$2,250,000 valley park school district general …to the approval of validity by gilmore & bell,...

NEW ISSUE S&P Rating: AA BOOK-ENTRY ONLY See “BOND RATING” herein BANK QUALIFIED In the opinion of Gilmore & Bell, P.C., Bond Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended (the “Code”), (1) the interest on the Bonds is excludable from gross income for federal income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, (2) the interest on the Bonds is exempt from Missouri income taxation by the State of Missouri, and (3) the Bonds are “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code. See “TAX MATTERS” in this Official Statement.

$2,250,000 VALLEY PARK SCHOOL DISTRICT

GENERAL OBLIGATION REFUNDING BONDS SERIES 2012

Dated: Date of Delivery Due: March 1, as shown on the inside cover

The General Obligation Refunding Bonds, Series 2012 (the “Bonds”) will be issued by the Valley Park School District (the “District”) for the purpose of providing funds to (1) refund a portion of the District’s outstanding General Obligation Refunding Bonds, Series 2004A, as further described herein under the section captioned “PLAN OF FINANCING – The Refunding,” and (2) pay costs of issuance related to the Bonds. The Bonds will be issued as fully-registered bonds in the denomination of $5,000 or integral multiples thereof. Principal on the Bonds is payable annually on March 1, commencing on March 1, 2013. Interest on the Bonds is payable semiannually on each March 1 and September 1, commencing September 1, 2012, by check or draft mailed (or by wire transfer in certain circumstances as described herein) to the persons who are the registered owners of the Bonds as of the close of business on the 15th day of the month preceding the applicable interest payment date. The Bonds are not subject to optional redemption prior to maturity. THE BONDS AND INTEREST THEREON WILL CONSTITUTE GENERAL OBLIGATIONS OF THE DISTRICT, PAYABLE FROM AD VALOREM TAXES WHICH MAY BE LEVIED WITHOUT LIMITATION AS TO RATE OR AMOUNT UPON ALL OF THE TAXABLE TANGIBLE PROPERTY, REAL AND PERSONAL, WITHIN THE TERRITORIAL LIMITS OF THE DISTRICT. The Bonds are offered when, as and if issued by the District and accepted by the Underwriter, subject to the approval of validity by Gilmore & Bell, P.C., St. Louis, Missouri, Bond Counsel, and subject to certain other conditions. Bond Counsel will also pass on certain matters relating to this Official Statement. It is expected that the Bonds will be available for delivery through the facilities of The Depository Trust Company in New York, New York on or about March 2, 2012.

The date of this Official Statement is February 15, 2012.



MATURITY SCHEDULE

Base CUSIP: 92005P

Due

(March 1)

Principal Amount

Interest Rate

Price

CUSIP

2013 $700,000 2.00% 101.540% DU 7 2014 750,000 2.00 102.876 DV 5 2015 800,000 2.00 103.849 DW 3

VALLEY PARK SCHOOL DISTRICT

One Main Street Valley Park, Missouri 63088

(636) 923-3500

BOARD OF EDUCATION

William Dains, President and Director Peter Coates, Vice President and Director Frank Venturella, Secretary and Director

Faye Peats, Treasurer and Director Thomas Rauls, Jr., Director

Della Steele, Director Scott Werner, Director

ADMINISTRATION

Dr. David Knes, Superintendent Vickie Pardeck, Assistant Superintendent

Chris Finder, Director of Business

CERTIFIED PUBLIC ACCOUNTANT

Mueller, Walla & Albertson, P.C. St. Louis, Missouri

BOND COUNSEL

Gilmore & Bell, P.C. St. Louis, Missouri

UNDERWRITER

Stifel, Nicolaus & Company, Incorporated

St. Louis, Missouri

REGARDING USE OF THIS OFFICIAL STATEMENT

____________________________ THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON THE EXEMPTION CONTAINED IN SECTION 3(a)(2) OF SUCH ACT. The information set forth herein has been obtained from the District and other sources which are deemed to be reliable, but is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the District. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as 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. No dealer, broker, salesperson or any other person has been authorized by the District to give any information or make any representations, other than those contained in this Official Statement, in connection with the offering of the Bonds, and if given or made, such other information or representations must not be relied upon as having been authorized by the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any state in which it is unlawful for such person to make such offer, solicitation or sale. The information herein is subject to change without notice, and neither the delivery of this Official Statement nor the sale of any of the Bonds hereunder shall under any circumstances create any implication that there has been no change in the affairs of the District or the other matters described herein since the date hereof. IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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TABLE OF CONTENTS Page INTRODUCTION ..............................................................................................................................................1

General...........................................................................................................................................................1 Purposes of the Bonds....................................................................................................................................1 Security for the Bonds....................................................................................................................................1 Continuing Disclosure....................................................................................................................................1

THE BONDS .......................................................................................................................................................2 General...........................................................................................................................................................2 Book-Entry Only System...............................................................................................................................2 Registration, Transfer and Exchange of Bonds Upon Discontinuance of Book-Entry Only System ............4 No Redemption ..............................................................................................................................................5

SECURITY FOR THE BONDS ........................................................................................................................5 PLAN OF FINANCING .....................................................................................................................................5

Refunding of the Refunded Bonds.................................................................................................................5 Sources and Uses of Funds ............................................................................................................................5

THE DISTRICT..................................................................................................................................................6 LEGAL MATTERS............................................................................................................................................6 BOND RATING ..................................................................................................................................................6 TAX MATTERS .................................................................................................................................................6

Opinion of Bond Counsel ..............................................................................................................................7 Other Tax Consequences ...............................................................................................................................7

CONTINUING DISCLOSURE UNDERTAKING ..........................................................................................8 ABSENCE OF LITIGATION ...........................................................................................................................9 UNDERWRITING..............................................................................................................................................9 CERTAIN RELATIONSHIPS ........................................................................................................................10 MISCELLANEOUS .........................................................................................................................................10 APPENDIX A - INFORMATION REGARDING THE DISTRICT APPENDIX B - INDEPENDENT AUDITORS’ REPORT AND AUDITED FINANCIAL STATEMENTS

OF THE DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2011

___________________________

THIS PAGE INTENTIONALLY

LEFT BLANK

___________________________

OFFICIAL STATEMENT



INTRODUCTION The following introductory information is subject in all respects to more complete information contained elsewhere in this Official Statement. The order and placement of materials in this Official Statement, including the appendices hereto, are not to be deemed to be a determination of relevance, materiality or relative importance, and this Official Statement, including the cover page and appendices should be considered in its entirety. The offering of the Bonds to potential investors is made only by means of the entire Official Statement. General This Official Statement, including the cover page and appendices hereto, is furnished to prospective purchasers in connection with the offering and sale of $2,250,000 aggregate principal amount of General Obligation Refunding Bonds, Series 2012 (the “Bonds”) by the Valley Park School District (the “District”). The issuance and sale of the Bonds has been authorized by a resolution of the Board of Education of the District adopted on January 25, 2012 (the “Resolution”). All capitalized terms used herein and not otherwise defined herein have the meanings assigned to those terms in the Resolution. Purpose of the Bonds The Bonds are being issued for the purpose of providing funds to (1) refund a portion of the District’s outstanding General Obligation Refunding Bonds, Series 2004A, maturing in the years 2013 to 2015, inclusive, in the aggregate principal amount of $2,255,000 (the “Refunded Bonds”), and (2) pay the costs of issuing the Bonds. See the section herein captioned “PLAN OF FINANCING.” Security for the Bonds The Bonds will constitute general obligations of the District and will be payable as to both principal and interest from ad valorem taxes, which may be levied without limitation as to rate or amount upon all of the taxable tangible property, real and personal, within the territorial limits of the District. See the section herein captioned “SECURITY FOR THE BONDS.” Continuing Disclosure The District has agreed in a Continuing Disclosure Agreement (the “Continuing Disclosure Agreement”), between the District and UMB Bank, N.A., St. Louis, Missouri, as dissemination agent (the “Dissemination Agent”), to provide certain financial information and operating data relating to the District and to provide notices of the occurrence of certain enumerated events relating to the Bonds. The financial information, operating data and notice of events will be filed by the Dissemination Agent on behalf of the District in compliance with Rule 15c2-12 promulgated by the Securities and Exchange Commission. See the section herein captioned “CONTINUING DISCLOSURE UNDERTAKING.”

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THE BONDS General The Bonds are being issued in the aggregate principal amount of $2,250,000. The Bonds are dated as of the date of original delivery of and payment for such Bonds and the principal is payable on March 1 in the years and in the principal amounts set forth on the inside cover page hereof. Interest on the Bonds is calculated at the rates per annum set forth on the inside cover page, computed on the basis of a 360-day year of twelve 30-day months. The Bonds shall consist of fully registered bonds in denominations of $5,000 or any integral multiple thereof and shall be numbered from 1 consecutively upward. Interest on the Bonds is payable from the date thereof or the most recent date to which said interest has been paid and is payable semiannually on March 1 and September 1 in each year, beginning September 1, 2012. Payment of the interest on the Bonds will be made to the person in whose name such Bond is registered on the registration books (the “Bond Register”) at the close of business on the 15th day (whether or not a Business Day) of the calendar month next preceding an interest payment date (the “Record Date”). Interest on the Bonds will be paid to the Registered Owners thereof by check or draft mailed by UMB Bank, N.A., St. Louis, Missouri, as paying agent (the “Paying Agent”) to each Owner at the address shown on the Bond Register or at such other address as is furnished to the Paying Agent in writing by such Registered Owner, or in the case of an interest payment to any Registered Owner of $500,000 or more in aggregate principal amount of Bonds, by electronic transfer to such Registered Owner upon written notice signed by such Registered Owner and given to the Paying Agent not less than 15 days prior to the Record Date for such interest payment, containing the electronic transfer instructions including the name and address of the bank (which shall be in the continental United States), the ABA routing number and the account number to which such Owner wishes to have such transfer directed. Principal of the Bonds will be paid by check or draft to the Registered Owner of such Bond at the maturity of such Bond or otherwise, upon presentation and surrender of such Bond at the payment office of the Paying Agent in St. Louis, Missouri or at such other payment office as designated by the Paying Agent. Book-Entry Only System General. The Bonds are available in book-entry only form. Purchasers of the Bonds will not receive certificates representing their interests in the Bonds. Ownership interests in the Bonds will be available to purchasers only through a book-entry system (the “Book-Entry System”) maintained by The Depository Trust Company (“DTC”), New York, New York. The following information concerning DTC and DTC’s book-entry system has been obtained from DTC. The District takes no responsibility for the accuracy or completeness thereof and neither the Indirect Participants nor the Beneficial Owners should rely on the following information with respect to such matters, but should instead confirm the same with DTC or the Direct Participants, as the case may be. There can be no assurance that DTC will abide by its procedures or that such procedures will not be changed from time to time. DTC 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, each in the aggregate principal amount of such maturity and will be deposited with DTC. DTC and its Participants. 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

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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. Purchases of Ownership Interests. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. Transfers. 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. Notices. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices will be sent to DTC. If less than all of the Bonds within a maturity 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.

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Voting. 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 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). Payments of Principal, Redemption Price and Interest. Payment of the principal of and interest 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 the Paying Agent, on the payment 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 the principal of and interest on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or 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. Discontinuation of Book-Entry System. DTC may discontinue providing its services as securities 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 Direct Participants holding a majority position in the Bonds may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed, 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), and delivered to DTC (or a successor securities depository), to be held by it as securities depository for Direct Participants. If, however, the system of book-entry-only transfers has been discontinued and a Direct Participant has elected to withdraw its Bonds from DTC (or such successor securities depository), Bond certificates may be delivered to Beneficial Owners in the manner described herein under the caption “Registration, Transfer and Exchange of Bonds Upon Discontinuance of Book Entry Only System.” Registration, Transfer and Exchange of Bonds Upon Discontinuance of Book-Entry Only System The Paying Agent will keep or cause to be kept the Bond Register at its principal payment office or such other office designated by the Paying Agent. Upon surrender of any Bond to the Paying Agent, the Paying Agent shall transfer or exchange Bonds as provided in the Resolution. Any Bond may be transferred upon the Bond Register by the person in whose name it is registered and shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in a form and with guarantee of signature satisfactory to the Paying Agent, duly executed by the Registered Owner thereof or by the Registered Owner’s duly authorized agent. The Owner requesting such transfer or exchange will be required to pay any additional costs or fees that might be incurred in the secondary market with respect to such exchange. In the event any Registered Owner fails to provide a correct taxpayer identification number to the Paying Agent, the Paying Agent may make a charge against such Registered Owner sufficient to pay any governmental charge required to be paid as a result of such failure.

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No Redemption The Bonds are not subject to optional redemption prior to maturity.

SECURITY FOR THE BONDS

Pledge of Full Faith and Credit The Bonds will constitute general obligations of the District and will be payable as to both principal and interest from ad valorem taxes, which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the District. Levy and Collection of Annual Tax Under the Resolution, there is levied upon all of the taxable tangible property within the District a direct annual tax sufficient to produce the amounts necessary for the payment of the principal of and interest on the Bonds as the same become due and payable in each year. Such taxes shall be extended upon the tax rolls in each year, and shall be levied and collected at the same time and in the same manner as the other ad valorem taxes of the District are levied and collected. The proceeds derived from said taxes shall be deposited in the Debt Service Fund, shall be kept separate and apart from all other funds of the District, and shall be used solely for the payment of the principal of and interest on the Bonds as and when the same become due, taking into account scheduled mandatory redemptions, if any, and the fees and expenses of the Paying Agent.

PLAN OF FINANCING

Refunding of the Refunded Bonds

A portion of the proceeds of the Bonds will be used for the purpose of refunding and redeeming the Refunded Bonds. On the date of delivery of the Bonds, the District will transfer and deposit a portion of the proceeds of the Bonds to UMB Bank, N.A., as paying agent for the Refunded Bonds (the “Prior Paying Agent”). Such amount transferred and deposited with the Prior Paying Agent will be sufficient to redeem and pay the Refunded Bonds on March 2, 2012, at a redemption price of 100% of the principal amount thereof, plus accrued interest thereon to the date of redemption.

Sources and Uses of Funds

The sources and uses of the proceeds of the Bonds are as follows:

Sources of Funds: Par Amount of Bonds $2,250,000.00 Plus: Original Issue Premium 63,142.00 Total $2,313,142.00

Uses of Funds: Deposit with Paying Agent for the Refunded Bonds $2,255,225.82 Costs of Issuance (including Underwriter’s Discount) 57,916.18 Total $2,313,142.00

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THE DISTRICT

The District is located near Interstate 44 in southwestern St. Louis County, approximately 16 miles from downtown St. Louis. The District includes most of the City of Valley Park as well as the Village of Twin Oaks and unincorporated areas of St. Louis County. The District is bounded by the Meramec River on the south and Big Bend Road on the north. It encompasses approximately 4.6 square miles. See APPENDIX A – INFORMATION REGARDING THE DISTRICT for further information regarding the District.

LEGAL MATTERS Legal matters with respect to the authorization, execution and delivery of the Bonds are subject to the approval of Gilmore & Bell, P.C., St. Louis, Missouri, Bond Counsel, whose approving opinion will be available at the time of delivery of the Bonds. Gilmore & Bell, P.C. will also pass upon certain legal matters relating to this Official Statement. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment, of the transactions opined upon, or of the future performance of parties to such transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.

BOND RATING

Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (the “Rating Agency”), has assigned a municipal bond rating of “AA” to the Bonds based on the underlying credit of the District. Such rating reflects only the view of the Rating Agency, and an explanation of the significance of such rating may be obtained therefrom. There is no assurance that the rating will remain in effect for any given period of time or that it will not be revised, either downward or upward, or withdrawn entirely, by the Rating Agency if, in its judgment, circumstances warrant. The Underwriter has not undertaken any responsibility to bring to the attention of the holders of the Bonds any proposed revision or withdrawal of the rating of the Bonds or to oppose any such proposed revision or withdrawal. Pursuant to the Continuing Disclosure Agreement, the District is required to bring to the attention of the holders of the Bonds any proposed revision or withdrawal of the rating of the Bonds but has not undertaken any responsibility to oppose any such proposed revision or withdrawal. See the section herein captioned “CONTINUING DISCLOSURE UNDERTAKING.” Any such revision or withdrawal of the rating could have an adverse effect on the market price and marketability of the Bonds.

TAX MATTERS The following is a summary of the material federal and State of Missouri income tax consequences of holding and disposing of the Bonds. This summary is based upon laws, regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their personal investment circumstances or describe the tax consequences to certain types of owners subject to special treatment under the federal income tax laws (for example, dealers in securities or other persons who do not hold the Bonds as a capital asset, tax-exempt organizations, individual retirement accounts and other tax deferred accounts, and foreign taxpayers), and, except for the income tax laws of the State of Missouri, does

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not discuss the consequences to an owner under any state, local or foreign tax laws. The summary does not deal with the tax treatment of persons who purchase the Bonds in the secondary market. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax considerations of holding and disposing of the Bonds. Opinion of Bond Counsel In the opinion of Gilmore & Bell, P.C., Bond Counsel, under the law existing as of the issue date of the Bonds: Federal and Missouri Tax Exemption. The interest on the Bonds is excludable from gross income for federal income tax purposes and is exempt from income taxation by the State of Missouri. Alternative Minimum Tax. Interest on the Bonds is not an item of tax preference for purposes of computing the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. Bank Qualification. The Bonds are “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). Bond Counsel’s opinions are provided as of the date of the original issue of the Bonds, subject to the condition that the District comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. The District has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal and Missouri income tax purposes retroactive to the date of issuance of the Bonds. Bond Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Bonds but has reviewed the discussion under the heading “TAX MATTERS.” Other Tax Consequences Original Issue Premium. If a Bond is issued at a price that exceeds the stated redemption price at maturity of the Bond, the excess of the purchase price over the stated redemption price at maturity constitutes “premium” on that Bond. Under Section 171 of the Code, the purchaser of that Bond must amortize the premium over the term of the Bond using constant yield principles, based on the purchaser’s yield to maturity. As premium is amortized, the owner’s basis in the Bond and the amount of tax-exempt interest received will be reduced by the amount of amortizable premium properly allocable to the owner. This will result in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of the Bond prior to its maturity. Even though the owner’s basis is reduced, no federal income tax deduction is allowed. Prospective investors should consult their own tax advisors concerning the calculation and accrual of bond premium.

Sale, Exchange or Retirement of Bonds. Upon the sale, exchange or retirement (including

redemption) of a Bond, an owner of the Bond generally will recognize gain or loss in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale, exchange or retirement of the Bond (other than in respect of accrued and unpaid interest) and such owner’s adjusted tax basis in the Bond. To the extent a Bond is held as a capital asset, such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the Bond has been held for more than 12 months at the time of sale, exchange or retirement.

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Reporting Requirements. In general, information reporting requirements will apply to certain payments of principal, interest and premium paid on the Bonds, and to the proceeds paid on the sale of the Bonds, other than certain exempt recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. The amount of any backup withholding from a payment to an owner will be allowed as a credit against the owner’s federal income tax liability.

Collateral Federal Income Tax Consequences. Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with “excess net passive income,” foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Bonds. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Bonds should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Bonds, including the possible application of state, local, foreign and other tax laws.

CONTINUING DISCLOSURE UNDERTAKING

The District will covenant in the Continuing Disclosure Agreement to provide certain financial information and operating data relating to the District (updated within not later than 180 days following the end of its fiscal year, which currently ends on June 30) (the “Annual Report”) commencing with the Annual Report for the fiscal year ending June 30, 2012, and to provide notices of the occurrence of certain enumerated events, as described herein and therein. The Annual Report shall be filed by or on behalf of the District with the Municipal Securities Rulemaking Board (the “MSRB”) via the Electronic Municipal Market Access system (“EMMA”). The Annual Report shall include:

(1) The audited financial statements of the District for the prior fiscal year, prepared on the cash basis, which is a comprehensive basis of accounting other than generally accepted accounting principles.

(2) The information relating to the District and its operations set forth in APPENDIX A of this

Official Statement in the tables under the sections captioned: “THE DISTRICT – Enrollment,” “FINANCIAL INFORMATION CONCERNING THE DISTRICT – Sources of Revenue,” “PROPERTY TAX INFORMATION – Historic Assessed Valuation,” “– Tax Rates,” “– Tax Collections” and “Major Taxpayers.”

Not later than 10 business days after the occurrence of any of the following events, the District shall

give, or cause to be given to the MSRB, through EMMA, notice of the occurrence of any of the following events with respect to the Bonds (“Material Events”):

(1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions; the issuance by the Internal Revenue Service of proposed or final

determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other

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material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;

(7) modifications to rights of bondholders, if material; (8) Bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the District; (13) the consummation of a merger, consolidation, or acquisition involving the District or the sale

of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and

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

Nothing in the Continuing Disclosure Agreement shall prevent the District from disseminating any other information in addition to that which is required by the Continuing Disclosure Agreement. If the District chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required, the District shall have no obligation to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12 promulgated by the Securities and Exchange Commission. The District has made a similar undertaking with respect to its outstanding obligations to file an Annual Report for each fiscal year of the District. The District timely filed its Annual Report for the fiscal year ended June 30, 2011, and is currently in compliance under its prior continuing disclosure undertakings. However, the District has not consistently filed is Annual Report each year. The District has instituted procedures to insure that future filings are correctly made.

