 340 on employers, including the District and other employers in the STRS system, and employees will vary, based on each employer’s current level of benefits. To the extent that the new formulas lower retirement benefits, employer contribution rates could decrease over time as current employees retire and employees subject to the new formulas make up a larger percentage of the workforce. This change would, in some circumstances, result in lower retirement benefits than employees currently earn. Additionally, PERS has noted that AB 340 changes may have an adverse impact on public sector recruitment in areas that have historically experienced recruitment challenges due to higher pay for similar jobs in the private sector.

With respect to STRS, for employees hired after January 1, 2013, future members will pay the greater of either (1) at least 50 percent of the cost of their retirement plan, rounded to the nearest one-quarter percent, or (2) the contribution rate paid by current members. The member contribution rate could be increased from this level through collective bargaining or may be adjusted based on other factors. Public employers will pay at least the normal cost rate, after subtracting the member’s contribution. The District is unable to predict the amount of future contributions it will make to STRS as a result of the implementation of AB 340 (being its future contributions for the normal costs of new employees), and as a result of negotiations with its employee associations, or, notwithstanding the adoption of AB 340, resulting from any legislative changes regarding STRS employer contributions that may be adopted in the future.

More information about AB 340 can be accessed through the PERS’s web site at www.calpers.ca.gov and through the STRS website at www.calstrs.com. The references to these internet websites are shown for reference and convenience only; the information contained within the websites may not be current and has not been reviewed by the District and is not incorporated herein by reference. The District is unable to predict what the amount of State pension liabilities will be in the future, or the

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amount of the contributions which the District may be required to make. See APPENDIX C – “AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR FISCAL YEAR 2016-17 for additional information concerning STRS and PERS contained in the notes to said financial statements.

Other Post-Employment Benefits (“OPEB”)

In addition to the retirement plan benefits with STRS and PERS, the District provides certain post-retirement healthcare benefits, in accordance with District employment contracts. The District’s health care plan (the “Plan”) is a single-employer defined benefit healthcare plan administered by the District. The Plan provides health benefits to eligible retirees based on agreements entered into with the EWEA, the CSEA, and unrepresented groups. The required contribution is based on projected pay-as-you-go financing requirements. Membership of the Plan consists of 21 retirees currently receiving benefits and 628 active members. The District provides employer paid medical benefits to eligible retirees and their eligible dependents through age 65 up to an annual maximum. Certificated employees may also be eligible for an early retirement program that provides some enhanced benefits prior to age 60. Eligibility for retiree health benefits requires at least 10 years of service at retirement. For fiscal year 2016-17, the District contributed $469,125 to the Plan, all of which was used for current premiums. For fiscal year 2017-18, the District contributed $374,195 to the Plan, and for fiscal year 2018-19, the District has budgeted to contribute $405,205 to the Plan.

Demsey, Filiger & Associates, has prepared an actuarial valuation covering the District’s retiree health benefits and reports that, as of July 1, 2015 the District had an actuarial accrued liability of $3,948,115, and an unfunded actuarial accrued liability of $3,948,115. According to such valuation, the District’s annual required contribution was $474,326 for fiscal year 2016-17, $474,326 for fiscal year 2017-18, and will be $474,326 for fiscal year 2018-19. The District’s net OPEB obligation was $164,436 as of June 30, 2017 and $155,501 as of June 30, 2018. It is expected to be $145,343 as of June 30, 2019. Certain assumptions incorporated in such actuarial valuation include a 4% discount rate, a 4% inflation rate, a 4-8% increase for salaries, and various other assumptions. The District is currently working with Total Compensation to generate a new report and hopes to have this completed sometime in late November of 2018. The Governmental Accounting Standards Board (the “GASB”) released its Statement Number 45 (“Statement Number 45”), which requires municipalities to account for OPEB (meaning other than pension benefits) liabilities much like municipalities are required to account for pension benefits. The expense is generally accrued over the working career of employees, rather than on a pay-as-you-go basis, which has been the practice for most municipalities and public sector organizations. OPEBs generally include post-employment health benefits (medical, dental, vision, prescription drug and mental health), life insurance, disability benefits and long term care benefits. Statement Number 45 was phased in over a three-year period based upon the entity’s revenues.

Statement Number 45 explicitly incorporates Actuarial Standards of Practice (“ASOPs”). There was a recent change to ASOPs No. 6 (“ASOP 6”) requiring reflection of “implicit subsidies” in OPEB costs and projections. “Implicit subsidies” refers to an indirect cost sharing feature of OPEB plans. Using unadjusted flat-rate premiums as a cost basis for accounting was previously acceptable under GASB 45 when the health plans are considered “community-rated.” Community-rated plans have premium levels determined without adjustment for the demographics of an individual employer buying coverage. Although these subsidies were previously allowed to be excluded, the changes to ASOP 6 eliminated the community-rated exemption. As a result, the District was required to reflect these implicit subsidies in its OPEB liability accounting beginning with fiscal year 2016-17.

For additional information about the District’s Plan, as well as information regarding a previous actuarial valuation, see District’s financial statements attached hereto as APPENDIX C. A copy of the latest actuarial valuation is available upon request from the District at the address listed on the first page

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of the forepart of this Official Statement. The District may impose a charge for copying, handling and mailing such requested documents.

GASB 67 and 68

On June 25, 2012, GASB voted to approve two new standards that aimed to improve the accounting and financial reporting of public employee pensions by state and local governments. Statement No. 67, Financial Reporting for Pension Plans, revised existing guidance for the financial reports of most pension plans. Statement No. 68, Accounting and Financial Reporting for Pensions, revised and established new financial reporting requirements for most governments that provide their employees with pension benefits.

Statement 67 replaces the requirements of Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans and Statement 50, Pension Disclosures as they relate to pension plans that are administered through trusts or similar arrangements meeting certain criteria. Statement 67 builds upon the existing framework for financial reports of defined benefit pension plans, which includes a statement of fiduciary net position (the amount held in a trust for paying retirement benefits) and a statement of changes in fiduciary net position. Statement 67 enhances note disclosures and RSI for both defined benefit and defined contribution pension plans. Statement 67 also requires the presentation of new information about annual money-weighted rates of return in the notes to the financial statements and in 10-year required supplementary information schedules.

Statement 68 replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers and Statement No. 50, Pension Disclosures, as they relate to governments that provide pensions through pension plans administered as trusts or similar arrangements that meet certain criteria. Statement 68 requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. The Statement also enhances accountability and transparency through revised and new note disclosures and required supplementary information.

The provisions in Statement 67 became effective for financial statements for periods beginning after June 15, 2013. The provisions in Statement 68 became effective for fiscal years beginning after June 15, 2014.

Insurance

The District participates in joint powers agreements with the Whittier Area Liability/Property Self Insurance Authority (“WALPSIA”) and the Whittier Area Schools Insurance Authority (“WASIA”). WALPSIA provides property and liability insurance for its members and WASIA provides worker's compensation insurance.

The District also maintains insurance or self-insurance in such amounts and with such retentions and other terms providing coverage for property damage, fire and theft, general public liability and worker's compensation, as are adequate, customary and comparable with such insurance maintained by similarly situated school districts. In addition, based upon prior claims experience, the District believes that the recorded liabilities for self-insured claims are adequate.

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District Revenues

The District’s general operating fund (the “General Fund”) is used to account for the day-to-day operations of the District. The General Fund is divided into two sections: unrestricted and restricted. Unrestricted revenue may be spent at the District’s discretion. Restricted funds are moneys that can only be used for the purposes allowed by the funding agency.

Other state Revenues, or categorical funds, consist primarily of restricted revenues that fund specific items, such as new curriculum and technology, special education programs, instructional materials, and mentor teachers.

Prop 39 Energy Grant. Proposition 39, a voter approved initiative at the November 2012 statewide election, provides for annual transfers from the State General Fund to the Clean Energy Job Creation Fund for a period of five years, 2013-14 through 2017-18. The 2014-15 State budget appropriated $307 million to K-12 schools with 85 percent of the appropriation to be allocated based on 2013-14 ADA and 15 percent based on 2013-14 free and reduced-priced meals. Proposition 39 funds will be provided to schools to improve energy efficiency and create clean energy jobs. The total estimated funding over the five-year period for the District is $2,039,885, of which the District has received $1,122,473 to date.

State Lottery. The District receives a portion of the State Lottery (the “Lottery”) revenues. Lottery revenues allocated to the District must be used for the education of students and cannot be used for non-instructional purposes, such as real property acquisition, facility construction, or the financing of research. Lottery net revenues (gross revenues less prizes and administration expenses) are allocated by computing an amount per ADA or full time equivalent (“FTE”). This figure is derived by dividing the total net revenues figures by the total ADA for grades K-12 and by the total FTE for the community colleges, University of California system and the California State University and College system. Each entity receives an amount equal to its total ADA or FTE, as applicable, multiplied by the per ADA or FTE figure. The Lottery revenues were $1,726,292 in fiscal year 2016-17. The Lottery revenues in fiscal year 2017-18 were $1,856,245 and are budgeted to be approximately $1,621,064 in fiscal year 2018-19.

Developer Fees

The District maintains a fund separate and apart from its General Fund to account for developer fees collected by the District. Residential development is assessed a fee per square foot and the District collects a portion of that assessment. The following table sets forth the developer fees collected during fiscal years 2013-14 through 2017-18, and the projected developer fees to be collected during fiscal year 2018-19.

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EAST WHITTIER CITY SCHOOL DISTRICT Developer Fees

Fiscal Years 2013-14 through 2018-19

Fiscal Year Developer Fees Collected

2013-14 $36,406 2014-15 88,957 2015-16 25,472 2016-17 203,557 2017-18(1) 224,647 2018-19(2) 80,450

(1) Estimated. (2) Projected. Source: The District.

Financial Statements of the District

Independently audited financial reports are prepared annually in conformity with generally accepted accounting principles for educational institutions. The annual audit report is generally available about six months after the June 30 close of each fiscal year. For the District’s most recent available audited financial statements, see APPENDIX C – “AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR FISCAL YEAR 2016-17.”

The following table contains accounting data abstracted from financial statements prepared by the District’s independent auditors for the fiscal years 2013-14 through 2016-17.

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EAST WHITTIER CITY SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN GENERAL FUND BALANCES

FISCAL YEARS ENDED JUNE 30, 2014 THROUGH JUNE 30, 2017(1)

Fiscal Year 2013-14

Fiscal Year 2014-15

Fiscal Year 2015-16

Fiscal Year 2016-17

REVENUES LCFF sources $ 64,803,213 $ 68,492,653 $72,128,852 $73,434,359

Federal sources 2,837,371 2,908,211 3,487,451 3,127,995 Other state sources 7,073,607 5,876,319 10,677,164 8,114,452

Other local sources 6,052,419 6,402,921 6,009,438 5,208,412

Total Revenues $80,766,610 $83,680,104 $92,302,905 $89,885,218

EXPENDITURES Current

Instruction $51,232,881 $57,919,992 $61,230,126 $63,602,415

Instruction-related services Instructional supervision and administration

2,518,391 2,837,065 1,362,660 1,546,226

Instructional library, media and technology

186,928 163,985 - -

School site administration 4,165,102 4,917,914 5,048,510 5,394,349

Pupil services

Home-to-school transportation1,295,935 1,251,927 1,326,931 1,504,388

Food services - - - -

All other pupil services 2,863,107 3,166,277 3,492,841 3,566,636

General administration Centralized data processing 992,787 796,398 1,547,733 1,560,675 All other general administration

3,309,853 3,702,187 4,618,138 4,530,148

Plant services 7,107,323 8,883,696 8,439,700 7,952,745

Facilities acquisition and maintenance

138,653 22,340 240,048 73,948

Ancillary services 61,422 60,633 - -

Community services 109,781 127,718 - -

Transfer to other agencies 78,661 62,630 62,630 29,675

Debt Service Principal 10,420 18,599 19,571 20,592

Interest and other 134,009 2,253 5,073 2,250

Total Expenditures $74,205,253 $83,933,614 $87,393,961 $89,784,047

NET CHANGE IN FUND BALANCE 7,281,565 (253,510) 4,908,944 101,171

Fund Balance – Beginning $ 8,267,576 $15,549,141 $15,295,631 $20,204,575

Fund Balances - Ending $15,549,141 $15,295,631 $20,204,575 $20,305,746

(1) Totals may not add due to rounding. Source: The District.

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Budgets of District

State law requires school districts to maintain a balanced budget in each fiscal year. The State Department of Education imposes a uniform budgeting and accounting format for school districts.

California Assembly Bill 1200 (“A.B. 1200”), effective January 1, 1992, tightened the budget development process and interim financial reporting for school districts, enhancing the authority of the county schools superintendents’ offices and establishing guidelines for emergency State aid apportionments. Many provisions affect District operations directly, while others create a foundation from which outside authorities (primarily state and county school officials) may impose actions on the District. A school district governing board must file with the county superintendent of schools a tentative budget by July 1 in each fiscal year and an adopted budget by September 8 of each fiscal year.

Under the provisions of A.B. 1200, school districts in the State must also conduct a review of their budgets according to certain standards and criteria established by the State Department of Education, and each school district is required to file interim certifications with the county office of education as to its ability to meet its financial obligations for the remainder of the then-current fiscal year and, based on current forecasts, for the subsequent fiscal year. A written explanation must be provided for any element in the budget that does not meet the established standards and criteria. The district superintendent or designee must certify that such a review has been conducted and the certification, together with the budget review checklist and a written narrative, must accompany the budget when it is submitted to the governing board for approval. The balanced budget requirement makes appropriations reductions necessary to offset any revenue shortfalls. The county office of education reviews the certification, completes the budget review checklist and conducts an analysis of any budget item that does not meet the established standards and issues either a positive, negative or qualified certification. A copy of the completed checklist, together with any comments or recommendations, must be provided to the district and its governing board by November 1. By November 30, every district must have an adopted and approved budget, or the county superintendent of schools will impose one. A positive certification is assigned to any school district that will meet its financial obligations for the current fiscal year and subsequent two fiscal years. A negative certification is assigned to any school district that will be unable to meet its financial obligations for the remainder of the fiscal year or subsequent fiscal year. A qualified certification is assigned to any school district that may not meet its financial obligations for the current fiscal year or two subsequent fiscal years. Each certification is based on then-current projections. Within the previous five fiscal years, the District has not received a qualified or negative certification from the County Office of Education.

Presented on the following page are the District’s final budgets for fiscal years 2014-15 through 2017-18 and the adopted budget for fiscal year 2018-19 in comparison to the audited actuals for fiscal years 2014-15 through 2016-17 and unaudited actuals for fiscal year 2017-18.

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EAST WHITTIER CITY SCHOOL DISTRICT GENERAL FUND FINAL BUDGETS AND AUDITED ACTUALS

FISCAL YEARS 2014-15 THROUGH 2016-17, FINAL BUDGET AND UNAUDITED ACTUALS FOR FISCAL YEAR 2017-18, AND ADOPTED BUDGET FOR FISCAL YEAR 2018-19(1)(2)

Final Budget 2014-15

Audited Actuals 2014-15


Audited Actuals2015-2016


Audited Actuals 2016-17


Unaudited Actuals 2017-18

Adopted Budget 2018-19

REVENUES: LCFF Sources $68,014,541 $68,159,853 $71,677,517 $71,768,852 $72,993,081 $72,984,359 $74,126,785 $74,514,555 $77,400,437 Federal 3,348,678 2,908,211 3,428,859 3,487,451 3,330,368 3,127,995 2,900,403 3,333,211 3,202,463 Other State 3,564,670 3,703,089 7,311,824 8,201,857 4,669,542 5,639,574 2,820,236 4,818,079 4,971,047 Other Local 5,126,688 6,400,133 5,326,026 5,993,220 4,192,120 5,020,099 4,200,413 5,369,049 4,772,618

Total Revenues $80,054,577 $81,171,286 $87,744,226 $89,451,380 $85,185,111 $86,772,027 $84,047,837 $88,034,894 $90,346,565

EXPENDITURES: Certificated Salaries $38,796,789 $39,512,083 $40,746,957 $42,038,608 $42,815,924 $41,706,688 $42,157,485 $41,950,541 $46,263,878 Classified Salaries 11,621,328 12,026,395 12,090,988 12,137,759 12,556,245 12,299,331 12,523,014 12,281,007 13,705,260 Employee Benefits 17,643,503 17,688,135 18,369,824 18,047,925 20,178,246 20,105,738 19,882,601 19,927,499 22,231,068 Books and Supplies 4,483,816 3,921,555 4,933,929 3,622,118 5,514,793 4,572,848 2,039,700 1,938,782 3,124,414 Services and Other Operating Expenditures 8,171,427 8,255,718 9,101,449 8,343,749 9,472,525 8,386,212 9,382,430 7,985,209 8,446,253 Capital Outlay 13,614 64,134 370,000 346,820 530,000 44,601 - 20,344 15,000 Other Outgo (excluding Transfers of Indirect Costs) 103,002 83,482 22,749 87,274 82,747 52,517 69,747 94,468 73,690

Other Outgo – Transfers of Indirect Costs (135,000) (216,953) (167,820) (200,887) (200,580) (188,600) (210,000) (223,344) (217,431)

Total Expenditures $80,698,479 $81,334,549 $85,468,076 $84,423,366 $90,949,900 $86,979,335 $85,844,977 $83,974,515 $93,642,132

EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES: (643,902) (163,263) 2,276,150 5,028,014 (5,764,789) (207,308) (1,797,140) 4,060,378 (3,295,567)

OTHER FINANCING SOURCES AND USES: Interfund Transfers Out - - - - - - - - - Interfund Transfers In - - - - - - - - -

Total Other Financing Sources and Uses - - - - - - - - -

Net Change in Fund Balances (643,902) (163,263) 2,276,150 5,028,014 (5,764,789) (207,308) (1,797,14) 4,060,378 (3,295,567)

Fund Balance, Beginning of Year $15,031,828 $15,031,828 $14,898,565 $14,868,565 $19,896,578 $19,952,911 $16,537,682 $19,745,353 $20,336,811

Fund Balance, End of Year $14,387,926 $14,868,565 $17,144,715 $19,896,579 $14,131,789 $19,745,603 $14,740,542 $23,803,913 $17,041,244

(1) Totals may not add due to rounding. (2) The amounts reported on the Statement of Revenues, Expenditures and Changes in General Fund Balances table listed in the District’s Audited Financial Statements attached hereto as

Appendix C do not match this table because certain payments are not included in the actual revenues and expenditures reported here in each fiscal year and this table does not include the financial activity of the Deferred Maintenance Fund in each fiscal year.


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District Investments

The Treasurer and Tax Collector of the County (the “Treasurer”) manages, in accordance with California Government Code Section 53600 et seq., funds deposited with the Treasurer by school and community college districts located in the County, various special districts, and some cities within the State of California. State law generally requires that all moneys of the County, school and community college districts and certain special districts located in the County be held in the County’s Treasury Pool.

The composition and value of investments under management in the Treasury Pool vary from time to time depending on cash flow needs of the County and public agencies invested in the pool, maturity or sale of investments, purchase of new securities, and due to fluctuations in interest rates generally.

For a further discussion of the County’s Treasury Pool, see the caption “THE LOS ANGELES COUNTY TREASURY POOL” in the body of this Official Statement.

FUNDING OF SCHOOL DISTRICTS IN CALIFORNIA

Public school district revenues consist primarily of guaranteed State moneys, ad valorem taxes and funds received from the State and federal government in the form of categorical aid, which are amounts restricted to specific categories of use, under various ongoing programs. All State apportionment (“State Aid”) is subject to the appropriation of funds in the State’s annual budget. Decreases in State revenues may affect appropriations made by the State Legislature to the District.

Historically, approximately 84% of the District’s annual General Fund revenues (unrestricted) have consisted of payments from or under the control of the State. Payments made to K-12 public schools and public colleges and universities are priority payments for State funds and are expected to be made prior to other State payment obligations. Although the State Constitution protects the priority of payments to K-12 schools, college and universities, it does not protect the timing of such payments, and other obligations may be scheduled and have been scheduled to be paid in advance of those dates on which payments to school districts are scheduled to be made.

On June 27, 2013, the State adopted a new method for funding school districts commonly referred to as the “Local Control Funding Formula (the “LCFF”)” The LCFF began implementation in stages, beginning in fiscal year 2013-14 and will be fully implemented in fiscal year 2018-19, which is two years ahead of schedule. See “– Local Control Funding Formula” below for more information. Prior to adoption of the LCFF, the State used a revenue limit funding system, described below under “– Revenue Limit Funding.”

Revenue Limit Funding. School districts in the State have historically received most of their revenues under a formula known as the “revenue limit.” Generally, revenue limits were calculated for each school district by multiplying the ADA for such district by a base revenue limit per unit of ADA. Revenue limit calculations were subject to adjustment to provide cost of living adjustments (“COLAs”) and to equalize revenues among school districts of the same type. The revenue limit system of funding has been replaced by the LCFF. A description of the revenue limit system is included herein as the District has historically received financial assistance from the State pursuant to this method of appropriations.

Each school district’s revenue limit, which was funded by State moneys and local ad valoremproperty taxes from the general 1% ad valorem property tax levy, was allocated based on the ADA of each school district for either the current or preceding school year. Generally, State Aid to a school district amounted to the difference between the school district’s revenue limit and the school district’s local property tax allocation from the general 1% ad valorem property tax levy.

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Local Control Funding Formula. Effective in fiscal year 2013-14, the State established the LCFF, a new system for funding school districts, charter schools and county offices of education. The LCFF replaces the revenue limit funding system, as well as many categorical programs. The LCFF distributes State resources to schools through a guaranteed base funding grant per unit of ADA (a “Base Grant”). The Base Grants per unit of ADA for each grade span are: (i) $6,845 for grades K-3; (ii) $6,947 for grades 4-6; (iii) $7,154 for grades 7-8; and (iv) $8,289 for grades 9-12. Full implementation of the LCFF is slated in fiscal year 2018-19. An annual transition adjustment is calculated for each school district, equal to such district’s proportionate share of appropriations included in the State budget to close the gap between the prior-year funding level and the target allocation following full implementation of the LCFF. Beginning in fiscal year 2014-15, the Base Grants are adjusted for COLAs by applying the implicit price deflator for government goods and services. Following full implementation of the LCFF, the provision of COLAs will be subject to appropriation for such adjustment in the annual State budget.

