Issuance and Repayment of Long Term Debt

In the Governmental Funds

GAAP direct that the issuance of long term debt be treated as an “other financing source” rather than

revenue to isolate the nonroutine inflow of proceeds that would otherwise distort revenue analysis from

year to year. The amount reported as an other financing source should be equal to the face value of the

debt. If debt is issued at a premium, the premium should be reported as a separate other financing

source.

For accounting purposes, a bond issuance is considered to have taken place as of the closing date – the

date on which the bonds were issued. Therefore, a receivable should be recorded if the issuance occurs

prior to year end but the cash proceeds have not yet been received.

The amount of cash actually received is typically less than the face value (plus premium, if applicable) of

the debt because:

A portion of the proceeds of long term debt may be withheld for underwriter’s fees due in

connection with the issuance and/or

The stated interest rate on the debt may have been less than the market rate for similar

securities at the time of issuance, in which the case the debt was sold at a discount.

Neither type of discount should be netted against the amount recorded as an other financing source.

Instead, discounts resulting from underwriter’s fees should be reported as an expenditure and discounts

resulting from a difference in interest rates should be treated as an other financing use.

Use Fund 3X to account for the financial resources used to acquire or construct major capital facilities

financed as a result of issuing bonds. Bond proceeds are receipted here and accounts payable for all

bond projects will be paid for from this fund.

Sample Entry #1:

Bonds are issued with a face value of $6,500,000. $6,450,000 is received from the sale in cash. The

balance represents $40,000 in underwriter’s fees and $10,000 in discounts due to a difference in the

market and stated interest rates.

Dr. 3X..00101.001 Cash $6,450,000

Dr. 3X..15121.833 Expenditures – Debt Service Fees/Commissions 40,000

Dr. 3X..15121.925 Other Financing Use – Bond Discount 10,000

Cr. 3X..05111.009 Other Financing Source – Bond Proceeds $6,500,000

1

Sample Entry #2:

Bonds are issued with a face value of $3,750,000. $4,100,000 is received from the sale in cash. The

balance represents $30,000 in underwriter’s fees and $380,000 in bond premium.

Dr. 3X..00101.001 Cash $4,100,000

Dr. 3X..15121.833 Expenditures – Debt Service Fees/Commissions 30,000

Cr. 3X..05111.009 Other Financing Source – Bond Proceeds $3,750,000

Cr. 3X..05121.009 Other Financing Source – Bond Premium 380,000

GAAP direct that expenditures related to debt service principal and interest payments be recognized in

governmental funds in the period in which they become due.

Use Fund 2X to account for the accumulation of resources for, and the payment of, general long term

debt, principal and interest. Property tax revenues from a bond levy are receipted here and payments

for principal and interest on maturing bonds are recorded in this fund.

Sample Entry #3:

Interest payments of $25,000 are due on March 31 and September 30 of each year. Principal is due on

September 30 in the amount of $325,000.

Dr. 2X..15111.831 Redemption of Principal $325,000

Cr. 2X..00101.001 Cash $325,000

Dr. 2X..15121.832 Interest Expense 25,000

Cr. 2X..00101.001 Cash $25,000

In the Entity-Wide Statements

Governmental funds report only those liabilities that are expected to be liquidated with current

available financial resources. Therefore, governmental funds typically report no liability for the

unmatured principal of bonds, notes, capital lease obligations and similar debt. All debt, however, must

be reported in the entity-wide statements. Consistent with the treatment for long-term debt,

governmental funds typically do not report a liability for accrued interest until it is due and payable.

Accrued interest must be reported as a liability in the entity-wide statements.

From a full accrual perspective, the payment of debt service principal has no effect on net assets.

Consequently, debt service expenditures for principal payments are not expenses and should not be

included in the entity-wide statement of activities. The same approach should be taken to other

2

financing uses reported in connection with current or advance refunding transactions. In addition, debt

issuance has no impact on net assets, but instead affects only accounts reported on the statement of

position. Accordingly, other financing sources, uses and expenditures associated with the issuance of

debt should not be included in the entity-wide statement of activities.