ABSENCE OF LITIGATION

As of the date hereof, there is no controversy, suit or other proceeding of any kind pending or, to the District’s knowledge, threatened wherein or whereby any question is raised or may be raised, questioning, disputing or affecting in any way the legal organization of the District or its boundaries, or the right or title of any of its officers to their respective offices, or the legality of any official act in connection with the authorization, issuance and sale of the Bonds, or the constitutionality or validity of the Bonds or any of the proceedings had in relation to the authorization, issuance or sale thereof, or the levy and collection of a tax to pay the principal and interest thereof, or which might affect the District’s ability to meet its obligations to pay the Bonds.

UNDERWRITING Stifel, Nicolaus & Company, Incorporated, St. Louis, Missouri (the “Underwriter”), has agreed to purchase the Bonds at a price of $2,290,642.00 (which is equal to the aggregate original principal amount of the Bonds, less an underwriting discount of $22,500.00 and plus original issue premium of $63,142.00). The Underwriter is purchasing the Bonds for resale in the normal course of the Underwriter’s business activities. The Underwriter reserves the right to offer any of the Bonds to one or more purchasers on such terms and conditions and at such price or prices as the Underwriter, in its discretion, shall determine.

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CERTAIN RELATIONSHIPS

Gilmore & Bell, P.C., Bond Counsel, has represented the Underwriter and the Paying Agent in transactions unrelated to the issuance of the Bonds, but is not representing them in connection with the issuance of the Bonds.

MISCELLANEOUS The references, excerpts and summaries of all documents referred to herein do not purport to be complete statements of the provisions of such documents, and reference is made to all such documents for full and complete statements of all matters of fact relating to the Bonds, the security for the payment of the Bonds and the rights of the Owners thereof. During the period of the offering, copies of drafts of such documents may be examined at the offices of the Underwriter. The information contained in this Official Statement has been compiled from official and other sources that are deemed to be reliable, and while not guaranteed as to completeness or accuracy, is believed to be correct as of this date. Any statement made in this Official Statement involving matters of opinion or of estimates, whether or not expressly so stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the information presented herein since the date hereof. This Official Statement is not to be construed as a contract or agreement between the District, the Paying Agent, or the Underwriter and the purchasers or Owners of any Bonds. The District has duly authorized the delivery of this Official Statement.

VALLEY PARK SCHOOL DISTRICT By: /s/ William Dains President of the Board of Education

APPENDIX A

INFORMATION REGARDING THE DISTRICT

TABLE OF CONTENTS THE DISTRICT..............................................................................................................................................A-1

General.......................................................................................................................................................A-1 Board of Education ....................................................................................................................................A-1 District Personnel.......................................................................................................................................A-1 Educational Facilities.................................................................................................................................A-2 Enrollment..................................................................................................................................................A-3 School Rating and Accreditation ...............................................................................................................A-3

ECONOMIC AND DEMOGRAPHIC INFORMATION CONCERNING THE DISTRICT .................A-3 Commerce, Industry and Employment ......................................................................................................A-3 Population and Other Statistics ..................................................................................................................A-5

FINANCIAL INFORMATION CONCERNING THE DISTRICT ...........................................................A-8 Sources of Revenue....................................................................................................................................A-8 Local Revenue ...........................................................................................................................................A-8 State Revenue.............................................................................................................................................A-9 Federal Revenue.......................................................................................................................................A-12 Tax Limitation Provisions........................................................................................................................A-12 Accounting, Budgeting and Auditing Procedures....................................................................................A-13 Summary of Revenues, Expenditures and Fund Balances .......................................................................A-14 Summary Statement of Revenues, Expenditures and Changes in Fund Balances ...................................A-15

PROPERTY TAX INFORMATION ..........................................................................................................A-16 Property Valuations .................................................................................................................................A-16 Current Assessed Valuation .....................................................................................................................A-16 Historic Assessed Valuation ....................................................................................................................A-17 Tax Rates .................................................................................................................................................A-17 Tax Collections and Major Taxpayers .....................................................................................................A-18 Tax Collection Record .............................................................................................................................A-19 Tax Abatement and Tax Increment Financing.........................................................................................A-19 District’s Rights in the Event of Tax Delinquencies................................................................................A-20

INDEBTEDNESS OF THE DISTRICT .....................................................................................................A-20 General.....................................................................................................................................................A-20 General Obligation Bonds Outstanding ...................................................................................................A-21 Debt Service Requirements......................................................................................................................A-21 Lease Obligations.....................................................................................................................................A-21 Overlapping Bonded Indebtedness ..........................................................................................................A-22 Debt Ratios and Related Information.......................................................................................................A-22 Short-Term Borrowings ...........................................................................................................................A-23 Debt Limitation and Debt Capacity .........................................................................................................A-23 Revenue Obligations ................................................................................................................................A-23 Employee Relations .................................................................................................................................A-23 Pension and Employee Retirement Plans.................................................................................................A-23

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THE DISTRICT General The District is located near Interstate 44 in southwestern St. Louis County, approximately 16 miles from downtown St. Louis. The District includes most of the City of Valley Park as well as the Village of Twin Oaks and unincorporated areas of St. Louis County. The District is bounded by the Meramec River on the south and Big Bend Road on the north. It encompasses approximately 4.6 square miles. As of November 2011, the District had an estimated population of 8,426. Much of the District is located within the Meramec River flood plain. The District incurred damage to buildings and contents due to flooding of the Meramec River in 1994, although all of the damage to District property was completely repaired through the proceeds of the District’s flood insurance policy. The District’s current flood insurance policy has liability limits of $500,000 per building and $500,000 for the contents of each building. The United States Corps of Engineers constructed a 3.1 mile levee, which is designed to protect the City of Valley Park and the District from 100-year floods of the Meramec River and its tributaries. Board of Education

The District is organized and governed pursuant to Chapter 162 of the Revised Statutes of Missouri, as amended. The District is governed by a seven-director Board of Education (the “Board”). The directors of the Board are elected by the voters of the District for three-year staggered terms, with two directors being elected in two successive years and three directors being elected every three years. All directors are elected at-large and serve without compensation. The Board is responsible for all policy decisions. The President of the Board is elected by the Board from among its members for a term of one year and has no regular administrative duties. The Secretary and Treasurer are appointed by the Board and may or may not be members of the Board.

The following table provides brief descriptions of the members of the Board:

Name and Title

Occupation

Year First Elected

Current Term

Expires (April)

William Dains, President and Director Owner, Moving/Logistics Company 1994 2012 Peter Coates, Vice President and Director Preventive Maintenance Manager 1996 2014 Frank Venturella, Secretary and Director Sales Director 1999(1) 2012 Faye Peats, Treasurer and Director Legal Assistant 1999 2014 Thomas Rauls, Jr., Director Aerospace Administrator 2010 2013 Della Steele, Director Pharmacy Assistant 2010 2013 Scott Werner, Director Manager of Contract Food Service

Company 2011 2014

(1) Served on the Board from 1999-2002 and was re-elected to the Board in 2003. District Personnel The Board appoints the Superintendent of Schools, who is the chief administrative officer of the District responsible for carrying out the policies set by the Board. For the 2011-12 school year, the District has a total of 155 employees, including 6 administrative personnel, 94 certified staff members and 55 non-certified staff members. On average, teachers have approximately 12 years of experience and 82% of the District’s teachers have attained a Master’s degree or beyond.

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The Superintendent of Schools is Dr. David Knes. Dr. Knes is serving his 5th year as Superintendent of the District. He has spent a total of 23 years in education, including 21 years in administration. Prior to serving as Superintendent, Dr. Knes served as Assistant Superintendent of the District for three years. Dr. Knes was also principal for six years at Ellisville Elementary School in the Rockwood School District prior to joining the District. Dr. Knes received his Bachelor’s degree from University of Missouri-Columbia and a Master’s degree from University of Missouri-St. Louis. Dr. Knes also holds a Specialist degree and a Doctor of Education degree from Saint Louis University. Dr. Knes was honored in 2004 by the Missouri State Principals Association as the St. Louis area’s Principal of the Year. Dr. Knes was honored in 2009 by the Missouri State Superintendent’s Association as the St Louis area’s New Superintendent of the Year. Educational Facilities The District operates an elementary school, a middle school, a multi-purpose building, a high school, a fine and practical arts building and an early childhood center, with a total enrollment of approximately 992 students. Elementary students receive instruction in the basic subject areas of reading, math, science, social studies and language, and introductions to the fine arts of music and art by specially trained teachers. There is also emphasis on physical education and health. Senior high students select from a wide variety of courses with more specialization for future needs in college and the work world. Computer instruction is available at all educational levels. The District also offers the following special programs and services:

• Parents as Teachers Program offers parent education and screening for children from birth to age five. Children age four are eligible for a pre-kindergarten program that is tuition-based.

• Gifted education and enrichment courses for students of high academic ability are offered at all levels

in a variety of areas, including language arts, science and social studies. Advanced placement and college credit courses are offered to high school students.

• The Missouri A+ Schools Program is available to high school students. Valley Park High School is

one of only five high schools in St. Louis County to be awarded this program which provides, upon graduation, free tuition, books and fees to any State of Missouri (the “State”) community college or public technical school to qualifying high school students.

• The Community School is an academic recovery program for at-risk secondary school students.

[Remainder of Page Intentionally Left Blank.]

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Enrollment The following table shows student enrollment in the District as of the fall semester in each of the following school years:

School Year Total 2007-08 997 2008-09 988 2009-10 998 2010-11 996 2011-12 992

Source: District. School Rating and Accreditation

Missouri law requires the Department of Elementary and Secondary Education (“DESE”) to regularly evaluate each public school district. The process of accrediting school districts is mandated by state law, and the specific responsibilities are outlined both by rules of the State Board of Education and in Section 161.092 of the Revised Statutes of Missouri, as amended. Under DESE’s current accreditation system, school districts are evaluated every five years based on DESE standards in three areas: resource standards, educational process standards and performance standards. Districts receive an evaluation judgment for each of the three sets of standards and an overall evaluation, which evaluations are in one of four categories: “accredited,” “provisionally accredited”, “unaccredited” or “interim accredited.” As of September 2011, 97.7% of all school districts in the State were “accredited,” 1.9% were “provisionally accredited,” 0.5% were “unaccredited” and DESE assigned one school district “interim” status under the Missouri School Improvement Program (“MSIP”) rating system. The District is assigned an “accredited” status, which is the highest accreditation status given. For fiscal years 2007-2011, the District further received DESE’s Annual Distinction in Performance designation.

ECONOMIC AND DEMOGRAPHIC INFORMATION CONCERNING THE DISTRICT Commerce, Industry and Employment

Major Employers. Listed below are the major employers located within the City of St. Louis, Missouri and St. Louis County, Missouri, and the approximate number of employees employed by each:

No.

Major Employers

Product/Service

Approximate Number of Full and

Part-Time Employees

1. BJC Health Care Health care 24,044 2. Boeing Integrated Defense Systems Defense systems 15,000 3. Washington University Education 13,208 4. SSM Health Care Health care 11,194 5. Schnuck Markets, Inc. Retail grocery 10,985 6. United States Postal Service Post office 10,400 7. Wal-Mart Stores Inc. Discount retail 10,300 8. St. John’s Mercy Health Care Health care 9,639 9. AT&T Telecommunications 8,847

10. Saint Louis University Education 7,089 Source: St. Louis Business Journal 2011 Book of Lists.

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Unemployment. The following tables set forth employment statistics for St. Louis County, the State of Missouri and the United States:

2007 2008 2009 2010 2011(1) St. Louis County Total Labor Force 529,436 522,882 515,120 513,534 511,781 Employed 503,391 491,695 468,888 465,389 465,835 Unemployed 26,045 31,187 46,232 48,145 45,946 Unemployment Rate 4.9% 6.0% 9.0% 9.4% 9.0% State of Missouri Total Labor Force 3,054,202 3,054,640 3,051,123 3,014,310 3,057,142 Employed 2,899,695 2,869,569 2,768,144 2,725,527 2,806,825 Unemployed 154,507 185,071 282,979 288,783 250,317 Unemployment Rate 5.1% 6.1% 9.3% 9.6% 8.2% United States Total Labor Force 153,125,000 154,286,000 154,142,000 153,889,000 153,617,000 Employed 146,047,000 145,362,000 139,877,000 139,064,000 139,064,000 Unemployed 7,078,000 8,924,000 14,265,000 14,825,000 13,747,000 Unemployment Rate 4.6% 5.8% 9.3% 9.6% 8.9%

(1) Preliminary numbers as of November 2011. Source: U.S. Department of Labor, Bureau of Labor Statistics and Missouri Economic Research & Information Center. The following table represents workforce by occupation in St. Louis County and the State of Missouri:

St. Louis County State of Missouri Classification Number Percent Number Percent Management, professional and related occupations 205,589 42.8% 939,797 34.4% Service occupations 77,375 16.1 492,308 18.0 Sales and office occupations 128,063 26.6 699,708 25.6 Natural resources, construction, & maintenance

occupations 27,280 5.7 241,289 8.8 Production, transportation and material moving

occupations 42,426 8.8 360,774 13.2 Total 480,733 100.0% 2,733,876 100.0%

Source: U.S. Bureau of the Census (2010 Census).

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The following table represents employees by industry in St. Louis County and the State of Missouri:

St. Louis County

State of Missouri

Classification Number Percent Number Percent Agriculture, forestry, fishing, hunting and

mining 2,255 0.5% 47,689 1.7% Construction 19,257 4.0 161,710 5.9 Manufacturing 49,696 10.3 309,768 11.3 Wholesale trade 16,095 3.4 78,608 2.9 Retail trade 54,447 11.3 330,191 12.1 Transportation and warehousing and

utilities 19,315 4.0 139,157 5.1 Information 13,292 2.8 64,091 2.3 Finance, insurance, real estate, and rental

and leasing 44,451 9.3 190,905 7.0 Professional, scientific, management,

administrative and waste management services 57,289 11.9 240,638 8.8

Educational, health and social services 124,380 25.9 660,567 24.2 Arts, entertainment, recreation,

accommodation and food services 43,831 9.1 248,691 9.1 Other services (except public

administration) 21,809 4.5 129,080 4.7 Public administration 14,616 3.0 132,781 4.9 Total 480,733 100.0% 2,733,876 100.0%

Source: U.S. Bureau of the Census (2010 Census). Population and Other Statistics

The following table shows the populations of the District, St. Louis County and the State of Missouri:

1990 2000 2010 District 5,372 7,645 8,426(1) St. Louis County 993,529 1,016,315 998,954 State of Missouri 5,117,073 5,595,211 5,988,927

(1) Estimate as of November 2011. Source: U.S. Bureau of the Census.

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The following table shows population by age categories for the areas indicated:

Age

St. Louis County

State of Missouri

0-4 years 58,606 390,237 5-19 years 201,820 1,211,174 20-24 years 60,220 413,289 25-44 years 244,614 1,524,083 45-64 years 284,201 1,611,850 65 years and over 149,493 838,294


The median family income for the District, St. Louis County and the State of Missouri, are as follows:

2000 2010(1) District $54,451 - St. Louis County 61,680 $72,967 State of Missouri 46,044 56,214

(1) Information not yet available for the District for 2010. Source: U.S. Bureau of the Census.

The following table presents per capita personal income(1) for St. Louis County and the State of Missouri for the years 2005 through 2009, the latest date for which such information is available:

St. Louis County State of Missouri

Year Per Capita

Personal Income

% Change Per Capita

Personal Income

% Change

2005 $46,994 N/A $32,162 N/A 2006 50,881 +8.27% 33,903 +5.41% 2007 52,671 +3.52 35,387 +4.38 2008 54,924 +4.28 36,884 +4.23 2009 52,214 -4.93 36,181 -1.91

(1) “Per Capita Personal Income” is the annual total personal income of residents divided by the resident population as of

July 1. “Personal Income” is the sum of net earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and transfer payments. “Net Earnings” is earnings by place of work - the sum of wage and salary disbursements (payrolls), other labor income, and proprietors’ income - less personal contributions for social insurance, plus an adjustment to convert earnings by place of work to a place-of-residence basis. Personal Income is measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars (no adjustment is made for price changes).

Source: U.S. Department of Commerce, Bureau of Economic Analysis.

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The following table represents the distribution of household income for St. Louis County and the State of Missouri:

St. Louis County State of Missouri Income

Number

Percent

Number

Percent

Under $10,000 23,684 5.9% 198,773 8.5% $10,000 to $14,999 16,669 4.1 153,514 6.5 $15,000 to $24,999 45,034 11.2 301,253 12.8 $25,000 to $34,999 41,511 10.3 277,413 11.8 $35,000 to $49,999 57,338 14.3 363,710 15.5 $50,000 to $74,999 69,128 17.2 437,371 18.6 $75,000 to $99,999 49,807 12.4 260,738 11.1 $100,000 to $149,999 54,697 13.6 235,283 10.0 $150,000 to $199,999 20,656 5.1 63,833 2.7 $200,000 or more 23,927 5.9 58,740 2.5 Total 402,451 100.0% 2,350,628 100.0%

Source: U.S. Bureau of the Census (2010 Census). The median value of owner-occupied housing units in the District, St. Louis County and the State of Missouri was as follows:

2000

2010(1)

District $127,222 - St. Louis County 116,600 $178,100 State of Missouri 89,900 139,000

(1) Information not yet available for the District for 2010. Source: U.S. Bureau of the Census. The value of specified owner-occupied housing units of St. Louis County and the State of Missouri was, according the 2010 Census, as follows:

St. Louis County State of Missouri Value

Number

Percent

Number

Percent

Under $50,000 10,404 3.6% 183,965 11.4% $50,000 to $99,999 41,855 14.5 346,005 21.3 $100,000 to $149,999 54,658 18.9 353,035 21.8 $150,000 to $199,999 59,926 20.7 293,297 18.1 $200,000 to $299,999 59,127 20.5 261,674 16.1 $300,000 to $499,999 39,329 13.6 127,638 7.9 $500,000 to $999,999 18,641 6.5 44,276 2.7 $1,000,000 or more 4,831 1.7 11,481 0.7 Total 288,771 100.0% 1,621,371 100.0%


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FINANCIAL INFORMATION CONCERNING THE DISTRICT Sources of Revenue The District finances its operations through local property taxes, revenues from a 1% State Sales Tax, State Aid Formula Funds, federal grant programs and miscellaneous sources including State Aid for Transportation, State Aid for Handicapped Students, and a state tax on cigarettes (“Fair Share” revenues). A recent history of the breakdown of the sources of revenues (all funds) for the District is as follows:

Source 2011 2010 2009 2008 2007 Local Revenue $10,860,325.64 $10,632,368.65 $10,853,175.88 $10,856,368.70 $ 9,838,422.58 County Revenue 127,230.45 147,259.71 133,913.28 129,385.30 131,065.31 State Revenue 1,197,895.75 925,334.70 1,156,579.79 1,028,902.58 1,030,618.52 Federal Revenue 760,407.73 928,707.05 773,311.80 644,683.44 847,407.04 Other Revenue 2,655,000.00(1) 4,000,000.00(2) 0.00 0.00 0.00 TOTAL $15,600,859.57 $16,633,670.11 $12,916,980.75 $12,659,340.02 $11,847,513.45

(1) Includes the sale of general obligation refunding bonds. (2) Includes the sale of general obligation bonds. Source: District’s Annual Secretary of the Board Reports. Local Revenue The primary sources of “local revenue” are (1) taxes upon real and personal property within a district, excluding railroad and utility property taxes, which are more fully described below under the caption “PROPERTY TAX INFORMATION,” (2) fines and forfeitures collected as a result of violations within a district’s boundaries, (3) a district’s allocable portion of state assessed railroad and utility property taxes collected and distributed by the county or counties in which it is located, and (4) receipts from a 1% state sales tax (commonly referred to as “Proposition C revenues”). For school taxation purposes, all state assessed railroad and utility property within a county is taxed uniformly at a rate determined by averaging the tax rates of all school districts in the county. No determination is made of the assessed value of the railroad and utility property that is physically located within the boundaries of each school district. Such tax collections for each county are distributed to the school districts within that county according to a formula, based in part on total student enrollment in each district and in part on the taxes levied by each district. Proposition C revenues are generated by a 1-cent state sales tax that was approved by the voters in 1982. The sales tax proceeds are deemed to be “local” revenues for school district accounting purposes. Such revenues are distributed under the provisions of a State Aid formula using weighted average daily attendance (see the section below captioned “State Revenue”). The following table shows the amounts of Proposition C revenue per pupil distributed for each of the Fiscal Years shown below:

Fiscal Year Ended June 30

Proposition C Revenue

2007 $856.93 2008 845.28 2009 804.07 2010 763.83 2011 777.49

Source: Missouri Department of Elementary and Secondary Education.