The Base Grants for grades K-3 are subject to adjustments of 10.4% to cover the costs of class size reduction. Following full implementation of the LCFF in fiscal year 2018-19, and unless otherwise collectively bargained for, school districts serving students in grades K-3 must maintain an average class enrollment of 24 or fewer students in grades K-3 at each school site in order to continue receiving the adjustment to the K-3 Base Grant. The Base Grants for grades 9-12 are subject to adjustments of 2.6% for the provision of career technical education.

School districts that serve students of limited English proficiency (“EL” students), students from low income families that are eligible for free or reduced priced meals (“LI” students) and foster youth are eligible to receive additional funding grants. Enrollment counts are unduplicated; if the school district has students with both limited English proficiency and eligibility for reduced price meals, for instance, such students will not be duplicated for purposes of determining the additional funding grants. Foster students automatically qualify for free or reduced priced meals. A supplemental grant add-on (each, a “Supplemental Grant”) is authorized for school districts that serve EL/LI students, equal to 20% of the applicable Base Grant multiplied by such districts’ percentage of unduplicated EL/LI student enrollment. School districts whose EL/LI populations exceed 55% of their total enrollment are eligible for a concentration grant add-on (each, a “Concentration Grant”) equal to 50% of the applicable Base Grant multiplied the percentage of such district’s unduplicated EL/LI student enrollment in excess of the 55% threshold. The following table shows a breakdown of the District’s ADA by grade span, total enrollment, and the percentage of EL/LI student enrollment, for fiscal years 2015-16 through 2018-19.

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EAST WHITTIER CITY SCHOOL DISTRICT ADA, ENROLLMENT AND EL/LI ENROLLMENT PERCENTAGE

Average Daily Attendance(1) Enrollment(2)

Fiscal Year K-3 4-6 7-8

Total ADA

Total Enrollment

% of EL/LI

Enrollment

2015-16(3) 3,637 2,978 1,960 8,575 8,891 55.1%

2016-17(3) 3,638 2,980 1,965 8,583 8,829 55.0%

2017-18(3) 3,537 2,835 1,984 8,356 8,829 54.56%

2018-19(3)(4) 3,561 2,771 2,006 8,338 8,640 59.6%

(1) Reflects P-2 ADA.

(2) As of October report submitted to the California Basic Educational Data System. For purposes of calculating supplemental funding grants, a school district's fiscal year 2015-16 percentage of unduplicated EL/LI students will be expressed solely as a percentage of its total fiscal year 2015-16 total enrollment.

(3) Represents funded ADA. Due to the declines in enrollment in fiscal years 2015-16 and 2016-17, the District’s funded for each year is based on the prior year’s ADA.

(4) Adopted Budget numbers have been updated with current enrollment and % of EL/LI.


The LCFF provides for a permanent economic recovery target (“ERT”) add-on for school districts that would have received greater funding levels under the revenue limit system. The ERT is equal to the difference between the revenue limit allocations such districts would have received under the prior system in Fiscal Year 2020-21, and the target LCFF allocations owed to such districts in the same year. The ERT add-on will be paid incrementally over the implementing period of the LCFF. The District does not qualify for the ERT add-on.

The sum of a school district’s adjusted Base, Supplemental and Concentration Grants will be multiplied by such district’s P-2 ADA for the current or prior year, whichever is greater (with certain adjustments applicable to small school districts). This funding amount, together with any applicable ERT or categorical block grant add-ons, will yield a district’s total LCFF allocation. Generally, the amount of annual State apportionments received by a school district will amount to the difference between such total LCFF allocation and such district’s share of applicable local property taxes.

Beginning July 1, 2014, school districts are required to develop a three-year Local Control and Accountability Plan (each, an “LCAP”). County Superintendent of Schools and the State Superintendent of Public Instruction will review and provide support to the districts and county offices of education under their jurisdiction. In addition, the Fiscal Year 2013-14 State Budget created the California Collaborative for Education Excellence (the “Collaborative”) to advise and assist school districts, county offices of education, and charter schools in achieving the goals identified in their plans. The State Superintendent of Public Instruction may direct the Collaborative to provide additional assistance to any district, county office, or charter school. For those entities that continue to struggle in meeting their goals, and when the Collaborative indicates that additional intervention is needed, the State Superintendent of Public Instruction has authority to make changes to the district or county office’s local plan. For charter schools, the charter authorizer will be required to consider revocation of a charter if the Collaborative finds that the inadequate performance is so persistent and acute as to warrant revocation. The State will continue to

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measure student achievement through statewide assessments, produce an Academic Performance Index for schools and subgroups of students, determine the contents of the school accountability report card, and establish policies to implement the federal accountability system.

State Assistance

Districts’ principal funding formulas and revenue sources are derived from the budget of the State of California. The following discussion of the California State budget has been obtained from publicly available information which the District believes to be reliable; however neither District nor the Underwriter guarantee the accuracy or completeness of this information and have not independently verified such information. Additional information regarding State budgets is available at various State-maintained websites, including www.dof.ca.gov. These websites are not incorporated herein by reference and neither the District nor the Underwriter makes any representation as to the accuracy of the information provided therein.

Fiscal Year 2018-19 State Budget

On June 27, 2018, Governor Jerry Brown signed the fiscal year 2018-2019 State Budget Act (the “2018-19 State Budget”). The 2018-19 State Budget includes general fund revenues in the amount of $129.8 billion for fiscal year 2017-18 and $133.3 billion in fiscal year 2018-19. State general fund expenditures are $127 billion for fiscal year 2017-18 and $138.7 billion for fiscal year 2018-19. The 2018-19 State Budget includes a reserve balance of approximately $15.73 billion, comprised of an approximate balance of $1.96 billion in the Special Fund for Economic Uncertainties (the “SFEU”) and an approximate balance of $13.77 billion in the Budget Stabilization Account (the “BSA”).

The 2018-19 State Budget acknowledges the State’s recovery from the “Great Recession” and the historic growth in education funding. The State plans to continue to save for the next recession and to protect against future cuts by fully filling the BSA and emphasizing one-time expenditures. The 2018-19 State Budget discusses the minimum wage increase, the expansion of health care coverage, and the State’s first earned income tax credit. The State has also improved in restoring fiscal health to its retirement benefit plans, paying down its budgetary borrowing, and improving the transportation and water systems within the State. The 2018-19 State Budget reflects an investment in education for K-12 schools with funding levels increased by over $4,633 per student over fiscal year 2011-12 levels. Funding has grown by 66 percent over a seven-year period. The 2018-19 State Budget provides total funding of $97.2 billion for all K-12 education programs, comprised of $56.1 billion in the general fund and $41.1 billion in other funds.

The 2018-19 State Budget includes Proposition 98 funding of $78.4 billion. With the significant increase in funding, the State has been able to pay down debt owed to the schools for outstanding obligations, provide schools with larger grants of discretionary funding, and to fully implement the LCFF in fiscal year 2018-19. Further, the 2018-19 State budget enacts a new Proposition 98 certification process consistent with retiring debt and liabilities and to provide a new mechanism to ensure annual certifications.

The 2018-19 State Budget included the following significant adjustments affecting State K-12 school districts:

• Local Control Funding Formula – An increase of $3.7 billion in Proposition 98 funding to fully implement the LCFF two years earlier than expected.

• Low-Performing Students Block Grant – $300 million in one-time Proposition 98 funding to provide resources to local education agencies with students who perform at the lowest levels

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on the State’s academic assessments, and do not generate supplemental LCFF funds or State or federal special education resources.

• State System of Support – $57.8 million in Proposition 98 funding for county offices of education to provide technical assistance to school districts.

• Multi-Tiered Systems of Support (MTSS) – $15 million one-time Proposition 98 funding to expand the State’s MTSS framework to foster positive school climate.

• Community Engagement Initiative – $13.3 million in one-time Proposition 98 funding for the California Collaborative for Educational Excellence and a co-lead county office of education to help build capacity for community engagement in the LCAP process.

• California Collaborative for Educational Excellence – $11.5 million in Proposition 98 funding to support the Collaborative in its role within the statewide system of support.

• Special Education Local Plan Area (SELPA) Technical Assistance – $10 million in Proposition 98 funding for SELPAs to assist county offices of education in providing technical assistance to school districts identified for differentiated assistance (specific to students with exceptional needs) within the Statewide system of support.

• Career Technical Education (CTE) – $164 million in Proposition 98 funding to establish a K-12 specific component within the Strong Workforce Program.

• CTE Incentive Grant Program – $150 million in ongoing Proposition 98 funding to make the State’s Career Technical Education Incentive Grant Program permanent.

• One-Time Funding – An increase of $1.1 billion in one-time Proposition 98 funding for school districts, charter schools and county offices to further support local priorities.

• Teacher Residency Grant Program – $75 million in one-time Proposition 98 funding to support locally sponsored, one-year intensive, mentored, clinical teacher preparation programs with $50 million aimed at preparing and retaining special education teachers and $25 million aimed at bilingual and STEM teachers.

• Local Solutions Grant Program – $50 million in one-time Proposition 98 funding to provide one-time competitive grants to local educational agencies to develop and implement new, or expand existing, locally identified solutions that address a local need for special education teachers.

• Classified School Employee Summer Assistance Program – $50 million one-time Proposition 98 funding to provide state matching funds to classified school employees that elect to have a portion of their monthly paychecks withheld during the school year and then paid during the summer recess period.

• Classified School Employee Professional Development Block Grant Program – $50 million one-time Proposition 98 funding for professional development opportunities for classified staff, with a priority on professional development for the implementation of school safety plans.

• Charter School Facility Grant Program – $21.1 million one-time and $24.8 million ongoing Proposition 98 funding to reflect increases in programmatic costs.

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• English Language Proficiency Assessment for California (ELPAC) – $27.1 million one-time Proposition 98 funding to convert the paper-based ELPAC to a computer based assessment and to develop an ELPAC assessment specific to students with exceptional needs.

• Kids Code After School Program – $15 million one-time Proposition 98 funding to increase opportunities for students in after-school programs to access computer coding education.

• Fire-Related Support – $4.4 million Proposition 98 funding over two years in property tax relief to schools impacted by the fires in Northern and Southern California in 2017, and an additional $25 million Proposition 98 funding relief through the LCFF. The 2018-19 Budget also holds harmless the average daily attendance used in calculating the LCFF for these counties for three years.

• California-Grown Fresh School Meals Grants – $1 million in one-time Proposition 98 funding to encourage the purchase of California-grown food by schools and expand the number of freshly prepared school meals offered that use California-grown ingredients.

• Fiscal Crisis and Management Assistance Team (FCMAT) – $972,000 Proposition 98 funding to allow FCMAT to coordinate with county offices of education to offer more proactive and preventive services to fiscally distressed school districts, specifically those with a qualified interim budget status (school districts that may not meet their financial obligations in the current year or subsequent two years).

Additional Information. Information about the State budget and State spending for education is regularly available at various State-maintained websites. Text of the State budget may be found at the website of the Department of Finance, www.dof.ca.gov, under the heading “California Budget.” Various analyses of the budget may be found at the website of the LAO at www.lao.ca.gov. In addition, various State official statements, many of which contain a summary of the current and past State budgets and the impact of those budgets on school districts in the State, may be found via the website of the State Treasurer, www.treasurer.ca.gov. The information presented in these websites is not incorporated by reference in this Official Statement.

Future State Budgets. The District cannot predict what actions will be taken in the future by the State Legislature and the Governor to address any future budget deficits and cash management practices. Future State budgets will be affected by national and State economic conditions over which the District has no control, and other factors over which the District will have no control. To the extent that the State budget process results in reduced revenues deferred revenues or increased expenses for the District, the District will be required to make adjustments to its budget and cash management practices. In the event current or future State Budgets decrease the District’s revenues or increase required expenditures by the District from the levels assumed by the District, the District will be required to generate additional revenues, curtail programs or services, or use its reserve funds to ensure a balanced budget.

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APPENDIX B

FORM OF BOND COUNSEL OPINIONS

On the date of issuance of the Measure R Bonds, Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, proposes to issue its approving opinion relating to the Measure R Bonds in substantially the following form:

[Closing Date]

Honorable Members of the Board of Education East Whittier City School District Whittier, California

Re: $__________ East Whittier City School District (Los Angeles County, California) Election of 2016 General Obligation Bonds, Series B (Measure R)

Dear Honorable Members of the Board of Education:

We have examined the Constitution and the laws of the State of California, a certified record of the proceedings of the East Whittier City School District (the “District”) taken in connection with the authorization and issuance of the District’s Election of 2016 General Obligation Bonds, Series B (Measure R), in the aggregate principal amount of $__________ (the “Measure R Bonds”), and such other information and documents as we consider necessary to render this opinion. In rendering this opinion, we have relied upon certain representations of fact and certifications made by the County of Los Angeles (the “County”), the District, the initial purchaser of the Measure R Bonds and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us.

The Measure R Bonds have been issued by the District pursuant to Article 4.5 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California, a vote of the qualified electors of the District voting at an election held on November 8, 2016 and pursuant to a resolution adopted by the Board of Education of the District on October 22, 2018 (the “Bond Resolution”) and a resolution adopted by the Board of Supervisors of the County on November 7, 2018.

The Measure R Bonds mature on the dates and in the amounts authorized in the Bond Resolution. The Measure R Bonds are dated their date of delivery and bear interest payable semiannually on each February 1 and August 1, commencing February 1, 2019, at the rates per annum authorized in the Bond Resolution. The Measure R Bonds are registered bonds as set forth in the Bond Resolution.

Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that:

(1) The Measure R Bonds have been duly and validly authorized and constitute legal, valid and binding obligations of the District enforceable in accordance with the terms of the Bond

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Resolution, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by limitations on legal remedies against public agencies in the State of California. The Measure R Bonds are obligations of the District but are not a debt of the County, the State of California or any other political subdivision thereof within the meaning of any constitutional or statutory limitation, and neither the faith and credit nor the taxing power of the County, the State of California, or any such political subdivisions is pledged for the payment thereof.

(2) The Bond Resolution has been duly adopted by the Board of Education of the District and constitutes the legal, valid and binding obligation of the District. The Bond Resolution is enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by limitations on legal remedies against public agencies in the State of California, provided, however, we express no opinion as to the enforceability of provisions of the Bond Resolution as to indemnification, penalty, contribution, choice of law, choice of forum or waiver contained therein.

(3) The Measure R Bonds are secured by the proceeds of ad valorem taxes levied upon taxable property in the District which the Board of Supervisors of the County has the power to levy and is obligated by statute to levy without limit as to rate or amount (except as to certain personal property which is taxable at limited rates) for payment of the Measure R Bonds and the interest thereon.

(4) Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) on the Measure R Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals.

(5) Interest (and original issue discount) on the Measure R Bonds is exempt from State of California personal income tax.

(6) The difference between the issue price of a Measure R Bond (the first price at which a substantial amount of the Measure R Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Measure R Bond (to the extent the redemption price at maturity is more than the issue price) constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Measure R Bond owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Measure R Bond owner will increase the Measure R Bond owner’s basis in the applicable Measure R Bond. Original issue discount that accrues for the Measure R Bond owner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and is exempt from State of California personal income tax.

(7) The amount by which a Measure R Bond owner’s original basis for determining loss on sale or exchange in the applicable Measure R Bond (generally the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium which must be amortized under Section 171 of the Internal Revenue Code of 1986, as amended (the

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“Code”); such amortizable bond premium reduces the bond owner’s basis in the applicable Measure R Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a Measure R Bond owner realizing a taxable gain when a Measure R Bond is sold by the owner for an amount equal to or less (under certain circumstances) than the original cost of the Measure R Bond to the owner.

The opinions expressed in paragraphs (4) and (6) above as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Measure R Bonds are subject to the condition that the District complies with all requirements of the Code that must be satisfied subsequent to the issuance of the Measure R Bonds to assure that such interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Measure R Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Measure R Bonds. The District has covenanted to comply with all such requirements. Except as set forth in paragraphs (4), (5), (6) and (7) above, we express no opinion as to any tax consequences related to the Measure R Bonds.

Certain agreements, requirements and procedures contained or referred to in the Bond Resolution and the Tax Certificate executed by the District with respect to the Measure R Bonds may be changed and certain actions may be taken or omitted, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax exempt obligations. We express no opinion as to the effect on the exclusion from gross income for federal income tax purposes of the interest (and original issue discount) on any Measure R Bonds if any such change occurs or action is taken or omitted upon advice or approval of bond counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation.

The opinions expressed herein and the exclusion of interest on the Measure R Bonds from gross income for federal income tax purposes may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Our engagement as bond counsel to the District terminates upon the issuance of the Measure R Bonds.

The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities.

Our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.

We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement relating to the Measure R Bonds or other offering material relating to the Measure R Bonds and expressly disclaim any duty to advise the owners of the Measure R Bonds with respect to matters contained in the Official Statement.

Respectfully submitted,

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On the date of issuance of the Measure Z Bonds, Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, proposes to issue its approving opinion relating to the Measure Z Bonds in substantially the following form:

[Closing Date]

Honorable Members of the Board of Education East Whittier City School District Whittier, California

Re: $__________ East Whittier City School District (Los Angeles County, California) Election of 2016 General Obligation Bonds, Series B (Measure Z)

Dear Honorable Members of the Board of Education:

We have examined the Constitution and the laws of the State of California, a certified record of the proceedings of the East Whittier City School District (the “District”) taken in connection with the authorization and issuance of the District’s Election of 2016 General Obligation Bonds, Series B (Measure Z), in the aggregate principal amount of $__________ (the “Measure Z Bonds”), and such other information and documents as we consider necessary to render this opinion. In rendering this opinion, we have relied upon certain representations of fact and certifications made by the County of Los Angeles (the “County”), the District, the initial purchaser of the Measure Z Bonds and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us.

The Measure Z Bonds have been issued by the District pursuant to Article 4.5 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California, a vote of the qualified electors of the District voting at an election held on November 8, 2016 and pursuant to a resolution adopted by the Board of Education of the District on October 22, 2018 (the “Bond Resolution”) and a resolution adopted by the Board of Supervisors of the County on November 7, 2018.

The Measure Z Bonds mature on the dates and in the amounts authorized in the Bond Resolution. The Measure Z Bonds are dated their date of delivery and bear interest payable semiannually on each February 1 and August 1, commencing February 1, 2019, at the rates per annum authorized in the Bond Resolution. The Measure Z Bonds are registered bonds as set forth in the Bond Resolution.

Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that:

(1) The Measure Z Bonds have been duly and validly authorized and constitute legal, valid and binding obligations of the District enforceable in accordance with the terms of the Bond Resolution, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by

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limitations on legal remedies against public agencies in the State of California. The Measure Z Bonds are obligations of the District but are not a debt of the County, the State of California or any other political subdivision thereof within the meaning of any constitutional or statutory limitation, and neither the faith and credit nor the taxing power of the County, the State of California, or any such political subdivisions is pledged for the payment thereof.

(2) The Bond Resolution has been duly adopted by the Board of Education of the District and constitutes the legal, valid and binding obligation of the District. The Bond Resolution is enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by limitations on legal remedies against public agencies in the State of California, provided, however, we express no opinion as to the enforceability of provisions of the Bond Resolution as to indemnification, penalty, contribution, choice of law, choice of forum or waiver contained therein.

(3) The Measure Z Bonds are secured by the proceeds of ad valorem taxes levied upon taxable property in the District which the Board of Supervisors of the County has the power to levy and is obligated by statute to levy without limit as to rate or amount (except as to certain personal property which is taxable at limited rates) for payment of the Measure Z Bonds and the interest thereon.

(4) Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) on the Measure Z Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals.

(5) Interest (and original issue discount) on the Measure Z Bonds is exempt from State of California personal income tax.

(6) The difference between the issue price of a Measure Z Bond (the first price at which a substantial amount of the Measure Z Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Measure Z Bond (to the extent the redemption price at maturity is more than the issue price) constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Measure Z Bond owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Measure Z Bond owner will increase the Measure Z Bond owner’s basis in the applicable Measure Z Bond. Original issue discount that accrues for the Measure Z Bond owner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and is exempt from State of California personal income tax.

(7) The amount by which a Measure Z Bond owner’s original basis for determining loss on sale or exchange in the applicable Measure Z Bond (generally the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium which must be amortized under Section 171 of the Internal Revenue Code of 1986, as amended (the “Code”); such amortizable bond premium reduces the bond owner’s basis in the applicable Measure Z Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a

B-6

Measure Z Bond owner realizing a taxable gain when a Measure Z Bond is sold by the owner for an amount equal to or less (under certain circumstances) than the original cost of the Measure Z Bond to the owner.

The opinions expressed in paragraphs (4) and (6) above as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Measure Z Bonds are subject to the condition that the District complies with all requirements of the Code that must be satisfied subsequent to the issuance of the Measure Z Bonds to assure that such interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Measure Z Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Measure Z Bonds. The District has covenanted to comply with all such requirements. Except as set forth in paragraphs (4), (5), (6) and (7) above, we express no opinion as to any tax consequences related to the Measure Z Bonds.

Certain agreements, requirements and procedures contained or referred to in the Bond Resolution and the Tax Certificate executed by the District with respect to the Measure Z Bonds may be changed and certain actions may be taken or omitted, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax exempt obligations. We express no opinion as to the effect on the exclusion from gross income for federal income tax purposes of the interest (and original issue discount) on any Measure Z Bonds if any such change occurs or action is taken or omitted upon advice or approval of bond counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation.

The opinions expressed herein and the exclusion of interest on the Measure Z Bonds from gross income for federal income tax purposes may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Our engagement as bond counsel to the District terminates upon the issuance of the Measure Z Bonds.

The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities.

Our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.

We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement relating to the Measure Z Bonds or other offering material relating to the Measure Z Bonds and expressly disclaim any duty to advise the owners of the Measure Z Bonds with respect to matters contained in the Official Statement.