Sample conversion entries follow. These are entries are made separate from the WVEIS accounting

system on separate files.

3

Conversion Entries (N, P)

Convert debt principal payments to reduction of liability

Action Needed: Debt principal payments are recorded as expendtiures in the governmental funds but should be shown as a reduction of the liability in the entity-wide statements.

Conversion Entries (N P):

dr. BONDS PAYABLE 2,520,000$ cr. Expenditures-Debt service-principal retirement 2,520,000$

dr. CAPITAL LEASE PAYABLE 76,923$ cr. Expenditures-Debt service-principal retirement 76,923$

Where do the Numbers Come From?

Long-term debt table

Bonds payable

Balance, Beginning of Year Restatement Additions Deductions

Balance, End of Year

Amounts due within one year

Amounts due past one year

General obligation debt 10,550,000 - - 2,520,000 8,030,000 2,600,000 5,430,000 Compensated absences 175,448 - 573,976 - 749,424 - 749,424 Accrued sick leave 3,388,703 7,113,568 - - 10,502,271 10,502,271 - Capital lease payable 769,231 - - 76,923 692,308 76,923 615,385

Long-term liabilities 14,883,382 7,113,568 573,976 2,596,923 19,974,003 13,179,194 6,794,809

4

Conversion Entry (S)

Amortize bond issuance costs in the entity-wide statements

Action Needed: When incurred, total bond issuance costs are recorded as expenditures in the governmental funds. If material, they should be capitalized inthe entity-wide statements and amortized over the length of the bond. Deferred charges for bond issuance costs are treated much like a prepaid asset.

Conversion Entry:

To record one year's amortization of the bond issuance costs.

dr. Expenditures-support services-business 13,200$ cr. DEFERRED CHARGES-BOND ISSUANCE COSTS 13,200$

Where do the Numbers Come From?

Total Bond Issuance costs 66,000$ Length of bond 5

This is the second year of the bond

Amount to amortize each year 13,200$

5

Conversion Entry (V)

Record interest due but not paid as of June 30

Action Needed: Interest that has accumulated on debt but has not been paid as of June 30 must be accrued in the entity-wide statements to comply with full accrualaccounting. Interest is recorded only when paid in the governmental funds.

Conversion Entry:

dr. ACCRUED INTEREST PAYABLE 11,550$ cr. NET ASSETS 11,550$

To adjust the balance in accrued interest payable.

Where do the Numbers Come From?

Interest payment amount 90,532

Payable March 30 and September 30 each year

Portion accrued at June 30((113,632/6 months) x 3 months) 45,266

Balance in accrued interest payable 56,816

Entry needed to adjust balance to actual at June 30 (11,550)$

6

Arbitrage

The interest paid on most debt issued by state and local governments is not subject to federal income

tax. As a result, purchasers of this type of debt are willing to accept a lower interest rate than they

would on taxable debt. Governments sometimes temporarily reinvest the proceeds in materially higher-

yielding taxable securities, especially during construction projects. This practice is called “arbitrage” by

the federal tax code. It is possible in certain specific situations, called “safe harbors”, for governments

to keep the extra earnings that result from arbitrage. In all other cases, any excess earnings resulted

from arbitrage must be rebated to the federal government. The liability to the federal government for

any excess earnings is therefore known as “rebatable arbitrage”. Typically, arbitrage rebate payments

must be made to the federal government every five years and at final maturity.

Rebatable arbitrage falls within the category of claims and judgments. Governmental funds may not

recognize a liability for claims and judgments (and also rebatable arbitrage) until amounts actually

become due and payable. Therefore, governmental funds should not report either an expenditure or

liability in connection with rebatable arbitrage until payment is actually made or the liability has become

due and payable.

It is recommended, however, that monies be set aside in a budgetary reserve in an amount sufficient to

provide for the rebatable arbitrage when it becomes due. An arbitrage calculation should be performed

annually to determine the estimated rebate amount.

Sample documents follow to illustrate the process.