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Under Proposition C, after determining its budget and the levy rate needed to produce required revenues to fund the budget, a school district must reduce the operating levy by an amount sufficient to decrease the revenues it would have received therefrom by an amount equal to approximately one-half of the estimated revenues to be received through Proposition C during the year. School districts may submit propositions to voters to forego some or all of the reduction in the operating levy that is otherwise required under the terms of Proposition C. In November 1994, voters of the District passed a proposition to waive all of the reduction in the operating levy required under Proposition C. State Revenue State Aid. The amount of State Aid for school districts in Missouri has typically been calculated using a complex formula. Senate Bill 287 passed by the Missouri General Assembly in its 2005 regular session is intended to transition the State away from a local tax rate based formula to a formula that is primarily student-needs based. The new formula is being phased in over a seven-year period that started with the 2006-07 fiscal year. During the phase-in period, State Aid for each school district will be based on a percentage of both the old local tax rate based formula (determined as a percentage of the 2005-06 State Aid Payments), and the new student-needs based formula. State Aid will be calculated using the following percentages of the old and new formulas:

Phase-In Year

Percentage of 2005-06

State Aid Payment

Percentage of SB 287

Formula

2006-07 85% 15% 2007-08 70 30 2008-09 56 44 2009-10 42 58 2010-11 28 72 2011-12 14 86 2012-13 0 100

The basic formula for State Aid has not been fully funded since the 2008-09 fiscal year. To lessen the impact of the funding shortfall, the General Assembly approved an amendment to Chapter 163 of the Revised Statutes of Missouri, which provides that in fiscal years 2010-11, 2011-12 and 2012-13, if the State’s basic formula appropriation is less than the amount needed to fully fund the phased-in formula, or the appropriation for transportation is funded at a level that provides less than 75% of the allowable transportation-related costs, school districts will be excused from compliance with certain spending requirements for professional development, as well as certain fund placement and expenditure requirements, described below under the caption “Mandatory Deposit and Expenditures of Certain Amounts in the Teachers’ Fund.” School districts will also be excused from complying with these requirements if the Governor withholds funds appropriated for funding the basic formula in any of the same three years. Property Tax Levy Requirements. The sum of a district’s local property tax levies in its Incidental and Teachers’ Funds must be at least $2.75 per $100 assessed valuation in order for the district to receive increases in State Aid above the level of State Aid it received in the 2005-06 fiscal year. Levy reductions required as a result of a “Hancock rollback” or an “SB 711 rollback” (see the caption “Tax Limitation Provisions” below) will not affect a district’s eligibility for State Aid increases. The Formula. A district’s State Aid is determined by first multiplying the district’s weighted average daily attendance (“ADA”) by the state adequacy target (discussed below). This figure may be adjusted upward by a “dollar value modifier,” which is an index of the relative purchasing power of a dollar, calculated as one plus 15% of the difference of the regional wage ratio minus one. The product of the weighted ADA multiplied

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by the state adequacy target is then reduced by a district’s “local effort” (discussed below) to calculate a district’s final State Aid amount. Weighted ADA. Weighted ADA is based upon regular term ADA plus summer school ADA, with additional weight assigned in certain circumstances for students who qualify for free and reduced lunch, receive special education services, or possess limited English language proficiency. Students receive additional weighted treatment if, categorically, they exceed certain thresholds (based on the percentage of students in each of the categories in “Performance Districts,” as defined below). Currently, additional weight is assigned to students above the following thresholds: above 26.6% for students who qualify for free or reduced lunch, above 14.9% for students receiving special education services, and above 1.1% for students possessing limited English language proficiency. The District’s State Aid revenues would be adversely affected by decreases in its weighted ADA resulting from decreased enrollment generally and, specifically, decreased enrollment of students eligible for free and reduced lunch, special education students, or students with limited English language proficiency. State Adequacy Target. The new State Aid formula requires DESE to calculate a “state adequacy target,” which is intended to be the minimum amount of funds a school district needs in order to educate each student. DESE’s calculation of the state adequacy target will be based upon amounts spent, excluding federal and state transportation revenues, by certain high performing districts (known as “Performance Districts”). Every two years, using the most current list of Performance Districts, DESE will recalculate the state adequacy target. The recalculation can never result in a decrease from the previous state adequacy target amount. DESE has established the state adequacy target at $6,131 for fiscal year 2012. Local Effort. For the 2006-07 fiscal year, the “local effort” figure utilized in a district’s State Aid calculation is the amount of locally generated revenue that the district would have received in the 2004-05 fiscal year if its operating levy was set at $3.43. The $3.43 amount is called the “performance levy.” For all subsequent years, a district’s “local effort” amount will be frozen at the 2006-07 amount, except for adjustments due to increased locally collected fines or decreased assessed valuation in the district. Growth in assessed valuation and operating levy increases will result in additional local revenue to the district, without affecting State Aid payments. Categorical-Source Add-Ons. In addition to State Aid distributed pursuant to the formula as described above, the formula provides for the distribution of certain categorical sources of State Aid to school districts. These include (1) 75% of allowable transportation costs, (2) the career ladder entitlement, (3) the vocational education entitlement, and (4) educational and screening program entitlements. Classroom Trust Fund (Gambling Revenue) Distribution. A portion of the State Aid received under the formula will be in the form of a distribution from the “Classroom Trust Fund”, a fund of the state treasury containing a portion of the State’s gambling revenues. This money is distributed to school districts on the basis of average daily attendance (versus weighted ADA, which applies to the basic formula distribution). The funds deposited into the Classroom Trust Fund are not earmarked for a particular fund or expense and may be spent at the discretion of the local school district, except that, beginning with the 2010-11 fiscal year, all proceeds of the Classroom Trust Fund in excess of amounts received in the 2009-10 fiscal year must be placed in the Teachers’ or Incidental Funds. Mandatory Deposit and Expenditures of Certain Amounts in the Teachers’ Fund. The following state and local revenues must be deposited in the Teachers’ Fund: (1) 75% of basic formula State Aid, excluding State Aid distributed from the Classroom Trust Fund (gambling revenues); (2) 75% of one-half of the district’s local share of Proposition C revenues; (3) 100% of the career ladder state matching payments; and (4) 100% of local revenue from fines and escheats based on violations or abandoned property within the district’s boundaries.

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In addition to these mandatory deposits, school districts are also required to spend for certificated staff compensation and tuition expenditures each year the amounts described in clauses (1) and (2) of the preceding paragraph. School districts are further required to spend for certificated staff compensation and tuition expenditures each year, per the second preceding year’s weighted ADA, as much as was spent in the previous year from local and county tax revenues deposited in the Teachers’ Fund, plus the amount of any transfers from the Incidental Fund to the Teachers’ Fund that are calculated to be local and county tax sources. This amount is to be determined by dividing local and county tax sources in the Incidental Fund by total revenue in the Incidental Fund. Commencing with the 2006-07 fiscal year, the formula provides that certificated staff compensation now includes the costs of public school retirement and Medicare for those staff members. These items were previously paid from the Incidental Fund. Failure to satisfy the deposit and expenditure requirements applicable to the Teachers’ Fund will result in a deduction of the amount of the expenditure shortfall from a district’s basic formula State Aid for the following year, unless the district receives an exemption from the State Board of Education. In fiscal years 2010-11, 2011-12 and 2012-13, under certain circumstances described above under “State Aid”, school districts will be excused from compliance with certain spending requirements for professional development, as well as certain of these fund placement and expenditure requirements. School districts will also be excused from complying with these requirements if the Governor withholds funds appropriated for funding the basic formula in any of the same three years. A school board may transfer any portion of the unrestricted balance remaining in the Incidental Fund to the Teachers’ Fund. Any school district that uses a transfer from the Incidental Fund to pay for more than 25% of the annual certificated compensation obligation of the school district, and has an Incidental Fund balance on June 30 in any year in excess of 50% of the combined Incidental and Teachers’ Fund expenditures for the fiscal year just ended, will be required to transfer the excess from the Incidental Fund to the Teachers’ Fund. Limited Sources of Funds for Capital Expenditures. School districts may only pay for capital outlays from the Capital Projects Fund. Sources of revenues in the Capital Projects Fund are limited to: (i) proceeds of general obligation bonds (which are repaid from a Debt Service Fund levy); (ii) revenue from the school district’s local property tax levy for the Capital Projects Fund; (iii) certain permitted transfers from the Teachers’ and Incidental Funds; and (iv) a portion of the funds distributed to school districts from the Classroom Trust Fund. Capital Projects Fund Levy. Prior to setting tax rates for the Teachers’ and Incidental Funds, each school district must annually set the tax rate for the Capital Projects Fund as necessary to meet the expenditures of the Capital Projects Fund for capital outlays, except that the tax rate set for the Capital Projects Fund may not be in an amount that would result in the reduction of the equalized combined tax rates for the Teachers and Incidental Funds to an amount below $2.75. Transfers from Incidental Fund to Capital Projects Fund. In addition to money generated from the Capital Projects Fund levy, each school district may transfer money from the Incidental Fund to the Capital Projects Fund under the following limited circumstances:

(1) The amount to be expended for transportation equipment that is considered an allowable cost under the state board of education rules for transportation reimbursements during the current year;

(2) Current year obligations for lease-purchase obligations entered into prior to January 1,

1997; (3) The amount necessary to repay costs of one or more guaranteed energy savings

performance contracts to renovate buildings in the school district, provided that the contract specified that no payment or total of payments shall be required from the school district until at least an equal

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total amount of energy and energy-related operating savings and payments from the vendor pursuant to the contract have been realized; and

(4) To satisfy current year capital project expenditures, an amount not to exceed the

greater of:

a. $162,326; or b. Seven percent (7%) of the state adequacy target (currently, $6,131) times the

school district’s weighted ADA. Transfers from Incidental Fund to Debt Service Fund and/or Capital Projects Fund. If a school district is not using the seven percent (7%) or the $162,326 transfer (as discussed above) and is not making payments on lease purchases pursuant to Section 177.088 of the Revised Statutes of Missouri, as amended, then the school district may transfer from the Incidental Fund to the Debt Service and/or the Capital Projects Fund the greater of:

(1) The State Aid received in the 2005-2006 school year as a result of no more than eighteen (18) cents of the sum of the debt service and capital projects levy used in the foundation formula and placed in the Capital Projects Fund or Debt Service Fund; or

(2) Five percent (5%) of the state adequacy target (currently, $6,131) times the school

district’s weighted ADA. Federal Revenue School districts receive certain grants and other revenue from the federal government, which are usually required to be used for the specified purposes of the grant or funding program. The federal “No Child Left Behind” law requires that every public school student must score at a “proficient” level or higher in math and reading by 2014. Each state establishes its own proficiency levels. Federal sanctions for school districts that fail to meet established proficiency standards include providing parents and students from underperforming schools within a district the right to request a transfer to a school within the district that meets proficiency standards. In addition, schools that continue to fail to meet proficiency standards must, in addition to transfers and tutoring, make additional changes in staffing, curriculum and management. Federal sanctions apply only to public schools that receive Title I federal money. All of the schools in the District are currently in compliance with the established proficiency standards. Tax Limitation Provisions

The operating levy of a school district (consisting of all ad valorem taxes levied except the debt service levy) cannot exceed the “tax rate ceiling” for the current year without voter approval. The tax rate ceiling, determined annually, is the rate of levy which, when charged against the district’s assessed valuation for the current year, excluding new construction and improvements, will produce an amount of tax revenues equal to tax revenues for the previous year increased by the lesser of actual assessment growth, 5% or the Consumer Price Index. Without the required percentage of voter approval, the tax rate ceiling cannot at any time exceed the greater of the tax rate in effect in 1980 or the most recent voter-approved tax rate (as adjusted pursuant to the provisions of the Hancock Amendment, more fully explained below).

Under Article X, Section 11(b) of the Missouri Constitution, a school district may increase its operating

levy up to $2.75 per $100 assessed valuation without voter approval. Any increase above $2.75, however, must be approved by a majority of the voters voting on the proposition. Further, pursuant to Article X, Section 11(c) of the Missouri Constitution, any increase above $6.00 must be approved by two-thirds of the voters voting on

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the proposition. The tax levy for debt service on a school district’s general obligation bonds is exempt from these limitations upon the tax rate ceiling.

Article X, Section 22(a) of the Missouri Constitution (popularly known as the “Hancock

Amendment”), approved in 1980, places limitations on total state revenues and the levying or increasing of taxes without voter approval. The Missouri Supreme Court has interpreted the definition of “total state revenues” to exclude voter-approved tax increases. The Hancock Amendment also includes provisions for rolling back tax rates. If the assessed valuation of property, excluding the value of new construction and improvements, increases by a larger percentage than the increase in the Consumer Price Index from the previous year (or 5%, if greater), the maximum authorized current levy must be reduced to yield the same gross revenue from existing property, adjusted for changes in the Consumer Price Index, as could have been collected at the existing authorized levy on the prior assessed value. This reduction is often referred to as a “Hancock rollback.” The limitation on local governmental units does not apply to taxes levied in the Debt Service Fund for the payment of principal and interest on general obligation bonds.

In 2008, through the enactment of Senate Bill 711 (“SB 711”), the Missouri General Assembly

approved further limitations on the amount of property taxes that can be imposed by a local governmental unit. Prior to the enactment of SB 711, a Hancock rollback would not necessarily result in a reduction of a school district’s actual operating tax levy if its current tax levy was less than its current tax levy ceiling, due to the school district’s voluntary rollback from the maximum authorized tax levy. Under SB 711, in reassessment years (odd-numbered years), the Hancock rollback is applied to a school district’s actual operating tax levy, regardless of whether that levy is at the school district’s tax levy ceiling. This further reduction is sometimes referred to as an “SB 711 rollback.” In non-reassessment years (even-numbered years), the operating levy may be increased to the school district’s tax levy ceiling (as adjusted by the Hancock rollback), only after a public hearing and adoption of a resolution or policy statement justifying the action. Further pursuant to SB 711, governing bodies of political subdivisions, including school districts, are required to informally project non-binding tax rate levies and provide the projected levies to the County Clerk by April 8th of each year. Accounting, Budgeting and Auditing Procedures

The audited financial statements of the District present the District’s financial position and results of operations in accordance with the cash basis, which is a comprehensive basis of accounting other than generally accepted accounting principles. See the notes to the District’s audited financial statements for the fiscal year ended June 30, 2011, attached hereto as Exhibit B.

The accounts of the District are organized on the basis of funds and account groups, each of which is

considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures. District resources are allocated to and accounted for individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The following fund types and account groups are used by the District:

General (Incidental) Fund

Special Revenue (Teachers’) Fund Capital Projects (Building) Fund

Debt Service Fund

The Treasurer of the District is responsible for handling all moneys of the District and administering the above funds. All money received by the District from whatever source are credited to the appropriate fund. Money may be disbursed from such funds by the Treasurer only for the purpose for which it is levied, collected or received and only upon warrants drawn by order of the Board and signed by the President and Secretary of the Board.

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An annual budget of estimated receipts and disbursements for the coming fiscal year is prepared by the Superintendent and is presented to the Board prior to July 1 for approval. The District’s fiscal year is July 1 through June 30. The budget lists estimated receipts by funds and sources and estimated disbursements by funds and purposes and includes a statement of the rate of levy per hundred dollars of assessed valuation required to raise each amount shown on the budget as coming from District taxes.

The financial statements of the District are audited annually by a firm of independent certified public

accountants in accordance with generally accepted auditing standards. The firm of Mueller, Walla & Albertson, P.C., audited the financial statements of the District for the fiscal year ended June 30, 2011, a copy of which is included in this Official Statement as Appendix B. A summary of significant accounting policies of the District is contained in the notes to the financial statements.

Summary of Revenues, Expenditures and Fund Balances

The following summary statement of revenues, expenditures and changes in fund balances of the District (excluding the Expendable Trust Fund) for the fiscal years ended June 30, 2007 through June 20, 2011, has been obtained from the District’s Annual Secretary of the Board Report for such fiscal years. The statement on the following page should be read in conjunction with the annual audited financial statements and notes pertaining thereto for the fiscal year ended June 30, 2011, set forth on Appendix B to this Official Statement, and the financial statements for the years prior to 2011 are on file and available for examination at the District’s office.

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SUMMARY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

2011 2010 2009 2008 2007 General Fund (Incidental Fund): Beginning Balance $ 5,023,444.53 $5,788,028.72 $5,552,269.12 $4,961,740.51 $ 4,742,902.03 Revenues 4,826,583.94 4,887,929.55 4,847,976.22 4,982,614.28 4,802,056.22 Expenditures (3,827,946.66) (3,833,140.76) (3,887,859.02) (3,787,688.34) (3,673,920.52) Other Sources (Uses)(1) (1,840,817.89) (1,819,372.98) (724,357.60) (604,397.33) (909,297.22) Ending Balance $ 4,181,263.92 $5,023,444.53 $5,788,028.72 $5,552,269.12 $ 4,961,740.51 Special Revenue (Teachers’) Fund: Beginning Balance $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Revenues 5,820,894.84 5,561,251.59 6,250,474.42 6,068,875.93 5,66,979.13 Expenditures (7,536,697.73) (7,345,411.57) (6,913,041.29) (6,635,662.26) (6,434,762.49) Other Sources (Uses)(1) 1,715,802.89 1,784,159.98 662,566.87 566,786.33 867,783.36 Ending Balance $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Capital Projects (Building) Fund: Beginning Balance $ 3,557,369.64 $ 79,575.18 $ 138,847.62 $ 135,848.04 $ 175,510.81 Revenues 1,151,830.09 5,171,079.75(2) 822,599.05 791,421.84 874,116.16 Expenditures (4,764,330.65) (1,728,498.29) (943,662.22) (826,033.26) (955,292.79) Other Sources (Uses) (1) 125,015.00 35,213.00 61,790.73 37,611.00 41,513.86 Ending Balance $ 69,884.08 $3,557,369.64 $ 79,575.18 $ 138,847.62 $ 135,848.04 Debt Service Fund: Beginning Balance $ 478,619.16 $ 578,436.94 $ 715,866.88 $ 652,986.41 $ 767,694.47 Revenues 3,801,550.70(3) 1,013,409.22 966,531.06 816,427.97 604,361.94 Expenditures (1,075,220.76) (1,113,227.00) (1,133,361.00) (753,547.50) (719,070.00) Other Sources (Uses)(1) 0.00 0.00 0.00 0.00 0.00 Ending Balance $ 3,204,949.10 $ 478,619.16 $ 578,436.94 $ 715,866.88 $ 652,986.41 Total Funds: Beginning Balance $ 9,059,433.33 $6,446,040.84 $6,406,983.62 $5,750,574.96 $ 5,686,107.31 Revenues 15,600,859.57 16,633,670.11(2) 12,916,980.75 12,659,340.02 11,847,513.45 Expenditures (17,204,195.80) (14,020,277.62) (12,877,923.53) (12,002,931.36) (11,783,045.80) Other Sources (Uses)(1) 0.00 0.00 0.00 0.00 0.00 Ending Balance $ 7,456,097.10 $9,059,433.33 $6,446,040.84 $6,406,983.62 $ 5,750,574.96 __________________ (1) Represents transfers to and from funds, non-current sources, and money received from other districts. (2) Includes the sale of $4,000,000 principal amount of general obligation bonds. (3) Includes the sale of $2,655,000 principal amount of general obligation refunding bonds. Source: Annual Secretary of the Board Report.


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PROPERTY TAX INFORMATION Property Valuations

All taxable, real and personal, property within the District is assessed annually by the County Assessor. Missouri law requires that real property be assessed at the following percentages of true value:

Residential real property.................................................................. 19% Agricultural and horticultural real property..................................... 12% Utility, industrial, commercial, railroad and all other real property ................................................ 32%

On January 1 in every odd-numbered year, each County Assessor must adjust the assessed valuation of

all real property located within the county in accordance with a two-year assessment and equalization maintenance plan approved by the State Tax Commission.

The assessment ratio for personal property is generally 33% of true value. However, subclasses of tangible personal property are assessed at the following assessment percentages: grain and other agricultural crops in an unmanufactured condition, ½%; livestock, 12%; farm machinery, 12%; historic motor vehicles, 5%; and poultry, 12%.

The County Assessor is responsible for preparing the tax roll each year and for submitting the tax roll

to the County Board of Equalization. The County Board of Equalization has the authority to adjust and equalize the values of individual properties appearing on the tax rolls. Current Assessed Valuation The following table shows the total assessed valuation and the estimated actual valuation by category, of all taxable tangible property situated in the District according to the assessment of January 1, 2011, as adjusted by the Board of Equalization:

Assessed Valuation(1) (2)

Assessment Rate

Estimated Actual Total Valuation(1)

Real Estate: Residential $95,371,720 19% $501,956,421 Agricultural 17,370 12 144,750 Commercial 39,194,800 32 122,483,750 Total Real Estate $134,583,890 $624,584,921 Personal Property $ 29,809,400 33-1/3 $ 89,428,289 TOTAL $164,393,290 $714,013,210

(1) Assumes all personal property is assessed at 33-1/3%; because certain subclasses of tangible personal property are

assessed at less than 33-1/3%, the estimated actual valuation for personal property would likely be greater than that shown above. See “Property Valuations” above.

(2) Includes the incremental increase in assessed valuation over the established valuation base within a tax increment financing district within the District. See “Tax Abatement and Tax Increment Financing” herein.