Respectfully submitted,

C-1

APPENDIX C

AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR FISCAL YEAR 2016-17



AUDIT REPORT JUNE 30, 2017


TABLE OF CONTENTS

FOR THE YEAR ENDED JUNE 30, 2017

FINANCIAL SECTION

Independent Auditors’ Report ............................................................................................................................................. 1 Management’s Discussion and Analysis ............................................................................................................................. 4 Basic Financial Statements

Government‐wide Financial Statements

Statement of Net Position .......................................................................................................................................... 11 Statement of Activities ............................................................................................................................................... 12

Fund Financial Statements

Governmental Funds – Balance Sheet ...................................................................................................................... 13 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ........................... 14 Governmental Funds – Statement of Revenues, Expenditures, and Changes in Fund Balances ..................... 16 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund

Balances to the Statement of Activities ................................................................................................................. 17 Proprietary Funds – Statement of Net Position ...................................................................................................... 19 Proprietary Funds – Statement of Revenues, Expenses, and Changes in Net Position ..................................... 20 Proprietary Funds – Statement of Cash Flows ........................................................................................................ 21 Fiduciary Funds – Statement of Net Position .......................................................................................................... 22

Notes to Financial Statements ............................................................................................................................................ 23

REQUIRED SUPPLEMENTARY INFORMATION

General Fund – Budgetary Comparison Schedule .......................................................................................................... 57 Schedule of Funding Progress ............................................................................................................................................ 58 Schedule of the District’s Proportionate Share of the Net Pension Liability ‐ CalSTRS ............................................. 59 Schedule of the District’s Proportionate Share of the Net Pension Liability ‐ CalPERS ............................................. 60 Schedule of District Contributions ‐ CalSTRS .................................................................................................................. 61 Schedule of District Contributions ‐ CalPERS .................................................................................................................. 62 Notes to Required Supplementary Information............................................................................................................... 63

SUPPLEMENTARY INFORMATION

Schedule of Expenditures of Federal Awards .................................................................................................................. 64 Schedule of Average Daily Attendance (ADA) ................................................................................................................ 65 Schedule of Instructional Time ........................................................................................................................................... 66 Schedule of Financial Trends and Analysis ...................................................................................................................... 67 Reconciliation of Annual Financial and Budget Report with Audited Financial Statements .................................... 68 Combining Statements – Non‐Major Governmental Funds

Combining Balance Sheet ............................................................................................................................................ 69 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ........................................... 70

Local Education Agency Organization Structure ............................................................................................................ 71 Notes to Supplementary Information ................................................................................................................................ 72


TABLE OF CONTENTS


OTHER INDEPENDENT AUDITORS’ REPORTS

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 ........................................ 74 Report on Compliance For Each Major Federal Program; and Report on Internal Control Over Compliance

Required by the Uniform Guidance ................................................................................................................................ 76 Report on State Compliance ................................................................................................................................................ 78

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

Summary of Auditors’ Results ........................................................................................................................................... 81 Financial Statement Findings .............................................................................................................................................. 82 Federal Award Findings and Questioned Costs .............................................................................................................. 83 State Award Findings and Questioned Costs ................................................................................................................... 84 Summary Schedule of Prior Audit Findings .................................................................................................................... 85

FINANCIAL SECTION

Christy White, CPA

Michael D. Ash, CPA

John Whitehouse, CPA

Heather Daud Rubio

SAN DIEGO

LOS ANGELES

SAN FRANCISCO/BAY AREA

Corporate Office:348 Olive Street

San Diego, CA 92103

toll-free: 877.220.7229tel: 619.270.8222fax: 619.260.9085

www.christywhite.com

1

INDEPENDENT AUDITORS’ REPORT

Governing Board

East Whittier City School District

Whittier, California

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, each

major fund, and the aggregate remaining fund information of the East Whittier City School

District, as of and for the year ended June 30, 2017, and the related notes to the financial

statements, which collectively comprise the East Whittier City School District’s basic financial

statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial

statements in accordance with accounting principles generally accepted in the United States

of America; this includes the design, implementation, and maintenance of internal control

relevant to the preparation and fair presentation of financial statements that are free from

material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We

conducted our audit in accordance with auditing standards generally accepted in the United

States of America and the standards applicable to financial audits contained in Government

Auditing Standards, issued by the Comptroller General of the United States. Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditorʹs

judgment, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entityʹs preparation and fair presentation of the

financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

entityʹs internal control. Accordingly, we express no such opinion. An audit also includes

evaluating the appropriateness of accounting policies used and the reasonableness of

significant accounting estimates made by management, as well as evaluating the overall

presentation of the financial statements.

2

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective

financial position of the governmental activities, each major fund, and the aggregate remaining fund information of

East Whittier City School District, as of June 30, 2017, and the respective changes in financial position and, where

applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted

in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the required supplementary

information, such as management’s discussion and analysis, budgetary comparison information, schedule of funding

progress for OPEB benefits, schedules of proportionate share of net pension liability, and schedules of District

contributions for pensions be presented to supplement the basic financial statements. Such information, although

not part of the basic financial statements, is required by the Governmental Accounting Standards Board who

considers it to be an essential part of financial reporting for placing the basic financial statements in appropriate

operational, economic, or historical context. We have applied certain limited procedures to the required

supplementary information in accordance with auditing standards generally accepted in the United States of

America, which consisted of inquiries of management about the methods of preparing the information and

comparing the information for consistency with management’s responses to our inquiries, the basic financial

statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express

an opinion or provide any assurance on the information because the limited procedures do not provide us with

sufficient evidence to express an opinion or provide any assurance.

Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise

the East Whittier City School District’s basic financial statements. The supplementary information listed in the table

of contents, including the schedule of expenditures of Federal awards, which is required by the Title 2 U.S. Code of

Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements

for Federal Awards, is presented for purposes of additional analysis and is not a required part of the basic financial

statements.

The supplementary information listed in the table of contents is the responsibility of management and was derived

from and relates directly to the underlying accounting and other records used to prepare the basic financial

statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial

statements and certain additional procedures, including comparing and reconciling such information directly to the

underlying accounting and other records used to prepare the basic financial statements or to the basic financial

statements themselves, and other additional procedures in accordance with auditing standards generally accepted

in the United States of America. In our opinion, the supplementary information is fairly stated, in all material

respects, in relation to the basic financial statements as a whole.

3

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 5, 2017 on our

consideration of East Whittier City School Districtʹs internal control over financial reporting and on our tests of its

compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The

purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and

compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting

or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing

Standards in considering East Whittier City School District’s internal control over financial reporting and compliance.

San Diego, California

December 5, 2017


4

MANAGEMENT’S DISCUSSION AND ANALYSIS

INTRODUCTION

Our discussion and analysis of East Whittier City School District’s (District) financial performance provides an

overview of the District’s financial activities for the fiscal year ended June 30, 2017. It should be read in conjunction

with the District’s financial statements, which follow this section.

FINANCIAL HIGHLIGHTS

The District’s total net position was ($32,399,116) at June 30, 2017. This was a decrease of $1,617,516 from the

prior year.

Overall revenues were $100,300,529 which were less than expenses of $101,918,045.

OVERVIEW OF FINANCIAL STATEMENTS

Components of the Financials Section

Summary Detail

Management's Discussion &

Analysis

Basic Financial Statements

Required Supplementary

Information

Government-Wide Financial Statements

Fund Financial Statements

Notes to the Financial Statements


MANAGEMENT’S DISCUSSION AND ANALYSIS, continued


5

This annual report consists of three parts – Management’s Discussion and Analysis (this section), the basic financial

statements, and required supplementary information. The three sections together provide a comprehensive overview

of the District. The basic financial statements are comprised of two kinds of statements that present financial

information from different perspectives:

Government‐wide financial statements, which comprise the first two statements, provide both short‐term

and long‐term information about the entity’s overall financial position.

Fund financial statements focus on reporting the individual parts of District operations in more detail. The

fund financial statements comprise the remaining statements.

Governmental Funds provide a detailed short‐term view that helps you determine whether there are

more or fewer financial resources that can be spent in the near future to finance the District’s

programs.

Proprietary Funds report services for which the District charges customers a fee. Like the

government‐wide statements, they provide both long‐ and short‐term financial information.

Fiduciary Funds report balances for which the District is a custodian or trustee of the funds, such as

Associated Student Bodies and pension funds.

The financial statements also include notes that explain some of the information in the statements and provide more

detailed data. The basic financial statements are followed by a section of required and other supplementary

information that further explain and support the 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 position 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 District’s net position and how it has changed. Net position is one

way to measure the District’s financial health. Over time, increases or decreases in the District’s net position are an

indicator of whether its financial health is improving or deteriorating, respectively.

The government‐wide financial statements of the District include governmental activities. All of the District’s basic

services are included here, such as regular education, food service, maintenance and general administration. Local

control formula funding and federal and state grants finance most of these activities.




6

FINANCIAL ANALYSIS OF THE ENTITY AS A WHOLE

Net Position

The District’s net position was ($32,399,116) at June 30, 2017, as reflected in the table below. Of this amount,

($52,304,955) was unrestricted. Restricted net position is reported separately to show legal constraints from debt

covenants and enabling legislation that limit the Governing Board’s ability to use that net position for day‐to‐day

operations.

2017 2016 Net Change

ASSETS

Current and other assets 58,621,830$ 32,176,358$ 26,445,472$

Capital assets 17,607,228 16,396,820 1,210,408

Total Assets 76,229,058 48,573,178 27,655,880

DEFERRED OUTFLOWS OF RESOURCES 18,518,823 7,550,600 10,968,223

LIABILITIES

Current liabilities 11,709,678 10,006,085 1,703,593

Long‐term liabilities 111,825,031 69,134,059 42,690,972

Total Liabilities 123,534,709 79,140,144 44,394,565

DEFERRED INFLOWS OF RESOURCES 3,612,288 7,765,234 (4,152,946)

NET POSITION

Net investment in capital assets 11,301,751 12,607,841 (1,306,090)

Restricted 8,604,088 10,758,324 (2,154,236)

Unrestricted (52,304,955) (54,147,765) 1,842,810

Total Net Position (32,399,116)$ (30,781,600)$ (1,617,516)$

Governmental Activities




7

FINANCIAL ANALYSIS OF THE ENTITY AS A WHOLE (continued)

Changes in Net Position

The results of this year’s operations for the District as a whole are reported in the Statement of Activities. The table

below takes the information from the Statement and rearranges it slightly, so you can see our total revenues,

expenses, and special items for the year.


REVENUES

Program revenues

Charges for services 1,357,504$ 1,287,415$ 70,089$

Operating grants and contributions 16,848,074 13,427,199 3,420,875

General revenues

Property taxes 14,077,965 13,759,318 318,647

Unrestricted federal and state aid 66,886,562 67,633,418 (746,856)

Other 1,130,424 3,187,808 (2,057,384)

Total Revenues 100,300,529 99,295,158 1,005,371

EXPENSES

Instruction 69,347,395 61,069,759 8,277,636

Instruction‐related services 7,589,312 6,451,272 1,138,040

Pupil services 9,497,314 9,066,146 431,168

General administration 6,444,003 6,256,432 187,571

Plant services 8,154,426 8,496,689 (342,263)

Ancillary and community services 81,666 3,583 78,083

Debt service 409,834 451,893 (42,059)

Other Outgo 394,095 123,950 270,145

Total Expenses 101,918,045 91,919,724 9,998,321

Change in net position (1,617,516) 7,375,434 (8,992,950)

Net Position ‐ Beginning (30,781,600) (38,157,034) 7,375,434

Net Position ‐ Ending (32,399,116)$ (30,781,600)$ (1,617,516)$





8

FINANCIAL ANALYSIS OF THE ENTITY AS A WHOLE (continued)

Changes in Net Position (continued)

The total cost of all our governmental activities this year was $101,918,045, while the net cost of all our governmental

activities was $83,712,467. The amount that our taxpayers ultimately financed for these activities through taxes was

only $14,077,965 because the cost was paid by other governments and organizations who subsidized certain

programs with grants and contributions $83,734,636 and user charges and other revenues of $2,487,928.

In the table below we have presented the net cost of each of the District’s functions. As discussed above, net cost

shows the financial burden that was placed on the District’s taxpayers by each of these functions. Providing this

information allows our citizens to consider the cost of each function in comparison to the benefits they believe are

provided by that function.

2017 2016

Instruction 58,048,267$ 52,593,257$

Instruction‐related services 6,480,457 5,865,774

Pupil services 4,832,022 4,555,194

General administration 6,023,668 5,786,938

Plant services 7,635,217 8,138,846

Ancillary and community services 81,666 3,583

Debt service 409,834 451,893

Transfers to other agencies 201,336 (190,375)

Total Expenses 83,712,467$ 77,205,110$

Net Cost of Services

FINANCIAL ANALYSIS OF THE DISTRICT’S MAJOR FUNDS

The financial performance of the District as a whole is reflected in its governmental funds as well. As the District

completed this year, its governmental funds reported a combined fund balance of $48,532,692, which is more than

last year’s ending fund balance of $27,936,643. The District’s General Fund had $101,171 more in operating revenues

than expenditures for the year ended June 30, 2017. The Districtʹs Building Fund was new for the year ended June

30, 2017 and ended the year with a fund balance of $22,161,185.

CURRENT YEAR BUDGET 2016‐17

During the fiscal year, budget revisions and appropriation transfers are presented to the Board for their approval on

a monthly basis to reflect changes to both revenues and expenditures that become known during the year. In

addition, the Board of Education approves financial projections included with the Adopted Budget, First Interim,

and Second Interim financial reports. The Unaudited Actuals reflect the District’s financial projections and current

budget based on State and local financial information.




9

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

By the end of 2016‐17 the District had invested $17,607,228 in capital assets, net of accumulated depreciation.


CAPITAL ASSETS

Land 2,099,225$ 2,099,225$ ‐$

Construction in progress 2,415,641 ‐ 2,415,641

Land improvements 1,886,376 1,812,428 73,948

Buildings & improvements 45,761,418 45,761,418 ‐

Furniture & equipment 6,625,974 6,344,809 281,165

Accumulated depreciation (41,181,406) (39,621,060) (1,560,346)

Total Capital Assets 17,607,228$ 16,396,820$ 1,210,408$


Long‐Term Liabilities

At year‐end, the District had $111,825,031 in long‐term liabilities, an increase of 61.8% from last year – as shown in

the table below. (More detailed information about the District’s long‐term liabilities is presented in footnotes to the

financial statements.)


LONG‐TERM LIABILITIES

Total general obligation bonds 28,563,107$ 3,992,304$ 24,570,803$

Capital leases 31,026 51,618 (20,592)

Early retirement incentive 292,500 585,000 (292,500)

Compensated absences 270,966 311,969 (41,003)

Net OPEB obligation 289,440 291,688 (2,248)

Net pension liability 84,124,971 66,850,724 17,274,247

Less: current portion of long‐term debt (1,746,979) (2,949,244) 1,202,265

Total Long‐term Liabilities 111,825,031$ 69,134,059$ 42,690,972$





10

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES

At the time these financial statements were prepared and audited, the District was aware of several circumstances

that could affect its future financial health.

Landmark legislation passed in Year 2013 reformed California school district finance by creating the Local Control

Funding Formula (LCFF). The District continues to analyze the impact of the LCFF on funding for our program

offerings and services. The LCFF is designed to provide a flexible funding mechanism that links student achievement

to state funding levels. The LCFF provides a per pupil base grant amount, by grade span, that is augmented by

supplemental funding for targeted student groups in low income brackets, those that are English language learners

and foster youth. The State anticipates all school districts to reach the statewide targeted base funding levels by 2020‐

21 but the annual amount funded to meet the target is uncertain.

Factors related to LCFF that the District is monitoring include: (1) estimates of funding in the next budget year and

beyond; (2) the Local Control and Accountability Plan (LCAP) that aims to link student accountability measurements

to funding allocations; (3) ensuring the integrity of reporting student data through the California Longitudinal Pupil

Achievement Data System (CALPADs); and, (4) meeting annual compliance and audit requirements.

State revenues are estimated to increase modestly in 2017‐18 but there is uncertainty about the State’s long‐term

economic growth. According to the Legislative Analyst’s Office, there are concerns about a possible mild recession.

In addition, purchasing power has not been restored to pre‐2007/08 levels for most school districts as added funding

is going to pay for increases in CalPERS and CalSTRS rates increases and rising health care costs.

The District participates in state employee pensions plans, PERS and STRS, and both are underfunded. The District’s

proportionate share of the liability is reported in the Statement of Net Position as of June 30, 2017. The amount of

the liability is material to the financial position of the District. To address the underfunding issues, the pension plans

continue to raise employer rates in future years and the increased costs are significant.

Enrollment can fluctuate due to factors such as population growth, competition from private, parochial, inter‐district

transfers in or out, economic conditions and housing values. Losses in enrollment will cause a school district to lose

operating revenues without necessarily permitting the district to make adjustments in fixed operating costs.

All of these factors were considered in preparing the District’s budget for the 2017‐18 fiscal year.

CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, students, and investors and creditors with a

general overview of the District’s finances and to show the District’s accountability for the money it receives. If you

have questions about this report or need any additional financial information, contact the Business Office, 14535

Whittier Boulevard; Whittier, CA 90605.


The accompanying notes are an integral part of these financial statements.

11

STATEMENT OF NET POSITION

JUNE 30, 2017

Governmental

Activities

ASSETS

Cash and investments 54,674,469$

Accounts receivable 3,860,614

Inventory 78,967

Prepaid expenses 7,780

Capital assets, not depreciated 4,514,866

Capital assets, net of accumulated depreciation 13,092,362

Total Assets 76,229,058

DEFERRED OUTFLOWS OF RESOURCES

Deferred outflows related to pensions 18,391,352

Deferred amount on refunding 127,471

Total Deferred Outflows of Resources 18,518,823

LIABILITIES

Accrued liabilities 9,193,216

Unearned revenue 769,483

Long‐term liabilities, current portion 1,746,979

Long‐term liabilities, non‐current portion 111,825,031

Total Liabilities 123,534,709

DEFERRED INFLOWS OF RESOURCES

Deferred inflows related to pensions 3,612,288

Total Deferred Inflows of Resources 3,612,288

NET POSITION

Net investment in capital assets 11,301,751

Restricted:

Capital projects 530,960

Debt service 4,544,477

Educational programs 2,862,573

All others 666,078

Unrestricted (52,304,955)

Total Net Position (32,399,116)$



12

STATEMENT OF ACTIVITIES


Operating

Charges for Grants and Governmental

Expenses Services Contributions Activities

GOVERNMENTAL ACTIVITIES

Instruction 69,347,395$ 418,137$ 10,880,991$ (58,048,267)$

Instruction‐related services

Instructional supervision and administration 1,736,246 18,600 816,956 (900,690)

School site administration 5,853,066 ‐ 273,299 (5,579,767)

Pupil services

Home‐to‐school transportation 1,526,502 ‐ ‐ (1,526,502)

Food services 4,144,086 856,205 3,229,907 (57,974)

All other pupil services 3,826,726 13,716 565,464 (3,247,546)

General administration

Centralized data processing 1,531,741 ‐ ‐ (1,531,741)

All other general administration 4,912,262 42,360 377,975 (4,491,927)

Plant services 8,154,426 7,670 511,539 (7,635,217)

Interest on long‐term debt 409,834 ‐ ‐ (409,834)

Other Outgo 394,095 816 191,943 (201,336)

Total Governmental Activities 101,918,045$ 1,357,504$ 16,848,074$ (83,712,467)

General revenues

Taxes and subventions

Property taxes, levied for general purposes 12,597,809

Property taxes, levied for debt service 1,297,475

Property taxes, levied for other specific purposes 182,681

Federal and state aid not restricted for specific purposes 66,886,562

Interest and investment earnings 266,664

Miscellaneous 863,760

Subtotal, General Revenue 82,094,951

CHANGE IN NET POSITION (1,617,516)

Net Position ‐ Beginning (30,781,600)

Net Position ‐ Ending (32,399,116)$

Function/Programs

Net (Expenses)

Revenues and

Changes in

Program Revenues Net Position



13

GOVERNMENTAL FUNDS

BALANCE SHEET

JUNE 30, 2017

General Fund Building Fund

Non‐Major

Governmental

Funds

Total

Governmental

Funds

ASSETS

Cash and investments 24,205,040$ 24,358,710$ 4,364,136$ 52,927,886$

Accounts receivable 3,238,352 93,069 523,257 3,854,678

Bonds receivable ‐ ‐ 1,290,000 1,290,000

Stores inventory ‐ ‐ 78,967 78,967

Prepaid expenditures 7,780 ‐ ‐ 7,780

Total Assets 27,451,172$ 24,451,779$ 6,256,360$ 58,159,311$

LIABILITIES

Accrued liabilities 6,461,559$ 2,290,594$ 104,983$ 8,857,136$

Unearned revenue 683,867 ‐ 85,616 769,483

Total Liabilities 7,145,426 2,290,594 190,599 9,626,619

FUND BALANCES

Nonspendable 17,648 ‐ 80,454 98,102

Restricted 2,862,573 22,161,185 5,985,307 31,009,065

Assigned 560,143 ‐ ‐ 560,143

Unassigned 16,865,382 ‐ ‐ 16,865,382

Total Fund Balances 20,305,746 22,161,185 6,065,761 48,532,692

Total Liabilities and Fund Balances 27,451,172$ 24,451,779$ 6,256,360$ 58,159,311$



14

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT

OF NET POSITION

JUNE 30, 2017

Total Fund Balance ‐ Governmental Funds 48,532,692$

Amounts reported for assets and liabilities for governmental activities in the

statement of net position are different from amounts reported in governmental

funds because:

Capital assets:

In governmental funds, only current assets are reported. In the statement

of net position, all assets are reported, including capital assets and

accumulated depreciation:

Capital assets 58,788,634$

Accumulated depreciation (41,181,406) 17,607,228

Internal bonds receivable:

In governmental funds, amounts related to the repayment of long‐term

obligations are recognized as accounts receivable with the Financing

Authority. In the government‐wide statements, these amounts are

eliminated: (1,290,000)

Deferred amount on refunding:

In governmental funds, the net effect of refunding bonds is recognized

when debt is issued, whereas this amount is deferred and amortized in the

government‐wide financial statements: 127,471

Unmatured interest on long‐term debt:

In governmental funds, interest on long‐term debt is not recognized until

the period in which it matures and is paid. In the government‐wide

statement of activities, it is recognized in the period that it is incurred. The

additional liability for unmatured interest owing at the end of the period

was: (243,792)

Long‐term liabilities:

In governmental funds, only current liabilities are reported. In the

statement of net position, all liabilities, including long‐term liabilities, are

reported. Long‐term liabilities relating to governmental activities consist

of:

Total general obligation bonds 28,563,107$

Capital leases 31,026

Early retirement incentive 292,500

Compensated absences 270,966

Net OPEB obligation 289,440

Net pension liability 84,124,971 (113,572,010)

(continued on next page)



15

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT

OF NET POSITION, continued

JUNE 30, 2017

Deferred outflows and inflows of resources relating to pensions:

In governmental funds, deferred outflows and inflows of resources relating

to pensions are not reported because they are applicable to future periods.