Sample Entry #4:

Record the arbitrage payment due at March 31 of $1,225,000:

Dr. 3X..15121.833 Debt Service Fees/Commissions $1,225,000

Cr. 3X..00101.001 Cash $1,225,000

Use this sample entry if the arbitrage payment is due and payment is remitted within the same

accounting period. If monies have been transferred to Fund 11 and the payment is made from that fund,

then fund code 11 will be used in place of 3X.

Sample Entry #5: (See sample documents following this page)

Record the arbitrage payment due at June 30, but not paid by that date of $1,332,977:

Dr. 3X..15121.833 Debt Service Fees/Commissions $1,332,977

Cr. 3X..00448.004 Arbitrage Rebate Payable $1,332,977

7

Then record the subsequent cash payment:

Dr. 3X..00448.004 Arbitrage Rebate Payable $1,332,977

Cr. 3X..00101.001 Cash $1,332,977

Use this sample entry if the actual payment is made in an accounting period subsequent to the period in

which the payment becomes due and payable. If monies have been transferred to Fund 11 and the

payment is made from that fund, then fund code 11 will be used in place of 3X.

8

9

10

11

SUMMARY OF ARBITRAGE CALCULATIONS$60,455,000 Board of Education of

The County of _______________ (West Virginia)Public School Bonds, Series 2006

Name of Fund Amount

Debt Service Reserve Fund $0.00Repurchase Agreement $1,629,570.03Bond Fund-Interest $0.00Construction Fund ($291,141.03)

Subtotal $1,338,428.99

Less: Computation Date Credit $5,452.34

Total Arbitrage Liability $1,332,976.65

BOND YIELD 4.31446900%INVESTMENT YIELD 5.09234510%

When the Investment Yield is higher than the Bond Yield, you may be in a situation with

See Sample Entry #6

This is a sample arbitrage calculation at Year 5

12

.".* 8038-T(Rev. April 2011)

Department of the TreasuryIntemal Revenue Service

Arbitrage Rebate, Yield Reductionand Penalty in Lieu of Arbitrage Rebate

) Under Sections 1,13(gX3) and 148(f)and Section of the lnternal Hevenue Gode of 1954

OMB No. 1545-1219

Check box if Amended Return )2 Issuer's employer ation number (ElN)

55-60003064 Report number (For /BS Use

6 Date of lssue

06/06/20068 CUSIP number

12681C CQsTelephone number of officer or

304-528-5047

60,680,964.40

Amount

1,332.976.65

1,332,976.65

AuthorityI lssuer's name

THE BOARD OF EDUCATION OF THE COUNTY OF CABELL (West Virginia)3 Number and street (or P.O. box no. if mail is not delivered to street address)

2850 Fifth Avenue

, town, or post office, state, and ZIP code

Huntington, West Virginia7 Name of issue

Public School Bonds, Series 20069 Name and title of officer of the issuer or other person whom the I may call for more information

16

17't8

19

Conrad J. Lucas, Business Manager and Treasurer

11 of issue ) Education lssue price )

12 Computation date to which this payment relates (MM/DD/yyyy) 06/06/201 1

13 Arbitrage rebate payment (see instructions) [ check box if less than 100% of rebate amount14 Yield reduction payment (see instructions) Ll check box if less than 100% of vield reduction amount15 Rebate from Qualified Zone Academy Bond (QZAB) defeasance escrow (see instructions) .

RebateNumber of months since date of issue:

LJ omos E 12mos n 18ro" n 24mos n Otner. No. of mos )Penalty in lieu of rebateDate of termination election MM/DD/YYY\IPenalty upon termination

Does failure to pay timely qualify for waiver of penalty (see instructions) Yes n NoPenalty for failure to pay on iime (see instructions)lnterest on (see instructions)

Tota ayment23 Total Add lines 13, 14, 15, 17,19,21,and22. Entertotal here

MiscellaneousUnspeni proceeds as of this computation dateProceeds used to redeem bondsGross proceeds used for qualified administrative costs for quaranteed invesiment contracts {GlCs) andoeTeasance escrows

Fees paid for a qualified guarantee

ls the issue a variable rate issue?

Did the issuer enter into a hedge?