Source: St. Louis County Department of Revenue Collections Division.

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Historic Assessed Valuation The table below shows the assessed valuation(1) of property in the District as of January 1, as adjusted through December 31, for each of the years shown:

Year

Real Estate Residential

Real Estate Commercial

Real Estate Agriculture

Personal Property

Total Assessed

Valuation

Percentage

Change

2008 $104,380,550 $41,745,640 $18,040 $36,382,000 $182,526,230 N/A 2009 97,818,650 40,080,000 17,440 35,574,400 173,490,950 -4.95% 2010 97,643,650 41,966,410 17,440 34,015,150 173,642,650 +0.09 2011 95,371,720 39,194,800 17,370 29,809,400 164,393,290 -5.33

(1) Includes the incremental increase in assessed valuation over the established valuation base within a tax increment

financing district within the District. See “Tax Abatement and Tax Increment Financing” below. Source: St. Louis County Department of Revenue Collections Division. Tax Rates

Debt Service Levy. The District is required under Article VI, Section 26(f) of the Missouri Constitution to levy an annual tax on all taxable tangible property therein sufficient to pay the interest and principal of the indebtedness as they fall due and to retire the same within 20 years from the date of issue. The Board may set the tax rate for debt service, without limitation as to the rate or amount, at the level required to make such payments.

Operating Levy. The operating levy (consisting of all the taxes levied, except those allocated to the

debt service fund) cannot exceed the “tax rate ceiling” for the current year without voter approval. The tax rate ceiling, determined annually, is the rate of levy which, when charged against the assessed valuation of the District for the current year, excluding new construction and improvements, will produce an amount of tax revenues equal to tax revenues for the previous year increased by 5% or the Consumer Price Index, whichever is lower. Without the required percentage of voter approval, the tax rate ceiling cannot at any time exceed the greater of the tax rate in effect in 1980 or the most recent voter-approved tax rate (as adjusted pursuant to the provisions of the Hancock Amendment and SB 711, more fully explained above under the caption “FINANCIAL INFORMATION CONCERNING THE DISTRICT – Tax Limitation Provisions”). The tax rate ceiling for 2012 is $4.4574 The tax levy for debt service on the District’s general obligation bonds is exempt from the calculations of and limitations upon the tax rate ceiling. Under Article X, Section 11(c) of the Missouri Constitution, any increase in the District’s operating levy above $6.00 must be approved by two-thirds of the voters voting on the proposition. The District’s operating levy for the 2011-2012 year is $4.4052 per $100 of assessed valuation.


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Tax Rates – Allocation by Fund. The following table shows the District’s tax levies (per $100 of

assessed valuation) for the current and each of the last four fiscal years:

Fiscal Year Ended

June 30

General (Incidental)

Fund

Special Revenue (Teachers’)

Fund

Debt Service Fund

Capital Projects (Building)

Fund

Total Levy

2012 $2.7252 $1.1000 $0.6460 $0.5800 $5.0512 2011 2.5300 1.1157 0.6460 0.6200 4.9117 2010 2.5428 1.1000 0.6460 0.4200 4.7088 2009 2.4043 1.1000 0.5900 0.3900 4.4843 2008 2.3914 1.1000 0.4560 0.3900 4.3374

Source: Annual Secretary of the Board Report. Tax Collections and Major Taxpayers Tax Collection Procedure. Property taxes are levied and collected for the District by St. Louis County, for which the County receives a collection fee of 1.5% of the gross tax collections. The Board annually prepares an estimate of the amount of money to be raised by taxation for the ensuing school year and the tax rate required to produce such amount, and the rate necessary to sustain the school or schools of the District for the ensuing school year, to meet principal and interest payments on any bonded debt of the District and to provide the funds to meet other legitimate District purposes. Such estimates are based on the annual budget for the coming year and the assessed figures provided by the County Clerk. The Board forwards the estimated tax rate to the County Clerk on or before July 15 and must certify a final tax rate by October 1. The County Clerk receives the county tax books from the County Assessor, which set forth the assessments of real and personal property. The County Clerk enters the tax rates certified to him or her by the local taxing bodies in the tax books and assesses such rates against all taxable property in the District as shown in the books. By October 31, the County Clerk forwards the tax books to the County Collector who is charged with levying and collecting taxes as shown therein. The County Collector extends the taxes on the tax rolls and issues the tax statements in early December. Taxes are due by December 31 and become delinquent if not paid to the County Collector by that time. All tracts of land and lots on which delinquent taxes are due are charged with a penalty of 18% of each year’s delinquency. All land and lots on which taxes are delinquent and unpaid are subject to sale at public auction in August of each year. The County Collector of Revenue is required to make disbursements of collected taxes to the District each month. Because of the tax collection procedure described above, the District receives the bulk of its moneys from local property taxes in the months of December, January and February.

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Tax Collection Record. The following table sets forth the tax collection information for the District for the last five fiscal years:

Fiscal Year

Ending June 30

Assessed Valuation on January 1(1)

Current Year

Tax Levy

Current Taxes

Collected By Due Date

% of Levy

Delinquent Taxes

Collected

Current and

Delinquent Taxes

Collected % of

Levy(2)

2011 $152,856,480 $7,507,852 $7,236,511 96.39% $266,790 $7,503,301 99.94% 2010 152,996,420 7,204,295 7,004,739 97.23 115,330 7,120,069 98.83 2009 161,706,640 7,251,411 7,004,157 96.59 176,370 7,180,527 99.02 2008 157,174,950 6,817,306 6,592,113 96.70 358,077 6,950,190 101.95 2007 138,217,450 6,439,827 5,798,502 90.04 482,662 6,281,164 97.54

(1) Excludes the incremental increase in assessed valuation over the established valuation base within a tax increment

financing district within the District. See “Tax Abatement and Tax Increment Financing” herein. (2) Delinquent taxes are shown in the year payment is actually received, which may cause the percentage of current and

delinquent taxes collected to exceed 100%. Current and Delinquent Taxes Collected also includes the current year’s protested taxes which have been released.

Source: St. Louis County Department of Revenue Collections Division for Assessed Valuation; Annual Secretary of the Board Report.

Major Taxpayers. The ten largest real property taxpayers in the District according to their 2011 assessed valuations are listed below. These taxpayers represent 15.90% of the District’s 2011 assessed valuation of $164,393,290(1).

Firm Assessed

Valuation Percent of Total Assessed Value

1. Baldor Electric Co. $ 5,786,770 3.52% 2. Good Samaritan Independent Living 3,874,040 2.36 3. Big Bend Apartments LLC 2,923,810 1.78 4. Bausch & Lomb Inc. 2,270,060 1.38 5. Forest Equities LLC 2,223,000 1.35 6. Park Common Apartments #100 LLC 2,152,060 1.31 7. Kemco Aerospace Manufacturing 1,988,530 1.21 8. Stonegate Apartments Ltd Ptnsp 1,761,300 1.07 9. Colt Industries, Inc. 1,608,570 0.98 10. GVCC Partnership 1,550,530 0.94 Total $26,138,680 15.90% (1) Includes assessed valuation attributable to TIF districts located within the District. Source: St. Louis County Department of Revenue Collections Division. Tax Abatement and Tax Increment Financing Under Missouri law, tax abatement is available for redevelopers of areas determined by the governing body of a city to be “blighted”. The Land Clearance for Redevelopment Authority Law authorizes 10-year tax abatement pursuant to Sections 99.700 to 99.715, Revised Statutes of Missouri, as amended. In lieu of 10-year tax abatement, a redeveloper which is an urban redevelopment corporation formed pursuant to Chapter 353, Revised Statutes of Missouri, as amended, may seek real property tax abatement for a total period of 25 years. In addition, the Industrial Development Law, Chapter 100 Revised Statutes of Missouri, as amended, authorizes real and personal property tax abatement for corporations for projects for industrial development.

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In addition, the Real Property Tax Increment Allocation Redevelopment Act, Sections 99.800 to 99.865, Revised Statutes of Missouri, as amended (the “TIF Act”), makes available tax increment financing for redevelopment projects in certain areas determined by the governing body of a city to be a “blighted area”, “conservation area”, or “economic development area”, each as defined in the TIF Act.

In October 2011, a tax increment financing district with an approximately $20 million assessed valuation located in the District terminated pursuant to the TIF Act, resulting in an increase in local property tax revenue available to the District in fiscal years 2012-13 and thereafter. In March 2011, the City of Valley Park, Missouri designated a portion of the District as a tax increment financing district. Such tax increment financing district has an approximate assessed valuation of $6,214,380. Neither tax abatement nor tax increment financing will diminish the amount of property tax revenues currently collected by the District in the affected areas, but instead will act to freeze such revenues at current levels and will deprive the District of future increases in ad valorem property tax revenues which would otherwise have resulted from increases in assessed valuation in such areas until the tax increment financing obligations issued are repaid and the tax abatement period terminates.

District’s Rights in the Event of Tax Delinquencies

Taxes on real estate become delinquent on January 1 and the collector is required to enforce the state’s lien by offering the property for sale on the fourth Monday in August. If the offering does not produce a bid equal to the delinquent taxes plus interest, penalty, and costs, the property is offered for sale again the following year. If the second offering also does not produce a bid adequate to cover the amount due, the property is sold the following year to the highest bidder. Tax sales at the first or second offerings are subject to the owner’s redemption rights.

Delinquent personal property taxes constitute a debt of the person assessed with the taxes, and a

personal judgment can be rendered for such taxes against the debtor. Personal property taxes become delinquent on January 1. Collection suits may be commenced on or after February 1 and must be commenced within three years.

INDEBTEDNESS OF THE DISTRICT

General Under Missouri law, refunding bonds and obligations payable from annual appropriations do not require voter approval. Any general obligation bonds, other than refunding bonds, require voter approval for issuance. Pursuant to the Missouri Constitution, the District is authorized to issue general obligation bonds payable from unlimited ad valorem taxes upon a two-thirds or, at elections held on general municipal election days or state primary or general election days, a four-sevenths majority vote of the qualified voters voting on the specific proposition.

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General Obligation Bonds Outstanding The District fixes an annual debt service levy and levies taxes to meet the annual debt service requirements of its general obligation bonds. The District’s total outstanding general obligation indebtedness, including the Bonds and excluding the Refunded Bonds, is shown below:

Series

Original Amount of Issue

Amount Outstanding

Final Maturity

2004A $ 7,634,692.75 $ 353,202.85 2012 2010ABC 4,000,000.00 3,880,000.00 2025 2011 2,655,000.00 2,655,000.00 2018 2012 2,250,000.00 2,250,000.00 2015

TOTAL $16,539,692.75 $9,138,202.85

Debt Service Requirements The following table shows the debt service requirements for all of the District’s outstanding general obligation bonds and the debt service requirements for the Bonds:

The Bonds

Fiscal Year Ending

June 30

Prior Principal

and Interest Requirements Principal

Interest

Total

Total

Outstanding

2012 $1,074,585.24 $ 0.00 $ 0.00 $ 0.00 $ 1,074,585.24 2013 1,090,401.24 700,000.00 44,875.00 744,875.00 1,835,276.24 2014 1,107,676.24 750,000.00 31,000.00 781,000.00 1,888,676.24 2015 1,137,476.24 800,000.00 16,000.00 816,000.00 1,953,476.24 2016 1,163,993.74 0.00 0.00 0.00 1,163,993.74 2017 1,183,793.74 0.00 0.00 0.00 1,183,793.74 2018 1,154,831.24 0.00 0.00 0.00 1,154,831.24 2019 405,506.24 0.00 0.00 0.00 405,506.24 2020 404,082.50 0.00 0.00 0.00 404,082.50 2021 412,350.00 0.00 0.00 0.00 412,350.00 2022 390,000.00 0.00 0.00 0.00 390,000.00 2023 400,000.00 0.00 0.00 0.00 400,000.00 2024 400,000.00 0.00 0.00 0.00 400,000.00 2025 400,000.00 0.00 0.00 0.00 400,000.00

Totals $10,724,696.42 $2,250,000.00 $91,875.00 $2,341,875.00 $13,066,571.42

Lease Obligations Obligations secured by annually appropriated funds do not constitute an indebtedness for purposes of any Missouri statutory or constitutional debt limit. Such obligations are payable solely from annually appropriated funds of a governmental body available therefor and neither taxes nor a specific source of revenues can be pledged to make payments on such obligations. Any increase in taxes required to generate sufficient funds with which to make payments on such obligations are subject to voter approval.

A-22

In fiscal year 2007, the District entered into a lease transaction with the Valley Park School District Educational Facilities Authority (the “Corporation”) and the Corporation issued bonds in the original principal amount of $6,625,000 (the “Series 2007 Bonds”) to refund certain leasehold revenue bonds of the Corporation issued in 2001. The current outstanding principal amount of the Series 2007 Bonds is $6,215,000. In fiscal year 2010, the District entered into an additional lease transaction with the Corporation and the Corporation issued bonds in the original principal amount of $4,370,000 (the “Series 2010 Bonds”) to refund certain leasehold revenue bonds of the Corporation issued in 2003. The current outstanding principal amount of the Series 2010 Bonds is $4,215,000. The District has covenanted to levy an amount each year in its Capital Projects Fund sufficient to generate funds in an amount, together with other lawfully available amounts on deposit in the Capital Projects Fund, to pay debt service on the Series 2010 Bonds and the Series 2007 Bonds. Such payments are subject to annual appropriation by the Board. The District has entered into various operating leases. See Note 4 to the Audited Financial Statements and Independent Auditor’s Report attached hereto as Exhibit B for more information regarding the District’s operating leases. Overlapping Bonded Indebtedness (As of February 1, 2012) The following table sets forth the approximate overlapping indebtedness of political subdivisions with boundaries overlapping the District as of February 1, 2012, and the percentage attributable (on the basis of assessed valuation) to the District. The table was compiled from information furnished by the jurisdictions responsible for the debt, and the District has not independently verified the accuracy or completeness of such information. Furthermore, political subdivisions may have ongoing programs requiring the issuance of substantial additional bonds, the amounts of which cannot be determined at this time.

Taxing Body

General Obligation Debt

Approx. Percent Applicable

Amount of Overlapping Debt

St. Louis County $13,425,000.00 0.73% $98,002.50 ________________ Source: St. Louis County Department of Revenue. Debt Ratios and Related Information

Estimated Population, District, 2011: 8,426 Assessed Valuation (01/01/2011)(1): $164,393,290 Estimated Actual Value (01/01/2011)(1): $714,013,210 Outstanding Direct Debt(2): $9,138,202.85 Overlapping General Obligation Debt(2): $98,002.50 Total Direct and Overlapping General Obligation Debt(2): $9,236,205.35 Per Capita Direct Debt(2): $1,084.52 Per Capita Direct and Overlapping General Obligation Debt(2): $1,096.16 Ratio of Direct Debt to Assessed Valuation (2): 5.56% Ratio of Direct Debt to Estimated Actual Value (2): 1.28% Ratio of Direct and Overlapping General Obligation Debt to Assessed Valuation(2): 5.62% Ratio of Direct and Overlapping General Obligation Debt to Estimated Actual Value(2):

1.29%

(1) Includes the incremental increase in assessed valuation over the established valuation base within a tax increment

financing district within the District. (2) Includes the Bonds but does not include the Refunded Bonds.

A-23

Short-Term Borrowings The District has no outstanding short-term debt. Debt Limitation and Debt Capacity Under Article VI, Section 26(b) of the Missouri Constitution, the District may incur indebtedness not to exceed 15% of the valuation of taxable tangible property in the District. Based on the assessed valuation (including the assessed valuation attributable to TIF districts located within the District) of the District as of January 1, 2011 ($164,393,290), the District’s legal debt limit is $24,658,993.50. The District’s current total outstanding indebtedness is $9,138,202.85, which leaves a legal debt margin of $15,520,790.65. Revenue Obligations The District has no outstanding revenue obligations. Employee Relations

The District’s teaching staff is not unionized, but may join professional groups or associations and participate in collective bargaining with the District pursuant to State law.

Pension and Employee Retirement Plans

The District contributes to the State-wide retirement systems created by Chapter 169 of the Revised Statutes of Missouri to provide retirement allowances for substantially all of its employees. Teachers are covered by The Public School Retirement System of Missouri, and non-teachers are covered by The Nonteacher School Employee Retirement System of Missouri (collectively, the “Systems”). The Systems include most of the school districts in Missouri, and are administered by a five-member Board of Trustees, consisting of two trustees appointed by the State Board of Education, two trustees elected by the members of the Systems, and the State Commissioner of Education. Both Systems are advance funded plans which are required by statute to remain in actuarial balance. For additional information regarding the District’s pension and employee retirement plans, see the notes to the District’s audited financial statements in Appendix B hereto.

* * *

___________________________


LEFT BLANK

___________________________

APPENDIX B

INDEPENDENT AUDITORS’ REPORT AND AUDITED FINANCIAL STATEMENTS

OF THE DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2011

___________________________


LEFT BLANK

___________________________

VALLEY PARK SCHOOL DISTRICT

AUDITED FINANCIAL STATEMENTS ANDINDEPENDENT AUDITOR'S REPORT

FOR THE YEAR ENDED JUNE 30, 2011

VALLEY PARK SCHOOL DISTRICTTABLE OF CONTENTS

JUNE 30, 2011FINANCIAL SECTION

INDEPENDENT AUDITORS' REPORT

MANAGEMENT DISCUSSION AND ANALYSIS (Unaudited)

BASIC FINANCIAL STATEMENTS

GOVERNMENT WIDE FINANCIAL STATEMENTS

Statement ofNet Assets - Cash Basis

Statement of Activities - Cash Basis

FUND FINANCIAL STATEMENTS

Statement of Assets and FundBalances Arising from Cash Transactions-All Governmental Funds and Fiduciary Fund, Including Component Unit

Statement of Revenues Collected,Expenditures Paid and Changes in Fund Balances-Cash Basis-All Governmental Funds and Fiduciary Fund,Including Component Unit

Reconciliation of the Statement of Revenues, Expenditures, and Changes inFund Balance of Governmental Funds and Fiduciary Fund to the StatementofActivities

Notes to Financial Statements

REQUIRED SUPPLEMENTAL INFORMATION

Statement of Revenues Collected,Expenditures Paid and Changes in Fund Balances-Original Budget, Final Budget and Actual-Cash Basis-General Fund and Fiduciary Fund

Statement of Revenues Collected,Expenditures Paid and Changes in Fund Balances-Original Budget, Final Budget and Actual-Cash Basis Special Revenue Funds

PAGE

1-2

3-13

14

15

16

17

18

19-33

34

35

VALLEY PARK SCHOOL DISTRICTTABLE OF CONTENTS (CONT'D)

JUNE 30, 2011

SUPPLEMENTARY INFORMATION

Statement of Revenues Collected,Expenditures Paid and Changes in Fund Balances- Cash Basis-Original Budget, Final Budget and Actual-Debt Service Fund

Statement of Revenues Collected,Expenditures Paid and Changes in Fund Balances- Cash Basis-Original Budget, Final Budget and Actual-Capital Projects Fund

Schedule of Selected Statistics

Combining Statements of Assets and Fund Balance-Cash Basis- All Capital Projects Funds and Component Units

Combining Statement of Revenues Collected- Expenditures PaidAnd Changes in Fund Balance- Cash Basis-All Capital Projects Funds and Component Unit

STATE COMPLIANCE REPORTING

Independent Auditors' Report on Management'sAssertions About Compliance with SpecifiedRequirements of Missouri Laws and Regulations

FEDERAL COMPLIANCE REPORTING

Report on Internal Control Over Financial Reporting and on Complianceand Other Matters Based on an Audit of Financial Statements Performedin Accordance with Government Auditing Standards

Independent Auditor's Report on Compliance with Requirements That CouldHave a Direct and Material Effect on Each Major Program and on InternalControl over Compliance in Accordance with OMB Circular A-133

Schedule of Expenditures of Federal Awards

Schedule of Findings and Questioned Costs

Schedule of Resolutions of Prior Year Audit Findings

PAGE

36

37

38-41

42

43

44

45-46

47-48

49

50-53

54

9200 Watson Rd., Ste. G-I0SSt. Louis, MO 63126

:mueller, Walla & ~lbert50n, ~.([.

Certified Public Accountants

INDEPENDENT AUDITORS' REPORT

(314) 842-8844Fax (314) 842-2343

Board of EducationValley Park School DistrictValley Park, Missouri

We have audited the accompanying financial statements of the governmental activities,component units, each major fund and the aggregate remaining fund information of Valley ParkSchool District as of and for the year ended June 30, 2011, which collectively comprise theDistrict's basic financial statements as listed in the table of contents. These financial statementsare the responsibility of Valley Park School District's management. Our responsibility is toexpress opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinions.

As discussed in Note 1, the Valley Park School District prepares its financial statements on thecash basis, which is a comprehensive basis of accounting other than accounting principles,generally accepted in the United States of America.

In our opinion, the financial statements referred to above present fairly, in all material respects,the respective financial position -cash basis of governmental activities and each major fund ofthe Valley Park School District as of June 30, 2011 and the respective changes in financialposition cash basis, thereof for the year ended June 30, 2011 in conformity with the basis ofaccounting described in Note 1.

