Illinois County School Facility Tax Public Act 97-0542

1. Illinois County School Facility Tax Public Act 97-0542 Presentation to McLean County School Districts February 19, 2013

2. Presented by Stifel, Nicolaus & Co., Inc. Jim Burgett First Vice President 618-830-9782 burgettj@stifel.com Anne Noble Senior Vice President 800-230-5151 x8488 noblea@stifel.com Kevin Heid Senior Vice President 309-661-0004 heidk@stifel.com Mary C. Kane Senior Vice President 618-692-4306 kanem@stifel.com Sean McCarthy First Vice President 800-230-5151 x2737 mccarthys@stifel.com Tom Crabtree First Vice President 800-230-5151 x8457 crabtreet@stifel.com 70 West Madison Street, Suite 2400, Chicago, Illinois 60602 Telephone: 312/269-0329 501 North Broadway, St. Louis, Missouri, 63102 Telephone: 314/342-2993 2101 Eastland Drive, Suite B, Bloomington, Illinois 61704 Telephone: 309/661-0004

3. Stifel NicolausThe Illinois K-12 Finance Resource Who we are: • It’s pronounced Stee-fuhl • Stifel Nicolaus is a national brokerage firm and a leader in Illinois bond underwriting with 24 offices in Illinois alone • Stifel focuses on Illinois K-12 finance • We provide full service financing from financial planning and referendum assistance to ultimately delivering the lowest cost financing on bond sales • Expert resource on Illinois K-12 bond financing (Health Life Safety, General Obligation, Working Cash, etc.) including County School Facilities Sales Tax issues • Stifel has created and produced a complimentary informational sales tax video for Illinois schools to help begin discussions on the topic in community forums We hope that your District will allow Stifel Nicolaus the opportunity to prove our ability to better serve your District the next time you are considering a bond financing

4. Nontraditional Approach for Illinois Public Schools • Sales tax vs. Real Estate tax for school capital • Allows county voters to approve a sales tax to fund school facility costs • 1% maximum in ¼% increments • Law went into effect October 2007 • Law was based on similar law that is currently in place in every county in Iowa • Law was amended in August 2011 • County Board no longer has to approve the tax

5. Illinois County School Facility Tax Act:Election Results and Future Votes X Counties where the CSFT has passed X X X X X Counties where the CSFT failed in the November 2008 (X),April 2009 (X), February 2010 (X), November 2010 (X), April 2011 (X) Elections, March 2012 (X) Elections and November 2012 (X)Elections X X X X X X X X X X X X X X X X X Counties where the CSFT election is being voted on April 2013 X X X X X X X X X X

6. Low Impact on Key Business and Fixed Income Persons • Sales Tax Base: • Everything in the municipal and county sales tax base is included in the tax base except for: • Cars, Trucks, ATVs • Boats & RVs • Mobile homes • Unprepared Food • Drugs (including over-the-counter and vitamins) • Farm Equipment and Parts • Farm Inputs • “If it is not currently taxed, it will not be taxed”

7. Use of Sales Tax Revenues

8. How to Use Sales Taxes • Pay as you go capital projects • Sales tax can be saved up over time • Issue new bonds for current capital needs • Support bonds with sales tax • Retire existing debt issued for capital purposes • Abate taxes • Refund qualifying debt • ………Or any combination of the above Interest on money received on a monthly basis and reserved for bond payments or future construction projects may be transferred to the General Fund… Education & Operation and Maintenance Fund

9. Benefit to Property Taxes Two Ways to Decrease Property Taxes • Reduce: A district can abate or decrease existing property taxes by using sales tax funds to pay off outstanding building bonds. • Property taxes reduced on residential, commercial and industrial properties • Avoidance: A district can avoid levying property taxes by using sales tax funds to pay for facility projects that would have been paid for with property taxes

10. D R A F T The Money Follows the Student

11. Local Sales Tax Rates

12. How to Place Before Voters? • School boards pass a resolution • When School Boards representing more than 50% of the resident student enrollment in the county adopt resolutions, the Regional Superintendent must certify the question to the County clerk • County Clerk will place on the ballot at the next regularly scheduled election

13. Required Language on the Ballot • Ballot Language (cannot change): Shall a retailer’s occupation tax and a service occupation tax (commonly referred to as a “Sales Tax”) be imposed in (name of county) at a rate of (insert rate) to be used exclusively for school facility purposes?

