ABC Unified School District

1. ABC Unified School District Board of Education Meeting July 15, 2014 Bond Resolution ToanNguyen, Assistant Superintendent-Business Services/Chief Financial Officer Mark Farrell, Senior Financial Advisor, Dale Scott & Company Don Field, Partner, Orrick, Herrington, Sutcliffe LLP

2. PROCESS AND TIMELINE

3. PROCESS AND TIMELINE

4. The 1997 Bond 1997 Election - Yes Vote: 68.2% (Approved as a “Two-Thirds” Bond) • Authorized $59M • Including State Facilities Matching Fund and Other District funding sources, the old modernization project was approximately $135 M • $42M Outstanding, will be paid off by 2034 • Approximately $28 per 100,000 Assessed Value Tax Rate • Two refundings, saving the taxpayers more than $2M.

5. The 1997 Bond Modernization Architectural and Structural • Replace roofing and repair canopies • Abate asbestos and lead • Upgrade restrooms, replace toilet partition and restroom hardware • Re-paint & re-carpet Mechanical Systems • Replace heating ventilation and air-conditioning units • Provide solid state energy management system

6. The 1997 Bond Modernization Plumbing Systems • Replace galvanized piping and exterior hose bibs • Evaluate and add hydrants per code • Replace drinking fountains and plumbing accessories • Correct drainage and replace drains • Correct irrigation with replacement of sprinkler heads, re-plumbing, timer and shut off valves Electrical Systems and Low Voltage • Provide new power distribution • Replace technology distribution system and re-cable all classrooms • Replace light fixtures with T-8 lamps • Install emergency lighting • Provide standardize Fire Alarm Systems • Replace intrusion detection system

7. 2014 Possible Bond Survey In February, 2014, a survey of 500 registered voters was conducted over a seven day period A telephone survey of 500 likely voters (those having voted in Nov. 2012 and voted in either Nov. 2002, Nov. 2006, Nov. 2010 or June 2012) was conducted between February 21, 2014 and February 27, 2014. Surveys were conducted during the weekday in the evenings, and on the weekend both in the morning and evening. The average length of the bond survey was about 8.70 minutes. Margin of error for the bond survey is +/- 4.33%.

8. Results The G.O. bond measure received 72.2% (Yes/Lean Yes) support before voters received information and remained at 72.2% after voters received additional information There was strong voter support for all of the projects tested (More/Somewhat More Likely) Bond measure size still to-be-determined, survey based on 3.5% annual assessed value growth and a $59/$100,000 tax rate Voters in the District indicate strong support for a local school improvement bond program 2014 Possible Bond Survey

9. Current Facilities/Technology Needs Estimated CostCumm. Est. Cost • Safety and Security $ 18,473,709 $ 18,473,709 • Basic Facilities Needs $ 71,701,635 $ 90,175,344 • STEM/Science Initiative $ 4,496,678 $ 94,672,022 • Access to Modern Technology: A. Baseline Technology $ 85,410,038 $180,082,060 B. 21st Century Infrastructure $ 92,702,022 $272,784,082 • Parity (Transform) $ 73,921,894 $346,705,976 • Future Project Phase $298,428,492 $645,134,468

10. From great… • Cerritos HS • Stowers ES • Nixon ES

11. Exceptional … to • Classroom Inspiration • Library Media Inspiration

12. Safety and Security • Improved School Drop-off Area • Cerritos ES • Congestion

13. Basic Facilities Needs • Bragg ES • Current Playground • Playground Surface Inspiration

14. Basic Needs Continued • Bragg ES • Current Pergola • Shaded Lunch Area Inspiration

15. Basic Needs Continued • Cerritos HS • Typical Classroom Configuration • Inspiration Classroom

16. STEM and Science Initiative • Cerritos HS • Current Science Lab • Science Lab Inspiration

17. Access to Modern Technology • Cerritos HS Current Technology • Technology Center Inspiration

18. Access to Technology Continued • Melbourne ES • Current Technology • Inspirational Technology Access

19. Parity and Transformation • Aloha ES • Portable Classroom • Exterior Inspiration

20. FACILITIES FUNDING SOURCES

21. Proposition 39 Overview Constitutional amendment passed in 2000, lowering voter approval threshold for school district G.O. bonds to 55% What can be financed? Limitations and Requirements 2/3rd approval by school board More specific project list Regular elections only $60 per $100,000 of Assessed Value (not Market Value) tax rate limit for unified school districts Annual financial and performance audits Citizen oversight committee • Acquisition of real property • Construction, renovation or replacement of school facilities • Furnishing and equipping of school facilities

22. LA County Unified School Districts Tax Rates 2013/14 Tax Rates per $100,000 of Assessed Value

23. LA County Unified Districts Bond Dollars per Student Cumulative Bond Authorizations Per Student (at time of Election) ABC has the lowest bond authorization amount per Student in the County

24. Assessed Value History Total Assessed Value 2.9% 2.0% 6.6% 2.1% -1.9% -1.1% 7.1% 8.2% 8.8% 6.5% 7.0% 4.9% 4.8% Assessed Value (billions) 7.8% 4.3% 1.3% 2.4% 0.7% 3.9% -0.4% 0.7% 6.4% 8.3% 9.1% 10.6% 4.3% Fiscal Year Note: Annual percentage changes listed above assessed value figures

25. Bond Sizing Analysis Bond authorization amount determined by project needs and capacity of tax base • New Bond Authorization Overview • Will fully comply with AB 182 • Would not require the use of Capital Appreciation Bonds • Uses reasonable AV growth projections in order to not “over promise” voters • Assumptions: • Three financings: 2015, 2018, and 2021 • 30-year amortization, Current Interest Bonds Only • Current interest rates: 4.5% • 3.5% annual assessed value growth For a property with a Assessed Value (not Market) of $300,000, the additional tax will be $180 per year, or 49 cents a day.

26. Additional Tax per Household

27. Additional Tax per Household Assuming the AV will increase by 2 percent per Proposition 13 limitation

28. ADA & Enrollment - 10 years

29. Hypothetical Bond Fund Allocation by Student(Actual Bond Allocation will be determined by future Board actions)

30. Hypothetical Bond Fund Allocation by Student(Actual Bond Allocation will be determined by future Board actions)

31. Citizen Oversight Committee • Formed within 60 days of school board acknowledging election results • Independent committee, no District employees or officials, vendors, contractors or consultants • Minimum of seven members and include: • Member of business organization • Member of senior citizen organization • Member of bona fide taxpayers organization • Parent of a child enrolled in district • Parent of a child enrolled in district and active in parent-teacher organization • Reviews bond expenditures for compliance with Bond Project List • Reviews bond expenditures for compliance with Bond Project List

32. Bond Audits • Annual Performance Audit • Independent audit to ensure bond proceeds expended only upon projects listed in Bond Project List • Annual Financial Audit • Independent audit of financial statements related to bond proceeds and expenditures • Audits must be submitted to Citizen Oversight Committee and made publically available • Audits must be conducted according to Government Audit Standards issued by Comptroller General of the United States

33. Bond Resolution • The Board can not, nor have the authority to raise tax. • By passing the Bond Resolution, the Board is placing a school bond measure to a vote. This will give voters a chance to approve or reject the school bond. • The voters will decide on the bond measure. • Must have at least 55 percent approval from voters. • Bond money can not be used for salaries.

34. NEXT STEPS

35. ABC Unified School District