In accordance with Government Auditing Standards, we have also issued our report datedDecember 20, 2011, on our consideration of Valley Park School District's internal control overfinancial 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 to describe thescope of our testing of internal control over financial reporting and compliance and the results ofthat testing, and not to provide an opinion on the internal control over financial reporting or oncompliance. That report is an integral part of an audit performed in accordance with GovernmentAuditing Standards and should be considered in assessing the results of our audit.

MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTSMISSOURI SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

1

Accounting principles generally accepted in the United States of America require that themanagement's discussion and analysis and budgetary comparison information in the "RequiredSupplemental Information" as listed in the table of contents be presented to supplement the basicfinancial statements. Such information, although not a part of the basic financial statements, isrequired by the Governmental Accounting Standards Board, who considers it to be an essentialpart of financial reporting for placing the basic financial statements in an appropriate operational,economic, or historical context. We have applied certain limited procedures to the requiredsupplementary information in accordance with auditing standards generally accepted in theUnited States of America, which consisted of inquiries of management about the methods ofpreparing the information and comparing the information for consistency with management'sresponses to our inquiries, the basic financial statements, and other knowledge we obtainedduring our audit of the basic financial statements. We do not express an opinion or provide anyassurance on the information because the limited procedures do not provide us with sufficientevidence to express an opinion or provide any assurance.

Our audit was conducted for the purpose of forming an opinion on the financial statements thatcollectively comprise Valley Park School District's financial statement taken as a whole. Thestatements and schedules as listed in the "Supplementary Information" section of the table ofcontents are presented for the purpose of additional analysis and is not a required part of thefinancial statements. The accompanying schedule of expenditures of federal awards is presentedfor the purposes of additional analysis as required by U.S. Office of Management and BudgetCircular A-I33, Audits ofStates, Local Governments, and Non-Profit Organizations, and is not arequired part of the financial statements of the Valley Park School District. The schedule ofexpenditures of federal awards are the responsibility of management and were derived from andrelate directly to the underlying accounting and other records used to prepare the financialstatements. The information has been subjected to the auditing procedures applied in the audit ofthe financial statements and certain additional procedures, including comparing and reconcilingsuch information directly to the underlying accounting and other records used to prepare thefinancial statements or to the financial statements themselves, and other additional procedures inaccordance with auditing standards generally accepted in the United States of America. In ouropinion, the information is fairly stated in all material respects in relation to the financialstatements as a whole. The schedule of selected statistics, budget statements and combiningstatements for the component unit as listed in the Supplementary Information section of the tableof contents section have not been subjected to the auditing procedures applied in the audit of thebasic financial statements and, accordingly, we do not express an opinion or provide anyassurance on it.

~I 'W't1iJo,. t~ RC.Mueller, Walla & Albertson, p.e.December 20, 2011

2

VALLEY PARK SCHOOL DISTRICTMANAGEMENT'S DISCUSSION AND ANALYSISFOR THE FISCAL YEAR ENDED JUNE 30, 2011

(UNAUDITED)

The discussion and analysis of Valley Park School District's financial performance provides anoverview of the School District's financial activities for the fiscal year ended June 30, 2011. Theintent of this discussion and analysis is to look at Valley Park School District's financialperformance as a whole; readers should also review the financial statements and the notes to thebasic financial statements to enhance their understanding of the Valley Park School District'sfinancial performance.

Financial Highlights

Key financial highlights for the 2011 fiscal year include:

1. Operating balances for the School District (General Fund and Special Revenue Fund)went from $5,023,444 to $4,181,264. Due to the state of the economy, the district hasused the fund balance reserve to offset any difference between revenues and expenditures.

2. District operating revenues increased from $10,449,181 to $10,647,479.

3. District operating expenditures increased from $11,178,552 to $11,364,644.

4. The District's General Obligation Bonds increased from $9,638,653 to $11,803,203. TheDistrict refunded General Obligation Bonds during the 10/11 school year. These bondsappear as amount borrowed in 10/11 and will be paid off in 11/12.

5. The District's Lease Purchase debt decreased from $10,755,000 to $10,430,000.

6. The Voters of Valley Park School District passed a $4,000,000 no tax increase bond issuein April, 2010. The remainder of the construction project was completed in the 10/11school year.

Using This Annual Report

This annual report consists of various financial statements that are commonly used in Missourischools as recommended by the Missouri Finance and Accounting Manual. These statements areorganized so the reader can understand the Valley Park School District as a financial whole andas an entire operating entity. The Statement of Net Assets and the Statement of Activities onpages 14 and 15 provide information about the activities of the Valley Park School District as awhole and present a longer-term view of the School District's finances. Fund financialstatements start on page 16. For governmental activities, these statements tell how these serviceswere financed in the short term as well as what remains for future spending. The statements thenproceed to provide an increasingly detailed look at specific financial activities.

3


(UNAUDITED)

Reporting the School District ~s a Whole

Statement ofNet Assets and the Statement of Activities

The view of the School District as a whole looks at all financial transactions and asks thequestion, 'Is the School District's financial position as a whole better or worse as a result of theyear's activities?' The Statement of Net Assets and the Statement of Activities on pages 14 and15 answer this question. These statements include all significant assets and liabilities using thecash basis of accounting, which is an Other Comprehensive Basis of Accounting than GenerallyAccepted Accounting Principles. The District's policy is to prepare its financial statements onthe cash basis of accounting; consequently, revenues are recognized when received rather thanwhen earned, and expenditures and purchases of assets are recognized when cash is disbursedrather than when the obligation is incurred.

These two statements report the School District's net assets and changes in those assets. Thischange in net assets is important because it tells the reader that, for the School District as awhole, the financial position of the School District has improved or diminished. The causes ofthis change may be the result of many factors, some financial and some not. Non-financialfactors include the School District's property tax base, current property tax laws in Missouri,required educational programs, student performance and other factors.

The table below provides a summary of the School District's net assets for the fiscal year endedJune 30, 2011. The change in net assets (the difference between total assets and total liabilities)over time is one indicator of whether the School's financial health is improving or deteriorating.However, you need to consider other non financial factors in making an assessment of theSchool's health, such as changes in enrollment, changes in the State's funding of educationalcosts, changes in the economy, changes in the School's tax base, etc. to assess the overall healthof the School. These amounts do not include "Insurance Trust Fund".

4


(UNAUDITED)

Table 1Net Assets

2010 2011Governmental Governmental %

Assets Activities Activities Change Change

Cash and Cash Equivalents $ 8,594,788 $ 4,159,512 $ -4,435,276340,954 4,180,406

Escrow Investments 3,839,452Investments 1,091,421 -1,091,421

Total Assets $ 10,027,163 $ 8,339,918 $ -1,687,245 -17.0%

In the 2009/2010 school year the Valley Park School District Educational Facilities Authority(component unit) Had both investments and escrow that could be used other than Principal andInterest. In 2010/2011 all accounts are escrow accounts used for payments of Principal andInterest. You will notice on the above table that there was a 17% decrease in net assets from2010 to 2011.

Expenditures exceeded revenues by $4,350,317 as shown on Table 2 on the following page. Thisincrease results from expenditures of the $4,000,000 No Tax Increase Bond Issue that was passedby the Valley Park School District Voters in April, 2010. Table 2 reflects amounts from theAnnual Secretary of the Board Report. It excludes the Valley Park School District EducationalFacilities Authority and the Insurance Trust Fund revenues and expenditures.

The results of this year's operations for the District as a whole are reported in the Statement ofActivities on page 15 and the Statement of Revenues Collected, Expenditures paid, and Changesin Fund Balance on page 17.

5


(UNAUDITED)

Table 2Changes in Net Assets2010 2011 Change

RevenuesLocal Receipts $ 10,417,785 $ 10,533,478 $ 115,693County Receipts 147,260 127,230 -20,030State Receipts 925,335 1,197,896 272,561Federal Receipts 928,707 760,408 -168,299Sale of Bonds 4,000,000 ° -4,000,000

Interest on Investments 40,851 147,572 106,721Total Revenue $ 16,459,938 $ 12,766,584 $-3,693,354

ExpensesInstruction $ 7,026,019 $ 7,174,115 $ 148,096Support Services

Attendance 2,721 1,072 -1,649Guidance 276,331 288,261 11,930Health, Psych, Speech & Audio 102,318 170,892 68,574Improvement of Instruction 278,541 295,580 17,039Professional Development 5,804 5,211 -593Media Services 480,632 684,936 204,304Board of Education Services 79,364 115,693 36,329Executive Administration 275,559 294,154 18,595Building Level Administration 700,568 718,044 17,476

7,935Business, Fiscal, Internal Servo 114,622 122,557Operation of Plant 1,164,364 1,105,461 -58,903

79,005Pupil Transportation 282,139 361,144Food Service 436,251 501,903 65,652Central Office Support Service 86,732 76,685 -10,047Community Services 66,324 47,193 -19,131Security Service 681 -681

Principal & Facilities Const. 1,547,969 4,152,933 2,604,964Interest 923,223 942,244 19,021Other Fees 96,236 58,823 -37,413

Total Expenses $ 13,946,398 $ 17,116,901 $3,170,503

6


(UNAUDITED)

Reporting the School District's Most Significant Funds

Fund Financial Statements

Fund financial reports provide detailed information about the School District's major funds andbegin on page 16 The School District uses four major funds to account for a multitude offinancial transactions. All of the School District's activities are reported in governmental funds,which focus on how money flows into and out of those funds and the balances left at year-endavailable for spending in future periods.

The funds are reported using a cash accounting system. The cash basis of accounting recordsrevenues when collected and expenses when paid. The governmental fund statements provide adetailed short-term view of the School District's general governmental operations and basicservices it provides. Governmental fund information helps you determine whether there are moreor fewer financial resources that can be spent in the near future to finance educational programs.

The following table reflects amounts in the Annual Secretary of the Board Report and excludesthe Valley Park School District Educational Facilities Authority.

A Summary of the District's Fund Balances as of June 30, 2011

General Fund Special Debt Capital TotalRevenue Service ProjectsFund Fund Fund

Beginning Balance $5,023,445 $ ° $ 478,619 $3,557,370 $9,059,4337/1/10Revenues 4,826,584 5,820,895 3,801,551 1,151,830 15,600,860

Expenditures 3,827,947 7,536,698 1,075,221 4,764,331 17,204,196

Transfers -1,840,818 1,715,803 125,015

Ending Balance $4,181,264 $ ° $3,204,949 $ 69,884 $7,456,0976/30/11

The District's balances decreased from $5,023,445 to $4,181,264 in operating funds, (GeneralFund and Special Revenue Fund). Due to the state of the economy, the District has used the fundbalance reserve to offset any difference between revenue and expenditures and has thereforereduced its operating fund by 9%. The District's fund balance in Capital Projects decreased from$4,648,790 to $69,884. This decrease was due to the expenditure of the $4,000,000 bond issuepassed by the voters of Valley Park School District in April, 2010. The District's Debt Service

7


(UNAUDITED)

balance totals are $3,204,949 and have restricted funds in the amount of $356,132. The largeincrease in the Debt Service balance is a result of General Obligation Bonds that had beenrefunded in the 2010/2011 school year but have not yet been paid.

The transfer in the Capital Projects Fund was for transportation and food services.

Governmental Activities

Local and county revenues accounted for $10,987,556 in revenue or 85 percent of all revenues.Local and county revenues are composed primarily of receipts from taxes, interest income andVoluntary Interdistrict Choice Corporation (Desegregation Program). Revenues from state andfederal sources account for $1,958,303 or 15% of the total revenues of $12,945,860. Thisamount excludes the refunding of General Obligation Bonds revenue.

The School District had $17,204,196 in expenses; only $1,208,748 of these expenses was offsetby program specific charges for services, Federal and Operating Grants and Contributions. Withrevenues of $12,945,860 and expenditures of $17,204,196, the School District overspentrevenues by $4,258,336, mostly due to the expenditures from the $4,000,000 no tax increasebond issue approved by the voters in April 201 O.

After subtracting expenditures from the $4,000,000 bond issue, instruction comprises 52 percentof total expenses, support services comprise 34 percent, and principal, interest and fees for thedistrict's debt comprise 14 percent. In 2009/2010 the percentages were instruction - 54%,support services - 33%, and principal, interest and fees - 13%.

The Statement of Activities shows the cost of program services and the charges for services andgrants offsetting those services. Table 3 shows the total cost of services and the net cost ofservices. That is, it identifies the cost of these services supported by tax revenue, VoluntaryInterdistrict Choice Corporation and other miscellaneous revenues.

These figures do not include the $4,000,000 bond issue.

Table 3 is on the following page.

8


(UNAUDITED)Table 3

2009/2010 2009/2010 2010/2011 2010/2011Total Cost Net Cost Total Cost Net Costof Services of Services of Services of Services

Functions/ProgramsInstruction $7,026,021 $6,402,392 $7,174,115 $6,501,099Support Services

Attendance 2,721 2,721 1,072 1,072Guidance 276,331 276,331 288,261 288,261Health, Psych, Speech and Aud. 102,318 102,318 170,892 170,892Improvement of Instruction 278,541 278,541 295,580 295,580Professional Development 5,804 -38,887 5,211 -35,190Media Services 480,632 480,632 684,936 684,936Board of Education Services 79,364 79,364 115,693 115,693Executive Administration 275,559 275,559 294,154 294,154Building Level Admin. 700,568 700,568 718,044 718,044Business, Fiscal, Internal Service 114,622 114,622 122,557 122,557Operation of Plant 1,164,364 1,164,364 1,105,461 1,105,461Pupil Transportation 282,139 271,099 361,144 293,892Food Service 436,251 4,490 501,903 73,824Central Office Support Service 86,732 86,732 76,685 76,685Community Services 66,324 -129,628 47,193 47,193Security Services 681 681 ° °Principal & Facilities Const. 1,547,969 1,547,969 4,152,933 4,152,933

Interest 924,152 924,152 942,244 942,244Other Fees 96,236 96,236 58,823 58,823

Total Expenses $13,947,327 $12,640,254 $17,116,901 $15,908,153

Instruction expenses include activities directly dealing with the teaching of pupils and theinteraction between teacher and pupil.

Support Services include all expenses that indirectly assist, administer and sustain the teaching ofpupils.

Facility Acquisition and Construction, Principal, Interest and Other Fees are expenses related toValley Park School District Lease Purchase and Bond Debt.

9


(UNAUDITED)

Budgeting Highlights

The School District's budget is prepared according to Missouri law and is based on accountingfor certain transactions on a basis of cash receipts, disbursements, and encumbrances. TheSchool District amended the budget several times throughout the fiscal year.

The final General Fund revenue budget was $5,056,511 which was a decrease of $17,232 fromthe 2010/2011 Preliminary Budget. This increase is due mainly to changes in tax revenue. Thefinal General Fund expenditure budget was $4,381,718 which was an increase of$41,714. Thisincrease was due mainly to salary and benefit increases.

The final Special Fund revenue budget was $6,003,935 which was an increase of $792,261 fromthe 2010/2011 Preliminary Budget. The increase is due mainly to tax revenue changes and staterevenues. The final Special Fund expenditure budget was $7,672,357 which was an increase of$221,330 from the 2010/2011 Preliminary Budget. This was due to salary and benefit increasesnot in the preliminary budget.

There was an increase in revenue of $16,731 in the Debt Service fund from the 2010/2011Preliminary Budget to the Final Budget. This was due to tax revenue changes. Expendituresincreased $247,593 leaving a final budget figure of$I,117,974.

The final Capital Projects revenue budget was $1,173,362 which was a $39,024 increase from the2010/2011 Preliminary Budget. Expenditures increased from the 2010/2011 Preliminary budgetby $3,650,270 because of the uncertainty of the $4,000,000 Bond Issue when the PreliminaryBudget was approved.

Debt Administration

At June 30, 2011, the School District had $11,803,202 in general obligation bonds, with interest ratecharges over 14 years. The School District had $10,430,000 in lease certificates of participation, withinterest rate charges over 12 years. The School District has four bus leases with an ending balance at

the end of the year of$72,915. Table 5 summarizes the outstanding debt.Table 5

Outstanding Debt at June 30, 2011

Capital Bus LeaseGeneral Obligation BondsLease Certificates of Participation

$ 72,91511,803,20210,430,000

10

$ 22,306,117


Debt Administration

At June 30, 2011 the School District's overall legal debt margin was $14,402,252. Please seeNote 4 for more information regarding debt.

Current Financial Issues and Concerns

Due to a decline in revenues from 2007-2011 our school board made the following adjustmentsto the budget:

Eliminated position- Director of Federal ProgramsEliminated position- Director of Human ResourcesEliminated position-In School Suspension teacher -elementary levelEliminated Social Worker positionEliminated 1 teacher position at Elementary level through attritionDefeasance of Bond paymentsHealth insurance switch from Cigna to UHC resulting in saving on premiumsChange in school copier leasesContinue the elimination of staff positions through attrition when possibleMove to an 11 year refresh cycle of bus purchases from the current 10 year cycleMove from a 5 to 6 year refresh cycle on the purchase of textbooksDelay some minor maintenance projectsReduce school supply budgets by 5%Reduce technology budget by 10%

These adjustments resulted in savings of $813,000 over a four year period.

In addition to these savings, this 2011-12 year we are reducing our expenses by making thefollowing adjustments to the budget:

Restructuring the after school club and pay structure ($4884)Eliminating planning period pay for after-school clubs and activities ($2500)Eliminating out of state travel, unless 100% paid for by a grantEliminating bus purchase ($75,000)Eliminating Tungsten assessment cost ($40,000)Salary freeze on coaching pay and substitute teaching payEliminating 2 classroom assts. at the elementary ($46,000)Eliminating 1 teaching position at the high school through attrition ($75,000)Postpone the Social Studies textbook purchase ($55,000)Eliminate the building technology coordinator stipends ($5100)Reduce the Curriculum Coordinator stipends from $1976 each to $500 ($13,284)Reduce mentor pay from $476 to $300 ($1056)

This year the staff received a 2.3% increase. Staff salaries are 63.47% of our expenditures.

11


2011 is a reassessment year for political subdivisions; Article 10 of the Missouri Constitutionlimits the increase in the rate of new revenue from real and personal property taxes the districtcan collect for the operating fund for the 2011-2012 year to the Consumer Price Index for thecurrent fiscal year. In addition, school districts may recoup any loss in revenue due to a decreasein the assessed value (A/V), not to exceed the amount of revenue over the previous year. Ouroverall assessed value continues to decline and since we are at the tax rate ceiling in personalproperty we will lose approximately $150,000 this year.

However, this year we are receiving an additional $865,000 in new construction due to theending of the Valley Park Levee TIF. This is money we will receive each year from this pointforward.

2011-12 will be the fifth year of a seven-year phase-in period for the state formula created for thedistribution of state revenue for education. According to this formula, a district's state funding isdetermined by the difference of a minimum level of local effort and an expected cost to educate astudent. The expected cost for educating a student is based on the concepts of a state adequacytarget, weighted average daily attendance, and a dollar value modifier. Currently, this formula isbeing modified by the state and the different models have not yet been finalized. We have beeninformed that the modification will result in the phase-in occurring over a longer period of time,than the current seven year phase-in. The state formula continues to be under-funded. It has notbeen fully funded since its inception. This year the proration was 96%.

Sales taxi Prop C is a source of state revenue that we expect to increase slightly throughout the2011-12 year. Therefore, we have adjusted our budget to reflect a conservative $801 per pupil.

Funding for the 2011-2012 year for the desegregation program is estimated at $7000 per student.Student enrollment in this program is projected to increase for the 2011-12 year. We currently

have 150 students enrolled through the program. This is an increase of 15 students over theprevious year.

By law, retirement contributions will increase an additional ~% for certified staff and .23% forsupport staff next year making the contribution rates 14.5% and 6.86% respectively for bothemployer and employee.

The Valley Park School District fund balance is 34.62%. This ranks us #3 out of the 23 St. LouisCounty school districts. Our expenditure per average daily attendance is $10,725.

12


Contacting the School District Financial Management

This financial report is designed to provide our citizens, taxpayers, investors and creditors with ageneral overview of the School District's finances and to show the School District's finances andthe School District's accountability for the money it receives. If you have questions about thisreport or need additional financial information, please contact Dr. David Knes, Superintendent, atValley Park School District, One Main Street, Valley Park, MO 63088, 636-923-3695.