In the statement of net position, deferred outflows and inflows of resources

relating to pensions are reported.

Deferred outflows of resources related to pensions 18,391,352$

Deferred inflows of resources related to pensions (3,612,288) 14,779,064

Internal service funds:

Internal service funds are used to conduct certain activities for which costs

are charged to other funds on a full cost‐recovery basis. Because internal

service funds are presumed to operate for the benefit of governmental

activities, assets, deferred outflows of resources, liabilities, and deferred

inflows of resources of internal service funds are reported with

governmental activities in the statement of net position. Net position for

internal service funds is: 1,660,231

Total Net Position ‐ Governmental Activities (32,399,116)$



16

GOVERNMENTAL FUNDS

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES



Non‐Major

Governmental

Funds

Total

Governmental

Funds

REVENUES

LCFF sources 73,434,359$ ‐$ ‐$ 73,434,359$

Federal sources 3,127,995 ‐ 3,203,239 6,331,234

Other state sources 8,114,452 ‐ 203,817 8,318,269

Other local sources 5,208,412 93,069 2,551,767 7,853,248

Total Revenues 89,885,218 93,069 5,958,823 95,937,110

EXPENDITURES

Current

Instruction 63,602,415 ‐ ‐ 63,602,415

Instruction‐related services

Instructional supervision and administration 1,546,226 ‐ ‐ 1,546,226

School site administration 5,394,349 ‐ ‐ 5,394,349

Pupil services

Home‐to‐school transportation 1,504,388 ‐ ‐ 1,504,388

Food services ‐ ‐ 4,096,715 4,096,715

All other pupil services 3,566,636 ‐ ‐ 3,566,636


Centralized data processing 1,560,675 ‐ ‐ 1,560,675

All other general administration 4,530,148 89,679 188,600 4,808,427

Plant services 7,952,745 ‐ 34,149 7,986,894

Facilities acquisition and maintenance 73,948 2,652,205 ‐ 2,726,153

Transfers to other agencies 29,675 ‐ ‐ 29,675

Debt service

Principal 20,592 ‐ 5,155,000 5,175,592

Interest and other 2,250 303,100 244,521 549,871

Total Expenditures 89,784,047 3,044,984 9,718,985 102,548,016

Excess (Deficiency) of Revenues

Over Expenditures 101,171 (2,951,915) (3,760,162) (6,610,906)

Other Financing Sources (Uses)

Other sources ‐ 25,113,100 2,093,855 27,206,955

Net Financing Sources (Uses) ‐ 25,113,100 2,093,855 27,206,955

NET CHANGE IN FUND BALANCE 101,171 22,161,185 (1,666,307) 20,596,049

Fund Balance ‐ Beginning 20,204,575 ‐ 7,732,068 27,936,643

Fund Balance ‐ Ending 20,305,746$ 22,161,185$ 6,065,761$ 48,532,692$



17

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 20,596,049$

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

from amounts reported in governmental funds because:

Capital outlay:

In governmental funds, the costs of capital assets are reported as expenditures in

the period when the assets are acquired. In the statement of activities, costs of

capital assets are allocated over their estimated useful lives as depreciation

expense. The difference between capital outlay expenditures and depreciation

expense for the period is:

Expenditures for capital outlay: 2,770,754$

Depreciation expense: (1,560,346) 1,210,408

Debt service:

In governmental funds, repayments of long‐term debt are reported as expenditures.

In the government‐wide statements, repayments of long‐term debt are reported as

reductions of liabilities. Expenditures for repayment of the principal portion of long‐

term debt were: 2,590,592

Internal debt service:

In governmental funds, repayments of internal debt between the District and the

Financing Authority are reported as expenditures. In the government‐wide

statements, repayments of internal debt are eliminated. Expenditures for the

repayment of the principal portion of internal debt were: 2,585,000

Debt proceeds:

In governmental funds, proceeds from debt are recognized as Other Financing

Sources. In the government‐wide statements, proceeds from debt are reported as

increases to liabilities. Amounts recognized in governmental funds as proceeds

from debt, net of issue premium or discount, were: (27,206,955)

Deferred amounts on refunding:

In governmental funds, deferred amounts on refunding are recognized in the period

they are incurred. In the government‐wide statements, the deferred amounts on

refunding are amortized over the life of the debt. The net effect of the deferred

amounts on refunding during the period was: (127,472)

Unmatured interest on long‐term debt:

In governmental funds, interest on long‐term debt is recognized in the period that it

becomes due. In the government‐wide statement of activities, it is recognized in the

period it is incurred. Unmatured interest owing at the end of the period, less

matured interest paid during the period but owing from the prior period, was: (163,063)

(continued on next page)



18

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,

EXPENDITURES, AND CHANGES IN FUND BALANCE TO THE STATEMENT OF

ACTIVITIES, continued


Compensated absences:

In governmental funds, compensated absences are measured by the amounts paid

during the period. In the statement of activities, compensated absences are

measured by the amount earned. The difference between compensated absences

paid and compensated absences earned, was: 41,003

Postemployment benefits other than pensions (OPEB):

In governmental funds, OPEB costs are recognized when employer contributions

are made. In the statement of activities, OPEB costs are recognized on the accrual

basis. This year, the difference between OPEB costs and actual employer

contributions was: 2,248

Pensions:

In governmental funds, pension costs are recognized when employer contributions

are made, in the government‐wide statement of activities, pension costs are

recognized on the accrual basis. This year, the difference between accrual‐basis

pension costs and employer contributions was: (2,025,606)

Other liabilities not normally liquidated with current financial resources:

In the government‐wide statements, expenses must be accrued in connection with

any liabilities incurred during the period that are not expected to be liquidated

with current financial resources. Examples include special termination benefits

such as retirement incentives financed over time, and structured legal settlements.

This year, expenses incurred for such obligations were: 292,500

Amortization of debt issuance premium or discount:

In governmental funds, if debt is issued at a premium or at a discount, the premium

or discount is recognized as an Other Financing Source or an Other Financing Use

in the period it is incurred. In the government‐wide statements, the premium or

discount is amortized over the life of the debt. Amortization of premium or

discount for the period is: 66,152

Internal Service Funds:

Internal service funds are used to conduct certain activities for which costs are

charged to other funds on a full cost‐recovery basis. Because internal service funds

are presumed to benefit governmental activities, internal service activities are

reported as governmental in the statement of activities. The net increase or

decrease in internal service funds was: 521,628

Change in Net Position of Governmental Activities (1,617,516)$



19

PROPRIETARY FUNDS


JUNE 30, 2017

Internal Service

Fund

ASSETS

Current assets

Cash and investments 1,746,583$

Accounts receivable 5,936

Total Assets 1,752,519

LIABILITIES

Current liabilities

Accrued liabilities 92,288

Total Liabilities 92,288

NET POSITION

Unrestricted 1,660,231

Total Net Position 1,660,231$

Governmental

Activities



20

PROPRIETARY FUNDS

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION


Internal Service

Fund

OPERATING REVENUE

Charges for services 471,373$

Other local revenues 182,562

Total operating revenues 653,935

OPERATING EXPENSE

Professional services 145,350

Total operating expenses 145,350

Operating income/(loss) 508,585

NON‐OPERATING REVENUES/(EXPENSES)

Interest income 13,043

Total non‐operating revenues/(expenses) 13,043

CHANGE IN NET POSITION 521,628

Net Position ‐ Beginning 1,138,603

Net Position ‐ Ending 1,660,231$

Governmental

Activities



21

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS


Internal Service

Fund

Cash flows from operating activities

Cash received (paid) from assessments made to

(from) other funds 649,877$

Cash payments for payroll, insurance, and operating costs (145,350)

Net cash provided by (used for) operating activities 504,527

Cash flows from investing activities

Interest received 13,043

Net cash provided by (used for) investing activities 13,043

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 517,570

CASH AND CASH EQUIVALENTS

Beginning of year 1,229,013

End of year 1,746,583$

Reconciliation of operating income (loss) to cash

provided by (used for) operating activities

Operating income (loss) 508,585$

Adjustments to reconcile operating income (loss) to net cash

provided by (used in) operating activities:

Changes in assets and liabilities:

(Increase) decrease in accounts receivable (4,058)

Net cash provided by (used for) operating activities 504,527$

Governmental

Activities



22

FIDUCIARY FUNDS


JUNE 30, 2017

Warrant/Pass‐

through Fund

Student Body

Fund

ASSETS

Cash and investments 262,563$ 188,573$

Stores inventory ‐ 7,154

Total Assets 262,563$ 195,727$

LIABILITIES

Accrued liabilities 262,563$ 247$

Due to student groups ‐ 195,480

Total Liabilities 262,563$ 195,727$

Agency Funds


23

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2017

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Financial Reporting Entity

The East Whittier City School District (the “District”) accounts for its financial transactions in accordance with

the policies and procedures of the Department of Educationʹs California School Accounting Manual. The

accounting policies of the District conform to generally accepted accounting principles as prescribed by the

Governmental Accounting Standards Board (GASB) and the American Institute of Certified Public Accountants

(AICPA).

The District operates under a locally elected Board form of government and provides educational services to

grades K‐8 as mandated by the state. A reporting entity is comprised of the primary government, component

units, and other organizations that are included to ensure the financial statements are not misleading. The

primary government of the District consists of all funds, departments and agencies that are not legally separate

from the District. For the District, this includes general operations, food service, and student‐related activities.

B. Component Units

Component units are legally separate organizations for which the District is financially accountable. Component

units may also include organizations that are fiscally dependent on the District in that the District approves their

budget, the issuance of their debt or the levying of their taxes. In addition, component units are other legally

separate organizations for which the District is not financially accountable but the nature and significance of the

organization’s relationship with the District is such that exclusion would cause the District’s financial statements

to be misleading or incomplete.

Based upon the application of the criteria listed above, the East Whittier City School Facilities Financing

Authority has been included in the financial statements as a blended component unit. The Financing Authority

was created on April 1, 2007, for the purpose of assisting financing and refinancing of certain public programs

and projects of the District and for the purpose of aiding in the financing and refinancing of public capital

improvements for the benefit of the District.

C. Basis of Presentation

Government‐Wide Statements. The statement of net position and the statement of activities display information

about the primary government (the District). These statements include the financial activities of the overall

government, except for fiduciary activities. Eliminations have been made to minimize the double‐counting of

internal activities. Governmental activities generally are financed through taxes, intergovernmental revenue,

and other non‐exchange transactions.


NOTES TO FINANCIAL STATEMENTS, continued

JUNE 30, 2017

24

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

C. Basis of Presentation (continued)

Government‐Wide Statements, continued

The statement of activities presents a comparison between direct expenses and program revenue for each

function of the District’s governmental activities. Direct expenses are those that are specifically associated with

a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations

that have been made in the funds have been reserved for the statement of activities. Program revenues include

charges paid by the recipients of the goods or services offered by the programs and grants and contributions that

are restricted to meeting of operational or capital requirements of a particular program. Revenues that are not

classified as program revenues are presented as general revenues. The comparison of program revenues and

expenses identifies the extent to which each program or business segment is self‐financing or draws from the

general revenues of the District.

Fund Financial Statements. The fund financial statements provide information about the District’s funds,

including its proprietary and fiduciary funds. Separate statements for each fund category – governmental,

proprietary and fiduciary – are presented. The emphasis of fund financial statements is on major governmental

funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as

non‐major funds.

Governmental funds are used to account for activities that are governmental in nature. Governmental activities

are typically tax‐supported and include education of pupils, operation of food service and child development

programs, construction and maintenance of school facilities, and repayment of long‐term debt.

Proprietary funds are used to account for activities that are more business‐like than government‐like in nature.

Business‐type activities include those for which a fee is charged to external users or to other organizational units

of the District, normally on a full cost‐recovery basis. Proprietary funds are generally intended to be self‐

supporting.

Fiduciary funds are used to account for assets held by the District in a trustee or agency capacity for others that

cannot be used to support the Districtʹs own programs.

Major Governmental Funds

General Fund: The General Fund is the main operating fund of the District. It is used to account for all activities

except those that are required to be accounted for in another fund. In keeping with the minimum number of

funds principle, all of the Districtʹs activities are reported in the General Fund unless there is a compelling reason

to account for an activity in another fund. A District may have only one General Fund.

Building Fund: This fund exists primarily to account separately for proceeds from the sale of bonds (Education

Code Section 15146) and may not be used for any purposes other than those for which the bonds were issued.

Other authorized revenues to the Building Fund are proceeds from the sale or lease‐with‐option‐to‐purchase of

real property (Education Code Section 17462) and revenue from rentals and leases of real property specifically

authorized for deposit into the fund by the governing board (Education Code Section 41003).



JUNE 30, 2017

25



Non‐Major Governmental Funds

Special Revenue Funds: Special revenue funds are used to account for and report the proceeds of specific

revenue sources that are restricted or committed to expenditures for specified purposes other than debt service

or capital projects. The District maintains the following special revenue funds:

Cafeteria Special Revenue Fund: This fund is used to account separately for federal, state, and local

resources to operate the food service program (Education Code Sections 38090–38093). The Cafeteria Special

Revenue Fund shall be used only for those expenditures authorized by the governing board as necessary for

the operation of the Districtʹs food service program (Education Code Sections 38091 and 38100).

Capital Project Funds: Capital project funds are established to account for financial resources to be used for the

acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust

funds).

Capital Facilities Fund: This fund is used primarily to account separately for moneys received from fees

levied on developers or other agencies as a condition of approving a development (Education Code Sections

17620–17626). The authority for these levies may be county/city ordinances (Government Code Sections 65970–

65981) or private agreements between the District and the developer. Interest earned in the Capital Facilities

Fund is restricted to that fund (Government Code Section 66006).

Special Reserve Fund for Capital Outlay Projects: This fund exists primarily to provide for the

accumulation of General Fund moneys for capital outlay purposes (Education Code Section 42840).

Debt Service Funds: Debt service funds are established to account for the accumulation of resources for and the

payment of principal and interest on general long‐term debt.

Bond Interest and Redemption Fund: This fund is used for the repayment of bonds issued for the District

(Education Code Sections 15125–15262). The board of supervisors of the county issues the bonds. The proceeds

from the sale of the bonds are deposited in the county treasury to the Building Fund of the District. Any

premiums or accrued interest received from the sale of the bonds must be deposited in the Bond Interest and

Redemption Fund of the District. The county auditor maintains control over the Districtʹs Bond Interest and

Redemption Fund. The principal and interest on the bonds must be paid by the county treasurer from taxes

levied by the county auditor‐controller.

Debt Service Fund for Blended Component Units: The Debt Service Fund for Blended Component Units is

used to account for the activity of the East Whittier City School Facilities Financing Authority. The Authority

was formed to refinance the District’s general obligation bonds.



JUNE 30, 2017

26



Proprietary Funds

Internal Service Funds: Internal service funds are created principally to render services to other organizational

units of the District on a cost‐reimbursement basis. These funds are designed to be self‐supporting with the intent

of full recovery of costs, including some measure of the cost of capital assets, through user fees and charges.

Self‐Insurance Fund: Self‐insurance funds are used to separate moneys received for self‐insurance activities

from other operating funds of the District. Separate funds may be established for each type of self‐insurance

activity, such as workersʹ compensation, health and welfare, and deductible property loss (Education Code

Section 17566).

Fiduciary Funds

Trust and Agency Funds: Trust and agency funds are used to account for assets held in a trustee or agent

capacity for others that cannot be used to support the Districtʹs own programs. The key distinction between trust

and agency funds is that trust funds are subject to a trust agreement that affects the degree of management

involvement and the length of time that the resources are held.

Warrant/Pass‐Through Fund: This fund exists primarily to account separately for amounts collected from

employees for federal taxes, state taxes, transfers to credit unions, and other contributions.

Student Body Fund: The Student Body Fund is an agency fund and, therefore, consists only of accounts such

as cash and balancing liability accounts, such as due to student groups. The student body itself maintains its

own general fund, which accounts for the transactions of that entity in raising and expending money to

promote the general welfare, morale, and educational experiences of the student body (Education Code

Sections 48930–48938).

D. Basis of Accounting – Measurement Focus

Government‐Wide, Proprietary, and Fiduciary Financial Statements

The government‐wide, proprietary, and fiduciary fund financial statements are reported using the economic

resources measurement focus. The government‐wide, proprietary, and fiduciary fund financial statements are

reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded

at the time liabilities are incurred, regardless of when the related cash flows take place.



JUNE 30, 2017

27


D. Basis of Accounting – Measurement Focus (continued)

Government‐Wide, Proprietary, and Fiduciary Financial Statements, continued

Net Position equals assets and deferred outflows of resources minus liabilities and deferred inflows of resources.

Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the

outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets.

The net position should be reported as restricted when constraints placed on its use are either externally imposed

by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other

governments or imposed by law through constitutional provisions or enabling legislation. The net position

restricted for other activities results from special revenue funds and the restrictions on their use.

Proprietary funds distinguish operating revenues and expenses from non operating items. Operating revenues

and expenses generally result from providing services and producing and delivering goods in connection with

a proprietary fund’s principal ongoing operations. The principal operating revenues of the internal service fund

are charges to other funds for self insurance costs. Operating expenses for internal service funds include the

costs of insurance premiums and claims related to self‐insurance.

Governmental Funds

Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the

financial statements. Governmental funds use the modified accrual basis of accounting.

Revenues – Exchange and Non‐Exchange Transactions

Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is

recorded under 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 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. Generally, “available” means collectible within the current period or

within 60 days after year‐end. However, to achieve comparability of reporting among California school districts

and so as not to distort normal revenue patterns, with specific respect to reimbursement grants and corrections

to State‐aid apportionments, the California Department of Education has defined available for school districts as

collectible within one year.

Non‐exchange transactions, in which the District receives value without directly giving equal value in return,

include property taxes, grants, and entitlements. Under the accrual basis, revenue from property taxes is

recognized in the fiscal year for which the taxes are levied. Revenue from the grants and entitlements 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 to be used

or the fiscal year when use is first permitted; matching requirements, in which the District must provide local

resources to be used for a specific purpose; and expenditure requirements, in which the resources are provided

to the District on a reimbursement basis. Under the modified accrual basis, revenue from non‐exchange

transactions must also be available before it can be recognized.



JUNE 30, 2017

28


D. Basis of Accounting – Measurement Focus (continued)

Unearned Revenue

Unearned revenue arises when potential revenue does not meet both the ʺmeasurableʺ and ʺavailableʺ criteria

for recognition in the current period or when resources are received by the District prior to the incurrence of

qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the

District has a legal claim to the resources, the liability for unearned revenue is removed from the balance sheet

and revenue is recognized.

Certain grants received that have not met eligibility requirements are recorded as unearned revenue. On the

governmental fund financial statements, receivables that will not be collected within the available period are also

recorded as unearned revenue.

Expenses/Expenditures

On the accrual basis of accounting, expenses are recognized at the time a liability is incurred. On the modified

accrual basis of accounting, expenditures are generally recognized in the accounting period in which the related

fund liability is incurred, as under the accrual basis of accounting. However, under the modified accrual basis

of accounting, debt service expenditures, as well as expenditures related to compensated absences and claims

and judgments, are recorded only when payment is due. Allocations of cost, such as depreciation and

amortization, are not recognized in the governmental funds. When both restricted and unrestricted resources

are available for use, it is the District’s policy to use restricted resources first, then unrestricted resources as they

are needed.

E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, Fund Balance and Net Position

Cash and Cash Equivalents

The District’s cash and cash equivalents consist of cash on hand, demand deposits and short‐term investments

with original maturities of three months or less from the date of acquisition. Cash equivalents also include cash

with county treasury balances for purposes of the statement of cash flows.

Investments

Investments with original maturities greater than one year are stated at fair value. Fair value is estimated based

on quoted market prices at year‐end. All investments not required to be reported at fair value are stated at cost

or amortized cost. Fair values of investments in county and State investment pools are determined by the

program sponsor.

Inventories

Inventories are recorded using the purchases method in that the cost is recorded as an expenditure at the time

the individual inventory items are requisitioned. Inventories are valued at historical cost and consist of

expendable supplies held for consumption.



JUNE 30, 2017

29


E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, Fund Balance and Net Position (continued)

Capital Assets

The accounting and reporting treatment applied to the capital assets associated with a fund is determined by its

measurement focus. Capital assets are reported in the governmental activities column of the government‐wide

statement of net position, but are not reported in the fund financial statements.

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 acquisition value as of the date received. The District

maintains a capitalization threshold of $5,000. The District does not own any infrastructure as defined in GASB

Statement No. 34. 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 capitalized. All reported capital assets, except

for land 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

estimated useful lives:

Asset Class Estimated Useful Life

Buildings and Improvements 20‐50 years

Furniture and Equipment 5‐20 years

Vehicles 8 years

Interfund Balances

On fund financial statements, receivables and payables resulting from short‐term interfund loans are classified

as ʺDue from other funds/Due to other funds.” These amounts are eliminated in the governmental activities

columns of the statement of net position.

Compensated Absences

Accumulated unpaid employee vacation benefits are accrued as a liability as the benefits are earned. The entire

compensated absence liability is reported on the government‐wide financial statements. For governmental

funds, the current portion of unpaid compensated absences is recognized upon the occurrence of relevant events

such as employee resignations and retirements that occur prior to year‐end that have not yet been paid with

expendable available financial resource. These amounts are recorded in the fund from which the employees who

have accumulated leave are paid.