30

31

32

20

21

22

24

25

26

28

29 Name of provider

Term of hedge

Were gross proceeds invested in a GIC? Name of provider Bayerische LandesbankTerm of GIC 3.1 yrs

Were any gross proceeds invested beyond an available temporary period?Calculations for filing of this form prepared by: Issuer Trimble & Associates

SignatureandConsent

Underpena|tiesofperiury,toeclaretnatlniveexamlnEElEEreturn,andaccbelief' they are true, c6rrtict, and complete. I further declare that I consent to the lRS''s disclosure of the issuer,s reiuin intormarron, as necessary roprocess this return, to the person that I have authorized above.

Type or print name and title

PaidPreparerUse Only Firm's EIN l

Signature of issuer's authorized representative

For Papenvork Reduction Act Notice, see the separate instructions. Cat. No. 11545Y

Phone no

rorm 8038-T fRev. 4-2011)

13

Refundings

Governments often elect to take advantage of reductions in interest rates by issuing new debt to

refinance existing (old) debt. Or, a government could elect to refinance old debt to escape unfavorable

debt covenants or to change the maturity date of the debt. These transactions are called refundings and

there are two types:

Current Refunding – the proceeds of the refunding debt are applied immediately to redeem the

old debt.

Advance Refunding – the proceeds of the refunding debt are placed into an escrow account

pending the call date or maturity of the old debt.

The most common type of refunding is advance refunding. Most advance refunding result in the

defeasance of the old debt: the debt is accounted for as though it had actually been redeemed. For any

refunding that result in defeasance, GAAP direct that the proceeds of the refunding bonds, whether

used for redemption or places in escrow, be reported as an other financing use instead of an

expenditure.

DEFINITIONS OF ACCOUNT NAMES APPEARING ON MBC STATEMENTS

GO ESCROW - General Obligation Escrow account. In years subsequent to refunding, the entire account

is committed to the refunded bonds. Some "normal" activity and some cash may show on the

statement due to buying/selling securities to pay debt service on refunded issue.

GO SUR COL - General Obligation Surplus Collections account. If levy collections are greater than the

projected need for the year, the surplus goes into this account. As a result, the levy could be retired

early or, at the time refunding, the balance is paid to the issuer.

REFUNDING GO - Refunding General Obligation account. If this account is for a past refunding then the

balance belongs to the issuer and may be withdrawn at any time.

GO BANK FEE - General Obligation Bank Fee account. Moneys in this account goes to pay for fees. Any

balance remaining after the issue is refunded or retired belongs to the issuer and can be withdrawn at

any time.

REF GO SPECIAL SURPLUS - Refunding General Obligation Special Surplus account. During the first year

of refunding, the proceeds may not be sufficient to cover debt service on the refunding bonds. As a

protection, this account may be set up to cover any shortcomings. If the balance is not needed during

the first year, it will be paid to issuer.

REF GO - Refunding General Obligation account. This account tracks the refunding bonds.

GO - General Obligation account. This account tracks regular general obligation bonds.

14

MORE INFORMATION FROM MBC

Copies of ledger cards are available upon request from MBC. Contact MBC at 558-3971. The ledger

cards detail all transactions occurring during the period and should agree to the amounts reported on

the MBC statements.

INSTRUCTIONS FOR PREPARING THE FINANCIAL STATEMENTS

To complete the financial statements for an advanced refunding, you will need:

o All June 30 MBC annual statements (both for the old issuance that was refunded and the new issuance of refunding bonds)

o Blank debt service fund statements o Blank Exhibit E worksheet

1. Determine which issuance is on each MBC statement. Look at the upper left corner where it lists

"Account Name". It should show your entity’s name followed by a two-digit number and the type of

issuance. The two-digit number represents the year of the issuance. The type of issuance can be

determined by matching it to the MBC account definitions above.

For example, Exhibit A shows "89 GO ESCROW" for the account name. This means it is a 1989

issuance that has been refunded. Exhibit C shows "97 REF GO" which means it is a 1997 issuance

used to refinance the 1989 debt.

Ignore any MBC statement that shows zero beginning and ending balances and no activity for the

year.

