FAYETTE COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION

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1 This Preliminary Official Statement has been prepared for submission to prospective bidders for the Series 2015 Bonds herein described and is in a form deemed final by the Corporation for purposes of SEC Rule 15c2-12(b)(1), but is subject to revision, amendment and completion in a final Official Statement. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2015 Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED AUGUST 26, 2015 (Series 2015B Bonds to be sold September 2, 2015 at 11:30 a.m. EDT; Series 2015A Bonds to be sold September 2, 2015 at Noon EDT) In the opinion of Bond Counsel, subject to the conditions set forth in Tax Matters herein, under existing laws, interest on the Series 2015 Bonds is excluded from gross income for federal and Kentucky income tax purposes and is not an item of tax preference for purposes of computing the federal alternative minimum tax. Bond Counsel is further of the opinion that the Series 2015 Bonds are exempt from ad valorem taxation by the Commonwealth of Kentucky and its political subdivisions. See Tax Matters herein. New Issue Ratings: Moody s ( Moody s Underlying) S&P (See Ratings Herein) FAYETTE COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION $34,325,000* SCHOOL BUILDING REFUNDING REVENUE BONDS, SERIES 2015A $37,245,000* SCHOOL BUILDING REFUNDING REVENUE BONDS, SERIES 2015B Dated: Date of Delivery Bonds Due: as identified herein The School Building Refunding Revenue Bonds, Series 2015A (the Series 2015A Bonds ) and the School Building Refunding Revenue Bonds, Series 2015B (the Series 2015B Bonds and, together with the Series 2015A Bonds, the Series 2015 Bonds ) will be issued initially in book-entry form only, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Series 2015 Bonds. Purchasers will not receive certificates representing their ownership interest in the Series 2015 Bonds. Accordingly, principal and interest on the Series 2015 Bonds will be paid by Branch Banking and Trust Company, Wilson, North Carolina, as Paying Agent and Bond Registrar, directly to DTC or Cede & Co., its nominee. DTC will in turn remit such principal or interest to the DTC Participants (as defined herein) for subsequent distribution to the Beneficial Owners (as defined herein) of the Series 2015 Bonds. The Series 2015 Bonds will be issuable in denominations of $5,000 or any integral multiples thereof, fully registered as to both principal and interest. Interest on the Series 2015A Bonds is payable semi-annually on each February 1 and August 1, commencing on February 1, Interest on the Series 2015B Bonds is payable semi-annually on each May 1 and November 1, commencing on November 1, The Series 2015 Bonds will mature * on the respective dates as shown on the inside cover of this Official Statement. The Series 2015A Bonds maturing on and after August 1, 2026 are callable on and after August 1, 2025 at par as described herein. The Series 2015B Bonds maturing on and after May 1, 2026 are callable on and after November 1, 2025 at par as described herein. The Series 2015 Bonds are offered, subject to prior sale, when, as and if issued by the Corporation, subject to prior approval of legality by Stoll Keenon Ogden PLLC, Louisville, Kentucky, Bond Counsel. Certain legal matters will be passed on by George F. Allgeier, Jr., Special Counsel to the Fayette County Board of Education. Delivery of the Series 2015B Bonds is expected on or about September 23, Delivery of the Series 2015A Bonds is expected on or about September 30, * Preliminary, subject to adjustment. J.J.B. HILLIARD, W.L. LYONS, LLC Louisville, Kentucky Financial Advisor

2 MATURITY SCHEDULES $34,325,000 * FAYETTE COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION SCHOOL BUILDING REFUNDING REVENUE BONDS, SERIES 2015A (First Interest Payment Due February 1, 2016) The Series 2015A Bonds will mature * on the respective dates set forth below as follows: CUSIP # Maturity Date Principal Amount* Interest Rate Yield/ Price CUSIP # Maturity Date Principal Amount* Interest Rate 8/1/16 $1,895,000 % 8/1/24 $2,335,000 % 8/1/17 1,930,000 8/1/25 $2,400,000 8/1/18 1,970,000 8/1/26 $2,470,000 8/1/19 2,015,000 8/1/27 $2,540,000 8/1/20 2,075,000 8/1/28 $2,615,000 8/1/21 2,135,000 8/1/29 $2,695,000 8/1/22 2,200,000 8/1/30 $2,780,000 8/1/23 2,270,000 Yield/ Price $37,245,000 * FAYETTE COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION SCHOOL BUILDING REFUNDING REVENUE BONDS, SERIES 2015B (First Interest Payment Due November 1, 2015) The Series 2015B Bonds will mature * on the respective dates set forth below as follows: CUSIP # Maturity Date Principal Amount* Interest Rate Yield/ Price CUSIP # Maturity Date Principal Amount* Interest Rate 5/1/16 $730,000 % 5/1/22 $1,030,000 % 5/1/17 235,000 5/1/23 1,035,000 5/1/18 500,000 5/1/24 4,240,000 5/1/19 510,000 5/1/25 4,335,000 5/1/20 520,000 5/1/26 11,395,000 5/1/21 970,000 5/1/27 11,725,000 Yield/ Price * Preliminary, subject to adjustment. Copyright 2015, American Bankers Association. CUSIP data herein is provided by CUSIP Global Services managed by Standard & Poor s Financial Services LLC on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for CUSIP Global Services. CUSIP Numbers are provided for convenience of reference only. Neither the Board,the Corporation, the Financial Advisor, the Underwriter nor Bond Counsel take any responsibility for the accuracy of such numbers. - ii -

3 FAYETTE COUNTY SCHOOL DISTRICT FINANCE CORPORATION Corporation Directors and Officers John D. Price - President and Director Melissa Bacon - Vice President and Director Doug Barnett - Director Amanda Ferguson - Director Daryl Love - Director Emmanuel Manny Caulk - Secretary Myron Q. Thompson - Treasurer FAYETTE COUNTY BOARD OF EDUCATION Board Members John D. Price, Chairperson Melissa Bacon, Vice Chairperson Doug Barnett Amanda Ferguson Daryl Love Emmanuel Manny Caulk, Superintendent and Secretary Myron Q. Thompson, Acting Senior Director of Operations and Support Rodney Jackson, Director of Financial Services Julie Meulendyke, Construction Accounting Manager BOND COUNSEL Stoll Keenon Ogden PLLC Louisville, Kentucky FINANCIAL ADVISOR J.J.B. Hilliard, W.L. Lyons, LLC Louisville, Kentucky PAYING AGENT AND BOND REGISTRAR Branch Banking and Trust Company Wilson, North Carolina - iii -