Accumulated sick leave benefits are not recognized as liabilities of the District. The Districtʹs policy is to record

sick leave as an operating expense in the period taken because such benefits do not vest, nor is payment

probable; however, unused sick leave is added to the creditable service period for calculation of retirement

benefits when the employee retires.



JUNE 30, 2017

30



Accrued Liabilities and Long‐Term Obligations

All payables, accrued liabilities, and long‐term obligations are reported in the government‐wide and proprietary

fund financial statements. In general, governmental fund payables and accrued liabilities that, once incurred,

are paid in a timely manner and in full from current financial resources are reported as obligations of the funds.

Premiums and Discounts

In the government‐wide and proprietary fund financial statements, long‐term obligations are reported as

liabilities in the applicable governmental activities or proprietary fund statement of net position. Bond premiums

and discounts are deferred and amortized over the life of the bonds using the straight line method.

Deferred Outflows/Deferred Inflows of Resources

In addition to assets, the District will sometimes report a separate section for deferred outflows of resources.

This separate financial statement element, deferred outflows of resources, represents a consumption of net

position that applies to a future period and so will not be recognized as an outflow of resources

(expense/expenditure) until then.

In addition to liabilities, the District will sometimes report a separate section for deferred inflows of resources.

This separate financial statement element, deferred inflows of resources, represents an acquisition of net position

that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time.

Pensions

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of

resources related to pensions, and pension expense, information about the fiduciary net position of the defined

benefit pension plans (the Plans) of the California State Teachers’ Retirement System (CalSTRS) and the

California Public Employees’ Retirement System (CalPERS) and additions to/deductions from the Plans’

fiduciary net position have been determined on the same basis as they are reported by the Plans. For this purpose,

benefit payments (including refunds of employee contributions) are recognized when due and payable in

accordance with the benefit terms. Investments are reported at fair value.



JUNE 30, 2017

31



Fund Balance

Fund balance is divided into five classifications based primarily on the extent to which the District is bound to

observe constraints imposed upon the use of the resources in the governmental funds. The classifications are as

follows:

Nonspendable ‐ The nonspendable fund balance classification reflects amounts that are not in spendable form.

Examples include inventory, prepaid items, the long‐term portion of loans receivable, and nonfinancial assets

held for resale. This classification also reflects amounts that are in spendable form but that are legally or

contractually required to remain intact, such as the principal of a permanent endowment.

Restricted ‐ The restricted fund balance classification reflects amounts subject to externally imposed and legally

enforceable constraints. Such constraints may be imposed by creditors, grantors, contributors, or laws or

regulations of other governments, or may be imposed by law through constitutional provisions or enabling

legislation.

Committed ‐ The committed fund balance classification reflects amounts subject to internal constraints self‐

imposed by formal action of the Governing Board. The constraints giving rise to committed fund balance must

be imposed no later than the end of the reporting period. The actual amounts may be determined subsequent to

that date but prior to the issuance of the financial statements. In contrast to restricted fund balance, committed

fund balance may be redirected by the government to other purposes as long as the original constraints are

removed or modified in the same manner in which they were imposed, that is, by the same formal action of the

Governing Board.

Assigned ‐ The assigned fund balance classification reflects amounts that the government intends to be used for

governing body, and are subject to neither the restricted nor committed levels of constraint. In contrast to the

constraints giving rise to committed fund balance, constraints giving rise to assigned fund balance are not

required to be imposed, modified, or removed by formal action of the Governing Board. The action does not

require the same level of formality and may be delegated to another body or official. Additionally, the assignment

need not be made before the end of the reporting period, but rather may be made any time prior to the issuance

of the financial statements.

Unassigned ‐ In the General Fund only, the unassigned fund balance classification reflects the residual balance

that has not been assigned to other funds and that is not restricted, committed, or assigned to specific purposes.

However, deficits in any fund, including the General Fund that cannot be eliminated by reducing or eliminating

amounts assigned to other purposes are reported as negative unassigned fund balance.

The District applies restricted resources first when expenditures are incurred for purposes for which either

restricted or unrestricted (committed, assigned and unassigned) amounts are available. Similarly, within

unrestricted fund balance, committed amounts are reduced first followed by assigned, and then unassigned

amounts when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance

classifications could be used.



JUNE 30, 2017

32


F. Interfund Activity

Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses

in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment

are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in

governmental funds and after non‐operating revenues/expenses in proprietary funds. Repayments from funds

responsible for particular expenditures/expenses to the funds that initially paid for them are not presented in the

financial statements. Interfund transfers are eliminated in the governmental activities columns of the statement

of activities.

G. Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the

United States of America requires management to make estimates and assumptions that affect the amounts

reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

H. Budgetary Data

The budgetary process is prescribed by provisions of the California Education Code and requires the governing

board to hold a public hearing and adopt an operating budget no later than July 1 of each year. The District

governing board satisfied these requirements. The adopted budget is subject to amendment throughout the year

to give consideration to unanticipated revenue and expenditures primarily resulting from events unknown at

the time of budget adoption with the legal restriction that expenditures cannot exceed appropriations by major

object account.

The amounts reported as the original budgeted amounts in the budgetary statements reflect the amounts when

the original appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetary

statements reflect the amounts after all budget amendments have been accounted for. For purposes of the budget,

on‐behalf payments have not been included as revenue and expenditures as required under generally accepted

accounting principles.

I. Property Tax

Secured property taxes attach as an enforceable lien on property as of January 1. Taxes are payable in two

installments on November 1 and February 1 and become delinquent on December 10 and April 10, respectively.

Unsecured property taxes are payable in one installment on or before August 31. The County Auditor‐Controller

bills and collects the taxes on behalf of the District. Local property tax revenues are recorded when received.



JUNE 30, 2017

33


J. New Accounting Pronouncements

GASB Statement No. 75 – In June 2015, GASB issued Statement No. 75, Accounting and Financial Reporting for

Postemployment Benefits Other Than Pensions. This standard’s primary objective is to improve accounting and

financial reporting by state and local governments for postemployment benefits other than pensions. The

Statement is effective for periods beginning after June 15, 2017. The District has not yet determined the impact

on the financial statements.

GASB Statement No. 80 – In January 2016, GASB issued Statement No. 80, Blending Requirements for Certain

Component Units – an Amendment of GASB Statement No. 14. This standard’s primary objective is to improve

financial reporting by clarifying the financial statement presentation requirements for certain component units.

The Statement is effective for periods beginning after June 15, 2016. The District has implemented GASB

Statement No. 80 for the year ended June 30, 2017.

GASB Statement No. 82 – In March 2016, GASB issued Statement No. 82, Pension Issues – an Amendment of GASB

Statements No. 67, No. 68, and No. 73. This standard’s primary objective is to address issues regarding the

presentation of payroll‐related measures in required supplementary information, the selection of assumptions

and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting

purposes, and the classification of payments made by employers to satisfy employee (plan member) contribution

requirements. The majority of this Statement is effective for periods beginning after June 15, 2016. The District

has implemented GASB Statement No. 82 for the year ended June 30, 2017.



JUNE 30, 2017

34

NOTE 2 – CASH AND INVESTMENTS

A. Summary of Cash and Investments

Total

Governmental Internal Service Governmental Fiduciary

Funds Funds Activities Funds

Investment in county treasury 52,831,126$ 1,733,844$ 54,564,970$ 262,563$

Cash on hand and in banks 56,567 12,739 69,306 188,573

Cash with fiscal agent 28,838 ‐ 28,838 ‐

Cash in revolving fund 11,355 ‐ 11,355 ‐

Total cash and investments 52,927,886$ 1,746,583$ 54,674,469$ 451,136$

B. Policies and Practices

The District is authorized under California Government Code to make direct investments in local agency bonds,

notes, or warrants within the state; U.S. Treasury instruments; registered state warrants or treasury notes;

securities of the U.S. Government, or its agencies; bankers acceptances; commercial paper; certificates of deposit

placed with commercial banks and/or savings and loan companies; repurchase or reverse repurchase

agreements; medium term corporate notes; shares of beneficial interest issued by diversified management

companies, certificates of participation, obligations with first priority security; collateralized mortgage

obligations; and the County Investment Pool.

Investment in County Treasury – The District maintains substantially all of its cash in the County Treasury in

accordance with Education Code Section 41001. The Los Angeles County Treasurer’s pooled investments are

managed by the County Treasurer who reports on a monthly basis to the board of supervisors. In addition, the

function of the County Treasury Oversight Committee is to review and monitor the County’s investment policy.

The committee membership includes the Treasurer and Tax Collector, the Auditor‐Controller, Chief

Administrative Officer, Superintendent of Schools Representative, and a public member. The fair value of the

Districtʹs investment in the pool is based upon the Districtʹs pro‐rata share of the fair value provided by the

County Treasurer for the entire portfolio (in relation to the amortized cost of that portfolio). The balance available

for withdrawal is based on the accounting records maintained by the County Treasurer, which is recorded on

the amortized cost basis.



JUNE 30, 2017

35

NOTE 2 – CASH AND INVESTMENTS (continued)

C. General Authorizations

Except for investments by trustees of debt proceeds, the authority to invest District funds deposited with the

county treasury is delegated to the County Treasurer and Tax Collector. Additional information about the

investment policy of the County Treasurer and Tax Collector may be obtained from its website. The table below

identifies the investment types permitted by California Government Code.

Authorized Investment Type

Maximum

Remaining

Maturity

Maximum

Percentage of

Portfolio

Maximum

Investment in

One Issuer

Local Agency Bonds, Notes, Warrants 5 years None None

Registered State Bonds, Notes, Warrants 5 years None None

U. S. Treasury Obligations 5 years None None

U. S. Agency Securities 5 years None None

Banker’s Acceptance 180 days 40% 30%

Commercial Paper 270 days 25% 10%

Negotiable Certificates of Deposit 5 years 30% None

Repurchase Agreements 1 year None None

Reverse Repurchase Agreements 92 days 20% of base None

Medium‐Term Corporate Notes 5 years 30% None

Mutual Funds N/A 20% 10%

Money Market Mutual Funds N/A 20% 10%

Mortgage Pass‐Through Securities 5 years 20% None

County Pooled Investment Funds N/A None None

Local Agency Investment Fund (LAIF) N/A None None

Joint Powers Authority Pools N/A None None

D. Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an

investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to

changes in market interest rates. The District manages its exposure to interest rate risk by investing in the County

Treasury. The District maintains a pooled investment with the County Treasury with a fair value of

approximately $54,500,789 and an amortized book value of $54,827,533. The average weighted maturity for this

pool is 672 days.

E. Credit Risk

Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.

This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The

investments in the County Treasury are not required to be rated. As of June 30, 2017, the pooled investments in

the County Treasury were not rated.



JUNE 30, 2017

36

NOTE 2 – CASH AND INVESTMENTS (continued)

F. Custodial Credit Risk – Deposits

This is the risk that in the event of a bank failure, the Districtʹs deposits may not be returned to it. The District

does not have a policy for custodial credit risk for deposits. However, the California Government Code requires

that a financial institution secure deposits made by state or local governmental units by pledging securities in an

undivided collateral pool held by a depository regulated under state law. The market value of the pledged

securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public

agencies. California law also allows financial institutions to secure public deposits by pledging first trust deed

mortgage notes having a value of 150 percent of the secured public deposits and letters of credit issued by the

Federal Home Loan Bank of San Francisco having a value of 105 percent of the secured deposits. As of June 30,

2017, the Districtʹs bank balance was not exposed to custodial credit risk.

G. Fair Value

The District categorizes the fair value measurements of its investments based on the hierarchy established by

generally accepted accounting principles. The fair value hierarchy is based on the valuation inputs used to

measure an assetʹs fair value. The following provides a summary of the hierarchy used to measure fair value:

Level 1 ‐ Quoted prices (unadjusted) in active markets for identical assets.

Level 2 ‐ Observable inputs other than Level 1 prices such as quoted prices for similar assets in active markets,

quoted prices for identical or similar assets in markets that are not active, or other inputs that are observable,

either directly or indirectly.

Level 3 ‐ Unobservable inputs should be developed using the best information available under the circumstances,

which might include the Districtʹs own data. The District should adjust that data if reasonable available

information indicates that other market participants would use different data or certain circumstances specific

to the District are not available to other market participants.

Uncategorized ‐ Investments in the Los Angeles County Treasury Investment Pool are not measured using the

input levels above because the Districtʹs transactions are based on a stable net asset value per share. All

contributions and redemptions are transacted at $1.00 net asset value per share.

The Districtʹs fair value measurements at June 30, 2017 were as follows:

Uncategorized

Investment in county treasury 54,500,789$

Total fair market value of investments 54,500,789$



JUNE 30, 2017

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NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable at June 30, 2017 consisted of the following:


Non‐Major

Governmental

Funds

Internal Service

Funds

Total

Governmental

Activities

Federal Government

Categorical aid 1,801,707$ ‐$ 421,208$ ‐$ 2,222,915$

State Government

Categorical aid 907,154 ‐ 28,572 ‐ 935,726

Lottery 363,641 ‐ ‐ ‐ 363,641

Local Government

Other local sources 165,850 93,069 73,477 5,936 338,332

Total 3,238,352$ 93,069$ 523,257$ 5,936$ 3,860,614$

NOTE 4 – CAPITAL ASSETS

Capital asset activity for the year ended June 30, 2017 was as follows:

Balance Balance

July 01, 2016 Additions Deletions June 30, 2017


Capital assets not being depreciated

Land 2,099,225$ ‐$ ‐$ 2,099,225$

Construction in progress ‐ 2,415,641 ‐ 2,415,641

Total Capital Assets not Being Depreciated 2,099,225 2,415,641 ‐ 4,514,866

Capital assets being depreciated

Land improvements 1,812,428 73,948 ‐ 1,886,376

Buildings & improvements 45,761,418 ‐ ‐ 45,761,418

Furniture & equipment 6,344,809 281,165 ‐ 6,625,974

Total Capital Assets Being Depreciated 53,918,655 355,113 ‐ 54,273,768

Less Accumulated Depreciation

Land improvements 1,387,909 49,563 ‐ 1,437,472

Buildings & improvements 32,712,975 1,239,657 ‐ 33,952,632

Furniture & equipment 5,520,176 271,126 ‐ 5,791,302

Total Accumulated Depreciation 39,621,060 1,560,346 ‐ 41,181,406


Capital Assets, net 16,396,820$ 1,210,408$ ‐$ 17,607,228$



JUNE 30, 2017

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NOTE 4 – CAPITAL ASSETS (continued)

Depreciation expense is allocated to governmental activities as follows:


Instruction 1,081,408$

Instructional supervision and administration 54,109

School site administration 84,723

Home‐to‐school transportation 22,114

Food services 58,762

All other pupil services 70,219

Centralized data processing 10,242

All other general administration 60,169

Plant services 118,600

1,560,346$

NOTE 5 – ACCRUED LIABILITIES

Accrued liabilities at June 30, 2017 consisted of the following:


Non‐Major

Governmental

Funds

Internal Service

Funds District‐Wide

Total

Governmental

Activities Total Fiduciary

Payroll 1,821,447$ ‐$ 73,354$ ‐$ ‐$ 1,894,801$ ‐$

Construction ‐ 2,122,687 ‐ ‐ ‐ 2,122,687 ‐

Vendors payable 4,640,112 167,907 31,629 92,288 ‐ 4,931,936 262,810

Unmatured interest ‐ ‐ ‐ ‐ 243,792 243,792 ‐

Total 6,461,559$ 2,290,594$ 104,983$ 92,288$ 243,792$ 9,193,216$ 262,810$

NOTE 6 – UNEARNED REVENUE

Unearned revenue at June 30, 2017, consisted of the following:

General Fund

Non‐Major

Governmental

Funds

Total

Governmental

Activities

Federal sources 427,175$ ‐$ 427,175$

Local sources 256,692 85,616 342,308

Total 683,867$ 85,616$ 769,483$



JUNE 30, 2017

39

NOTE 7 – LONG‐TERM DEBT

A schedule of changes in long‐term debt for the year ended June 30, 2017 consisted of the following:

Balance Balance Balance Due

July 01, 2016 Additions Deductions June 30, 2017 In One Year


General obligation bonds 3,860,000$ 25,000,000$ 2,570,000$ 26,290,000$ 1,290,000$

Unamortized premium 132,304 2,206,955 66,152 2,273,107 142,812

Total general obligation bonds 3,992,304 27,206,955 2,636,152 28,563,107 1,432,812

Capital leases 51,618 ‐ 20,592 31,026 21,667

Early retirement incentive 585,000 ‐ 292,500 292,500 292,500

Compensated absences 311,969 ‐ 41,003 270,966 ‐

Net OPEB obligation 291,688 ‐ 2,248 289,440 ‐

Net pension liability 66,850,724 17,274,247 ‐ 84,124,971 ‐

Total 72,083,303$ 44,481,202$ 2,992,495$ 113,572,010$ 1,746,979$

Payments for general obligation bonds are made in the Bond Interest and Redemption Fund.

Payments for capital lease obligations are made in the General Fund.

Payments for the early retirement incentive are made in the General Fund.

Payments for compensated absences are typically liquidated in the General Fund and the Non‐Major

Governmental Funds.

A. General Obligation Bonds

Bonds Bonds

Issue Maturity Interest Original Outstanding Outstanding

Series Date Date Rate Issue July 01, 2016 Additions Deductions June 30, 2017

2007 Refunding May 9, 2007 August 1, 2017 4.00% ‐ 5.00% 16,905,000$ 3,860,000$ ‐$ 2,570,000$ 1,290,000$

Election 2016, Series A ‐ Measure R April 11, 2017 August 1, 2046 2.00% ‐ 5.25% 19,000,000 ‐ 19,000,000 ‐ 19,000,000

Election 2016, Series A ‐ Measure Z April 11, 2017 August 1, 2037 2.00% ‐ 5.00% 6,000,000 ‐ 6,000,000 ‐ 6,000,000

3,860,000$ 25,000,000$ 2,570,000$ 26,290,000$

2007 Refunding Bonds / East Whittier City School Facilities Financing Authority Revenue Bonds, Series 2007

On June 3, 1997, the voters approved the issuance of bonds, not to exceed $20,000,000, to finance various capital

improvements including improvement of schools, repair of roofs, plumbing and sewer systems, elimination of

asbestos hazards, reduction of earthquake dangers and provision of adequate restroom facilities.

On August 1, 1997 and June 1, 1998, the District offered for sale $12,998,810 and $7,000,000 of general obligation

bonds under the provisions of Title 1, Division 1, Part 10, Chapter 2 of the State of California Education Code,

commencing with Section 15100, and pursuant to the County Resolution dated July 29, 1997. The bonds represent

the first and second issues of a total of $20,000,000 of bonds approved by District voters on June 3, 1997.



JUNE 30, 2017

40

NOTE 7 – LONG‐TERM DEBT (continued)

A. General Obligation Bonds (continued)

2007 Refunding Bonds / East Whittier City School Facilities Financing Authority Revenue Bonds, Series 2007, continued

During the fiscal year 2006‐07, the District authorized the formation of a joint power authority between the

District and the California Municipal Financing Authority called the East Whittier City School Financing

Authority (the Authority). The Authority was formed to issue $16,905,000 in revenue bonds. The Authority then

invested in the District by issuing $16,960,000 of 2007 General Obligation Refunding bonds. The District used

the proceeds from the refunding bonds to pay off portions of the Series A and Series B general obligation bonds.

The proceeds were placed into an irrevocable escrow account and will be used to fund the future required

principal and interest payments of the refunded bonds. The refunded portions of the bonds are considered in‐

substance defeased and are not recorded on the financial statements.

2007 Refunding Bonds

Interest due is payable semiannually on February 1 and August 1 of each year commencing February 1, 2009.

The principal with respect to the bonds is payable upon maturity or upon redemption in whole or in part at the

corporate trust office of the Paying Agent. The bonds are issuable as fully registered bonds without coupons in

denominations of $5,000 or any integral multiple thereof. The bonds bear an interest rate ranging from 4.50% to

5.00%.

East Whittier City School Facilities Financing Authority Revenue Bonds, Series 2007

Interest due is payable semiannually on February 1 and August 1 of each year commencing February 1, 2009.

The principal with respect to the bonds is payable upon maturity or upon redemption in whole or in part at the

corporate trust office of the Paying Agent. The bonds are issuable as fully registered bonds without coupons in

denominations of $5,000 or any integral multiple thereof. The bonds bear an interest rate ranging from 4.56% to

4.88%. At June 30, 2017, principal outstanding was $1,290,000, amounts to pay off these bonds are held within

the Debt Service Fund for Blended Component Units and are therefore not included in the government‐wide

statements for the District.

Election 2016, Series A – Measure R General Obligation Bonds

On November 8, 2016, the voters within the District approved the issuance of $70,000,000 of Measure R bonds.

On April 11, 2017, the District issued $19,000,000 of Series A General Obligation Bonds. Interest is payable

semiannually on February 1 and August 1 of each year, commencing August 1, 2017. The bonds bear an interest

rate ranging from 2.00% to 5.25%.

Election 2016, Series A – Measure Z General Obligation Bonds

On November 8, 2016, the voters within the District approved the issuance of $24,000,000 of Measure Z bonds.

On April 11, 2017, the District issued $6,000,000 of Series A General Obligation Bonds. Interest is payable

semiannually on February 1 and August 1 of each year, commencing August 1, 2017. The bonds bear an interest

rate ranging from 2.00% to 5.00%.