2. Eliminate any transfer activity between MBC accounts. On the exhibits, transfer activity is

highlighted in blue.

3. Identify each type of activity reported on the statements and enter the amounts on Exhibit E where

appropriate. Property taxes are highlighted in yellow, other local source revenues are shown in

pink, principal payments are highlighted in green, interest and other expenditures are highlighted in

lavender, proceeds from issuance of long-term debt is shown in purple, and cash balances are

highlighted in peach.

"Deposits from treasurer or sheriff" may need to broken out into two parts on the refunded

issuance. (See Exhibit A.) The refunding proceeds should be included in that total and needs to be

shown separately on the financial statements.

Note that some activity on the refunded statements (GO ESCROW) is not reported on the financial

statements. Also, only the cash balances in the refunding accounts (REF GO) are reported on the

balance sheet.

15

4. Calculate the "payment to refunded debt escrow agent" as shown on Exhibit E. Note that only

transfers from the refunded account to the refunding account are used in the calculation. In the

calculation, the activity in the refunded account subtracted from the proceeds of the refunding

bonds will result in the payment to debt escrow agent.

5. Transfer amounts from the Exhibit E worksheet to the financial statements. The financial

statements will be prepared using the debt maturity schedule for the refunding bonds. Remember

that the refunded issuance will no longer be shown on the financial statements.

6. In subsequent years, no activity from the escrowed account is recorded in the financial statements

until that issuance is retired. At that time, any monies remaining in the escrowed account will be

transferred to the Board.

7. The refunded bond issuance is no longer reported on the financial statements after the refunding

takes place. Only the refunding bonds are reported.

16

WEST VIRGINIAMUNICIPAL BOND COMMISSION

STATEMENT OF ACCOUNT SUITE 300JULY 1, 1997 TO JUNE 30, 1998 812 QUARRIER STACCOUNT NUMBER: NIE-E-1-89-X-NI-13 CHARLESTON WV 25301ACCOUNT NAME: COUNTY SCHOOLS 89 GO ESCROWCOUNTY:

BALANCE LAST STATEMENT 313,002.26 To Exhibit E AN

RECEIPTS 5,399,237.00 Refunding Proceeds NDEPOSITS FROM TREASURER OR SHERIFF 5,863,047.00 463,810.00 Property Tax Revenue To Exhibit E

DEPOSITS FROM PUBLIC UTILITY TAXES 113,300.19 To Exhibit E AINTEREST EARNED ON INVESTMENT POOL 16,177.92 To Exhibit E LINTEREST EARNED ON ESC INVESTMENTS 61,118.44INCOME EARNED ON LOANED ESC INVEST 0.00 FDISCOUNT EARNED ON MATURED ESC INVEST 0.00 YDISCOUNT EARNED ON RETIRED BONDS 0.00TRANFERS FROM RESERVE ACCOUNT 0.00 1997TRANSFERS FROM OTHER ACCOUNTS 1,311.16 --

0.00 19980.00

MISCELLANEOUS 0.00TOTAL RECEIPTS 6,054,954.71

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - TOTAL INCLUDING BALANCE FORWARD 6,367,956.97

DISBURSEMENTSBEARER BONDS MATURED AND PAID 0.00COUPON INTEREST PAID 0.00REGISTERED BONDS MATURED AND PAID -540,000.00 To Exhibit E

REGISTERED INTEREST PAID -364,680.00 To Exhibit E

ADMIN FEE TO REG BONDHOLDER 0.00PREMIUM PAID ON CALLED BONDS 0.00PAYING AGENT BANK SERVICE FEES -1,901.00MBC SERVICE FEES -2,000.00 To Exhibit E

LEGAL ADVERTISEMENTS 0.00PREMIUM PAID ON MATURED ESC INVEST 0.00TRANSFERS TO REVENUE ACCOUNT 0.00TRANSFERS TO OTHER ACCOUNTS -585,671.97 To Exhibit E

REFUNDS TO ISSUER 0.00MISCELLANEOUS 0.00

TOTAL DISBURSEMENTS -1,494,252.97- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