4 REGARDING USE OF THIS OFFICIAL STATEMENT This Official Statement does not constitute an offering of any security other than the original offering of the Series 2015 Bonds of the Fayette County School District Finance Corporation (the Corporation ) and the Board of Education of Fayette County (the Board ) referred to on the cover page hereof. No person has been authorized by the Corporation or the Board to give any information or to make any representation other than that contained in this Official Statement, and if given or made such other information or representation must not be relied upon as having been given or authorized by the Corporation, the Board or the Financial Advisor. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Series 2015 Bonds by any person in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. 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 affairs of the Corporation or the Board since the date hereof. The price and other terms respecting the offering and sale of the Series 2015 Bonds may be changed from time to time by the underwriter after the Series 2015 Bonds are released for sale, and the Series 2015 Bonds may be offered and sold at prices other than the initial offering price, including sales to dealers who may sell the Series 2015 Bonds into investment accounts. All quotations from and summaries and explanations of provisions of laws and documents herein do not purport to be complete, and reference is made to such laws and documents for full and complete statements of their provisions. The information in this Official Statement has been obtained from sources which are considered reliable and which are customarily relied upon in preparation of similar official statements, but such information is not guaranteed as to accuracy or completeness. The Series 2015 Bonds will not be registered under the Securities Act of 1933, as amended, or any state securities laws and will not be listed on any stock or other securities exchange, and neither the Securities and Exchange Commission nor any federal, state, municipal or other governmental agency other than the Corporation or the Board will pass upon the accuracy, completeness or adequacy of this Official Statement. All financial and other information presented in this Official Statement has been provided by the Corporation and the Board from their records, except for information expressly attributed to other sources. The presentation of information, including tables of receipts and other sources, is intended to show recent historic information, and is not intended to indicate future or continuing trends in the financial position or other affairs of the Corporation or the Board. No representation is made that past experience, as is shown by that financial and other information, will necessarily continue or be repeated in the future. Insofar as the statements contained in this Official Statement involve matters of opinion or estimates, even if not expressly stated as such, such statements are made as such and not as representations of fact or certainty, no representation is made that any of such statements have been or will be realized, and such statements should be regarded as suggesting independent investigation or consultation of other sources before the making of investment decisions. Certain information may not be current; however, attempts were made to date and document sources of information. Neither this Official Statement nor any oral or written representations by or on behalf of the Corporation or the Board preliminary to the sale of the Series 2015 Bonds should be regarded as part of the Corporation s contract with the successful bidder or the holders from time to time of the Series 2015 Bonds. References herein to provisions of Kentucky law, whether codified in the Kentucky Revised Statutes or uncodified, or to the provisions of the Kentucky Constitution, are references to such provisions as they presently exist. Any of these provisions may from time to time be amended, repealed or supplemented. - iv -

5 TABLE OF CONTENTS Introductory Statement... 1 Book Entry and DTC... 1 The Series 2015 Bonds... 4 Fayette County (Kentucky) School District Finance Corporation... 5 Board of Education of Fayette County... 5 Authority and Security... 6 State Intercept... 8 Kentucky School Facilities Construction Commission (Series 2015B Bonds)... 8 The Refunding Plans... 8 Disposition of Series 2015 Bond Proceeds Miscellaneous Resolution and Lease Provisions State Support for Education Kentucky Department of Education Supervision Biennial Budget for Period Ending June 30, Revenue Sources within the Fayette County School District State and Local Tax Limitations Employee Pensions Tax Matters Pending Legislation Legal Matters Continuing Disclosure Undertakings Material Litigation Verification of Mathematical Accuracy (Series 2015B Bonds) Underwriting Financial Advisor Ratings Reference to Documents Miscellaneous Appendix A: Appendix B: Appendix C: Appendix D: Tax Base and Operating Data Outstanding Bonds of the District Demographic and Economic Data Estimated District Debt Service Requirements on Series 2015A Bonds, Estimated Commission and District Debt Service Requirements on Series 2015B Bonds, and Estimated Total Annual District Debt Service Requirements Appendix E: Audited Financial Statements for the Year Ended June 30, 2014 Appendix F: Forms of Bond Counsel Opinions Page - v -