14. Passing the Vote and Receipt of Revenues • Simple majority of votes cast needed to pass • After approval by the voters, the tax will be imposed • The ordinance and the election results must • Be certified by the County Clerk • Filed with the Illinois Department of Revenue • Money is received monthly beginning approximately four months after the tax goes into effect • The money follows the student

15. Distribution of Sales Tax R.O.E. Distributed by R.O.E. on a per resident-pupil basis 2% withheld by IL Dept. of Revenue - Same as all sales taxes The money follows the student

16. Timeline is Critical

17. Keys to Success • Time is your most important asset – don’t waste it • Unified support (as much as possible) for CSFT from all districts • ALL DISTRICTS must communicate the message about what CSFT is and how it would benefit their district • Someone has to take ownership and lead the effort • Develop county-wide leadership and communication • Putting the question on the ballot is not enough – must EDUCATE voters – A LOT

18. It’s Different Because… Communication challenges • Unfamiliar type of school funding • Need to keep referendum from being indentified with a single district • Targeting of messages more important

19. It’s Different Because… Organization, Strategy are more complicated • Politics more involved • Coordinating multiple districts a challenge

20. It’s Different Because… Opposition more likely • Sales tax referenda often attract organized opposition • County/cities/districts might oppose referendum Fundraising more challenging • Especially if revenue to be used only for property tax relief

21. It’s Like a District Referendum… • Time is your most important asset – don’t waste it • Build foundation from community engagement – win before you begin • Develop community-wide leadership • Unity among school districts/key stakeholders • Someone has to take ownership

22. It’s Like a District Referendum… • Strong campaign leadership/doers not thinkers • District leadership commitment to helping with fundraising, grassroots effort and informational communications • Discipline – everyone works the plan • Successful fundraising

23. Pitfalls to Avoid • Opposition from a school district • Lack of cooperation from districts • No cat herder • Not adhering to message • Engaging opposition • Inability to raise money • No plan • Deviation from the plan

24. Introductory Video Below is a link to a 10 minute video that gives a non-technical introduction to the basics of the County School Facilities Sales Tax and how it has been used across the State. http://www.youtube.com/watch?v=Mv9LmF6baMM

25. Key Resources

26. Important Disclosures and Certifications Pursuant to revised Municipal Securities Rulemaking Board (“MSRB”) Rule G-23 (the “Rule”), in connection with new issues for which the Time of Formal Award occurs after November 27, 2011, a broker, dealer, or municipal securities dealer (“dealer”) is prohibited from acting as a Financial Advisor or Municipal Advisor, as defined in Section 15B of the Exchange Act of 1934 (as amended), to an issuer for a particular issue sold on a negotiated or competitive bid basis and subsequently switching roles to act as underwriter or placement agent with respect to the same issue. In compliance with the rules set forth by the MSRB, Stifel, Nicolaus & Company, Inc. (“Stifel”) is acting as an underwriter or placement agent and not a Financial Advisor or Municipal Advisor in connection with all services proposed and/or provided. MSRB Notice 2011-29 (the “Notice”) defines as “underwritings” both (i) the acquisition of all or any portion of an issue, directly or indirectly, from the issuer as principal, either alone or as a participant in a syndicate or other similar account formed for that purpose and (ii) acting as an agent for the issuer in arranging the placement of an issue. Additionally, the MSRB defines the role of an underwriter in the Notice, which states, “the primary role of an underwriter is to purchase securities in an arm’s-length commercial transaction between the issuer and the underwriter” and, “the underwriter has financial and other interests that differ from those of the issuer.” Furthermore, the Rule states that an underwriter may provide advice concerning the structure, timing, terms, and other similar matters related to the issuance of municipal securities to the extent the underwriter discloses that such advice is provided with respect to the underwriting and not in relation to a financial advisory relationship, as specifically defined in the Rule. Accordingly, any such services provided by Stifel as they relate to our role as underwriter or placement agent should not be construed as those of a Financial Advisor or Municipal Advisor and such notice, as described above, is hereby provided as set forth in the Rule. Additional information is available upon request Stifel, Nicolaus & Company, Inc., 501 N. Broadway, St. Louis, MO 63102

27. This presentation contains proprietary information compiled by Stifel Nicolaus. Reproductions can be made with permission from Stifel Nicolaus. Please call Tom Crabtree for permission at 1(800) 230 5151 Extension 8457 THANKS