JUNE 30, 2017

41


B. Debt Service Requirements to Maturity – Bonds

The bonds mature through 2047 as follows:

Year Ended June 30, Principal Interest Total

2018 1,290,000$ 794,852$ 2,084,852$

2019 2,665,000 980,000 3,645,000

2020 2,615,000 914,125 3,529,125

2021 215,000 870,600 1,085,600

2022 125,000 865,050 990,050

2023 ‐ 2027 1,225,000 4,229,250 5,454,250

2028 ‐ 2032 2,600,000 3,845,337 6,445,337

2033 ‐ 2037 4,415,000 3,212,441 7,627,441

2038 ‐ 2042 4,625,000 2,180,960 6,805,960

2043 ‐ 2047 6,515,000 912,206 7,427,206

Total 26,290,000$ 18,804,821$ 45,094,821$

C. Capital Leases

On November 1, 2013, the District entered into a capital lease with option to purchase for a mower, with

monthly payments beginning January 2014, with principal maturing through December 2019. Future

minimum lease payments are as follows:

Year Ended June 30, Lease Payment

2018 22,748$

2019 9,478

Total minimum lease payments 32,226

Less amount representing interest (1,200)

Present value of minimum lease payments 31,026$



JUNE 30, 2017

42


D. Early Retirement Incentive Plan (ERI)

ERI 2013‐Certificated: On December 12, 2012, the Board of Education approved the implementation of the

District’s early retirement incentive for eligible certificated employees. A total of 20 certificated employees

participated. The District agreed to pay $1,462,500 of benefits over five years. The District will pay $292,500

towards benefits in each of the next five years. For the fiscal year 2016‐17 the District paid $292,500. At June 30,

2017, one remaining payment of $292,500 was outstanding.

E. Compensated Absences

Total unpaid employee compensated absences as of June 30, 2017 amounted to $270,966. This amount is included

as part of long‐term liabilities in the government‐wide financial statements.

F. Other Postemployment Benefits

The District follows GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment

Benefits Other Than Pensions. The District’s annual required contribution for the year ended June 30, 2017, was

$474,326 with net interest and other adjustments of ($5,201) for a net annual OPEB cost of $469,125 and

contributions made by the District during the year were $471,373, which resulted in a decrease to net OPEB

obligation of $2,248. The ending balance at June 30, 2017 was $289,440. See Note 9 for additional information

regarding the OPEB obligation and the postemployment benefit plan.

G. Net Pension Liability

The District’s beginning net pension liability was $66,850,724 and increased by $17,274,247 during the year ended

June 30, 2017. The ending net pension liability at June 30, 2017 was $84,124,971. See Note 10 for additional

information regarding the net pension liability.



JUNE 30, 2017

43

NOTE 8 – FUND BALANCES

Fund balances were composed of the following elements at June 30, 2017:


Non‐Major

Governmental

Funds

Total

Governmental

Funds

Non‐spendable

Revolving cash 9,868$ ‐$ 1,487$ 11,355$

Stores inventory ‐ ‐ 78,967 78,967

Prepaid expenditures 7,780 ‐ ‐ 7,780

Total non‐spendable 17,648 ‐ 80,454 98,102

Restricted

Educational programs 2,862,573 ‐ ‐ 2,862,573

Capital projects ‐ 22,161,185 530,960 22,692,145

Debt service ‐ ‐ 4,788,269 4,788,269

All others ‐ ‐ 666,078 666,078

Total restricted 2,862,573 22,161,185 5,985,307 31,009,065

Assigned

Deferred maintenance 560,143 ‐ ‐ 560,143

Total assigned 560,143 ‐ ‐ 560,143

Unassigned

Remaining unassigned 16,865,382 ‐ ‐ 16,865,382

Total unassigned 16,865,382 ‐ ‐ 16,865,382

Total 20,305,746$ 22,161,185$ 6,065,761$ 48,532,692$

The District is committed to maintaining a prudent level of financial resources to protect against the need to reduce

service levels because of temporary revenue shortfalls or unpredicted expenditures. The District’s Minimum Fund

Balance Policy requires a Reserve for Economic Uncertainties, consisting of unassigned amounts, equal to no less

than three percent of General Fund expenditures and other financing uses.



JUNE 30, 2017

44

NOTE 9 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB)

A. Plan Description and Contribution Information

The District administers a single‐employer defined benefit healthcare plan. The plan provides health benefits to

all full‐time and part‐time Certificated, Administrative and Classified employees who have reached age 57 and

retire with at least 10 years of service, however, District‐paid retiree benefits begin at age 55 and terminate when

the retiree reaches age 65.

Membership of the plan consisted of the following:

Retirees and beneficiaries receiving benefits 21

Active plan members 628

Total* 649

Number of participating employers 1

*As of July 1, 2015 actuarial study

B. Funding Policy

The District’s contribution is currently based on a project pay‐as‐you‐go funding method, that is, benefits are

payable when due.

As of June 30, 2017, the District has not established a plan or equivalent that contains an irrevocable transfer of

assets dedicated to providing benefits to retirees in accordance with the terms of the plan and that are legally

protected from creditors.



JUNE 30, 2017

45

NOTE 9 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) (continued)

C. Annual OPEB Cost and Net OPEB Obligation

The District’s annual OPEB cost (expense) is calculated based on the annual required contribution of the

employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No.

45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost

each year and amortize any unfunded actuarial accrued liabilities (UAAL) (or funding excess) over a period not

to exceed thirty years. The following table shows the components of the District’s annual OPEB cost for the year,

the amount actually contributed to the Plan, and changes in the District’s net OPEB obligation to the Plan:

Annual required contribution 474,326$

Interest on net OPEB obligation 11,667

Adjustment to annual required contribution (16,868)

Annual OPEB cost (expense) 469,125

Contributions made (471,373)

Increase (decrease) in net OPEB obligation (2,248)

Net OPEB obligation, beginning of the year 291,688

Net OPEB obligation, end of the year 289,440$

The annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation

for the year ended June 30, 2017 and the preceding two years were as follows:

Annual

OPEB Percentage Net OPEB

Year Ended June 30, Cost Contributed Obligation

2017 469,125$ 100% 289,440$

2016 467,894$ 115% 291,688$

2015 602,974$ 93% 360,737$



JUNE 30, 2017

46

NOTE 9 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) (continued)

D. Funded Status and Funding Progress

The funded status of the plan as of the most recent actuarial evaluation consists of the following:

Actuarial

Actuarial Accrued Unfunded UAAL as a

Valuation Actuarial Valuation Liability AAL Covered Percentage of

Date of Assets (AAL) (UAAL) Funded Ratio Payroll Covered Payroll

July 1, 2015 ‐$ 3,948,115$ 3,948,115$ 0% 55,021,931$ 7%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions

about the probability of occurrence of events far into the future. Examples include assumptions about future

employment, investment returns, mortality, and the healthcare cost trend. Amounts determined regarding the

funded status of the Plan and the annual required contributions of the employer are subject to continual revision

as actual results are compared with past expectations and new estimates are made about the future.

The schedule of funding progress, presented as required supplementary information following the notes to

financial statements, presents multiyear trend information about whether the actuarial value of plan assets is

increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

E. Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood

by the employer and the plan members) and include the types of benefits provided at the time of each valuation

and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The

actuarial methods and assumptions used include techniques that are designed to reduce the effects of short‐term

volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long‐term

perspective of the calculations.

Additional information as of the latest actuarial valuation follows:

Valuation Date 7/1/2015

Actuarial Cost Method Projected Unit Credit

Amortization Method 30‐year level dollar, open period

Remaining Amortization Period 29

Actuarial Assumptions:

Investment rate of return 4.0%

Discount rate 4.0%

Health care trend rate 8.0%

Inflation rate 4.0%



JUNE 30, 2017

47

NOTE 10 – PENSION PLANS

Qualified employees are covered under multiple‐employer contributory retirement plans maintained by agencies of

the State of California. Certificated employees are members of the California State Teachersʹ Retirement System

(CalSTRS), and classified employees are members of the California Public Employeesʹ Retirement System (CalPERS).

The District reported its proportionate share of the net pension liabilities, pension expense, deferred outflow of

resources, and deferred inflow of resources for each of the above plans as follows:

Net pension

liability

Deferred

outflows related

to pensions

Deferred inflows

related to

pensions Pension expense

STRS Pension 67,185,568$ 13,202,331$ 1,638,915$ 6,950,226$

PERS Pension 16,939,403 5,189,021 1,973,373 1,737,775

Total 84,124,971$ 18,391,352$ 3,612,288$ 8,688,001$

California State Teachers’ Retirement System (CalSTRS)

Plan Description

The District contributes to the California State Teachersʹ Retirement System (CalSTRS); a cost‐sharing multiple

employer public employee retirement system defined benefit pension plan administered by CalSTRS. The plan

provides retirement and disability benefits and survivor benefits to beneficiaries. Benefit provisions are established

by state statutes, as legislatively amended, within the State Teachersʹ Retirement Law. CalSTRS issues a separate

comprehensive annual financial report that includes financial statements and required supplementary information.

Copies of the CalSTRS annual financial report may be obtained from CalSTRS, 7919 Folsom Blvd., Sacramento, CA

95826.

Benefits provided

The CalSTRS defined benefit plan has two benefit formulas:

CalSTRS 2% at 60: Members first hired on or before December 31, 2012, to perform service that could be creditable to

CalSTRS

CalSTRS 2% at 62: Members first hired on or after January 1, 2013, to perform service that could be creditable to

CalSTRS

CalSTRS 2% at 60

CalSTRS 2% at 60 members are eligible for normal retirement at age 60, with a minimum of five years of credited

service. The normal retirement benefit is equal to 2.0 percent of final compensation for each year of credited service.

Early retirement options are available at age 55 with five years of credited service or as early as age 50 with 30 years

of credited service. The age factor for retirements after age 60 increases with each quarter year of age to 2.4 percent

at age 63 or older. Members who have 30 years or more of credited service receive an additional increase of up to 0.2

percent to the age factor, known as the career factor. The maximum benefit with the career factor is 2.4 percent of

final compensation.



JUNE 30, 2017

48

NOTE 10 – PENSION PLANS (continued)

California State Teachers’ Retirement System (CalSTRS) (continued)

Benefits provided (continued)

CalSTRS 2% at 62

CalSTRS 2% at 62 members are eligible for normal retirement at age 62, with a minimum of five years of credited

service. The normal retirement benefit is equal to 2.0 percent of final compensation for each year of credited service.

An early retirement option is available at age 55. The age factor for retirement after age 62 increases with each quarter

year of age to 2.4 percent at age 65 or older.

Contributions

Active plan CalSTRS 2% at 60 and 2% at 62 members are required to contribute 10.25% and 9.205% of their salary for

fiscal year 2017, respectively, and the District is required to contribute an actuarially determined rate. The actuarial

methods and assumptions used for determining the rate are those adopted by CalSTRS Teachersʹ Retirement Board.

The required employer contribution rate for fiscal year 2017 was 12.58% of annual payroll. The contribution

requirements of the plan members are established by state statute. Contributions to the plan from the District were

$5,190,457 for the year ended June 30, 2017.

On‐Behalf Payments

The District was the recipient of on‐behalf payments made by the State of California to CalSTRS for K‐12 education.

These payments consist of state general fund contributions of approximately $2,474,878 to CalSTRS.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources

Related to Pensions

At June 30, 2017, the District reported a liability for its proportionate share of the net pension liability that reflected

a reduction for State pension support provided to the District. The amount recognized by the District as its

proportionate share of the net pension liability, the related State support, and the total portion of the net pension

liability that was associated with the District were as follows:

Districtʹs proportionate share of the

net pension liability 67,185,568$

Stateʹs proportionate share of the net

pension liability associated with the District 38,253,177

Total 105,438,745$

The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net

pension liability was determined by applying update procedures to an actuarial valuation as of June 30, 2015, and

rolling forward the total pension liability to June 30, 2016. The District’s proportion of the net pension liability was

based on a projection of the District’s long‐term share of contributions to the pension plan relative to the projected

contributions of all participating school districts, actuarially determined. At June 30, 2016, the District’s proportion

was 0.083 percent, which was an increase of 0.004 percent from its proportion measured as of June 30, 2015.



JUNE 30, 2017

49



For the year ended June 30, 2017, the District recognized pension expense of $6,950,226. In addition, the District

recognized pension expense and revenue of $6,950,226 for support provided by the State. At June 30, 2017, the District

reported deferred outflows of resources and deferred inflows of resources related to pensions from the following

sources:

Deferred Outflows Deferred Inflows

of Resources of Resources

Differences between projected and

actual earnings on plan investments 5,341,220$ ‐$

Differences between expected and

actual experience ‐ 1,638,915

Changes in proportion and differences

between District contributions and

proportionate share of contributions 2,670,654 ‐

District contributions subsequent

to the measurement date 5,190,457 ‐

13,202,331$ 1,638,915$

The $5,190,457 reported as deferred outflows of resources related to pensions resulting from District contributions

subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended

June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to

pensions will be recognized in pension expense as follows:


Year Ended June 30, of Resources of Resources

2018 572,524$ 299,111$

2019 572,524 299,111

2020 3,560,866 299,111

2021 2,459,290 299,111

2022 455,994 299,111

2023 390,676 143,360

8,011,874$ 1,638,915$



JUNE 30, 2017

50



Actuarial assumptions

The total pension liability was determined by applying update procedures to an actuarial valuation as of June 30,

2015, and rolling forward the total pension liability to June 30, 2016 using the following actuarial assumptions,

applied to all periods included in the measurement:

Consumer Price Inflation 3.00%

Investment Yield* 7.60%

Wage Inflation 3.75%

* Net of investment expenses, but gross of administrative expenses.

CalSTRS uses custom mortality tables to best fit the patterns of mortality among its members. These custom tables

are based on RP2000 series tables adjusted to fit CalSTRS experience.

The actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience

study for the period July 1, 2006−June 30, 2010.

The long‐term expected rate of return on pension plan investments was determined using a building‐block method

in which best‐estimate ranges of expected future real rates of return (expected returns, net of pension plan investment

expense and inflation) are developed for each major asset class. The best‐estimate ranges were developed using

capital market assumptions from CalSTRS general investment consultant (Pension Consulting Alliance ‐ PCA) as an

input to the process. Based on the model from CalSTRS consulting actuary’s (Milliman) investment practice, a best

estimate range was determined by assuming the portfolio is re‐balanced annually and that annual returns are

lognormally distributed and independent from year to year to develop expected percentiles for the long‐term

distribution of annualized returns. The assumed asset allocation by PCA is based on board policy for target asset

allocation in effect on February 2, 2012, the date the current experience study was approved by the board. Best

estimates of 20‐year geometric real rates of return and the assumed asset allocation for each major asset class for the

year ended June 30, 2016 are summarized in the following table:

Long‐Term*

Assumed Asset Expected Real

Asset Class Allocation Rate of Return

Global Equity 47% 6.30%

Private Equity 13% 9.30%

Real Estate 13% 5.20%

Inflation Sensitive 4% 3.80%

Fixed Income 12% 0.30%

Absolute Return 9% 2.90%

Cash/Liquidity 2% ‐1.00%

100%

* 20‐year geometric average



JUNE 30, 2017

51



Discount rate

The discount rate used to measure the total pension liability was 7.60 percent. The projection of cash flows used to

determine the discount rate assumed that contributions from plan members and employers will be made at statutory

contribution rates in accordance with the rate increases per AB 1469. Projected inflows from investment earnings

were calculated using the long‐term assumed investment rate of return (7.60 percent) and assuming that

contributions, benefit payments, and administrative expense occur midyear. Based on those assumptions, the Plan’s

fiduciary net position was projected to be available to make all projected future benefit payments to current plan

members. Therefore, the long‐term assumed investment rate of return was applied to all periods of projected benefit

payments to determine the total pension liability.

Sensitivity of the District’s proportionate share of the net pension liability to changes in the discount rate

The following presents the District’s proportionate share of the net pension liability calculated using the discount

rate of 7.60 percent, as well as what the District’s proportionate share of the net pension liability would be if it were

calculated using a discount rate that is 1‐percentage‐point lower (6.60 percent) or 1‐percentage‐point higher (8.60

percent) than the current rate:

1% Current 1%

Decrease Discount Rate Increase

(6.60%) (7.60%) (8.60%)

Districtʹs proportionate share of

the net pension liability 96,695,185$ 67,185,568$ 42,676,596$

Pension plan fiduciary net position

Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalSTRS

financial report.



JUNE 30, 2017

52


California Public Employees’ Retirement System (CalPERS)

Plan Description

The District contributes to the School Employer Pool under the California Public Employeesʹ Retirement System

(CalPERS); a cost‐sharing multiple‐employer public employee retirement system defined benefit pension plan

administered by CalPERS. The plan provides retirement and disability benefits, annual cost‐of‐living adjustments,

and death benefits to plan members and beneficiaries. Benefit provisions are established by state statutes, as

legislatively amended, within the Public Employeesʹ Retirement Laws. CalPERS issues a separate comprehensive

annual financial report that includes financial statements and required supplementary information. Copies of the

CalPERS annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, CA

95811.

Benefits provided

The benefits for the defined benefit plan are based on members’ years of service, age, final compensation, and benefit

formula. Benefits are provided for disability, death, and survivors of eligible members or beneficiaries. Members

become fully vested in their retirement benefits earned to date after five years of credited service.

Contributions

Active plan members who entered into the plan prior to January 1, 2013, are required to contribute 7.0% of their

salary. The California Public Employees’ Pension Reform Act (PEPRA) specifies that new members entering into the

plan on or after January 1, 2013, shall pay the higher of fifty percent of normal costs or 6.0% of their salary.

Additionally, for new members entering the plan on or after January 1, 2013, the employer is prohibited from paying

any of the employee contribution to CalPERS unless the employer payment of the member’s contribution is specified

in an employment agreement or collective bargaining agreement that expires after January 1, 2013.

The District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used

for determining the rate are those adopted by the CalPERS Board of Administration. The required employer

contribution rate for fiscal year 2017 was 13.888% of annual payroll. Contributions to the plan from the District were

$1,471,938 for the year ended June 30, 2017.


Related to Pensions

At June 30, 2017, the District reported a liability of $16,939,403 for its proportionate share of the net pension liability.

The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net

pension liability was determined by applying update procedures to an actuarial valuation as of June 30, 2015, and

rolling forward the total pension liability to June 30, 2016. The District’s proportion of the net pension liability was

based on a projection of the District’s long‐term share of contributions to the pension plan relative to the projected

contributions of all participating school districts, actuarially determined. At June 30, 2016, the District’s proportion

was 0.086 percent, which was a decrease of 0.005 percent from its proportion measured as of June 30, 2015.



JUNE 30, 2017

53


California Public Employees’ Retirement System (CalPERS) (continued)


Related to Pensions (continued)

For the year ended June 30, 2017, the District recognized pension expense of $1,737,775. At June 30, 2017, the District

reported deferred outflows of resources and deferred inflows of resources related to pensions from the following

sources:


of Resources of Resources

Differences between projected and

actual earnings on plan investments 2,628,451$ ‐$

Differences between expected and

actual experience 728,557 ‐

Changes in assumptions ‐ 508,928

Changes in proportion and differences

between District contributions and

proportionate share of contributions 360,075 1,464,445

District contributions subsequent

to the measurement date 1,471,938 ‐

5,189,021$ 1,973,373$

The $1,471,938 reported as deferred outflows of resources related to pensions resulting from District contributions

subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended

June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to

pensions will be recognized in pension expense as follows:


Year Ended June 30, of Resources of Resources

2018 895,328$ 900,388$

2019 851,462 873,601

2020 1,284,290 199,384

2021 686,003 ‐

3,717,083$ 1,973,373$



JUNE 30, 2017

54



Actuarial assumptions

The total pension liability was determined by applying update procedures to an actuarial valuation as of June 30,

2015, and rolling forward the total pension liability to June 30, 2016 using the following actuarial assumptions,

applied to all periods included in the measurement:

Consumer Price Inflation 2.75%

Investment Yield* 7.65%

Wage Inflation Varies by Entry Age and Service

* Net of investment expenses, but gross of administrative expenses.

CalPERS uses custom mortality tables to best fit the patterns of mortality among its members. These custom tables

are derived using CalPERS’ membership data for all funds. The table includes 20 years of mortality improvements

using Society of Actuaries Scale BB.

The actuarial assumptions used in the June 30, 2015, valuation were based on the results of an actuarial experience

study for the period from 1997 to 2011.

The long‐term expected rate of return on pension plan investments was determined using a building block method

in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment

expense and inflation) are developed for each major asset class. In determining the long‐term expected rate of return,

both short‐term and long‐term market return expectations as well as the expected pension fund cash flows were

taken into account. Such cash flows were developed assuming that both members and employers will make their

required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset

classes, expected compound (geometric) returns were calculated over the short‐term (first 10 years) and the long‐

term (11‐60 years) using a building block approach. Using the expected nominal returns for both short‐term and

long‐term, the present value of benefits was calculated for each fund. The expected rate of return was set by

calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as

the one calculated using both short‐term and long‐term returns. The expected rate of return was then set equivalent

to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.



JUNE 30, 2017

55



Actuarial assumptions (continued)

The table below reflects long‐term expected real rate of return by asset class. The rate of return was calculated using

the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of

return are net of administrative expenses.

Assumed Asset Real Return Real Return

Asset Class Allocation Years 1‐10* Years 11+**

Global Equity 51% 5.25% 5.71%

Global Debt Securities 20% 0.99% 2.43%

Inflation Assets 6% 0.45% 3.36%

Private Equity 10% 6.83% 6.95%

Real Estate 10% 4.50% 5.13%

Infrastructure and Forestland 2% 4.50% 5.09%

Liquidity 1% ‐0.55% ‐1.05%

100%

* An expected inflation of 2.5% used for this period

** An expected inflation of 3.0% used for this period

Discount rate

The discount rate used to measure the total pension liability was 7.65 percent. A projection of the expected benefit

payments and contributions was performed to determine if assets would run out. The test revealed the assets would

not run out. Therefore the long‐term expected rate of return on pension plan investments was applied to all periods

of projected benefit payments to determine the total pension liability for the Schools Pool. The results of the crossover

testing for the Schools Pool are presented in a detailed report that can be obtained at CalPERS’ website.

Sensitivity of the District’s proportionate share of the net pension liability to changes in the discount rate

The following presents the District’s proportionate share of the net pension liability calculated using the discount

rate of 7.65 percent, as well as what the District’s proportionate share of the net pension liability would be if it were

calculated using a discount rate that is 1‐percentage‐point lower (6.65 percent) or 1‐percentage‐point higher (8.65

percent) than the current rate:

1% Current 1%

Decrease Discount Rate Increase

(6.65%) (7.65%) (8.65%)

Districtʹs proportionate share of

the net pension liability 25,273,683$ 16,939,403$ 9,999,474$

Pension plan fiduciary net position

Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS

financial report.