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7 OFFICIAL STATEMENT Relating To FAYETTE COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION $34,325,000 * SCHOOL BUILDING REFUNDING REVENUE BONDS, SERIES 2015A $37,245,000 * SCHOOL BUILDING REFUNDING REVENUE BONDS, SERIES 2015B INTRODUCTORY STATEMENT This Official Statement, including the cover pages, is furnished in connection with the offering of the $34,325,000 * principal amount of School Building Refunding Revenue Bonds, Series 2015A (the Series 2015A Bonds ) and $37,245,000 * principal amount of School Building Refunding Revenue Bonds, Series 2015B (the Series 2015B Bonds and, together with the Series 2015A Bonds, the Series 2015 Bonds ), of the Fayette County School District Finance Corporation (the Corporation ). The Series 2015 Bonds will be issued under and in compliance with the laws of the Commonwealth of Kentucky (the Commonwealth ), including among others Sections through and of the Kentucky Revised Statutes (the Act ), and in accordance with the Series 2015 Bond Resolutions (as defined below) adopted by the Board of Directors of the Corporation. Also, the Board of Education of Fayette County, Kentucky (the Board ), has adopted separate resolutions approving and directing the issuance of each series of the Series 2015 Bonds by the Corporation. Before the issuance of the Series 2015 Bonds, the Board will execute a Continuing Disclosure Certificate with respect to each series of the Series 2015 Bonds (collectively, the Continuing Disclosure Certificates ) regarding its obligations to make continuing annual disclosure of certain financial and operating information and disclosure of certain events which might occur, all as described hereinafter under the heading CONTINUING DISCLOSURE UNDERTAKINGS. The Series 2015 Bonds will be issued initially only in book-entry form in the name of Cede & Co., a nominee of The Depository Trust Company, New York, New York ( DTC ), as securities depository. No physical delivery of the Series 2015 Bonds will be made to purchasers. SO LONG AS CEDE & CO., AS NOMINEE OF DTC, IS THE REGISTERED OWNER, REFERENCES TO BONDHOLDERS, REGISTERED HOLDERS OR OWNERS SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE SERIES 2015 BONDS. See BOOK ENTRY AND DTC. The Paying Agent and Bond Registrar for the Series 2015 Bonds is Branch Banking and Trust Company, Wilson, North Carolina (being referred to herein as the Paying Agent and Bond Registrar ). There follows brief descriptions of the Corporation and the Board, the Refunding Plans (as defined below), the Series 2015 Bonds, the Series 2015 Bond Resolutions and related documents, and the Continuing Disclosure Certificates, together with the Appendices containing financial and other information with respect to the Board. All descriptions contained herein of the Series 2015 Bonds, the Series 2015 Bond Resolutions and related documents, and the Continuing Disclosure Certificates do not purport to be comprehensive or definitive and are qualified in their entirety by reference to such documents, all of which are available for inspection at the office of the Board in Lexington, Kentucky. BOOK ENTRY AND DTC The following information regarding DTC and Cede & Co. will be applicable to the Series 2015 Bonds as long as a book-entry system is utilized. The Corporation does not assume any responsibility for the accuracy or completeness of the information set forth under this heading BOOK ENTRY AND DTC, and the Corporation is not required to supervise, and will not supervise, the operation of the book-entry system described herein. The following information concerning DTC and DTC s book-entry system has been obtained from DTC and contains statements that are believed to describe accurately DTC, the method of effecting book-entry transfers of securities distributed through DTC and certain related matters. * Preliminary, subject to adjustment. 1

8 DTC will act as securities depository for the Series 2015 Bonds. The Series 2015 Bonds will be issued as fullyregistered 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 Series 2015 Bonds, in the aggregate principal amount of each maturity, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 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 bond 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 whollyowned 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 and Purchases of the Series 2015 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2015 Bonds on DTC s records. The ownership interest of each actual purchaser of each Series 2015 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 Series 2015 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 Series 2015 Bonds, except if use of the book-entry system for the Series 2015 Bonds is discontinued. To facilitate subsequent transfers, all Series 2015 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 the Series 2015 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 Series 2015 Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Series 2015 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2015 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2015 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the bond documents. For example, Beneficial Owners of the Series 2015 Bonds may wish to ascertain that the nominee holding the Series 2015 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 Bond Registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2015 Bonds of a maturity are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in the maturity to be redeemed. 2

9 Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2015 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 Corporation 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 the Series 2015 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds and principal and interest payments on the Series 2015 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 Corporation or the Paying Agent and Bond Registrar, on the payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Paying Agent and Bond Registrar, or the Corporation, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest on the Series 2015 Bonds and proceeds of redemptions of the Series 2015 Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Corporation or the Paying Agent and Bond Registrar, 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. THE CORPORATION AND THE PAYING AGENT AND BOND REGISTRAR WILL HAVE NO RESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE PAYING AGENT AND BOND REGISTRAR AS BEING A REGISTERED OWNER WITH RESPECT TO: (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (2) THE PAYMENT OF ANY AMOUNT DUE BY DTC TO ANY DIRECT PARTICIPANT OR BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OR REDEMPTION PRICE OF OR INTEREST ON ANY SERIES OF THE SERIES 2015 BONDS; (3) THE DELIVERY OF ANY NOTICE BY DTC TO ANY DIRECT PARTICIPANT OR BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED TO BE GIVEN TO REGISTERED OWNERS UNDER THE TERMS OF THE RESPECTIVE SERIES 2015 BOND RESOLUTION FOR SUCH SERIES OF THE SERIES 2015 BONDS; (4) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF ANY SERIES OF THE SERIES 2015 BONDS; OR (5) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS REGISTERED OWNER. The securities depository may discontinue providing its services with respect to any series of the Series 2015 Bonds at any time by giving thirty days notice to the Corporation and the Paying Agent and Bond Registrar and discharging its responsibilities with respect thereto under applicable law. If no successor securities depository is appointed in accordance with the applicable Series 2015 Bond Resolution, or if the Corporation decides to discontinue the book-entry-only system, certificates for the respective series of Series 2015 Bonds shall be printed and delivered to and registered in the name of the Beneficial Owners. If the book-entry-only system is discontinued, a Bondholder may transfer or exchange any Series 2015 Bond in accordance with the applicable Series 2015 Bond Resolution. The Paying Agent and Bond Registrar may require a Bondholder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the applicable Series 2015 Bond Resolution. The Paying Agent and Bond Registrar shall not be required to transfer or exchange any Series 2015 Bond (a) during any period beginning five days before the selection by the Paying Agent and Bond Registrar of Series 2015 Bonds to be redeemed before maturity and ending on the date of mailing of notice of any such redemption or (b) if such Series 2015 Bond has been selected or called for redemption in whole or in part. 3