13

Valley Park School DistrictStatement of Net Assets-Cash Basis

June 30. 2011

GovernmentalActivities Total

AssetsCash and Cash Equivalent $ 4.159.512 $ 4.159.512Escrow Investments 4.180.406 4.180.406

Total Assets $ 8.339.918 $ 8.339.918

Net AssetsRestricted for:

Debt Service $Valley Park School District Educational Facilities Authority

Unrestricted

3.204.9491,099,5004.035,469

$$

3,204.9491.099,5004,035,469

8,339,918$8,339,918Total Net Assets $========::::::::::=

See accompanying notes to the financial statements.14

Valley Park School DistrictStatement of Activities

Cash BasisYear Ended June 30, 2011

Program Revenues

CashDisbursements

Charges forServices

OperatingGrants and

Contributions

CapitalGrants and

ContributionsNet (Disbursement) Receipts

and Changes in Net Assets

Government ActivitiesInstructionSupport Services:

AttendanceGuidanceHealth, Psych, Speech and AudioImprovement of InstructionProfessional DevelopmentMedia ServicesBoard of Education ServicesExecutive AdministrationBuilding Level AdministrationBusiness, Fiscal, Internal ServiceOperation of PlantSecurity ServicesPupil TransportationFood ServiceCentral Office Support ServiceAdult EducationCommunity Services

Facilities Acq & ConstructionPrincipalInterestOther Fees

Total Governmental Activities

General ReceiptsTaxes:

Property and other Taxes, Levied for General PurposesProperty and other Taxes, Levied for Special RevenueProperty and other Taxes Levied for Debt ServiceProperty and other Taxes Levied for Capital Projects

County RevenuesState RevenuesOther Revenues

Bond and Leasehold RefundingInterest and Investment EarningsMiscellaneous

Subtotal General Receipts

Increase (Decrease) in Net Assets

Net Assets Beginning of Year

Net Assets End of Year

$ (7,174,115)

(1,072)(288,261)(170,892)(295,580)

(5,211)(684.936)(115,693)(294,154)(718,044)(122,557)

(1,105,461 )

(361,144)(501,903)

(76,685)

(47,193)(3,212,334)(5,185,450)

(937,392)(166.nO)

(21,464.847)

$ 186,648

173,676

360,324

$ 486,368 $

40,401

67,252254,403

848,424

$

$

$

(6,501,099)

(1,072)(288,261)(170,892)(295,580)

35,190(684.936)(115,693)(294,154)(718,044)(122,557)

(1,105,461)

(293,892)(73,824)(76,685)

(47,193)(3,212,334)(5,185,450)

(937,392)(166,770)

(20,256,099)

3,879,8653,166,805

990,685950,780127,230

1,109,879

7,011,019147.572

1,185,01818,568,854

(1,687,245)

10,027,163

8,339,919

See accompanying notes to the financial statements.

15

VALLEY PARK SCHOOL DISTRICT Statement of Assets and Fund Balance Arising from Cash Transactions - AJI Governmental Funds and Fiduciary Fund, Including Component UnitYear ended June 30,2011

FiduciaryGovernmental Fund Type Fund Type Totals

Special CapitalGeneral Revenue Debt Projects Insurance

(Incidental) (Teachers) Service (Building) TrustFund Fund Fund Fund Fund June 30, 2011

ASSETS

Cash and Cash Equivalent $ 3,965,585 $ $ 2,848,817 $ 69,884 $ 215,679 $ 7,099,965Cash and Investment in Escrow 356,132 1,099,500 1,455,632

TOTAL ASSETS $ 3,965,585 $ $ 3,204,949 $ 1,169,384 $ 215,679 $ 8,555,597

FUND BALANCE

Fund balances:Restricted for.

Escrow Self Insurance 215,679 215,679Reserved for.

Capital Outlay 1,169,384 1,169,384Debt Service 3,204,949 3,204,949

Unrestricted/Unreserved 3,965,585 3,965,585

FUND BALANCE $ 3,965,585 $ $ 3,204,949 $ 1,169,384 $ 215,679 $ 8,555,597

See accompanying notes to the financial statements16

Valley Park School DistrictStatement ofRevenues Collected, Expenditures Paid, and Changes in Fund Balance-Cash Basis-All Governmental Funds and Fiduciary Fund, Including Public Building AuthorityYear Ended June 30,2011

FidcuciaryGovernmental Funds Funds

Special CapitalGeneral Revenue Debt Projects Insurance

(Incidental) (Teachers) Service (Building) Trust TotalsFund Fund Fund Fund Fund June 30, 2011

REVENUE COLLECTEDLocal $ 4,248,159 $ 4,209,003 $ 990,685 $ 1,085,630 $ 179,283 $ 10,712,761County 59,208 38,898 17,340 11,784 127,230State 82,424 1,115,471 1,197,896Federal 254,672 455,607 50,129 760,408Other

TOTAL REVENUES COLLECTED $ 4,644,463 $ 5,818,980 $ 1,008,026 $ 1,147,543 $ 179,283 $ 12,798,295

EXPENDITURES PAIDCURRENT

Instruction 898,803 6,172,889 102,423 87,295 7,261,410Support services 2,817,690 1,340,775 583,128 4,741,593Adult EducationCommunity Services 24,159 23,034 47,193

CAPTIAL OUTLAYFacilities and Acquisitions 3,212,334 3,212,334

DEBT SERVICEPrincipal 490,450 4,695,000 5,185,450Interest 527,677 409,716 937,392Other fees 57,094 109,676 166,770

TOTAL EXPENDITURES PAID $ 3,740,652 $ 7,536,698 $ 1,075,221 $ 9,112,277 $ 87,295 $ 21,552,142

Revenue Collected over(under)Expenditures Paid $ 903,812 $ (1,717,718) $ (67,195) $ (7,964,734) $ 91,988 $ (8,753,848)

Other Financing Sources(Uses)Operating Transfers inCout) (1,840,818) 1,715,803 125,015Interest on Investments 2,837 1,915 138,525 4,294 147,572Bond Refunding and Leasehold Refunding 2,655,000 4,356,019 7,011,019

Sale of PropertyTOTAL OTHER FINANCING (1,837,980) 1,717,718 2,793,525 4,485,328 7,158,591

FUND BALANCE-Beginning of Year 4,899,754 478,619 4,648,791 123,691 10,150,854

FUND BALANCEEnd of Year $ 3,965,585 $ $ 3,204,949 $ 1,169,384 $ 215,679 $ 8,555,597

The accompanying notes are an integral part of this financial statement

17

Valley Park School DistrictReconciliation of the Statement of Revenue, Expenditures, and Changes in Fund Balance of Governmental Fundsand Fiduciary Fund to the Statement of ActivitiesYear Ended June 30, 2011

Net Assets Beginning of Year

Net Changes in Fund Balances - Total Government Funds and Fiduciary Fund

Net Assets End of Year

Less Fiduciary Fund

Net Assets on Statement of Net Assets

18

$ 10,150,854

(1,595,258)

8,555,597

215,679

$ 8,339,919

VALLEY PARK SCHOOL DISTRICTNotes to Financial Statements

June 30, 2011

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Valley Park School District (the District) operates as a "six director" district (with sevenmembers of the Board of Education) as described in RSMo Chapter 162.

The financial statements of Valley Park School District have been prepared on the prescribedbasis of accounting that demonstrates compliance with the cash basis and budget laws of theState of Missouri, which is a comprehensive basis of accounting other than generally acceptedaccounting principles accepted in the United States of America. The Government AccountingStandards Board is the accepted standard-setting body for establishing governmental accountingand financial reporting principles. The more significant of the District's accounting policies aredescribed below.

A. Principles Used to Determine Scope of Entity

The District's reporting entity includes the district's governing board and all related organizationsthat exercise oversight responsibility.

In evaluating how to define the District, for financial reporting purposes, management hasconsidered all potential component units. The decision to include a potential component unit inthe reporting entity was made by applying criteria set forth in generally accepted accountingprinciples accepted in the United States of America. The basic criterion for including a potentialcomponent unit within the reporting entity is the governing body's ability to exercise oversightresponsibility. The most significant manifestation of this ability is financial interdependency.Other manifestations of the ability to exercise oversight responsibility include, but are not limitedto, the selection of governing authority, the designation of management, the ability tosignificantly influence operations and accountability for fiscal matters. The other criterion usedto evaluate potential component units for inclusion or exclusion from the reporting entity is theexistence of special financing relationships, regardless of whether the District is able to exerciseoversight responsibilities. Based upon the application of these criteria, the following is a briefreview of each potential component unit addressed in defining the District's reporting entity.

Excluded from the reporting entity:

Public School Retirement System of Missouri, Public Education Employees RetirementSystem of Missouri and Missouri United School Insurance Council (MUSIC). Theparticipating school district's governing bodies have appointed these potential componentunits jointly. These are independent units that select management staff, set user charges,establish budgets and control all aspects of its daily activity.

19

VALLEY PARK SCHOOL DISTICTNotes to Financial Statements

June 30, 2011

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

A. Principles Used to Determine Scope of Entity (Continued)

Included in the reporting entity:

Valley Park School District Educational Facilities Authority: This component unit wasincorporated as a not-for-profit organization whose stated purpose is to operateexclusively for the benefit of the District. Although the District is not legally responsiblefor the debt of the Public Facilities Authority, the corporation's sole source of revenue islease payments from the District. The financial information presented for the PublicFacilities Authority has been blended with that of the School District. The informationmust be reported using the blended method since the component unit is so closely relatedto the primary government that the component unit, in effect, is the same as the primaryunit. The separate information for the Public Facilities Authority can be found in thesupplemental information.

B. Basis of Presentation - Fund Accounting

The accounts of the District are organized on the basis of funds, each of which is considered aseparate accounting entity. The operations of each fund are accounted for with a separate set ofself-balancing accounts that comprise its assets, fund balance, revenues and expenditures.District resources are allocated to and accounted for in individual funds based upon the purposesfor which they are to be spent and the means by which spending activities are controlled. TheDistrict uses the following fund types:

GOVERNMENTAL FUNDS:

General (Incidental) Fund- Used to account for general activities of the district, including studentactivities, food services, and textbooks which are not required to be accounted for in anotherfund.

Special Revenue (Teachers') Fund- Used to account for the financial resources from taxes,revenues restricted by the State and the local tax levy and other sources for the payment ofteacher salaries and certain employee benefits that are restricted or committed to expenditures forspecified purposes other than debt service or capital projects.

Debt Service Fund- Used to account for the accumulation of resources that are restricted,committed or assigned for, and the payment of principal, interest and fiscal charges on generallong-term debt.

20

VALLEY PARK SCHOOL DISTICTNotes to Financial Statements

June 30, 2011


B. Basis of Presentation - Fund Accounting (Continued)

Capital Projects (Building) Fund- Used to account for and report financial resources from longterm debt, taxes and other resources that are restricted, committed or assigned to expenditure forcapital outlays, including the acquisition or construction of capital facilities and other capitalassets.

Fiduciary Funds: The fiduciary funds category consists of four fund types. Of the four fund types,the school utilizes the following:

Insurance Trust fund: Accounts for assets held by the District in a trustee capacity.

The Board of Education has the authority to set aside funds for a specific purpose. Commitmentsare authorized by formal Board resolution. The passage of a resolution must take place prior toJune 30 of the applicable fiscal year. If the actual amount of the commitment is not available byJune 30, the resolution must state the process or formula necessary to calculate the actual amountas soon as information is available.

Assignments are authorized by fund placement in the special revenue, capital projects and debtservice funds in the original, adopted and later revised budget. Upon adoption of a budget wherefund balance is used as a source to balance the budget, the superintendent shall record the amountas assigned fund balance. The Board delegates the authority to assign amounts for specificpurposes(s) to the superintendent.

When both restricted and unrestricted funds are available for expenditure, restricted funds shouldbe spent first unless legal requirements disallow it.

When committed, assigned and unassigned funds are available for expenditure, committed fundsshould be spent first, assigned funds second and unassigned funds last.

The undesignated fund balance in the operating funds will be maintained at a level sufficient toprovide the resources required to meet operating cost needs, to allow for unforeseen needs of anemergency nature, and to permit orderly adjustment to changes resulting from fluctuations of

21


June 30, 2011

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PO.LICIES (Continued)

B. Basis of Presentation - Fund Accounting (continued)

revenue sources. The District will strive to maintain a minimum undesignated balance in itsoperating funds equal to a range of 15-25 percent of its prior year operating expenditures.

If fund balances decline below the 15 percent floor, the Board will develop a plan to replenish thefund balance to the established minimum level within two (2) years. This policy will be reviewby the Superintendent every three (3) years following adoption or sooner, at the direction of theBoard.

The School District's basic financial statements consist of government-wide statements,including a statement of net assets and a statement of activities, and fund financial statements,which provide a more detailed level of financial information.

Government-wide Financial Statements:

The statement of net assets and the statement of activities display information about the SchoolDistrict as a whole. These statements include the financial activities of the District.

The Statement of Net Assets: Presents the financial condition of the governmental activities ofthe School District at year-end excluding agency funds.

The Statement of Activities: Presents a comparison between direct expenses and programrevenues for each program or function of the School District's governmental activities of theSchool District excluding agency funds. Direct expenses are those that are specificallyassociated with a service, program or department and therefore clearly identifiable to a particularfunction. Program revenues include charges paid by the recipient of the goods or servicesoffered by the program, grants and contributions that are restricted to meeting the operational orcapital requirements of a particular program and interest earned on grants that is required to beused to support a particular program. Revenues, which are not classified as program revenues,are presented as general revenues of the School District, with certain limited exceptions. Thecomparison of direct expenses with program revenues identifies the extent to which eachgovernmental function is self-financing or draws from the general revenues of the SchoolDistrict.

Fund Financial Statements: During the year, the School District segregates transactions relatedto certain School District functions or activities in separate funds in order to aid financialmanagement and to demonstrate legal compliance. Fund financial statements are designed topresent financial information of the District at this more detailed level.

22


June 30, 2011


Government-wide Financial Statements (Continued)

The focus of governmental financial statements is on major funds. Each major fund is presentedin a separate column. The fiduciary fund is reported by type.

c. Measurement Focus and Basis of Accounting

The accounting and financial reporting treatment applied to a fund is determined by itsmeasurement focus and basis of accounting. The District's policy is to prepare its financialstatements on the cash basis of accounting; consequently, revenues are recognized when receivedrather than when earned, and expenditures and purchases of assets are recognized when cash isdisbursed rather than when the obligation is incurred. Accordingly the accompanying financialstatements are not intended to present the financial position or results of operations in accordancewith generally accepted accounting principals accepted in the United States of America.

D. Budgets and Budgetary Accounting

The district follows these procedures in establishing the budgetary data reflected in the financialstatements:

1) In accordance with Chapter 67, RSMo, the District adopts a budget for each fund.

2) Prior to July the superintendent, who serves as the budget officer, submits to the Board ofEducation a proposed budget for the fiscal year beginning on the following July 1. Theproposed budget includes estimated revenues and proposed expenditures for all districtfunds. Budgeted expenditures cannot exceed beginning available monies plus estimatedrevenues for the year.

3) A public hearing is conducted to obtain taxpayer comments. Prior to its approval by theBoard of Education the budget document is available for public inspection.

4) On June 30, 2010 the budget was enacted by vote of the Board of Education.

5) Subsequent to its formal approval of the budget, the Board of Education has the authorityto make necessary adjustments to the budget by formal vote of the board. Adjustmentsmade during the year are reflected in the budget information included in the financialstatements. Budgeted amounts are as originally adopted, or as amended by the Board ofEducation.

23


June 30, 2011


D. Budgets and Budgetary Accounting (Continued)

6) Budgets for district funds are prepared and adopted on the cash basis (budget basis),recognizing revenues when collected and expenditures when paid. The actual results ofoperation are presented in the statement of revenues collected, expenditures paid, andchanges in fund balances - original budget, final budget and actual-cash basis-allgovernmental funds and trust agency fund in accordance with the budget basis to providea meaningful comparison of actual results with the budget.

E. Pooled Cash and Temporary Investments

Cash resources of the individual funds are combined to form a pool of cash and temporaryinvestments that is managed by the District Treasurer. Investments of the pooled accountsconsist of certificates of deposit and MOSIP investments, carried at cost, which approximatesmarket. Interest income earned is allocated to contributing funds based on cash and temporaryinvestment balances.

F. Inventory

Inventory is deemed immaterial and accounted for using the purchase method in which suppliesare charged to expenditures when purchased.

G. Property and Equipment

Capital assets are recorded as expenditures in the General (Incidental) Fund and the CapitalProjects (Building) Fund at the time the expenditures are paid. No depreciation is provided forproperty and equipment.

H. Compensated Absences

Vacation time, personal business days, and sick leave are considered as expenditures in the yearpaid.

I. Teachers' Salaries

Payroll checks written and dated in May 2011 for June, July and August 2011 payrolls from2010-2011 contracts are included in the financial statements as an expenditure paid in the monthof June. This practice has been consistently followed in previous years.

24


June 30, 2011

NOTE 2: CASH AND INVESTMENTS

The District maintains a cash and temporary cash investment pool that is available for use by allfunds except the Debt Service Fund (State law requires that all deposits of the Debt Service Fundbe kept separate and apart from all other funds of the District). Each fund type's portion of thispool is displayed on the statement of assets and fund balances arising from cash transactions as"Cash and Cash Equivalents" under each fund's caption. Cash Equivalents represent allinvestments which are short term, highly liquid, and readily convertible to a specified cash value.These investments generally have original maturities of three months or less.

District Cash and Investments

Custodial Credit Risk: Missouri statutes require that all deposits with financial institutions becollateralized in an amount at least equal to uninsured deposits. At June 30, 2011, the carryingamount of the District's deposits was $4,374,641 and the bank balance was 4,977,091. Of theDistricts deposits, $1,145,056 were insured by depository insurance and secured with collateralheld by the school districts or its agent in the school districts name. All investments areregistered in the name of the school district and held at the Federal Reserve in the districts name.The remainder amount of $903,034 was deposited with Missouri Securities Investment Program(MOSIP) in a money market. MOSIP invests in governmental backed securities. Theseinvestments are not covered by pledged securities or FDIC insurance. However, MOSIP is amember of the Securities Investor Protection Corporation.

Credit Risk and Investment Interest Rate Risk: The District may purchase any investmentsallowed by the State Treasurer. These include (1) obligations of the United States government orany agency or instrumentality thereof maturing and becoming payable not more than three yearsfrom the date of purchase or (2) repurchase agreements maturing and becoming payable withinninety days secured by u.S. Treasury obligations or obligations of u.S. government agencies orinstrumentalities of any maturity, as provided by law.

Component Unit Deposits

Custodial Credit Risk: Missouri statutes require that all deposits with financial institutions becollateralized in an amount at least equal to uninsured deposits. At June 30, 2011, the carryingamount of the component units deposits was $1,099,500 and the bank balance was $1,099,500.The amount of$I,099,500 invested in cash and short-term government backed securities. Thesefund are not secured.

Credit Risk and Investment Interest Rate Risk: The District may purchase any investmentsallowed by the State Treasurer. These include (1) obligations of the United States government orany agency or instrumentality thereof maturing and becoming payable not more than three years

25


June 30, 2011

NOTE 2: CASH AND INVESTMENTS (Continued)

from the date of purchase or (2) repurchase agreements maturing and becoming payable withinninety days secured by U.S. Treasury obligations or obligations of U.s. government agencies orinstrumentalities of any maturity, as provided by law.

Non-negotiable certificates of deposit are not subject to interest rate risk, therefore their maturityrates are not provided.

TYPECARRYING

RATING MATURITY VALUES

FAIRMARKETVALUE

District DepositsDemand DepositsCertificate of Deposits

Total Deposits

Component Unit DepositsDemand Deposits

Reconciliation To Statement of Net Assets

N/AN/A

N/A

N/AN/A

N/A

$ 1,430,6562,943,985

$ 4,374,641

$ 1,099,500$ 5,474,141

$ 1,430,6562,943,985

$ 4,374,641

$ 1,099,500$ 5,474,141

Total District & Component Unit DepositsPetty CashEscrow Deposits (MOHEFA) (See Note 4)Total Assets on Combined Statement of Assets and Fund BalanceLess Agency FundTotal Assets on Statement ofNet Assets

NOTE 3: TAXES

$ 5,474,141550

356,132$ 5,830,823

(224,723)$ 5,606,100

Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied onNovember 1 and payable by December 31. The county collects the property tax and remits it tothe district.

The district also receives sales tax collected by the state and remitted based on eligible pupils.

The assessed valuation of the tangible taxable property for the calendar years 2010 and 2009 forpurposes of local taxation was $153,336,700 and $173,490,950 respectively.

The tax levy per $100 of the assessed valuation of tangible taxable property for the calendar years26


June 30, 2011NOTE 3: TAXES (Continued)

2010 and 2009 for purposes of local taxation was:

2010Unadjusted Adjusted Unadjusted

General (Incidental) Fund 2.5300 2.5300 2.5429Special Revenue (Teachers') 1.1157 1.1157 1.1000Debt Service Fund 0.6460 0.6460 0.6460Capital Projects (Building) 0.6200 0.6200 0.4200

TOTAL 4.9117 4.9117 4.7089

2009Adjusted

2.54291.100

0.64600.4200

4.7089

The receipts of current and delinquent property taxes during the fiscal year ended June 30, 2011aggregate approximately 99.63 percent of the current assessment computed on the basis of thelevy as shown above.

NOTE 4: COMMITMENTS

BOND PAYABLE

During the fiscal year 2010-2011 the District issued $2,655,000 General Obligation RefundingBonds, Series 2011 for the purpose of providing funds to crossover refund a portion of theDistrict's outstanding General Obligation Bonds, Series 2004A.