BALANCE THIS STATEMENT 4,873,704.00- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

THE ABOVE BALANCE IS HELD AS FOLLOWS:CASH/MBC RESTRICTED POOL INVEST 64,819.00ESCROWED INVESTMENTS 4,808,885.00

TOTAL 4,873,704.00- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - REMAINING PRINCIPAL OUTSTANDING, AS OF JUNE 30, 1998/*JULY 2, 1998

4,525,000

Exhibit A

17

WEST VIRGINIAMUNICIPAL BOND COMMISSION

STATEMENT OF ACCOUNT SUITE 300JULY 1, 1997 TO JUNE 30, 1998 812 QUARRIER STACCOUNT NUMBER: NIE-E-5-89-X-NI-13 CHARLESTON WV 25301ACCOUNT NAME: COUNTY SCHOOLS 89 GO SUR COLCOUNTY:

BALANCE LAST STATEMENT 296,042.31 To Exhibit E AN

RECEIPTS NDEPOSITS FROM TREASURER OR SHERIFF 0.00 UDEPOSITS FROM PUBLIC UTILITY TAXES 0.00 AINTEREST EARNED ON INVESTMENT POOL 9,880.27 To Exhibit E LINTEREST EARNED ON ESC INVESTMENTS 0.00INCOME EARNED ON LOANED ESC INVEST 0.00 FDISCOUNT EARNED ON MATURED ESC INVEST 0.00 YDISCOUNT EARNED ON RETIRED BONDS 0.00TRANFERS FROM RESERVE ACCOUNT 0.00 1997TRANSFERS FROM OTHER ACCOUNTS 0.00 --

0.00 19980.00

MISCELLANEOUS 0.00TOTAL RECEIPTS 9,880.27

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - TOTAL INCLUDING BALANCE FORWARD 305,922.58

DISBURSEMENTSBEARER BONDS MATURED AND PAID 0.00COUPON INTEREST PAID 0.00REGISTERED BONDS MATURED AND PAID 0.00REGISTERED INTEREST PAID 0.00ADMIN FEE TO REG BONDHOLDER 0.00PREMIUM PAID ON CALLED BONDS 0.00PAYING AGENT BANK SERVICE FEES 0.00MBC SERVICE FEES 0.00LEGAL ADVERTISEMENTS 0.00PREMIUM PAID ON MATURED ESC INVEST 0.00TRANSFERS TO REVENUE ACCOUNT -1,311.16TRANSFERS TO OTHER ACCOUNTS -72,290.41 To Exhibit E

REFUNDS TO ISSUER -232,321.01 To Exhibit E

MISCELLANEOUS 0.00TOTAL DISBURSEMENTS -305,922.58

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - BALANCE THIS STATEMENT 0.00

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - THE ABOVE BALANCE IS HELD AS FOLLOWS:

CASH/MBC RESTRICTED POOL INVEST 0.00ESCROWED INVESTMENTS 0.00

TOTAL 0.00- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Exhibit B

18

WEST VIRGINIAMUNICIPAL BOND COMMISSION

STATEMENT OF ACCOUNT SUITE 300JULY 1, 1997 TO JUNE 30, 1998 812 QUARRIER STACCOUNT NUMBER: NIE-E-1-97-R-NI-13 CHARLESTON WV 25301ACCOUNT NAME: COUNTY SCHOOLS 97 REF GOCOUNTY:

BALANCE LAST STATEMENT 0.00 AN

RECEIPTS NDEPOSITS FROM TREASURER OR SHERIFF 387,959.00 UDEPOSITS FROM PUBLIC UTILITY TAXES 0.00 AINTEREST EARNED ON INVESTMENT POOL 4,174.14 LINTEREST EARNED ON ESC INVESTMENTS 0.00INCOME EARNED ON LOANED ESC INVEST 0.00 FDISCOUNT EARNED ON MATURED ESC INVEST 0.00 YDISCOUNT EARNED ON RETIRED BONDS 0.00TRANFERS FROM RESERVE ACCOUNT 0.00 1997TRANSFERS FROM OTHER ACCOUNTS 488,600.00 --