10 THE SERIES 2015 BONDS The Series 2015A Bonds The Series 2015A Bonds will be dated the date of delivery (anticipated to be on or about September 30, 2015), will be issued initially in book-entry form in the principal amount of $34,325,000 * and in denominations of $5,000 or any integral multiples thereof, will mature as to principal on August 1, 2016, and thereafter on each August 1 until final maturity on August 1, 2030, and will bear interest as set forth on the inside cover page of this Official Statement. The Series 2015A Bonds maturing on and after August 1, 2026, are subject to redemption by the Corporation, at its option, before maturity on and after August 1, 2025, in whole or in part at any time or times in any order of maturity (less than all of a single maturity to be selected by lot by the Paying Agent and Bond Registrar) at the redemption price of 100% of the principal amount thereof plus accrued interest to the redemption date. Not less than thirty days nor more than sixty days before the redemption date of the Series 2015A Bonds, the Paying Agent and Bond Registrar is required to cause a notice of redemption to be mailed postage prepaid by first class United States mail to all registered holders of the Series 2015A Bonds to be redeemed in whole or in part at their registered addresses, and any notice so mailed shall be conclusively presumed to have been duly given whether or not received by the registered holder. Failure to mail any notice or any defect in any notice with respect to the Series 2015A Bonds shall not affect the validity of the redemption of any of the Series 2015A Bonds. Such redemption notice must set forth the details with respect to the redemption. Interest accruing on the Series 2015A Bonds shall be payable semiannually on February 1 and August 1 of each year (commencing February 1, 2016) from the date of delivery or the most recent interest payment date to which interest has been paid or duly provided for. The interest installments on the Series 2015A Bonds will be paid to the person who is the registered holder thereof as of the close of business on the Record Date for such interest installment, which Record Date shall be the 15th day (whether or not a business day) of the calendar month next preceding such interest payment date. Payment of interest on the Series 2015A Bonds shall be made by check mailed to the person who is the registered holder on the applicable Record Date at the address of such registered holder as it appears on the books of the Paying Agent and Bond Registrar. Principal shall be paid when due upon delivery of the Series 2015A Bonds for payment at the designated office of the Paying Agent and Bond Registrar, Branch Banking and Trust Company, Wilson, North Carolina. If the date for making any principal or interest payment is not a business day for the Paying Agent and Bond Registrar, such payment may be made on the next succeeding business day and no interest shall accrue for the period after such stipulated date. The Series 2015B Bonds The Series 2015B Bonds will be dated the date of delivery (anticipated to be on or about September 23, 2015), will be issued initially in book-entry form in the principal amount of $37,245,000 * and in denominations of $5,000 or any integral multiples thereof, will mature as to principal on May 1, 2016 and thereafter on each May 1 until final maturity on May 1, 2027, and will bear interest as set forth on the inside cover page of this Official Statement. The Series 2015B Bonds maturing on and after May 1, 2026 are callable on and after November 1, 2025 at par as described herein. Interest accruing on the Series 2015B Bonds shall be payable semiannually on May 1 and November 1 of each year (commencing November 1, 2015) from the date of delivery or the most recent interest payment date to which interest has been paid or duly provided for. The interest installments on the Series 2015B Bonds will be paid to the person who is the registered holder thereof as of the close of business on the Record Date for such interest installment, which Record Date shall be the 15th day (whether or not a business day) of the calendar month next preceding such interest payment date. Payment of interest on the Series 2015B Bonds shall be made by check mailed to the person who is the registered holder on the applicable Record Date at the address of such registered holder as it appears on the books of the Paying Agent and Bond Registrar. Principal shall be paid when due upon delivery of the Series 2015B Bonds for payment at the designated office of the Paying Agent and * Preliminary, subject to adjustment. 4

11 Bond Registrar, Branch Banking and Trust Company, Wilson, North Carolina. If the date for making any principal or interest payment is not a business day for the Paying Agent and Bond Registrar, such payment may be made on the next succeeding business day and no interest shall accrue for the period after such stipulated date. See BOOK ENTRY AND DTC regarding payment of principal and interest to the Beneficial Owners while the Series 2015 Bonds are in the book-entry-only system. FAYETTE COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION The Corporation is an agency, instrumentality and constituted authority of the Board of Education of Fayette County, Kentucky (the Board ), organized pursuant to Sections and of the Kentucky Revised Statutes as a Kentucky nonprofit corporation under Sections through of the Kentucky Revised Statutes. The Corporation was created by the Board in order to act on behalf of the Board in the financing of school building projects for the Board. The Corporation is governed by a five-member Board of Directors consisting of the members of the Board from time to time. BOARD OF EDUCATION OF FAYETTE COUNTY The Board is a statutory board of education organized and existing pursuant to Chapter 160 of the Kentucky Revised Statutes, vested with the responsibility of providing for the public education in the Fayette County School District (the District ) by establishing and operating public schools. The Board consists of five members, each elected from a separate division within the District, which encompasses all of Fayette County, Kentucky. The Board employs a Superintendent, who, subject to the control of the Board, has general supervision of the conduct of the schools, the courses of instruction, the management of teachers, the discipline of pupils and the management of business affairs. The Board has directed the Corporation to act on its behalf in issuing the Series 2015 Bonds. Certain operating and financial data pertaining to the District is included in Appendix A to this Official Statement. The audited financial statements of the District for its fiscal year ended June 30, 2014 are included as Appendix E to this Official Statement. On June 27, 2015, Emmanuel Manny Caulk was unanimously voted by the Board as the new superintendent of the District. Dr. Marlene Helm served as Acting Superintendent of the District until Mr. Caulk s first date of employment on August 3, Report of Kentucky Auditor of Public Accounts On September 17, 2014, the Kentucky Auditor of Public Accounts released a report detailing the results of an examination of the Board s operations and policies. The report did not express an opinion regarding the Board s financial statements, but instead examined the Board s operational and working environment and budgetary and financial processes for fiscal years 2011 through The resulting findings and recommendations included (i) improvements to the Board s financial management and budgeting processes, (ii) improvements to the working relationship between the Board s Department of Financial Services and Department of Budget and Staffing Services, (iii) increased transparency in the reporting of raises for administrative personnel to the Board, (iv) the implementation of a budget transfer policy and strict compliance with existing procurement guidelines, (v) stronger oversight of travel and professional development expenses, (vi) increased detail in the monthly financial reports presented to the Board, (vii) strengthening of internal controls regarding nepotism, encumbering of funds, vendor creation and cost effectiveness of expenditures within the Department of Financial Services, and (viii) the creation of a formal audit committee and establishment of a related reporting system. A copy of the report, along with the reply of the Board s previous Superintendent, can be obtained from the Kentucky Auditor of Public Accounts website at: 5