JUNE 30, 2017

56

NOTE 11 – DEFERRED OUTFLOWS/INFLOWS OF RESOURCES

Refunded Debt

Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources,

and Net Position and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the District recognized

deferred outflows of resources in the District‐wide financial statements. The deferred outflow of resources pertains

to the difference in the carrying value of the refunded debt and its reacquisition price (deferred amount on

refunding). Previous financial reporting standards require this to be presented as part of the District’s long‐term

debt. This deferred outflow of resources is recognized as a component of interest expense in a systematic and rational

manner over the remaining life of the old debt or the new debt, whichever is shorter. At June 30, 2017, the deferred

amount on refunding was $127,471.

NOTE 12 – COMMITMENTS AND CONTINGENCIES

A. Grants

The District received financial assistance from federal and state agencies in the form of grants. The disbursement

of funds received under these programs generally requires compliance with terms and conditions specified in

the grant agreements and are 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 District at June 30, 2017.

B. Litigation

The District is involved in various litigation arising from the normal course of business. In the opinion of

management and legal counsel, the disposition of all litigation pending is not expected to have a material adverse

effect on the overall financial position of the District at June 30, 2017.

REQUIRED SUPPLEMENTARY

INFORMATION


See accompanying note to required supplementary information.

57

GENERAL FUND – BUDGETARY COMPARISON SCHEDULE


Actual* Variances ‐

Original Final (Budgetary Basis) Final to Actual

REVENUES

LCFF sources 73,058,117$ 72,993,081$ 72,984,359$ (8,722)$

Federal sources 2,948,101 3,330,368 3,127,995 (202,373)

Other state sources 4,645,166 4,669,542 5,639,574 970,032

Other local sources 4,388,365 4,192,120 5,020,099 827,979

Total Revenues 85,039,749 85,185,111 86,772,027 1,586,916

EXPENDITURES

Certificated salaries 42,705,924 42,815,924 41,706,688 1,109,236

Classified salaries 12,556,245 12,556,245 12,299,331 256,914

Employee benefits 20,178,246 20,178,246 20,105,738 72,508

Books and supplies 4,029,908 5,514,793 4,572,848 941,945

Services and other operating expenditures 9,255,433 9,472,525 8,386,212 1,086,313

Capital outlay 530,000 530,000 44,601 485,399

Other outgo

Excluding transfers of indirect costs 82,747 82,747 52,517 30,230

Transfers of indirect costs (200,580) (200,580) (188,600) (11,980)

Total Expenditures 89,137,923 90,949,900 86,979,335 3,970,565

NET CHANGE IN FUND BALANCE (4,098,174) (5,764,789) (207,308) 5,557,481

Fund Balance ‐ Beginning 19,896,578 19,896,578 19,952,911 56,333

Fund Balance ‐ Ending 15,798,404$ 14,131,789$ 19,745,603$ 5,613,814$

Budgeted Amounts

* The actual amounts reported on this schedule do not agree with the amounts reported on the Statement of

Revenues, Expenditures, and Changes in Fund Balance for the following reasons:

On behalf payments of $2,474,878 are not included in the actual revenues and expenditures reported in this

schedule.

Client restatement of $56,333 is not included in the actual revenues reported in this schedule.

Actual amounts reported in this schedule are for the General Fund only, and do not agree with the

amounts reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances because the

amounts on that schedule include the financial activity of the Deferred Maintenance Fund, in accordance

with the fund type definitions promulgated by GASB Statement No. 54.



58

SCHEDULE OF FUNDING PROGRESS


Actuarial

Actuarial Accrued Unfunded UAAL as a

Valuation Actuarial Valuation Liability AAL Covered Percentage of

Date of Assets (AAL) (UAAL) Funded Ratio Payroll Covered Payroll

July 1, 2015 ‐$ 3,948,115$ 3,948,115$ 0% 55,021,931$ 7%

July 1, 2013 ‐$ 5,067,996$ 5,067,996$ 0% 46,588,878$ 11%

July 1, 2011 ‐$ 4,300,119$ 4,300,119$ 0% 52,001,870$ 8%



59

SCHEDULE OF THE DISTRICT’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY‐

CALSTRS


June 30, 2017 June 30, 2016 June 30, 2015

Districtʹs proportion of the net pension liability 0.083% 0.079% 0.079%

Districtʹs proportionate share of the net

pension liability 67,185,568$ 53,379,234$ 46,115,873$

Stateʹs proportionate share of the net pension

liability associated with the District 38,253,177 28,231,655 27,846,755

Total 105,438,745$ 81,610,889$ 73,962,628$

Districtʹs covered payroll 41,259,595$ 40,709,981$ 42,218,208$


pension liability as a percentage

of its covered payroll 162.8% 131.1% 109.2%

Plan fiduciary net position as a

percentage of the total pension liability. 70.0% 74.0% 76.5%



60

SCHEDULE OF THE DISTRICT’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY‐

CALPERS


June 30, 2017 June 30, 2016 June 30, 2015

Districtʹs proportion of the net pension liability 0.086% 0.091% 0.087%


pension liability 16,939,403$ 13,471,490$ 9,821,634$



pension liability as a percentage

of its covered payroll 159.8% 131.2% 97.0%

Plan fiduciary net position as a

percentage of the total pension liability. 73.9% 79.4% 83.4%



61

SCHEDULE OF DISTRICT CONTRIBUTIONS ‐ CALSTRS


June 30, 2017 June 30, 2016 June 30, 2015

Contractually required contribution 5,190,457$ 4,368,181$ 3,440,294$

Contributions in relation to the

contractually required contribution* (5,190,457) (4,368,181) (3,440,294)

Contribution deficiency (excess) ‐$ ‐$ ‐$


Contributions as a percentage of

covered payroll 12.58% 10.73% 8.15%

*Amounts do not include on behalf contributions



62

SCHEDULE OF DISTRICT CONTRIBUTIONS ‐ CALPERS


June 30, 2017 June 30, 2016 June 30, 2015

Contractually required contribution 1,471,938$ 1,216,048$ 1,191,426$

Contributions in relation to the

contractually required contribution (1,471,938) (1,216,048) (1,191,426)

Contribution deficiency (excess) ‐$ ‐$ ‐$


Contributions as a percentage of

covered payroll 13.89% 11.85% 11.77%


63

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION


NOTE 1 – PURPOSE OF SCHEDULES

Budgetary Comparison Schedule

This schedule is required by GASB Statement No. 34 as required supplementary information (RSI) for the General

Fund and for each major special revenue fund that has a legally adopted annual budget. The budgetary comparison

schedule presents both (a) the original and (b) the final appropriated budgets for the reporting period as well as (c)

actual inflows, outflows, and balances, stated on the District’s budgetary basis. A separate column to report the

variance between the final budget and actual amounts is also presented, although not required.

Schedule of Funding Progress

This schedule is required by GASB Statement No. 45 for all sole and agent employers that provide other

postemployment benefits (OPEB). The schedule presents, for the most recent actuarial valuation and the two

preceding valuations, information about the funding progress of the plan, including, for each valuation, the actuarial

valuation date, the actuarial value of assets, the actuarial accrued liability, the total unfunded actuarial liability (or

funding excess), the actuarial value of assets as a percentage of the actuarial accrued liability (funded ratio), the

annual covered payroll, and the ratio of the total unfunded actuarial liability (or funding excess) to annual covered

payroll.

Schedule of the District’s Proportionate Share of the Net Pension Liability

This 10‐year schedule is required by GASB Statement No. 68 for each cost‐sharing pension plan. Until a full 10‐year

trend is compiled, the schedule will only show those years under which GASB Statement No. 68 was applicable. The

schedule presents the District’s proportion (percentage) of the collective net pension liability, the District’s

proportionate share (amount) of the collective net pension liability, the District’s covered payroll, the District’s

proportionate share (amount) of the collective net pension liability as a percentage of the employer’s covered payroll,

and the pension plan’s fiduciary net position as a percentage of the total pension liability.

Schedule of District Contributions

This 10‐year schedule is required by GASB Statement No. 68 for each cost‐sharing pension plan. Until a full 10‐year

trend is compiled, the schedule will only show those years under which GASB Statement No. 68 was applicable. The

schedule presents the District’s statutorily or contractually required employer contribution, the amount of

contributions recognized by the pension plan in relation to the statutorily or contractually required employer

contribution, the difference between the statutorily or contractually required employer contribution and the amount

of contributions recognized by the pension plan in relation to the statutorily or contractually required employer

contribution, the District’s covered payroll, and the amount of contributions recognized by the pension plan in

relation to the statutorily or contractually required employer contribution as a percentage of the District’s covered

payroll.

NOTE 2 – EXCESS OF EXPENDITURES OVER APPROPRIATIONS

For the year ended June 30, 2017, the District incurred no excesses of expenditures over appropriations in individual

major funds presented in the Budgetary Comparison Schedule by major object code.

SUPPLEMENTARY

INFORMATION


See accompanying note to supplementary information.

64

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


CFDA

Number

Pass‐Through Entity

Identifying Number

Federal

Expenditures

U. S. DEPARTMENT OF EDUCATION:

Passed through California Department of Education:

Title I, Part A, Basic Grants Low‐Income and Neglected 84.010 14329 903,905$

Title II, Part A, Teacher Quality 84.367 14341 236,406

Title III, English Learner Student Program 84.365 14346 142,662

IDEA Basic Local Assistance Entitlement, Part B, Sec 611 84.027 13379 1,440,965

Total U. S. Department of Education 2,723,938

U. S. DEPARTMENT OF AGRICULTURE:

Passed through California Department of Education:

Child Nutrition Cluster

School Breakfast Program ‐ Needy 10.553 13526 535,355

National School Lunch Program 10.555 13391 2,000,392

Meal Supplements 10.555 * 53,970

USDA Commodities 10.555 * 284,604

Supper Program 10.555 * 328,918

Subtotal Child Nutrition Cluster 3,203,239

Total U. S. Department of Agriculture 3,203,239

U. S. DEPARTMENT OF HEALTH AND HUMAN SERVICES:

Passed through California Department of Health Services:

Medicaid

Medi‐Cal Billing Option 93.778 10013 154,663

Medi‐Cal Administrative Activities 93.778 10060 165,034

Subtotal Medicaid 319,697

Total U. S. Department of Health & Human Services 319,697

Total Federal Expenditures 6,246,874$

* ‐ Pass‐Through Entity Identifying Number not available or not applicable

Federal Grantor/Pass‐Through Grantor/Program or Cluster



65

SCHEDULE OF AVERAGE DAILY ATTENDANCE (ADA)


Second

Period Annual

Report Report

SCHOOL DISTRICT

TK/K through Third

Regular ADA 3,606.20 3,600.76

Extended Year Special Education 8.68 8.68

Special Education ‐ Nonpublic Schools 1.00 1.00

Extended Year Special Education ‐ Nonpublic Schools 0.09 0.09

Total TK/K through Third 3,615.97 3,610.53

Fourth through Sixth

Regular ADA 2,924.82 2,922.36




Total Fourth through Sixth 2,935.43 2,932.73

Seventh through Eighth

Regular ADA 1,947.86 1,941.81




Total Seventh through Eighth 1,958.64 1,952.59

TOTAL SCHOOL DISTRICT 8,510.04 8,495.85



66

SCHEDULE OF INSTRUCTIONAL TIME


2016‐17

Minutes Actual Number

Grade Level Requirement Minutes of Days Status

Kindergarten 36,000 36,000 180 Complied

Grade 1 50,400 51,890 180 Complied

Grade 2 50,400 51,890 180 Complied

Grade 3 50,400 52,240 180 Complied

Grade 4 54,000 54,170 180 Complied

Grade 5 54,000 54,170 180 Complied

Grade 6 54,000 58,310 180 Complied

Grade 7 54,000 58,310 180 Complied

Grade 8 54,000 58,310 180 Complied



67

SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS


2018 (Budget) 2017 2016 2015

General Fund ‐ Budgetary Basis**

Revenues And Other Financing Sources 84,047,837$ 86,772,027$ 89,451,380$ 81,171,286$

Expenditures And Other Financing Uses 85,844,977 86,979,335 84,423,366 81,334,549

Net change in Fund Balance (1,797,140)$ (207,308)$ 5,028,014$ (163,263)$

Ending Fund Balance 15,600,466$ 19,745,603$ 19,896,579$ 14,868,565$

Available Reserves* 14,432,175$ 16,865,382$ 16,610,869$ 12,505,121$

Available Reserves As A

Percentage Of Outgo 16.81% 19.39% 19.68% 15.37%

Long‐term Debt 111,825,031$ 113,572,010$ 72,083,303$ 63,954,348$

Average Daily

Attendance At P‐2 8,354 8,510 8,583 8,744

The General Fund balance has increased by $4,877,038 over the past two years. The fiscal year 2017‐18 budget projects

a decrease of $1,797,140. For a District this size, the State recommends available reserves of at least 3% of General

Fund expenditures, transfers out, and other uses (total outgo).

The District has incurred operating deficits in two of the past three years and anticipates incurring an operating

deficit during the 2017‐18 fiscal year. Total long term obligations have increased by $49,617,662 over the past two

years.

Average daily attendance has decreased by 234 ADA over the past two years. Additional decline of 156 ADA is

anticipated during the 2017‐18 fiscal year.

*Available reserves consist of all unassigned fund balance within the General Fund.

**The actual amounts reported in this schedule are for the General Fund only, and do not agree with the amounts

reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances because the amounts on that

schedule include the financial activity of the Deferred Maintenance Fund, in accordance with the fund type

definitions promulgated by GASB Statement No. 54.

On behalf payments of $2,474,878 are not included in the actual revenues and expenditures reported in this schedule.

Client fund balance restatement of $56,333 is not included in the actual revenue reported in this schedule.



68

RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT WITH AUDITED

FINANCIAL STATEMENTS


General

Deferred

Maintenance

Fund Fund

19,745,603$ 560,143$

Adjustments and reclassifications:

Increase (decrease) in total fund balances:

Fund balance transfer (GASB 54) 560,143 (560,143)

Net adjustments and reclassifications 560,143 (560,143)

20,305,746$ ‐$

June 30, 2017, annual financial and budget report fund balance

June 30, 2017, audited financial statement fund balance



69

COMBINING BALANCE SHEET

JUNE 30, 2017

Cafeteria Fund

Capital Facilities

Fund

Special Reserve

Fund for Capital

Outlay Projects

Bond Interest &

Redemption Fund

Debt Service Fund

for Blended

Component Units

Non‐Major

Governmental

Funds

ASSETS

Cash and investments 327,745$ 240,984$ 297,138$ 3,469,431$ 28,838$ 4,364,136$

Accounts receivable 520,660 1,083 1,514 ‐ ‐ 523,257

Bonds receivable ‐ ‐ ‐ ‐ 1,290,000 1,290,000

Stores inventory 78,967 ‐ ‐ ‐ ‐ 78,967

Total Assets 927,372$ 242,067$ 298,652$ 3,469,431$ 1,318,838$ 6,256,360$

LIABILITIES

Accrued liabilities 95,224$ 9,759$ ‐$ ‐$ ‐$ 104,983$

Unearned revenue 85,616 ‐ ‐ ‐ ‐ 85,616

Total Liabilities 180,840 9,759 ‐ ‐ ‐ 190,599

FUND BALANCES

Non‐spendable 80,454 ‐ ‐ ‐ ‐ 80,454

Restricted 666,078 232,308 298,652 3,469,431 1,318,838 5,985,307

Total Fund Balances 746,532 232,308 298,652 3,469,431 1,318,838 6,065,761

Total Liabilities and Fund Balance 927,372$ 242,067$ 298,652$ 3,469,431$ 1,318,838$ 6,256,360$



70

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND

BALANCES


Cafeteria Fund

Capital Facilities

Fund

Special Reserve

Fund for Capital

Outlay Projects

Bond Interest &

Redemption Fund

Debt Service Fund

for Blended

Component Units

Non‐Major

Governmental

Funds

REVENUES

Federal sources 3,203,239$ ‐$ ‐$ ‐$ ‐$ 3,203,239$

Other state sources 190,906 ‐ ‐ 12,911 ‐ 203,817

Other local sources 919,715 203,557 3,249 1,301,636 123,610 2,551,767

Total Revenues 4,313,860 203,557 3,249 1,314,547 123,610 5,958,823

EXPENDITURES

Current

Pupil services

Food services 4,096,715 ‐ ‐ ‐ ‐ 4,096,715


All other general administration 188,600 ‐ ‐ ‐ ‐ 188,600

Plant services 34,149 ‐ ‐ ‐ ‐ 34,149

Debt service

Principal ‐ ‐ ‐ 2,570,000 2,585,000 5,155,000

Interest and other ‐ ‐ ‐ 125,146 119,375 244,521

Total Expenditures 4,319,464 ‐ ‐ 2,695,146 2,704,375 9,718,985

Excess (Deficiency) of Revenues

Over Expenditures (5,604) 203,557 3,249 (1,380,599) (2,580,765) (3,760,162)

Other Financing Sources (Uses)

Other sources ‐ ‐ ‐ 2,093,855 ‐ 2,093,855

Net Financing Sources (Uses) ‐ ‐ ‐ 2,093,855 ‐ 2,093,855

NET CHANGE IN FUND BALANCE (5,604) 203,557 3,249 713,256 (2,580,765) (1,666,307)

Fund Balance ‐ Beginning 752,136 28,751 295,403 2,756,175 3,899,603 7,732,068

Fund Balance ‐ Ending 746,532$ 232,308$ 298,652$ 3,469,431$ 1,318,838$ 6,065,761$



71

LOCAL EDUCATION AGENCY ORGANIZATION STRUCTURE

JUNE 30, 2017

The East Whittier City School District was established in 1902 and is comprised of an area of approximately 20 square

miles located in Los Angeles County. There were no changes in the boundaries of the District during the current

year. The District is currently operating one preschool, ten elementary, and three middle schools.

GOVERNING BOARD

Member Office Term Expires

Mr. Paul Gardiner President November 2018

Mrs. Christine Chacon Sullivan Vice President November 2018

Mr. Armando Urteaga Clerk November 2018

Mr. Dimitri Elbling Member November 2020

Mr. Carlos Aparicio Member November 2020

DISTRICT ADMINISTRATORS

Mrs. Mary Branca

Superintendent – Retired June 30, 2017

Mr. Marc Patterson

Superintendent – Effective July 1, 2017

Mr. Rick Holash

Chief Business Officer

Ms. Gabriela Tavitian

Assistant Superintendent, Educational Support Services

Dr. Douglas Staine

Assistant Superintendent, Personnel Services

Mr. Jose Herrera

Director, Budget and Accounting


72

NOTES TO SUPPLEMENTARY INFORMATION

JUNE 30, 2017

NOTE 1 – PURPOSE OF SCHEDULES

Schedule of Expenditures of Federal Awards

The accompanying Schedule of Expenditures of Federal Awards includes the Federal grant activity of the District

and is presented on the modified accrual basis of accounting. The information in this schedule is presented in

accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative

Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some amounts

presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial

statements.

The following schedule provides reconciliation between revenues reported on the Statement of Revenue,

Expenditures, and Changes in Fund Balance, and the related expenditures reported on the Schedule of Expenditures

of Federal Awards. The reconciling amounts represent Federal funds that have been recorded as revenues in a prior

year that have been expended by June 30, 2017 or Federal funds that have been recorded as revenues in the current

year and were not expended by June 30, 2017. The District did not elect to use the 10 percent de minimis indirect

cost rate.

CFDA

Number Amount

Total Federal Revenues reported in the

Statement of Revenues, Expenditures, and

Changes in Fund Balance 6,331,234$

Medi‐Cal Billing Option 93.778 (84,360)

Total Expenditures reported in the Schedule of

Expenditures of Federal Awards 6,246,874$

Schedule of Average Daily Attendance (ADA)

Average daily attendance (ADA) is a measurement of the number of pupils attending classes of the District. The

purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of state

funds are made to school districts. This schedule provides information regarding the attendance of students at

various grade levels and in different programs.

Schedule of Instructional Time

This schedule presents information on the amount of instructional time offered by the District and whether the

District complied with the provisions of Education Code Sections 46200 through 46208. During the year ended June 30,

2017, the District participated in the Longer Day incentive funding program. As of June 30, 2017, the District had not

yet met its target funding.

Schedule of Financial Trends and Analysis

This schedule discloses the Districtʹs financial trends by displaying past yearsʹ data along with current year budget

information. These financial trend disclosures are used to evaluate the Districtʹs ability to continue as a going concern

for a reasonable period of time.


NOTES TO SUPPLEMENTARY INFORMATION, continued

JUNE 30, 2017

73

NOTE 1 – PURPOSE OF SCHEDULES (continued)

Reconciliation of Annual Financial and Budget Report with Audited Financial Statements

This schedule provides the information necessary to reconcile the fund balance of all funds reported on the Annual

Financial and Budget Report Unaudited Actuals to the audited financial statements.

Combining Statements – Non‐Major Funds

These statements provide information on the District’s non‐major funds.

Local Education Agency Organization Structure

This schedule provides information about the Districtʹs boundaries and schools operated, members of the governing

board, and members of the administration.

OTHER INDEPENDENT

AUDITORS’ REPORTS

Christy White, CPA

Michael D. Ash, CPA


Heather Daud Rubio

SAN DIEGO

LOS ANGELES



San Diego, CA 92103

toll-free: 877.220.7229tel: 619.270.8222fax: 619.260.9085


74

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

Independent Auditors’ Report

Governing Board



We have audited, in accordance with the auditing standards generally accepted in the United

States of America and the standards applicable to financial audits contained in Government

Auditing Standards issued by the Comptroller General of the United States, the financial

statements of the governmental activities, each major fund, and the aggregate remaining fund

information of East Whittier City School District, as of and for the year ended June 30, 2017,

and the related notes to the financial statements, which collectively comprise the East Whittier

City School District’s basic financial statements, and have issued our report thereon dated

December 5, 2017.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered East Whittier

City School District’s internal control over financial reporting (internal control) to determine

the audit procedures that are appropriate in the circumstances for the purpose of expressing

our opinions on the financial statements, but not for the purpose of expressing an opinion on

the effectiveness of East Whittier City School District’s internal control. Accordingly, we do

not express an opinion on the effectiveness of East Whittier City School District’s internal

control.