During the 2009-2010 fiscal year the District issued three bond series totaling $4,000,000. TheGeneral Obligation Bonds, Series 201 OA were issued in the aggregate principal amount of$1,260,000. The Taxable General Obligation Bonds, Series 2010B (Build America Direct PayBonds) were issued in the aggregate principal amounts of $1,150,000, and the Taxable GeneralObligation Qualified School Construction Bonds, Series C (Direct Pay Bonds) were issued in theamount of$I,590,000. The proceeds of the bonds will be used for the purpose of paying costs ofmaintaining, repairing, and improving certain of the District's building and facilities, asrecommended by the long-range facilities team of the District, and to pay the issuing costs of thebonds.

During the fiscal year 2008-2009 the District paid out of district funds $329,159 to an escrowagent to defease $315,0000 worth of series 2004A General Obligation Refunding Bonds. Thedefeased bonds would normally mature on March 1, 2018, and are callable on March 1, 2012.The bonds are considered defeased since the escrow will pay the interest and principal of the

27


June 30, 2011

NOTE 4: COMMITMENTS (Continued)

BOND PAYABLE (Continued)

called bonds at the called date. Therefore, the escrow account and the bond liability are removedfrom the District's books.

During the 2003-2004 fiscal school year, the district had and issuance of Series 2004A GeneralObligation Refunding Bonds in the aggregate amount of $7,634,693, consisting of $6,520,000original principal amount of Current Interest Bonds and $1,114,693 original principal amount ofCapital Appreciation Bonds. The purpose of the bonds is to provide funding to refund thecallable portion of the District's outstanding General Obligation Refunding and ImprovementBond Series 1998.

In July 1998, the district issued $9,259,991 of General Obligation Refunding and ImprovementBonds consisting of $8,350,000 original principal of current interest bonds and $909,991 originalprincipal amount of Capital Appreciation Bonds. The proceeds of these bonds were used toadvance refund $6,260,000 of outstanding principal of the district's General Obligation Bonds,series 1995 and for construction, renovation and purchase of land for future school utilization.

The following is a summary of bond transactions for the year ended June 30, 2011:

Bonds payable at June 30, 2010Bonds issuedBonds retiredBonds payable at June 30, 2011

Bonds payable at June 30, 2011 consist of:

$9,638,6532,655,000(490,450)

$ 11,803,203

$2,655,000 General Obligation Refunding Bonds, Series 2011 due invarious installments; interest rates between 2.00% and 4.50%

$1,260,000 General Obligation Bonds, Series 2010A due in variousinstallments; Interest rates between 2.00% and 3.00%

$1,150,000 Taxable General Obligation Bonds, Series 2010B (BuildingAmerica Direct Pay Bonds) due March 1, 2021; Interest rate 4.75%

$1,590,000 Taxable General Obligation Qualified School ConstructionBonds, Series 2010B (Direct Pay Bonds) dueMarch 1, 2025; Interest rate 5.540%

28

$2,655,000

$1,140,000

$1,150,000

$1,590,000


June 30, 2011

NOTE 4: COMMITEMENTS (Continued)

BOND PAYABLE (Continued)

$7,634,693 General Obligation Refunding Bonds Series 2004A,consisting of $6,520,000 of Current Interest Bonds due in variousinstallments from 2004 through 2018, and $1,114,693 of CapitalAppreciation Bonds are due in various installments in 2007, 2008, and2012. The interest rates on the Bonds are between 1.20% to 4.05% and2.35% to 3.72% respectively.

Total Bonds payable

5,268,203

$11,803,203

Year Ended June 30,

201220132014201520162017-20212022-2025

Principle

$ 463,203890,000940,000

1,000,0001,920,0005,000,0001,590,000

$11,803,203

Interest

$ 424,917436,891408,291377,011342,419859,367221,046

$ 3,069,942

Total

$ 888,1201,326,8911,348,2911,377,0112,262,4195,859,3671,811,046

$ 14,873,145

$14,402,252

$ 23,000,505(11,803,202)

3,204,949

Article VI, Section 26(b), Constitution of Missouri, limits the outstanding amount of authorizedGeneral Obligation Bonds of a district to 15 percent of the assessed valuation of a district(including state - assessed railroad and utilities).

The School District has an escrow deposit with the Missouri School District Direct DepositProgram. This is direct deposit money paid directly to the trustee. The trustee then invests in apool of funds that are given to an investment agent. The agent only buys government treasurynotes or government agency type funds. The funds cannot by used by the District. The fundsare released by the trustee to pay, on the behalf of the District, the district bond obligationsdirectly.

The legal debt margin of the District at June 30, 2011 was:Constitutional debt limitGeneral obligation bonds payableAmount available in Debt Service Fund

Legal Debt MarginThe district did not exceed the legal debt margin at June 30, 2011.

29


June 30, 2011


LEASEHOLD BONDS

During the fiscal year 2002-2003, the district, through the Valley Park School DistrictEducational Facilities Authority, issued $2,115,000 of Leasehold Revenue Bonds Series 2003,and concurrently entered into the "Second Supplemental Base Lease" dated March 1, 2003. Thisis a supplemental lease pursuant to the original base lease and the First Supplemental Base Lease.The original base lease was amended and supplemented in order to maximize the lease term inconsideration of lease payments and upon the terms and conditions set forth in the original "BaseLease". The lease will extend for three one-year renewal options from March 2, 2021 to March2, 2023. The proceeds of the bonds were used for the purpose of paying the costs of completingthe construction, furnishing and equipping of an early childhood and health education center,including a gymnasium/auditorium, and construction vehicular traffic ways and parking areasincreasing the amount in the Bond Reserve Fund to the Bond Reserve requirement, and payingthe cost of issuing the Series 2003 Bonds.

During the fiscal year 2003-2004, the District, through the Valley Park School DistrictEducational Facilities Authority, issued $2,845,000 of Leasehold Revenue Bonds Series 2003B,and concurrently entered into the "Third Supplemental Base Lease" dated December 1, 2003.This is a supplemental lease pursuant to the original base lease, the First Supplemental BaseLease and the Second Supplemental Base Lease. As amended, the initial term of the Lease endJune 30, 2005, and the District has the option to extend the Lease for up to nineteen additionalsuccessive one-year renewal terms, except that the final renewal term may be for less than oneyear. The final renewal term, as amended, will commence July 1, 2022, and terminate on March2, 2023. The Series 2003B Bonds are being issued for the purpose of refunding all of theoutstanding Leasehold Refunding Revenue Bonds, Series 1998, being those bonds maturing inthe years 2004 and thereafter, and paying the cost of issuing the Series 2003B Bonds.

During the fiscal year 2006-2007, the District, through the Valley Park School DistrictEducational Facilities Authority, issued $6,625,000 Leasehold Refunding Revenue Bonds, series2007, and concurrently entered into the "Fourth Supplemental Base Lease" dated April 1, 2007.This is a supplemental lease pursuant to the original base lease, the first supplemental base lease,the second supplemental base lease and the third supplemental base lease. As amended, thecurrent term of the lease ended June 30, 2007, and the District has the option to extend the leasefor up to sixteen (16) additional one-year renewal terms. The final renewal term as amended,will commence July 1, 2022 and terminate on March 2, 2023, or such later date as all rentalpayments and additional payments required under the lease are paid.

During the fiscal year 2010-2011, the District, through the Valley Park School EducationalFacilities Authority, issued $4,370,000 of Leasehold Refunding Revenue Bonds, Series 2010 for

30


June 30, 2011


LEASEHOLD BONDS (Continued)

the purpose of refunding a portion of the Series 2003 Bonds, refunding the remaining outstandingSeries 2003B Bonds and funding a debt service reserve account for the Bonds.

LEASES CAPITAL

During the 2006-2007 fiscal year the School District entered into a $62,100 lease to purchase abus. This lease has five installments and was paid off in the 2011 fiscal year. Amount that waspaid for 2010-2011 was $12,980 in principal and $614 in interest.

During the 2009-2010 fiscal year the School District entered into two bus leases. This lease hasfive installments each. One lease amount is $71,825 and the second in the amount of $72,815.They will be paid off in 2013 and 2014 fiscal years respectively. Total principal and interestamounts paid in this fiscal year 2010-2011 were $15,556 and $15,814 respectively. Although theagreements provide for cancellation of the leases at the Districts option at the renewal dates ofJune 30, each year the District does not foresee exercising its option to cancel.

The following is a schedule of the future minimum lease payments under the leases:

Year Ending

June 30

201220132014201520162017-20212022-2023Total Minimum Lease paymentsLess: Amount Representing Interest

Net Lease Payments

NOTE 5: RETIREMENT PLANS

$

$

$

BusLeases

31,37131,37115,814

78,556(5,641)72,915

EducationalFacilities

Leasing Program

$ 926,6151,058,8151,072,3151,093,7151,121,8276,643,7381,174,687

$ 13,091,712(2,661,712)

$ 10,430,000

Total

$ 957,9861,090,1861,088,1291,093,7151,121,8276,643,7381,174,687

$ 13,170,268(2,667,353)

$ 10,502,915

The Valley Park School District contributed to the Public School Retirement System of Missouri(PSRS), a cost-sharing multiple-employer defined benefit pension plan. PSRS provides

31


June 30, 2011

NOTE 5: RETIREMENT PLANS (Continued)

retirement and disability benefits to full-time (and certain part-time) certificated employees anddeath benefits to members and beneficiaries. Positions covered by the PSRS are not covered bySocial Security. PSRS benefit provisions are set forth in Chapter 169.010 - 141 of the MissouriRevised Statutes. The statutes assign responsibility for the administration of the system to aseven-member Board of Trustees. PSRS issues a publicly available financial report that includesfinancial statements and required supplementary information. That report may be obtained bywriting to The Public School Retirement System of Missouri, P.O. Box 268, Jefferson City,Missouri 65102 or by calling 1-800-392-6848.

PSRS members are required to contribute 14.0%, 13.5%, 13.0% of their annual covered salaryand the Valley Park School District is required to contribute a matching amount during 20102011, 2009-2010, 2008-2009 fiscal years respectively. The contribution requirements ofmembers and the Valley Park School District are established and may be amended by the PSRSBoard of Trustees. The School District's contributions to PSRS for the year ending June 30,2011, 2010 and 2009 were $863,399, $828,203, $736,464 respectively which was equal to theamount paid by the PSRS members for the year.

The Valley Park School District also contributes to the Public Education Employees RetirementSystem of Missouri (PEERS), a cost-sharing multiple-employer defined benefit pension plan.PEERS provides retirement and disability benefits to employees of the district who work 20 ormore hours per week and who do not contribute to the Public School Retirement System ofMissouri. Positions covered by the Public Education Employees Retirement System are alsocovered by Social Security. Benefit provisions are set forth in Chapter 169.600 - .715 of theMissouri Revised Statutes (1986). The statutes assign responsibility for the administration of thesystem to the Board of Trustees of the Public School Retirement System. PEERS issues apublicly available financial report that includes financial statements and required supplementaryinformation. That report may be obtained by writing to the Public Education EmployeesRetirement System of Missouri, P.O. Box 268, Jefferson City, Missouri 65102 or by calling 1800-392-6848.

PEERS members are required to contribute 6.62%, 6.50%, 6.25% of their annual covered salaryand the Valley Park School District is required to contribute a matching amount during 20102011, 2009-2010, 2008-2009 fiscal years respectively. The contribution requirements ofmembers and the Valley Park School District are established and may be amended by the Boardof Trustees. The School District's contributions to PEERS for the year ending June 30, 2011,2010 and 2009 were $99,238, $93,833 and $88,545 respectively which was equal to the amountcontributed by the PEERS members for the year.

32


June 30, 2011

NOTE 6: PARTICIPATION IN A PUBLIC ENTITY RISK POOL

The District is a member of the Missouri School Insurance Council (MUSIC), a protected selfinsurance program of approximately 400 Missouri Public School Districts. The District does notpay premiums to purchase insurance policies, but pays assessments to be a member of selfsustaining risk sharing group. Part of the assessment is used to purchase excess insurance for thegroup as a whole.

NOTE 7: INTERFUND TRANSFERS

During the 2010-2011 fiscal year the District transferred from General Funds $1,840,818 toSpecial Revenue (Teacher Funds) and the Capital Project Funds in the amount of$I,715,803 and$125,015 respectively to zero out the Special Revenue Fund and in the Capital Projects Fund fortransportation and food service costs.

NOTE 8: CONTINGENCIES

The District receives Federal grants and State funding for specific purposes that are subject toreview and audit. These reviews and audits could lead to requests for reimbursement or towithholding of future funding for disallowed expenditures or other noncompliance with terms ofgrants and State funding. The District is not aware of any noncompliance with Federal or Stateprovisions that might require the District to provide reimbursement

33

REQUIRED SUPPLEMENTARY INFORMATION

Valley Park School DistrictStatement of Revenues Collected, Expenditures Paid and Changes in Fund Balance

Cash Basis- Original Budget, Final Budget and Actual-General Fund and Fiduciary FundYear Ended June 30, 2011

General (Incidental) FundOriginal Budget Final Budget Actual Variance

REVENUE COLLECTEDLocal $ 4,558,519 $ 4,641,246 $ 4,430,280 $ (210,966)County 71,540 71,540 59,208 (12,332)State 194,704 88,924 82,424 (6,500)Federal 248,980 254,801 254,672 (129)Other

TOTAL REVENUES COLLECTED $ 5,073,743 $ 5,056,511 $ 4,826,584 $ (229,927)

EXPENDITURES PAIDRegular Instruction 821,357 789,865 699,457 90,408Special Programs 49,586 25,127 4,362 20,765Vocational Instruction 6,724 6,700 3,771 2,929Student Activities 425,000 425,000 278,508 146,492Adult Vocational ProgramsPayments to Other DistrictsPupil Services 129,192 134,891 132,885 2,006Staff Services 270,198 268,668 238,424 30,244General Administration 191,012 223,533 195,358 28,175Building Level Administration 213,439 221,481 211,386 10,095Bldgs/Food Service/Fiscalffransportation 2,188,101 2,256,610 2,039,637 216,973Community Service 36,204 29,843 24,159 5,684Facilities and AcquisitionsDebt ServicesFees Bond Indebtedness 36,934 36,934

TOTAL EXPENDITURES PAID $ 4,330,813 $ 4,418,652 $ 3,827,947 $ 590,705

REVENUES COLLECTED OVER(UNDER)EXPENDITURES PAID 742,930 637,859 998,637

OTHER FINANCING SOURCES(USES):Operating Transfers in(out) (2,293,353) (1,832,203) (1,840,818)Sale of Property

REVENUES COLLECTED AND OTHER SOURCESOVER(UNDER) EXPENDITURES PAID $ (1,550,423) $ (1,194,344) $ (842,181)

FUND BALANCE - Beginning of Year 5,023,445 5,023,445 5,023,445

FUND BALANCE - End of Year $ 3,473,022 $ 3,829,101 $ 4,181,264


34


Cash Basis- Original Budget, Final Budget and Actual-Special Revenue FundYear Ended June 30, 2011

Special Revenue (Teachers) FundOriginal BUdget Final BUdget Actual Variance

REVENUE COLLECTEDLocal $ 3,719,300 $ 4,270,026 $ 4,210,918 $ (59,108)County 43,546 43,739 38,898 (4,841)State 740,955 1,154,989 1,115,471 (39,518)Federal 707,873 496,415 455,607 (40,808)Other

TOTAL REVENUES COLLECTED $ 5,211,674 $ 5,965,169 $ 5,820,895 $ (144,274)

EXPENDITURES PAIDRegular Instruction 5,521,298 5,616,512 5,525,578 90,934Special Programs 469,499 525,181 507,003 18,178Vocational Instruction 93,030 96,962 96,960 2Student ActivitiesAdult Vocational ProgramsPayments to Other Districts 60,000 45,000 43,348 1,652Pupil Services 253,356 255,729 255,718 11Staff Services 351,418 370,190 363,909 6,281General Administration 192,922 214,513 214,489 24Building Level Administration 487,960 507,269 506,658 611Bldgs/Food Service/FiscallTransportationCommunity Service 21,544 41,001 23,034 17,967Facilities and AcquisitionsDebt ServicesFees Bond Indebtedness


REVENUES COLLECTED OVER(UNDER)EXPENDITURES PAID (2,239,353) (1,707,188) (1,715,803)

OTHER FINANCING SOURCES(USES):Operating Transfers in(out) 2,239,353 1,707,188 1,715,803Sale of Property

REVENUES COLLECTED AND OTHER SOURCESOVER(UNDER) EXPENDITURES PAID $ $ $

FUND BALANCE - Beginning of Year

FUND BALANCE - End of Year $ $ $


35

SUPPLEMENTARY INFORMATION


Cash Basls- Original Budget, Final Budget and Actual-Debt Service FundYear Ended June 30, 2011

Debt Service FundOriginal Budget Final Budget Actual Variance

REVENUE COLLECTEDLocal $ 1,005,282 $ 1,022,013 $ 1,129,210 $ 107,197County 21,705 21,705 17,340 (4,365)StateFederalOther

TOTAL REVENUES COLLECTED $ 1,026,987 $ 1.043,718 $ 1,146,551 $ 102,833

EXPENDITURES PAIDRegular InstructionSpecial ProgramsVocational InstructionStudent ActivitiesAdult Vocational ProgramsPayments to Other DistrictsPupil ServicesStaff ServicesGeneral AdministrationBuilding Level AdministrationBldgs/Food Service/FiscallTransportationCommunity ServiceFacilities and AcquisitionsDebt Services 79,223 1,060,879 1,018,127 42,753Fees Bond Indebtedness 18,000 18,000 57,094 (39,094)

TOTAL EXPENDITURES PAID $ 97,223 $ 1,078,879 $ 1,075,221 $ 3,658

REVENUES COLLECTED OVER(UNDER)EXPENDITURES PAID 929,764 (35,161) 71,330

OTHER FINANCING SOURCES(USES):Operating Transfers in(out)Sale of Refunding Bond 2,655,000

REVENUES COLLECTED AND OTHER SOURCESOVER(UNDER) EXPENDITURES PAID $ 929,764 $ (35,161) $ 2,726,330

FUND BALANCE - Beginning of Year 478,619 478,619 478,619

FUND BALANCE - End of Year $ 1,408,383 $ 443,458 $ 3,204,949


36

Valley Park School DistrictStatement of Revenues Collected, Expenditures Paid. and Changes In Fund Balance

Cash Basis- Original Budget. Final Budget and Actual-Capital Projects FundYear Ended June 30, 2011

Capital Projects Fund (Excluding Public Facilities Authority)Original Budget Final Budget Actual Variance

REVENUE COLLECTEDLocal $ 1,123,838 $ 1,111,448 $ 1,089,917 $ (21,531)County 10,500 11,784 11,784 (0)StateFederal 50,130 50,129 (1 )Other

TOTAL REVENUES COLLECTED $ 1,134,338 $ t173,362 $ 1,151,830 $ (21,532)

EXPENDITURES PAIDRegular Instruction 6,002 102,424 102,423Special ProgramsVocational InstructionStudent ActivitiesAdult Vocational ProgramsPayments to Other DistrictsPupil Services 79,177 71,622 7,556Staff Services 383,878 383,394 484General Administration 167,839Building Level AdministrationBldgs/Food Service/FiscallTransportation 82,730 143,978 128,113 15,865Community ServiceFacilities and Acquisitions 430,000 3,662,489 3,662,483 6Debt Services 449,673 414,568 414,567 1Fees Bond Indebtedness 3,000 3,000 1,729 1,271


REVENUES COLLECTED OVER(UNDER)EXPENDITURES PAID (4,906) (3,616,152) (3,612,501)

OTHER FINANCING SOURCES(USES):Operating Transfers inCout) 125,015 125,015Sale of BondsSale of Property

REVENUES COLLECTED AND OTHER SOURCESOVER(UNDER) EXPENDITURES PAID $ (4,906) $ (3,491,137) $ (3,487,486)

FUND BALANCE - Beginning of Year 3,557,370 3,557,370 3,557,370

FUND BALANCE - End of Year $ 3,552,464 $ 66,233 $ 69,884


37

VALLEY PARK SCHOOL DISTRICTSchedule of Selected Statistics

For the year ending June 30, 2011

Type of audit performed: Yellow Book: Single Audit: _X _

1. Calendar (Sections 160.041 and 171.031, RSMo)

A. The number of actual calendar hours classes were in session and pupils were under the direction of teachersduring this school year was as follows:

Kindergarten - A.M.Kindergarten - P.M.Kindergarten - Full-day

N/A Hours----N/A Hours----

1,077.10 Hours

GradesGradesGrades

1-56-89-12

1,077.101,085.851,066.70

HoursHoursHours

B. The number of days classes were in session and pupils were under the direction of teachers during this school yearwas as follows:

Kindergarten - A.M.Kindergarten - P.M.Kindergarten - Full-day

___N_/A_ Days___N_/A_ Days___17_4_ Days

GradesGradesGrades

1-56-8

9-12

___1_7_4_ Days___1_7_4_ Days___17_4_ Days

Notes: _

2. Average Daily Attendance (ADA)

Full-Time& Federal

Regular Term Part-Time Remedial Deseg In Lands

Kindergarten - A.M. N/A N/A N/A N/AKindergarten - P.M. N/A N/A N/A N/AKindergarten - Full-day 82.86 ° 10.44 N/A

Grades 1-5 331.76 .56 51.68 N/AGrades 6-8 191.15 1.43 34.40 N/AGrades 9-12 212.65 ° 40.79 N/A

Subtotal Regular Term 818.42 1.99 137.32 N/A

FederalResident Deseg In Lands

Summer School Subtotal 10.73 3.38 N/A

Total Regular Term Plus Summer School ADA

Notes:

DesegTotal Out

N/A N/AN/A N/A

93.30 N/A

384.00 N/A226.98 N/A253.44 N/A

957.73 N/A

Total

14.11 N/A

971.84 I N/A I

38



3. September Membership

September Membership FTE Count

Full-Time&

PartTime

865.61

Deseg In

145.99

FederalLands

oTotal

1,011.60 I

DesegOut

2.00 I

Notes: _

4. Free and Reduced Priced Lunch FTE Count (Section 163.011(6), RSMo)

Full-Time&

Part-Time Deseg In Total

State FTE TotalFree 277.28 130.28 407.56

Reduced 57.57 6.00 63.57

471.13 ITotal 334.85 136.28

Notes:

5. Finance

Fill in the blank with the appropriate response of true, false, or N/A unless otherwise noted.