12 AUTHORITY AND SECURITY The Series 2015A Bonds The Series 2015A Bonds are being issued by the Corporation pursuant to the Act and a Resolution of its Board of Directors (the Series 2015A Bond Resolution ) for the purposes of currently refunding and defeasing the pledge and lien securing the outstanding Fayette County School District Finance Corporation School Building Revenue Bonds, Taxable Series 2010B (Build America Bonds - Direct Payment to Issuer) (the Series 2010B Bonds ), scheduled to mature on and after August 1, 2016 (the Refunded Series 2010B Bonds ), and paying the costs of issuance of the Series 2015A Bonds. Under the terms of the Resolution adopted by the Board of Directors of the Corporation on August 18, 2010, authorizing the sale and issuance of the Series 2010B Bonds, the Series 2010B Bonds are subject to extraordinary optional redemption before maturity, in whole or in part, at the option of the Corporation, on any day, at a redemption price equal to 100% of the principal amount redeemed plus accrued interest to the date of redemption, if the United States Treasury Department (the Treasury ) should not make a subsidy payment equal to 35% of the amount of interest paid by the Corporation with respect to the Series 2010B Bonds (the Subsidy Payment ). On July 15, 2013, the Corporation was notified by the Treasury, via letter, that the credit payments requested by the Corporation with respect to the August 1, 2013, interest payment on the outstanding Series 2010B Bonds were reduced by 8.7% pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended. The Corporation was also notified by the Treasury, via letter, that the credit payments requested by the Corporation with respect to the February 1, 2014, August 1, 2014, February 1, 2015, and August 1, 2015 interest payments on the outstanding Series 2010B Bonds were reduced by 7.2%, 7.2%, 7.3%, and 7.3%, respectively. The Treasury on behalf of the federal government has thus failed to make the full Subsidy Payment equal to 35% of the amount of interest paid by the Corporation with respect to the Series 2010B Bonds on August 1, 2013, February 1, 2014, August 1, 2014, February 1, 2015, and August 1, Accordingly, the Board has deemed it necessary, desirable and in its best interest, and has directed the Corporation, to refund the Refunded Series 2010B Bonds as a result of the failure of the Treasury to make the full cash Subsidy Payment for the Series 2010B Bonds on August 1, 2013, February 1, 2014, August 1, 2014, February 1, 2015, and August 1, The Refunded Series 2010B Bonds will be called for redemption on or about October 5, The Series 2015A Bonds do not constitute an indebtedness of the Corporation or the Board within the meaning of any limitations imposed by the Constitution of Kentucky and are payable solely from, and are secured by a pledge of a sufficient portion of, the income and revenues to be derived by the Corporation from leasing the school properties financed by the Series 2010B Bonds (the Series 2010B Projects ). The Resolution makes provision for setting aside in a special account designated the Fayette County School District Finance Corporation School Building Refunding Revenue Bond and Interest Redemption Fund, Series 2015A, of a sufficient portion of the income and revenues of the Series 2010B Projects to provide for the payment of interest on and principal of the Series 2015A Bonds when due. In order to provide to the Corporation such income and revenues from the Series 2010B Projects, the Corporation, as lessor, has executed a Contract of Lease and Rent with the Board, as lessee (the Series 2015A Contract of Lease and Rent ), under the terms of which the Board agrees to use and occupy the Series 2010B Projects for school purposes until August 1, 2030, on a year-to-year basis, subject, however, to the right of the Board to terminate such lease at the expiration of any rental year (July 31 st ) by giving written notice to the Corporation of its intention to do so at least ninety days before the August 1 immediately following the end of such rental year. Under the Series 2015A Contract of Lease and Rent, the Board agrees to make rental payments semiannually in such amounts as will be sufficient to pay the interest on and principal of the outstanding Series 2015A Bonds when due. The rentals are payable in semiannual installments on or before January 20 th and July 20 th of the respective rental years. The Board agrees in the Series 2015A Contract of Lease and Rent that it will, at its own expense, maintain the Series 2010B Projects in good condition and pay the costs of insuring the Series 2010B Projects. The Series 2015A Contract of Lease and Rent reserves to the Board the right and option to prepay rent and thereby purchase from the Corporation the Series 2010B Projects or any of the three component parts thereof, and to obtain a reconveyance thereof by the Corporation to the Board free and clear of liens, upon payment by the Board of a sum sufficient to provide for the redemption or retirement of all outstanding Series 2015A Bonds, 6