0.00 19980.00

MISCELLANEOUS 0.00TOTAL RECEIPTS 880,733.14

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - TOTAL INCLUDING BALANCE FORWARD 880,733.14

DISBURSEMENTSBEARER BONDS MATURED AND PAID 0.00COUPON INTEREST PAID 0.00REGISTERED BONDS MATURED AND PAID -644,165.00REGISTERED INTEREST PAID -78,174.34ADMIN FEE TO REG BONDHOLDER 0.00PREMIUM PAID ON CALLED BONDS 0.00PAYING AGENT BANK SERVICE FEES 0.00MBC SERVICE FEES -1,805.85LEGAL ADVERTISEMENTS 0.00PREMIUM PAID ON MATURED ESC INVEST 0.00TRANSFERS TO REVENUE ACCOUNT 0.00TRANSFERS TO OTHER ACCOUNTS 0.00REFUNDS TO ISSUER 0.00MISCELLANEOUS 0.00

TOTAL DISBURSEMENTS -724,145.19- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

BALANCE THIS STATEMENT 156,587.95- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

THE ABOVE BALANCE IS HELD AS FOLLOWS:CASH/MBC RESTRICTED POOL INVEST 156,587.95ESCROWED INVESTMENTS 0.00

TOTAL 156,587.95- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - REMAINING PRINCIPAL OUTSTANDING, AS OF JUNE 30, 1998/*JULY 2, 1998

4,822,572

Exhibit C

19

WEST VIRGINIAMUNICIPAL BOND COMMISSION

STATEMENT OF ACCOUNT SUITE 300JULY 1, 1997 TO JUNE 30, 1998 812 QUARRIER STACCOUNT NUMBER: NIE-E-8-97-R-NI-13 CHARLESTON WV 25301ACCOUNT NAME: COUNTY SCHOOLS 97 REF GO SPEC SURPLUSCOUNTY:

BALANCE LAST STATEMENT 0.00 AN

RECEIPTS NDEPOSITS FROM TREASURER OR SHERIFF 0.00 UDEPOSITS FROM PUBLIC UTILITY TAXES 0.00 AINTEREST EARNED ON INVESTMENT POOL 9,866.68 LINTEREST EARNED ON ESC INVESTMENTS 0.00INCOME EARNED ON LOANED ESC INVEST 0.00 FDISCOUNT EARNED ON MATURED ESC INVEST 0.00 YDISCOUNT EARNED ON RETIRED BONDS 0.00TRANFERS FROM RESERVE ACCOUNT 0.00 1997TRANSFERS FROM OTHER ACCOUNTS 657,962.38 --

0.00 19980.00

MISCELLANEOUS 0.00TOTAL RECEIPTS 667,829.06

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - TOTAL INCLUDING BALANCE FORWARD 667,829.06

DISBURSEMENTSBEARER BONDS MATURED AND PAID 0.00COUPON INTEREST PAID 0.00REGISTERED BONDS MATURED AND PAID 0.00REGISTERED INTEREST PAID 0.00ADMIN FEE TO REG BONDHOLDER 0.00PREMIUM PAID ON CALLED BONDS 0.00PAYING AGENT BANK SERVICE FEES 0.00MBC SERVICE FEES 0.00LEGAL ADVERTISEMENTS 0.00PREMIUM PAID ON MATURED ESC INVEST 0.00TRANSFERS TO REVENUE ACCOUNT 0.00TRANSFERS TO OTHER ACCOUNTS -488,600.00REFUNDS TO ISSUER 0.00MISCELLANEOUS 0.00

TOTAL DISBURSEMENTS -488,600.00- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

BALANCE THIS STATEMENT 179,229.06- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

THE ABOVE BALANCE IS HELD AS FOLLOWS:CASH/MBC RESTRICTED POOL INVEST 179,229.06ESCROWED INVESTMENTS 0.00

TOTAL 179,229.06- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Exhibit D

20

Calculations for Financial Statement Amounts

Debt Service Fund

Revenues:

Property taxTaxes receivable 16,029.93Property taxes - 97 issue 387,959.00Property taxes - 89 issue 463,810.00