A. As required by Section 162.401, RSMo, a bond was purchased for the district's treasurer in thetotal amount of: _$2_5-'-,0_0_0 _

B. The district's deposits were secured during the year as required by Sections 110.010 and 110.020, RSMo. _T_ru_e _

C. The district maintained a separate bank account for the Debt Service Fund in accordance with Section165.011, RSMo. _T_ru_e _

D. Salaries reported for educators in the October Core Data cycle are supported by payroll/contract records. _T_ru_e _

E. If a $162,326 or 7% x SAT x WADA transfer was made in excess of adjusted expenditures, the boardapprove a resolution to make the transfer, which identified the specific projects to be funded by thetransfer and an expected expenditure date for the projects to be undertaken. _N_/A _

39



5. Finance (Continued)

F. The district published a summary of the prior year's audit report within thirty days of the receipt of theaudit pursuant to Section 165.121, RSMo.

All above "false" answers must be supported by a finding or management letter comment.

Finding #:

Management Letter Comment #:

Notes:

True

6. Transportation (Section 163.161, RSMo)

Fill in the blank with the appropriate response of true, false, or NtA unless otherwise noted.

A.

B.

The school transportation allowable costs substantially conform to 5 CSR 30-261.040, Allowable Costsfor State Transportation Aid.

The district's school transportation ridership records are maintained in a manner to accurately disclose inall material respects the average number of regular riders transported.

True

True

c. Based on the ridership records, the average number of students (non-disabled K-12, K-12 students with disabilities andcareer education) transported on a regular basis (ADT) was:

• Eligible ADT _#7_6_8 _

• Ineligible ADT _#_0 _

D. The district's transportation odometer mileage records are maintained in a manner to accurately disclose inall material respects the eligible and ineligible mileage for the year. _T_r_u_e _

E. Actual odometer records show the total district-operated and contracted mileage for the year was: #56,710

Of this total, the eligible non-disabled and students with disabilities route miles and the ineligible nonroute and disapproved miles (combined) was:

• Eligible Miles

Ineligible Miles (Non-RoutelDisapproved)

40

#44,455

#12,255



6. Transportation (Section 163.161, RSMo) (Continued)

F. Number of days the district operated the school transportation system during the regular schoolyear: _17_4 _

All above "False" answers must be supported by a finding or management letter comment.

Finding#:

Management Letter Comment #:

Notes: _

41

Valley Park School DistrictCombining Statement of Assets and Fund Balances-Cash Basis-All Capital Projects Funds and Component Unit

June 30, 2011

Capital Projects Fund PublicSchool Facilities

ASSETS District Authority Totals

Cash and Investments in Escrow $ 69,884 $ 1,099,500 $ 1,169,384

TOTAL ASSETS $ 69,884 $ 1,099,500 $ 1,169,384

FUND BALANCE

Reserved for Capital Outlay $ 69,884 $ $ 69,884Reserved for Escrow Account 1,099,500 1,099,500

TOTAL LIABILITIES AND FUND BALANCE $ 69,884 $ 1,099,500 $ 1,169,384

See accompanying notes to the financial statements

42

Valley Park School DistrictCombining Statement of Revenues Collected, Expenditures Paid

and Changes in Fund Balances-Cash Basis-All Capital Projects Funds and Component UnitYear Ended June 30, 2011

Public Component UnitSchool Facilities EliminationDistrict Authority Adjustments* Totals

REVENUE COLLECTEDLocal $ 1,085,630 $ $ 1,085,630County 11,784 11,784StateFederal 50,129 50,129Other 864,716 864,716

TOTAL REVENUES COLLECTED $ 1,147,543 $ 864,716 $ 864,716 $ 1,147,543

EXPENDITURES PAIDInstruction 102,423 102,423AttendanceGuidanceHealth, psych, speech 71,622 71,622Improvement of instructionProfessional developmentMedia service 383,394 383,394Board of education servicesExecutive administrationBuilding level administrationBusiness, Fiscal, Internal ServicesOperation of plantSecurity ServicesPupil transportation 40,113 40,113Food services 88,000 88,000Business/central servicesCommunity servicesLease Payments/Capital Outlay 4,077,050 (864,716) 3,212,334Debt services

Principal 4,695,000 4,695,000Interest 409,716 409,716Other Charges 1,729 107,947 109,676

TOTAL EXPENDITURES PAID $ 4,764,331 $ 5,212,662 $ (864,716) $ 9,112,277

Revenue Collected over(under)Expenditures Paid (3,616,788) (4,347,947) (7,964,734)

Operating Transfers 125,015 125,015

Revenues Collected and Other Financing

Interest on Investments 4,287 7 4,294Leasehold Refunding and Other Proceeds 4,356,019 4,356,019

4,287 4,356,026 4,360,313

Fund Balance, Beginning $ 3,557,370 $ 1,091,421 $ 4,648,791

Fund Balance, Ending $ 69,884 $ 1,099,500 $ 1,169,384

*Interfund adjustments are due to the nature of the component unit financial arrangement. The funds are shown in a blended presentation will causeoverstatement of the actual debt service payments and revenue in Capital Project Fund.

See accompanying notes to the financial statements

43

STATE COMPLIANCE REPORTING

9200 Watson Rd., Ste. G-IOSSt. Louis, MO 63126

mueller, Walla & ~lbert50n, ~.QC.

Certified Publie Accountants (314) 842-8844Fax (314) 842-2343

INDEPENDENT AUDITORS' REPORT ON MANAGEMENT'S ASSERTIONSABOUT COMPLIANCE WITH SPECIFIED REQUIREMENTS OF

MISSOURI LAWS AND REGULATIONSBoard of EducationValley Park School DistrictValley Park, Missouri

We have examined management's assertions, included in its representation letter datedDecember 20, 2011, that Valley Park School District complied with the requirements of MissouriLaws and Regulations regarding budgetary and disbursement procedures; accurate disclosure bythe District's attendance records of average daily attendance, resident membership on the lastWednesday of September, and the free and reduced lunch count on the last Wednesday ofJanuary, and accurate disclosure by the District's pupil transportation records of the average dailytransportation of pupils eligible and ineligible for state aid, the number of miles eligible andineligible for state aid and the allowable costs for pupil transportation during the year ended June30,2011. As discussed in that representation letter, management is responsible for the District'scompliance with those requirements. Our responsibility is to express an opinion onmanagement's assertions about the district's compliance based on our examination.

Our examination was made in accordance with attestation standards established by the AmericanInstitute of Certified Public Accountants and, accordingly, included examining, on a test basis,evidence about the District's compliance with those requirements and performing such otherprocedures as we considered necessary in the circumstances. We believe that our examinationprovides a reasonable basis for our opinion. Our examination does not provide a legaldetermination on the District's compliance with specified requirements.

In our opinion, management's assertions that Valley Park School District complied with theaforementioned requirements for the year ended June 30, 2011 and are fairly stated in all materialrespects.

This report is intended solely for the information of the Board of Education, Districtmanagement, the Missouri Department of Elementary and Secondary Education, Federalawarding agencies, and pass-through entities. It is not intended to be and should not be used byanyone other than these specified parties.

Mueller, Walla & Albertson, p.e.December 20, 2011


44

FEDERAL COMPLIANCE REPORTING

9200 Watson Rd., Ste. G-105St. Louis, MO 63126

mueller, Walla &: ~lbert50n, l'.Qt.Certified Public Accountants (314) 842-8844

Fax (314) 842-2343

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ONCOMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL

STATEMENTS PERFORMED IN ACCORDANCE WITHGOVERNMENTAUDITING STANDARDS


We have audited the financial statements of the governmental activities and each major fund andcomponent unit and aggregate remaining fund information of Valley Park School District, as ofand for the year ended June 30, 2011, which collectively comprise Valley Park School District'sbasic financial statements and have issued our report thereon dated December 20, 2011. In ourreport, on financial statements which were prepared on the cash basis of accounting which isanother comprehensive basis of accounting other than generally accepted accounting principlesaccepted in the United States of America, as described in Note 1 our opinion was unqualified.We conducted our audit in accordance with auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered Valley Park School District's internalcontrol over financial reporting as a basis for designing our auditing procedures for the purposeof expressing our opinions on the financial statements, but not for the purpose of expressing anopinion on the effectiveness of the Valley Park School District's internal control over financialreporting. Accordingly, we do not express an opinion on the effectiveness of the Valley ParkSchool District's internal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, toprevent, or detect and correct misstatements on a timely basis. A material weakness is adeficiency, or a combination of deficiencies, in internal control such that there is a reasonablepossibility that a material misstatement of the entity's financial statements will not be prevented,or detected and corrected on a timely basis.


45

Our consideration of internal control over financial reporting was for the limited purposedescribed in the first paragraph of this section and was not designed to identify all deficiencies ininternal control over financial reporting that might be deficiencies, significant deficiencies, ormaterial weaknesses. We did not identify any deficiencies in internal control over financialreporting that we consider to be material weaknesses, as defined above.

However, we identified certain deficiencies in internal control over financial reporting, describedin the accompanying schedule of findings and questioned costs that we consider to be significantdeficiencies in internal control over financial reporting (See reference numbers 2011-1 and 20112). A significant deficiency is a deficiency, or a combination of deficiencies, in internal controlthat is less severe than a material weakness, yet important enough to merit attention by thosecharged with governance.

We noted certain matters that we reported to management of Valley Park School District, in aseparate letter dated December 20, 2011.

Valley Park School District's response to the findings identified in our audit is described in theaccompanying schedule of findings and questioned costs. We did not audit Valley Park SchoolDistrict's response and, accordingly, we express no opinion on it.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Valley Park School District'sfinancial statements are free of material misstatement, we performed tests of its compliance withcertain provisions of laws, regulations, contracts and grant agreements, noncompliance withwhich could have a direct and material effect on the determination of financial statementamounts. However, providing an opinion on compliance with those provisions was not anobjective of our audit and, accordingly, we do not express such an opinion. The results of ourtest disclosed no instances of noncompliance or other matters that are required to be reportedunder Government Auditing Standards.


Mueller, Walla & Albertson, P.C.December 15, 2010

46

9200 Watson Rd. Ste. G-I0SCrestwood. MO 63126

;ffllueller, Walla &: ~lbert50n, ~.Qt.

Certified Public Accountants (314) 842-8844FAX (314) 842-2343

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTSTHAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR

PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE INACCORDANCE WITH OMB CIRCULAR A-133


Compliance

We have audited Valley Park School District's compliance with the types of compliancerequirements described in the United States Office of Management and Budget (OMB) CircularA-i33 Compliance Supplement that could have a direct and material effect on each of theDistrict's major federal programs for the year ended June 30, 2011. The Valley Park SchoolDistrict's major federal programs are identified in the summary of auditor's results section ofthe accompanying schedule of findings and questioned costs. Compliance with therequirements of laws, regulations, contracts and grants applicable to each of its major federalprograms is the responsibility of the District's management. Our responsibility is to express anopinion on Valley Park School District's compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally acceptedin the United States of America; the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States; andOMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.Those standards and OMB Circular A-133 require that we plan and perform the audit to obtainreasonable assurance about whether noncompliance with the types of compliance requirementsreferred to above that could have a direct and material effect on a major federal programoccurred. An audit includes examining, on a test basis, evidence about the Valley Park SchoolDistrict's compliance with those requirements and performing such other procedures, as weconsidered necessary in the circumstances. We believe that our audit provides a reasonablebasis for our opinion. Our audit does not provide a legal determination on Valley Park SchoolDistrict's compliance with those requirements.

In our opinion, the Valley Park School District complied, in all material respects, with therequirements referred to above that could have a direct and material effect on each of its majorfederal programs for the year ended June 30, 2011.

Internal Control Over Compliance

Management of Valley Park School District is responsible for establishing and maintainingMEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

MISSOURI SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

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effective internal control over compliance with the requirements of laws, regulations, contracts,and grants applicable to federal programs. In planning and performing our audit, we consideredValley Park School District's internal control over compliance with the requirements that couldhave a direct and material effect on a major federal program in order to determine our auditingprocedures for the purpose of expressing our opinion on compliance and to test and report oninternal control over compliance in accordance with OMB Circular A-133, but not for thepurpose of expressing an opinion on the effectiveness of internal control over compliance.Accordingly, we do not express an opinion on the effectiveness of Valley Park School District'sinternal control over compliance.

Our consideration of internal control over compliance was for the limited purpose described inthe preceding paragraph and was not designed to identify all deficiencies in internal control overcompliance that might be significant deficiencies or material weaknesses and therefore, there canbe no assurance that all deficiencies, significant deficiencies, or material weaknesses have beenidentified. However, as discussed below, we identified certain deficiencies in internal controlover compliance that we consider to be significant deficiencies.

A deficiency in internal control over compliance exists when the design or operation of a controlover compliance does not allow management or employees, in the normal course of performingtheir assigned functions, to prevent or detect and correct, noncompliance with a type ofcompliance requirement of a federal program on a timely basis. A material weakness in internalcontrol over compliance is a deficiency, or combination of deficiencies, in internal control overcompliance, such that there is a reasonable possibility that material noncompliance with a type ofcompliance requirement of a federal program will not be prevented, or detected and corrected, ona timely basis.

A significant deficiency in internal control over compliance is a deficiency, or a combination ofdeficiencies, in internal control over compliance with a type of compliance requirement of afederal 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. We consider thedeficiencies in internal control over compliance described in the accompanying schedule offindings and questioned costs as items reference numbers 2011-3 to be significant deficiencies.

Valley Park School District's responses to the findings identified in our audit are described in theaccompanying schedule of findings and questioned costs. We did not audit Valley Park SchoolDistrict's responses and, accordingly, we express no opinion on the responses.


~J 'W'oJJo., t~ f!C.Mueller, Walla & Albertson, P.C.December 20, 2011

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Valley Park School DistrictSchedule of Expenditures of Federal AwardsYear Ended June 30,2011

Federal GrantorPass-through Grantor

Program Title

U.S. Department of Education

ProgramsCFDANumber

Pass-ThroughEntity

IdentifyingNumbers Expenditures(1 )

84.010A 096-113 $ 294,61384.389A 096-113 38,71584.367A 096-113 42,72984.186A 096-113 66684.394 096-113 35,87284.397 096-113 21,93084.410A 096-113 72,821

84.048A ** 2,759

510,105

Total U.S. Department of Agriculture

Total Expenditures of Federal Awards

**Numbers unavailable

10.55310.55510.55610.550

096-113096-113096-113096-113

$

62,801190,959

1,56237,989

293,311

803,416

(1) This information has been prepared on a prescribed basis of accounting that demonstratescompliance with the cash basis and budget laws of the State of Missouri, which is acomprehensive basis of accounting other than generally accepted accounting principles.Food distribution are commodities received which are non-cash revenues which arevalued using prices provided by the United States Department of Agriculture.The information in this schedule is presented in accordance with the requirements of OMSCircular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore,some amounts presented in this schedule may differ from amounts presented in, or used in thepreparation of the basic financial statements.

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VALLEY PARK SCHOOL DISTRICTSchedule of Findings and Questioned Costs

For the Year Ended June 30, 2011

A. SUMMARY OF AUDIT RESULTS

1. The auditor's report expresses an unqualified opinion on the governmental activities,component units, each major fund and the aggregate remaining fund information ofValley Park School District that were prepared on the cash basis of accounting.

2. Significant deficiencies were disclosed during the audit of the financial statements arereported in the report on internal control over financial reporting and on complianceand other matters based on an audit or financial statements performed in accordancewith Government Auditing Standards. The significant deficiency was not considered amaterial weakness.

3. No instances of noncompliance material to the financial statements of Valley ParkSchool District, which would be required to be reported in accordance withGovernmental Auditing Standards, were disclosed during the audit.

4. Significant deficiencies in internal control over major federal award programsdisclosed during the audit is reported in the Independent Auditor's report oncompliance with the requirements that could have a direct and material effect on eachmajor program and on internal control over compliance in accordance with OMBCircular A-I33. The condition is not reported as a material weakness.

5. The auditor's report on compliance for the major federal award programs for ValleyPark School District expresses an unqualified opinion on all major federal programs.

6. Audit findings that are required to be reported in accordance with Section 510 (a) ofOMB Circular A-I33 are reported in the Schedule.

7. The programs tested as major programs include:

Basic Formula Stabilization ARRABasic Formula Stabilization ARRAFederal Education Jobs Fund ARRATitle ITitle I A ARRA

CFDA#84.394CFDA#84.397CFDA#84.4IOACFDA# 84.0IOACFDA# 84.389A

8. The threshold for distinguishing Type A and B programs was $300,000.

9. Valley Park School District was not determined to be a low-risk auditee.50


For the year ended June 30, 2011

B. FINDINGS - FINANCIAL STATEMENTS AUDIT

Finding 2011-1 Title I and Title I A ARRA - CFDA No. 84.010A and 84.389A, BasicFormula Stabilization- CFDA No. 84.394 and 84.397 and Federal Education Jobs FundARRA- CFDA No. 84.410A

Passed Through: Department of Elementary and Secondary Education 84.010A and 84.389A,84.394, 94.397 and 84.410A

Federal Agency: Department of Education

Criteria: Management is responsible for establishing and maintaining internal controls andfor the fair presentation of the financial position, results of operation and disclosures in thefinancial statements, in conformity with the cash basis of accounting. The School Districtdoes not have a system of internal controls that will enable management to conclude thefinancial statements and related disclosures are complete and presented in accordance withthe cash basis of accounting. As such, management requested us to prepare a draft of thefinancial statements, including the related footnote disclosures.

Condition: Management does not have a policy in place over annual financial reporting underthe cash basis of accounting; therefore, a potential exists that a material misstatement of thefinancial statements could occur and not be prevented by the District's internal controls.

Questioned Costs: None

Effect: No effect on these financial statements.

Cause: Management has not adopted a policy over the annual financial reporting under thecash basis of accounting; however, they have reviewed and approved the financial statementsas prepared by the audit firm.

Recommendation: Management should continue to evaluate their internal staff and expertiseto determine if an internal control policy over financial reporting is beneficial or necessary.

Management's Response: Management reviews structure periodically, but due to financialand staff size there will be no change currently in the duties of personnel. We mitigate theissue by several levels of approvals for transactions.

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B. FINDINGS - FINANCIAL STATEMENTS AUDIT (Continued)


Criteria: SAS No. 55, Consideration ofInternal Control in a Financial Statement Audit asamended by SAS No. 78, Consideration ofInternal Control in a Financial Statement Audit:An Amendment to SAS No. 55.

Condition: Lack of Sufficient segregation of duties.

Questioned Cost: None

Effect: The design of the internal control over financial reporting that could adversely affectthe ability to record, process, summarize, and report financial data consistent with theassertions of management in the financial statements.

Cause: Size and budget constraints limiting the number of personnel within the accountingdepartment.

Recommendation: These areas should be reviewed periodically and consideration given toimproving the segregation of duties.

Management's Response: The size and limited resources of the school district limits theapplication of these principles, however, we attempt to, with the limited personnel available,diversify responsibilities in matters of ordering supplies via a computerized purchase ordersystem. Building secretaries enter purchase orders from requisitions completed by teachers.Principals approve the purchase order and send to the superintendent for approval. Theaccounts payable employee prints and mails the purchase order. Merchandise is received inthe Business Office and distributed. The teacher verifies the order and indicates approval topay on the packing slip. Accounts payable then sets up payment for the invoice, cuts thecheck, verifies check to invoice and mails payment after the Board of Education approval.All payroll requisition/time cards are approved by the supervisor. Payroll is done by theDirector of Business. Moneys received by the District are received and accounted for, andreceipted by the Director of Business. All revenues and disbursements for the month arereviewed by the superintendent.

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c. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAMSAUDIT


Significant deficiency. As Discussed in finding 2011-01 and 2011-02, the Districthas a lack of sufficient reporting under the cash basis of accounting andsegregation of duties.

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$2,250,000 valley park school district general …to the approval of validity by gilmore & bell,...

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