13 or an allocated portion of the Series 2015A Bonds in the case of a purchase of any of such component parts, in accordance with the terms of the Series 2015A Bond Resolution and the Series 2015A Contract of Lease and Rent, together with certain expenses, subject to the restrictions of any then outstanding leases. The Series 2015B Bonds The Series 2015B Bonds are being issued by the Corporation pursuant to the Act and a resolution of its Board of Directors (the Series 2015B Bond Resolution and, together with the Series 2015A Bond Resolution, the Series 2015 Bond Resolutions ) for the purposes of advance refunding and defeasing the pledge and lien securing the outstanding Fayette County School District Finance Corporation School Building Revenue Bonds, Series 2007A (the Series 2007A Bonds ), scheduled to mature on and after May 1, 2018 (the Refunded 2007A Bonds ), and paying costs of issuance of the Series 2015B Bonds, in order to obtain substantial savings in interest costs. The Refunded Bonds will be called for redemption on May 1, 2017 at par plus accrued interest thereon. The Board, acting through the Corporation, will continue to make required payments of principal and interest for the Series 2007A Bonds maturing on May 1, 2016 and May 1, 2017 until their respective maturity dates. The Board has adopted a resolution approving and directing the issuance of the Series 2015B Bonds by the Corporation. The Series 2015B Bonds do not constitute an indebtedness of the Corporation or the Board within the meaning of any limitations imposed by the Constitution of Kentucky and are payable solely from, and are secured by a pledge of a sufficient portion of, the income and revenues to be derived by the Corporation from leasing the school properties financed by the Series 2007A Bonds (the Series 2007A Projects ), subject to a prior pledge securing the Series 2007A Bonds until May 1, The Series 2015B Bond Resolution makes provision for setting aside in a special account designated the Fayette County School District Finance Corporation School Building Refunding Revenue Bond and Interest Redemption Fund, Series 2015B, of a sufficient portion of the income and revenues of the Series 2007A Projects to provide for the payment of interest on and principal of the Series 2015B Bonds when due. In order to provide to the Corporation such income and revenues from the Series 2007A Projects, the Corporation, as lessor, has executed a Contract of Lease and Rent with the Board, as lessee (the Series 2015B Contract of Lease and Rent and, together with the Series 2015A Contract of Lease and Rent, the Series 2015 Leases ), under the terms of which the Board agrees to use and occupy the Series 2007A Projects for school purposes until April 30, 2027, on a year-to-year basis, subject, however, to the right of the Board to terminate the Series 2015B Contract of Lease and Rent at the expiration of any rental year (April 30) by giving written notice to the Corporation of its intention to do so at least ninety days before the May 1 immediately following the end of such rental year. Under the Series 2015B Contract of Lease and Rent, the Board agrees to make rental payments semiannually in such amounts as will be sufficient to pay the interest on and principal of the outstanding Series 2015B Bonds when due. The rentals are payable in semiannual installments on or before April 20th and October 20th of the respective rental years, beginning October 20, The Board agrees in the Series 2015B Contract of Lease and Rent that it will, at its own expense, maintain the Series 2007A Projects in good condition and pay the costs of insuring the Series 2007A Projects. The Series 2015B Contract of Lease and Rent reserves to the Board the right and option to prepay rent and thereby purchase from the Corporation the Series 2007A Projects or any of the three component parts thereof, and to obtain a reconveyance thereof by the Corporation to the Board free and clear of liens, upon payment by the Board of a sum sufficient to provide for the redemption or retirement of all outstanding Series 2015B Bonds, or an allocated portion of the Series 2015B Bonds in the case of a purchase of either of such component parts, in accordance with the terms of the Series 2015B Bond Resolution and the Series 2015B Contract of Lease and Rent, together with certain expenses, subject to the restrictions of any then outstanding leases. Although the Board is obligated to pay to the Corporation annual rentals in the full amount of the principal and interest requirements on the Series 2015B Bonds for each year in which the Series 2015B Contract of Lease and Rent is renewed, the Board has entered into the Series 2015B Contract of Lease and Rent in reliance on a Participation Agreement between the Board and the Kentucky School Facilities Construction Commission (the Commission ). Under the terms of the Series 2015B Participation Agreement (as defined below), the Commission has agreed to pay directly to the Paying Agent and Bond Registrar for the Series 2015B Bonds for the Board s benefit, a stated annual Agreed Participation paid semiannually in each year until final maturity of the Series 2015B Bonds, subject to any constitutional restrictions limiting the commitment of state agencies to the then current biennium, unless and until renewed for the next biennium. The Agreed Participation is to be 7

14 applied only to the principal and interest requirements of the Series 2015B Bonds so long as the Board renews the Series 2015B Contract of Lease and Rent. Under the Series 2015B Contract of Lease and Rent, the Board has pledged and assigned its rights under the Participation Agreement and to the Agreed Participation with respect to the Bonds to the Corporation in order to secure the Series 2015B Bonds. See KENTUCKY SCHOOL FACILITIES CONSTRUCTION COMMISSION herein. STATE INTERCEPT KRS (5) and KRS (5) provide the School Facilities Construction Commission (the Commission ) the right to notify and request the Kentucky Department of Education to withhold from the Board a sufficient portion of any undisbursed funds then held, set aside, or allocated to the Board and to request said Department of Education to transfer the required amount thereof to the Paying Agent for the payment of rentals under the Series 2015 Leases upon a failure by the Board to pay the rentals due under the Series 2015 Leases and to show that sufficient funds have been transmitted to the Paying Agent, or will be so transmitted, for paying said rentals when due. KENTUCKY SCHOOL FACILITIES CONSTRUCTION COMMISSION (SERIES 2015B BONDS ONLY) The Commission is an independent corporate agency and instrumentality of the Commonwealth established pursuant to the provisions of Sections through of the Kentucky Revised Statutes, as repealed, amended, and reenacted (the Commission Act ) for the purpose of assisting local school districts in meeting the school construction needs of the Commonwealth in a manner which will ensure an equitable distribution of funds based upon unmet need. Pursuant to the provisions of the Commission Act and the Regulations of the Kentucky Board of Education and the Commission, the Commission has determined that the Board is eligible for participation from the Commission in meeting the costs to refinance a certain portion of the costs of the Series 2007A Projects. In furtherance thereof, the Commission will enter into that certain Participation Agreement with the Board concerning the Series 2015B Bonds (the Series 2015B Participation Agreement ) whereunder the Commission will agree to pay an annual Agreed Participation (as such term is defined in the Series 2015B Participation Agreement) equal to approximately 8.1% of the annual debt service requirements for the Series 2015B Bonds through May 1, 2027, provided, however, that the contractual commitments of the Commission to pay each annual Agreed Participation is limited to the biennial budget period of the Commonwealth, with the first such biennial period terminating on June 30, The right is reserved in the Commission to terminate its commitment to pay each Agreed Participation after the initial biennial period and every two years thereafter. The obligation of the Commission to make payments of each Agreed Participation shall be automatically renewed each two years for a period of two years unless the Commission shall give notice of its intention not to participate not less than sixty days before the end of the biennial budget period of the Commonwealth then in effect; however, by the execution of the Series 2015B Participation Agreement, the Commission has expressed its present intention to continue to pay the Agreed Participation in each successive biennial budget period until the retirement of all of the Series 2015B Bonds, but such execution does not obligate the Commission to do so. The Commission is attached to the Finance and Administration Cabinet of the Commonwealth. The Commonwealth, through certain of its bond-issuing commissions, has agreed among other things to provide annual financial information, including audited financial statements, within nine months after the end of each fiscal year of the Commonwealth (June 30 th ) to the Municipal Securities Rulemaking Board (the MSRB ), or any successor thereto for purposes of Rule 15c2-12 of the Securities and Exchange Commission (the Rule ), through the continuing disclosure service portal provided by the MSRB s Electronic Municipal Market Access ( EMMA ) system as described in 1934 Act Release No , or any similar system that is acceptable to the Securities and Exchange Commission, in accordance with the Rule. Reference is made to such annual financial information of the Commonwealth filed with the MSRB. The Series 2015A Bonds THE REFUNDING PLANS The Series 2015A Bonds are being issued to currently refund the Series 2010B Bonds by redeeming the Refunded Series 2010B Bonds on October 5,