Total property tax revenue 867,798.93 To Financial Statements

Other local sourcesInterest - 97 issue 4,174.14Interest - 97 issue surplus 9,866.68Public utility taxes - 89 issue 113,300.19Interest - 89 issue 16,177.92Interest - 89 issue 9,880.27

Total other local sources 153,399.20 To Financial Statements

Total revenues 1,021,198.13

Expenditures:

PrincipalPrincipal - 97 issue 540,000.00Principal - 89 issue 644,165.00

Total principal 1,184,165.00 To Financial Statements

Interest & other expendituresInterest - 97 issue 78,174.34MBC service fees - 97 issue 1,805.85Interest - 89 issue 364,680.00MBC service fees - 89 issue 2,000.00

Total interest and other expenditures 446,660.19 To Financial Statements

Total expenditures 1,630,825.19

Other Sources (Uses) of Funds:Proceeds from issuance of long-term debt 5,399,237.00 To Financial Statements

Payment to refunded debt escrow agentBeginning balance - 89 issue 313,002.26Beginning balance - 89 issue surplus 296,042.31Property taxes - 89 issue 463,810.00Utility taxes - 89 issue 113,300.19Interest - 89 issue 16,177.92Interest - 89 issue surplus 9,880.27Principal payments - 89 issue -540,000.00Interest payments - 89 issue -364,680.00Service fee - 89 issue -2,000.00Transfer to new account from 89 issue -585,671.97Transfer to new account from 89 issue surplus -72,290.41Refunds to issuer from 89 issue surplus -232,321.01Subtotal -584,750.44

Proceeds from issuance of long-term debt 5,399,237.00 From Above

Operating transfers out to Gen. Cur. Exp. Fund 232,321.01 From Above

To Financial Statements

Total other sources (uses) 5,166,915.99

Cash:

Cash - 97 issue 156,587.95Cash - 97 issue surplus 179,229.06

335,817.01 To Financial Statements

Exhibit E

21

SAMPLE COUNTY, WEST VIRGINIA, BOARD OF EDUCATION

PARTIAL BALANCE SHEET - GOVERNMENTAL FUNDS

DebtServiceFund

ASSETS

Cash and cash equivalents 1$ Investments 335,817 Taxes receivable, net 16,030 Food service receivable, netOther receivablesDue from other governments:

State aid receivablePEIA allocation receivableReimbursements receivable

Due from other fundsTotal assets 351,848$

LIABILITIES AND FUND BALANCES

Liabilities:

Salaries payable and related payroll liabilitiesOther post employment benefits payable - state aid fundedOther post employment benefits payable - all other employeesPEIA premiums payableAccounts payableDeferred revenueDue to other funds

Total liabilities -

Fund Balances:

NonspendableRestricted 351,848 CommittedAssigned Unassigned

Total fund balances 351,848 TOTAL LIABILITIES AND FUND BALANCES 351,848$

22

SAMPLE COUNTY, WEST VIRGINIA, BOARD OF EDUCATION

PARTIAL STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - GOVERNMENTAL FUNDS

DebtServiceFund

Revenues:

Property taxes 867,792$ Other Local sources 153,399 State sources Federal sources Miscellaneous sources

Total revenues 1,021,191

Expenditures:

InstructionSupporting services:

StudentsInstructional staffCentral administrationSchool administrationBusinessOperation and maintenance of facilitiesStudent transportation

Food servicesCommunity servicesCapital outlayDebt service:

Principal retirement 1,184,165 Interest and fiscal charges 446,660

Total expenditures 1,630,825

Excess (deficiency) of revenues over expenditures (609,634)

Other financing sources (uses):

Proceeds from issuance of long term debt 5,399,237 Payment to refunded debt escrow agent (4,814,487) Transfers inTransfers (out) (232,321)

Total other financing sources (uses) 352,429

Net change in fund balances (257,205)

Fund balances - beginning 609,053

Cumulative Effect of Adoption of Accounting Policy (See Note ___)

Fund balances - beginning, as restated 609,053

Fund balances - ending 351,848$

23