A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to

prevent, or detect and correct, misstatements on a timely basis. A material weakness is a

deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable

possibility that a material misstatement of the entityʹs financial statements will not be

prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency,

or a combination of deficiencies, in internal control that is less severe than a material

weakness, yet important enough to merit attention by those charged with governance.

75

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and

was not designed to identify all deficiencies in internal control that might be material weaknesses or significant

deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we

consider to be material weaknesses. However, material weaknesses may exist that have not been identified. .

Compliance and Other Matters

As part of obtaining reasonable assurance about whether East Whittier City School Districtʹs financial statements are

free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,

contracts, and grant agreements, noncompliance with which could have a direct and material effect on the

determination of financial statement amounts. However, providing an opinion on compliance with those provisions

was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests

disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing

Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the

results of that testing, and not to provide an opinion on the effectiveness of the entityʹs internal control or on

compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards

in considering the entityʹs internal control and compliance. Accordingly, this communication is not suitable for any

other purpose.


December 5, 2017

Christy White, CPA

Michael D. Ash, CPA


Heather Daud Rubio

SAN DIEGO

LOS ANGELES



San Diego, CA 92103

toll-free: 877.220.7229tel: 619.270.8222fax: 619.260.9085


76

REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; AND REPORT

ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM

GUIDANCE


Governing Board



Report on Compliance for Each Major Federal Program

We have audited East Whittier City School District’s compliance with the types of compliance

requirements described in the OMB Compliance Supplement that could have a direct and

material effect on each of East Whittier City School District’s major federal programs for the

year ended June 30, 2017. East Whittier City School Districtʹs major federal programs are

identified in the summary of auditorʹs results section of the accompanying schedule of

findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms

and conditions of its federal awards applicable to its federal programs.


Our responsibility is to express an opinion on compliance for each of East Whittier City School

Districtʹs major federal programs based on our audit of the types of compliance requirements

referred to above. We conducted our audit of compliance in accordance with auditing

standards generally accepted in the United States of America; the standards applicable to

financial audits contained in Government Auditing Standards, issued by the Comptroller

General of the United States; and the audit requirements of Title 2 U.S. Code of Federal

Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit

Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform

Guidance require that we plan and perform the audit to obtain reasonable assurance about

whether noncompliance with the types of compliance requirements referred to above that

could have a direct and material effect on a major federal program occurred. An audit includes

examining, on a test basis, evidence about East Whittier City School Districtʹs compliance with

those requirements and performing such other procedures as we considered necessary in the

circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each

major federal program. However, our audit does not provide a legal determination of East

Whittier City School Districtʹs compliance.

77

Opinion on Each Major Federal Program

In our opinion, East Whittier City School District complied, in all material respects, with the types of compliance

requirements referred to above that could have a direct and material effect on each of its major federal programs for

the year ended June 30, 2017.

Report on Internal Control Over Compliance

Management of East Whittier City School District is responsible for establishing and maintaining effective internal

control over compliance with the types of compliance requirements referred to above. In planning and performing

our audit of compliance, we considered East Whittier City School District’s internal control over compliance with the

types of requirements that could have a direct and material effect on each major federal program to determine the

auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on

compliance for each major federal program and to test and report on internal control over compliance in accordance

with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control

over compliance. Accordingly, we do not express an opinion on the effectiveness of East Whittier City School

District’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does

not allow management or employees, in the normal course of performing their assigned functions, to prevent, or

detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A

material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control

over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance

requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant

deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over

compliance with a type of compliance requirement of a federal program that is less severe than a material weakness

in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph

of this section and was not designed to identify all deficiencies in internal control over compliance that might be

material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over

compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been

identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal

control over compliance and the results of that testing based on the requirements of the Uniform Guidance.

Accordingly, this report is not suitable for any other purpose.


December 5, 2017

Christy White, CPA

Michael D. Ash, CPA


Heather Daud Rubio

SAN DIEGO

LOS ANGELES



San Diego, CA 92103

toll-free: 877.220.7229tel: 619.270.8222fax: 619.260.9085


78

REPORT ON STATE COMPLIANCE


Governing Board



Report on State Compliance

We have audited East Whittier City School District’s compliance with the types of compliance

requirements described in the 2016‐17 Guide for Annual Audits of K‐12 Local Education Agencies

and State Compliance Reporting, prescribed in Title 5, California Code of Regulations, section

19810, that could have a direct and material effect on each of East Whittier City School

District’s state programs for the fiscal year ended June 30, 2017, as identified below.

Management’s Responsibility

Management is responsible for compliance with the requirements of laws, regulations,

contracts, and grants applicable to its state programs.


Our responsibility is to express an opinion on compliance for each of East Whittier City School

Districtʹs state programs based on our audit of the types of compliance requirements referred

to above. We conducted our audit of compliance in accordance with auditing standards

generally accepted in the United States of America; the standards applicable to financial audits

contained in Government Auditing Standards, issued by the Comptroller General of the United

States; and the 2016‐17 Guide for Annual Audits of K‐12 Local Education Agencies and State

Compliance Reporting, prescribed in Title 5, California Code of Regulations, section 19810. Those standards require that we plan and perform the audit to obtain reasonable assurance

about whether noncompliance with the types of compliance requirements referred to above

that could have a direct and material effect on the state programs noted below occurred. An

audit includes examining, on a test basis, evidence about East Whittier City School Districtʹs

compliance with those requirements and performing such other procedures as we considered

necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance with the

requirements referred to above. However, our audit does not provide a legal determination

of East Whittier City School Districtʹs compliance with those requirements.

79

Opinion on State Compliance

In our opinion, East Whittier City School District complied, in all material respects, with the types of compliance

requirements referred to above that are applicable to the state programs noted in the table below for the year ended

June 30, 2017.

Procedures Performed

In connection with the audit referred to above, we selected and tested transactions and records to determine

East Whittier City School Districtʹs compliance with the state laws and regulations applicable to the following items:

PROGRAM NAME

PROCEDURES

PERFORMED

Attendance Yes

Teacher Certification and Misassignments Yes

Kindergarten Continuance Yes

Independent Study No, see below

Continuation Education Not Applicable

Instructional Time Yes

Instructional Materials Yes

Ratios of Administrative Employees to Teachers Yes

Classroom Teacher Salaries Yes

Early Retirement Incentive Not Applicable

Gann Limit Calculation Yes

School Accountability Report Card Yes

Juvenile Court Schools Not Applicable

Middle or Early College High Schools Not Applicable

K‐3 Grade Span Adjustment Yes

Transportation Maintenance of Effort Yes

Mental Health Expenditures Yes

Educator Effectiveness Yes

California Clean Energy Jobs Act Yes

80

Procedures Performed (continued)

PROGRAM NAME

PROCEDURES

PERFORMED

After School Education and Safety Program Yes

Proper Expenditure of Education Protection Account Funds Yes

Unduplicated Local Control Funding Formula Pupil Counts Yes

Local Control and Accountability Plan Yes

Independent Study‐Course Based Not Applicable

Immunizations Yes

Attendance; for charter schools Not Applicable

Mode of Instruction; for charter schools Not Applicable

Nonclassroom‐Based Instruction/Independent Study;

for charter schools Not Applicable

Determination of Funding for Nonclassroom‐Based

Instruction; for charter schools Not Applicable

Annual Instructional Minutes – Classroom Based; for

charter schools Not Applicable

Charter School Facility Grant Program Not Applicable

We did not perform testing for independent study because total ADA was below the threshold for testing.


December 5, 2017

SCHEDULE OF FINDINGS

AND QUESTIONED COSTS


81

SUMMARY OF AUDITORS’ RESULTS


FINANCIAL STATEMENTS

Type of auditorsʹ report issued: Unmodified

Internal control over financial reporting:

Material weakness(es) identified? No

Significant deficiency(ies) identified? None Reported

Non‐compliance material to financial statements noted? No

FEDERAL AWARDS

Internal control over major program:

Material weakness(es) identified? No


Type of auditorsʹ report issued: Unmodified

Any audit findings disclosed that are required to be reported in accordance

with Uniform Guidance 2 CFR 200.516(a)? No

Identification of major programs:

CFDA Number(s) Name of Federal Program or Cluster

10.553, 10.555 Child Nutrition Cluster

Dollar threshold used to distinguish between Type A and Type B programs: 750,000$

Auditee qualified as low‐risk auditee? Yes

STATE AWARDS

Internal control over state programs:

Material weaknesses identified? No


Type of auditorsʹ report issued on compliance for state programs: Unmodified


82

FINANCIAL STATEMENT FINDINGS


FIVE DIGIT CODE AB 3627 FINDING TYPE

20000

30000

Inventory of Equipment

Internal Control

There were no financial statement findings for the year ended June 30, 2017.


83

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS



50000

Federal Compliance

There were no federal award findings or questioned costs for the year ended June 30, 2017.


84

STATE AWARD FINDINGS AND QUESTIONED COSTS



10000 Attendance

40000

41000

60000

State Compliance

CalSTRS

Miscellaneous

61000 Classroom Teacher Salaries

62000 Local Control Accountability Plan

70000 Instructional Materials

71000 Teacher Misassignments

72000 School Accountability Report Card

There were no state award findings or questioned costs for the year ended June 30, 2017.


85

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS


There were no audit findings for the year ended June 30, 2016.


D-1

APPENDIX D

FORM OF CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Agreement (this “Disclosure Agreement”) is executed and delivered by the East Whittier City School District (the “District”) in connection with the execution and delivery of $_________ aggregate principal amount of its Election of 2016 General Obligation Bonds, Series B (Measure R) (the “Measure R Bonds”) and $________ aggregate principal amount of its Election of 2016 General Obligation Bonds, Series B (Measure Z) (the “Measure Z Bonds” and, together with the Measure R Bonds, the “Bonds”). The Bonds are being issued pursuant to two Resolutions adopted by the Board of Education of the District on October 22, 2018 (the “Resolutions”) and pursuant to two resolutions adopted by the Board of Supervisors of the County of Los Angeles (the “Board of Supervisors”) on November 7, 2018. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Resolutions.

In consideration of the execution and delivery of the Bonds by the District and the purchase of such Bonds by the Underwriter described below, the District hereby covenants and agrees as follows:

SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the District for the benefit of the Bondholders and in order to assist RBC Capital Markets, LLC (the “Underwriter”) in complying with Rule 15c2-12(b)(5) (the “Rule”) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

SECTION 2. Additional Definitions. In addition to the above definitions and the definitions set forth in the Resolutions, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the District pursuant to, and as described in, Sections 4 and 5 of this Disclosure Agreement.

“Bondholder” or “Holder” means any holder of the Bonds or any beneficial owner of the Bonds so long as they are immobilized with DTC.

“Designated Material Event” means any of the events listed in Section 6(a) of this Disclosure Agreement.

“Dissemination Agent” shall mean the District, or any Dissemination Agent, or any alternate or successor Dissemination Agent, designated in writing by the Superintendent (or otherwise by the District), which Dissemination Agent has evidenced its acceptance in writing. Initially, the Dissemination Agent shall be Applied Best Practices.

“EMMA System” shall mean the MSRB’s Electronic Municipal Market Access system, which can be found at www.emma.msrb.org, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission in the future.

“Material Event” means any of the events listed in Section 6(b) of this Disclosure Agreement.

“Material Events Disclosure” means dissemination of a notice of a Designated Material Event or Material Event as set forth in Section 6.

“MSRB” shall mean the Municipal Securities Rulemaking Board.

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“State” shall mean the State of California.

SECTION 3. CUSIP® Numbers and Final Official Statement. The CUSIP Numbers for the Bonds have been assigned. The Final Official Statement relating to the Bonds is dated ________, 2018.

SECTION 4. Provision of Annual Reports.

(a) The District shall cause the Dissemination Agent, not later than 270 days after the end of the District’s Fiscal Year (currently ending June 30), commencing with the report for the Fiscal Year ending June 30, 2018, to provide to the MSRB through the EMMA System an Annual Report which is consistent with the requirements of Section 5 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 5 of this Disclosure Agreement; provided that the audited financial statements of the District may be submitted, when and if available, separately from the balance of the relevant Annual Report.

(b) If the District is unable to provide to the MSRB through the EMMA System an Annual Report by the date required in paragraph (a) above, the District shall send a notice to the MSRB through the EMMA System in substantially the form attached as Exhibit A.

(c) The Dissemination Agent shall:

(i) determine each year prior to the Annual Report Date the electronic filing requirements of the MSRB for the Annual Reports; and

(ii) if the Dissemination Agent is other than the District or an official of the District, the Dissemination Agent shall file a report with the District certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and confirming that it has been filed with the MSRB through the EMMA System.

SECTION 5. Content of Annual Report. The District’s Annual Report shall contain or incorporate by reference the following:

(a) Financial information including the general purpose financial statements of the District for the preceding fiscal year, prepared in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board and the American Institute of Certified Public Accountants. If audited financial information is not available by the time the Annual Report is required to be filed pursuant to Section 4(a) hereof, the financial information included in the Annual Report may be unaudited, and the District will provide audited financial information to the EMMA System as soon as practical after it has been made available to the District.

(b) Operating data, including the following information (to the extent not included in the audited financial statements described in paragraph (a) above):

(i) Outstanding indebtedness and lease obligations for the preceding fiscal year;

(ii) General fund budget and actual results for the preceding fiscal year;

(iii) Average daily attendance and State funding information, as may be reasonably available, for the preceding fiscal year;

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(iv) A summary of assessed valuations as shown on the most recent equalized assessment roll;

(v) A summary of assessed valuations of single family homes;

(vi) A summary of assessed valuation and parcels by land use;

(vii) A summary of assessed valuation by jurisdiction;

(viii) A summary of total secured tax charges and delinquencies on taxable properties within the District;

(ix) A summary of typical tax rates levied in a typical tax rate area within the District; and

(x) Largest local secured taxpayers as shown on the most recent equalized assessment roll.

(c) Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the District or related public entities, which have been submitted to the EMMA System or to the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The District shall clearly identify each other document so incorporated by reference.

SECTION 6. Reporting of Designated Material Events and Material Events.

(a) The District agrees to provide or cause to be provided to the MSRB notice of the occurrence of any of the following Designated Material Events with respect to the Bonds not later than ten (10) Business Days after the occurrence of the event:

(i) Principal and interest payment delinquencies;

(ii) Unscheduled draws on any debt service reserves reflecting financial difficulties;

(iii) Unscheduled draws on any credit enhancements reflecting financial difficulties;

(iv) Substitution of or failure to perform by any credit provider;

(v) Issuance by the Internal Revenue Service of an adverse tax opinion, a proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB);

(vi) Tender offers;

(vii) Defeasances

(viii) Rating changes; and

(ix) Bankruptcy, insolvency, receivership or similar event of the obligated person.

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For purposes of item (ix) above, the described event shall be deemed to occur when any of the following shall occur: the appointment of a receiver, fiscal agent or similar officer for the District in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or other governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority have supervision or jurisdiction over substantially all of the assets or business of the District.

(b) The District shall give, or cause to be given, notice of the occurrence of any of the following Material Events with respect to the Bonds, if material, not later than ten (10) Business Days after the occurrence of the event:

(i) Unless described in paragraph 6(a)(v) hereof, other material events affecting the tax status of the Bonds;

(ii) Modifications of rights to Bondholders;

(iii) Optional, unscheduled or contingent Bond calls;

(iv) Release, substitution or sale of property securing repayment of the Bonds;

(v) Non-payment related defaults;

(vi) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, 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; or

(vii) Appointment of a successor or additional Paying Agent or the change of name of a Paying Agent.

(c) The District shall give, or cause to be given, in a timely manner, notice of a failure to provide the annual financial information on or before the date specified in Section 4 hereof, as provided in Section 4(b) hereof.

(d) Upon the occurrence of a Designated Material Event described in Section 6(a) hereof, or if the District determines that knowledge of a Material Event described in Section 6(b) hereof would be material under applicable federal securities laws, the District shall within ten (10) Business Days of occurrence of the Designated Material Event or Material Event file a notice of such occurrence with the MSRB in electronic format, accompanied by such identifying information as is prescribed by the MSRB. Notwithstanding the foregoing, notice of a Designated Material Event described in subsection (a)(vii) or a Material Event described in subsection (b)(iii) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Resolutions.

SECTION 7. Termination of Reporting Obligation. The District’s obligations under this Disclosure Agreement shall terminate when the District is no longer an obligated person with respect to

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the Bonds, as provided in the Rule, upon the defeasance, prior redemption or payment in full of all of the Bonds.

SECTION 8. Dissemination Agent. The District may, from time to time, appoint or engage an alternate or successor Dissemination Agent to assist in carrying out the District’s obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent.

The Dissemination Agent shall be entitled to the protections, limitations from liability, immunities and indemnities provided to the Paying Agent as set forth in the Resolutions which are incorporated by reference herein. The Dissemination Agent agrees to perform only those duties of the Dissemination Agent specifically set forth in the Agreement, and no implied duties, covenants or obligations shall be read into this Agreement against the Dissemination Agent.

The Dissemination Agent shall have no duty or obligation to review the Annual Report nor shall the Dissemination Agent be responsible for filing any Annual Report not provided to it by the District in a timely manner in a form suitable for filing. In accepting the appointment under this Agreement, the Dissemination Agent is not acting in a fiduciary capacity to the registered holders or beneficial owners of the Bonds, the District, or any other party or person.

The Dissemination Agent may consult with counsel of its choice and shall be protected in any action taken or not taken by it in accordance with the advice or opinion of such counsel. No provision of this Agreement shall require the Dissemination Agent to risk or advance or expend its own funds or incur any financial liability. The Dissemination Agent shall have the right to resign from its duties as Dissemination Agent under this Agreement upon thirty days’ written notice to the District. The Dissemination Agent shall be entitled to compensation for its services as Dissemination Agent and reimbursement for its out-of-pocket expenses, attorney’s fees, costs and advances made or incurred in the performance of its duties under this Agreement in accordance with its written fee schedule provided to the District, as such fee schedule may be amended from time to time in writing. The District agrees to indemnify and hold the Dissemination Agent harmless from and against any cost, claim, expense, or liability related to or arising from the acceptance of and performance of the duties of the Dissemination Agent hereunder, provided the Dissemination Agent shall not be indemnified to the extent of its willful misconduct or negligence. The obligations of the District under this Section shall survive the termination or discharge of this Agreement and the Bonds.

SECTION 9. Amendment. Notwithstanding any other provision of this Disclosure Agreement, the District may amend this Disclosure Agreement under the following conditions, provided no amendment to this Agreement shall be made that affects the rights, duties or obligations of the Dissemination Agent without its written consent:

(a) The amendment may be made only in connection with a change in circumstances that arises from a change in legal requirements, change in law or change in the identity, nature or status of the obligated person, or type of business conducted;

(b) This Disclosure Agreement, as amended, would have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) The amendment does not materially impair the interests of Holders, as determined either by parties unaffiliated with the District or another obligated person (such as Bond Counsel) or by the written approval of the Bondholders; provided, that the Annual Report containing the amended

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operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

SECTION 10. Additional Information. If the District chooses to include any information from any document or notice of occurrence of a Designated Material Event or a Material Event in addition to that which is specifically required by this Disclosure Agreement, the District shall have no obligation under this Disclosure Agreement to update such information or to include it in any future disclosure or notice of occurrence of a Designated Material Event or Material Event.

Nothing in this Disclosure Agreement shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Designated Material Event or Material Event, in addition to that which is required by this Disclosure Agreement.

SECTION 11. Default. The District shall give notice to the MSRB through the EMMA System of any failure to provide the Annual Report when the same is due hereunder, which notice shall be given prior to July 1 of that year. In the event of a failure of the District to comply with any provision of this Disclosure Agreement, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an event of default under the Resolutions, and the sole remedy under this Disclosure Agreement in the event of any failure of the District to comply with this Disclosure Agreement shall be an action to compel performance.

SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the District, the Dissemination Agent, the Underwriter and Holders from time to time of the Bonds, and shall create no rights in any other person or entity.

SECTION 13. Governing Law. This Disclosure Agreement shall be governed by the laws of the State, applicable to contracts made and performed in such State.

Dated: _________, 2018 EAST WHITTIER CITY SCHOOL DISTRICT

By: Superintendent

ACCEPTED: APPLIED BEST PRACTICES, as Dissemination Agent

By: Authorized Officer

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EXHIBIT A

NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: EAST WHITTIER CITY SCHOOL DISTRICT

Name of Issue: $_________ Election of 2016 General Obligation Bonds, Series B (Measure R)

$__________ Election of 2016 General Obligation Bonds, Series B (Measure Z )

Date of Issuance: ___, 2018

NOTICE IS HEREBY GIVEN that the above-named Issuer has not provided an Annual Report with respect to the above-named Bonds as required by Section 4(a) of the Continuing Disclosure Agreement dated ______, 2018. The Issuer anticipates that the Annual Report will be filed by ___________________.

Dated: _______________________________

[ISSUER/DISSEMINATION AGENT]

By:

cc: East Whittier City School District


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APPENDIX E

BOOK-ENTRY-ONLY SYSTEM

The information in this Appendix concerning DTC and DTC’s book-entry system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the accuracy or completeness thereof. The District cannot and does not give any assurances that DTC, DTC Direct Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, as to the Bonds, (b) Bonds representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants will act in the manner described in this Official Statement. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Direct Participants are on file with DTC.

General

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, in the aggregate principal amount or Maturity Value of such maturity, 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 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, 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. Such information is not incorporated herein by reference.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their

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purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

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

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

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

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District (or the Paying Agent on behalf thereof) 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal, premium, if any, interest payments and redemption proceeds on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District or Paying 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, the Paying Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, interest payments and redemption proceeds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Paying Agent, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to the Paying Agent. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on

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DTC’s records and followed by a book-entry credit of tendered Bonds to the Paying Agent’s DTC account.

DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.

The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered.

The information in this Appendix concerning DTC and DTC’s book-entry system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the accuracy thereof.

Documents

EAST WHITTIER CITY SCHOOL DISTRICT (Los Angeles County, … · 2018. 11. 7. · EAST WHITTIER CITY SCHOOL DISTRICT (Los Angeles County, California) ... Depository Trust Company, New