15 The estimated sources and uses of funds for the refunding effected by the Series 2015A Bonds (the Series 2015A Bond Refunding Plan ) are as follows: The Series 2015B Bonds Sources of Funds * Par Amount of Series 2015A Bonds $34,325,000 Bond Issuance Premium 616,452 Total Sources of Funds $34,941,452 Uses of Funds * Deposit to Refunded Series 2010B Bond Sinking Fund $34,444,068 Underwriter s Discount (1.50%) 343,250 Costs of Issuance and Miscellaneous 154,134 Total Uses of Funds $34,941,452 The Series 2015B Bonds are being issued to advance refund the Refunded Series 2007A Bonds, which are part of the Corporation s outstanding Series 2007A Bonds, by escrowing and investing the net proceeds of the Series 2015B Bonds and redeeming the Refunded Series 2007A Bonds in the outstanding principal amount of $34,290,000 on May 1, (The Board, acting through the Corporation, will continue to make payment of the Series 2007A Bonds maturing on May 1, 2016 and May 1, 2017.) The Series 2007A Bonds were issued in the original principal amount of $36,450,000. Net proceeds of the Series 2015B Bonds sufficient to advance refund the Refunded Series 2007A Bonds will be deposited in escrow and invested in direct obligations of the United States that will mature and pay interest in amounts sufficient to pay interest on the Refunded Series 2007A Bonds when due and to redeem the Refunded Series 2007A Bonds on May 1, 2017 at par. The estimated sources and uses of funds for the refunding effected by the Series 2015B Bonds (the Series 2015B Bond Refunding Plan ) are as follows: Sources of Funds * Par amount of Series 2015B Bonds $37,245,000 Bond Issue Premium 312,646 Total Sources of Funds $37,557,646 Uses of Funds * Deposit to Escrow fund $36,976,080 Underwriter s discount (1.0%) (1) 372,450 Costs of issuance and miscellaneous expenses 209,116 Total Uses of Funds $37,557,646 (1) Maximum permitted bond discount is 1.50%. * Preliminary, subject to adjustment. 9

16 DISPOSITION OF SERIES 2015 BOND PROCEEDS The Series 2015A Bonds The Series 2015A Bond proceeds will be applied as follows: (a) (b) There will be paid the expenses incident to the issuance, sale and delivery of the Series 2015A Bonds, including the fee of the Financial Advisor, legal fees, rating fees, fees of the Paying Agent and Bond Registrar, redemption expenses and such other appropriate expenses as may be approved by the Corporation or the Board. The balance of the proceeds of the Series 2015A Bonds will be deposited to the Fayette County School District Finance Corporation School Building Revenue Bond Fund, Series 2010B Bonds held at The Bank of New York Mellon Trust Company, N.A., Louisville, Kentucky, to be applied to the redemption price of the Refunded Series 2010B Bonds. The Series 2015B Bonds The Series 2015B Bond proceeds will be applied as follows: (a) (b) There will be paid the expenses incident to the issuance, sale and delivery of the Series 2015B Bonds, including the fee of the Financial Advisor, legal fees, rating fees, Paying Agent and Bond Registrar fees, redemption expenses and such other appropriate expenses as may be approved by the Corporation or the Board. The balance of the proceeds will be deposited in the Series 2007A Escrow Fund held by The Bank of New York Mellon Trust Company, N.A., Dallas, Texas, to pay interest on the Refunded Bonds when due and for the advance refunding and redemption of the Refunded Bonds on May 1, 2017, and will be invested pending such disbursement in direct or guaranteed obligations of the U.S. Government or the equivalent thereof. MISCELLANEOUS RESOLUTIONS AND LEASE PROVISIONS In the Series 2015 Bond Resolutions, the Corporation has reserved the right to cause the revenues of the Series 2007A Projects (a portion of the costs of which are being refunded by the Series 2015B Bonds) or the Series 2010B Projects and the mortgage liens securing the respective series of the Series 2015 Bonds, or any portion thereof, to be defeased and released by paying into a sinking fund or escrow fund established for such purpose sufficient, when invested (or sufficient without such investment, as the case may be) in direct obligations of the United States Government, which will produce amounts sufficient for payment of such series of the Series 2015 Bonds. The Series 2015 Bond Resolutions and the Series 2015 Leases contain tax covenants, representations and warranties to the effect that the Corporation and the Board are in compliance with, and will comply with, the requirements of the United States Internal Revenue Code of 1986, as amended (the Code ), so that the Series 2015 Bonds will not become arbitrage bonds within the meaning of the Code. STATE SUPPORT FOR EDUCATION The Commonwealth funds its system of common schools through the Support Education Excellence in Kentucky ( SEEK ) funding formula which is a shared state and local funding mechanism that guarantees a certain minimum amount of per pupil funding for each school district, while at the same time providing incentives for districts to raise funds above that amount through additional local taxation. The SEEK program is a tiered system of three related components: the adjusted base guarantee, Tier I and Tier II. Adjusted Base Guaranteed Funding Level Section of the Kentucky Revised Statutes ( KRS ) guarantees a base funding level, which is a guaranteed amount of revenue per pupil to be available to each school district to be used for regular operating and capital expenditures. See KRS (2). The base funding guaranteed to each school district is determined in each fiscal year by dividing the total annual state SEEK appropriation by the state-wide total of pupils in 10

17 average daily attendance ( ADA ) in the preceding fiscal year. See KRS Each school district is guaranteed to receive an amount equal to the base funding level for each pupil in average daily attendance in the district in the previous year, adjusted by certain factors such as at-risk or exceptional students in the district, transportation costs, etc. See KRS (2) and ; 702 Kentucky Administrative Regulations ( KAR ) 3:270, Section 2(4). The statewide base guarantee, with these additions and adjustments, is the school district s adjusted base guarantee. See 702 KAR 3:270 (SEEK funding formula), Section 2(4)(a). While the Commonwealth guarantees that each district will receive this minimum level of funding, the Commonwealth does not provide all of the funds. Each district is required to provide a level of funding from local taxes (ad valorem property taxes and the permissive school taxes occupational license taxes, utility gross receipts license taxes, and/or excise taxes), the required local effort, that is based upon the total assessed property value within the district. See KRS (17) and (5). Required Local Effort to Fund Adjusted Base Guarantee. KRS (9) requires that each school district levy a minimum equivalent tax rate of $0.30 per $100 of assessed value for general school purposes. The equivalent tax rate is defined as the rate which results when the income estimated to be collected during the year from all taxes (including ad valorem property taxes and the permissive school taxes) levied by the school district is divided by the total assessed value of property plus the assessment for motor vehicles certified by the Department of Revenue. Id.; see also 702 KAR 3:270, Section 1(8). Each school district determines the amount of revenue that would be generated by the levy of a $0.30 ad valorem tax rate. Once that amount is calculated, each school district must levy a $0.30 ad valorem tax rate (or its equivalent) by raising that amount through ad valorem taxes on property and through the permissive school taxes. Each school district s portion of the adjusted base guaranteed funding level, therefore, is the amount of all local taxes collected by the district that is equal to 0.3% of the total value of assessed property in the district. Revenue collected by a district above this required local effort is dealt with in the next tier of the SEEK formula. In levying the $0.30 minimum equivalent tax rate, any annual increase in ad valorem taxes on real property beyond the 4% annual limitation imposed by KRS (8) is not subject to the recall provisions of that Section. State Funding of the Adjusted Base Guarantee. KRS establishes the state SEEK fund which is funded from biennial appropriations from the General Assembly for distribution to school districts. The Commonwealth is required to provide from this fund that portion of each district s adjusted base guarantee not funded by the required local effort. Each school district receives from the Commonwealth SEEK fund the district s adjusted base guarantee less the amount of the local tax revenues generated for school purposes by the $0.30 minimum equivalent tax rate. See KRS ; 702 KAR 3:270, Section 2(4)(b). In addition to the required local effort and the state portion of the adjusted base guarantee, each district has the option of generating additional revenues through additional local effort. Tier I Funding Level KRS (1)(a) provides that each school district may levy an equivalent tax rate which will produce not only the required local effort but also up to an additional 15% of those revenues guaranteed by the SEEK program (known as Tier I funding). See also 702 KAR 3:270, Section 2(5). In levying this rate, any increase in ad valorem taxes on real property beyond the 4% annual limitation imposed by KRS (8) is not subject to the recall provisions of KRS (8). Each school district participating in Tier I funding is eligible for state equalization funds if its assessed property value per pupil is less than 150% of the statewide average per pupil assessment. This ensures that districts which make a similar effort receive the same amount of Tier I revenue per student, regardless of the district s property wealth. For example, if 150% of the statewide average per pupil assessment is $400,000 and the actual local assessment is $200,000 per pupil, the state pays half and the local district pays half of the equalized amount in excess of the required local effort. If the district per pupil assessment is $400,000 or greater, there are no matching funds. Tier II Funding Level KRS (2)(a) permits school districts to levy up to an additional 30% of those revenues guaranteed by the SEEK program plus the revenue produced by the 15% levy comprising the Tier I funding (known as Tier II funding). Districts are allowed to raise additional revenue up to 30% of the total adjusted base guarantee plus Tier I and, if levied, the FSPK Nickel (see below). See KRS (2)(a). Revenues raised through local 11

18 taxation (ad valorem property taxes and occupational license taxes, utility gross receipts license taxes or excise taxes) in excess of those counted against a district s required local effort and Tier I efforts are deemed Tier II funds. There are no state funds involved in Tier II funding. A school district seeking to levy taxes at a Tier II funding level cannot, without prior voter approval, levy a general property tax rate that exceeds the maximum rate that could have been levied on all property in the prior year. Id.; KRS (1). To ensure equity of opportunity in Kentucky schools, no school district may provide funding in excess of Tier II funding. However, no district is compelled to levy an equivalent tax rate lower than the rate levied in the school year. See KRS (1)(e). State and Local Funding for Capital Outlay and Facilities/Construction The Facilities Support Program of Kentucky ( FSPK, also known as the Building Fund, School Facilities Construction Commission Funds, and SEEK capital outlay) provides the Commonwealth funding to meet the facility needs of school districts as shown on each district s facility plan. See KRS (1). SEEK Capital Outlay. KRS (3) and (4) establish a formula which results in an allocation of the biennial state SEEK funds for capital expenditures in school districts at $100 per ADA pupil. The SEEK capital outlay is required to be segregated into a Capital Outlay Allotment Fund which may only be used for: (1) direct payment of construction costs; (2) debt service on voted and funding bonds; (3) lease rental payments in support of bond issues; (4) reduction of deficits resulting from over expenditures for emergency capital construction; and (5) a reserve for each of the categories enumerated in 1 through 4 above. These capital outlay funds are part of the state funded portion of the adjusted base guarantee. FSPK Nickel. School districts must levy a minimum equivalent tax rate of $0.05 per $100 of property assessment to participate in the FSPK program (the FSPK Nickel ). See KRS (1)(b) and (1). If the funds from the FSPK Nickel levy are committed to debt service, the FSPK provides equalized funding for school systems at 150% of the statewide average per pupil assessment. Id. This FSPK Nickel is in addition to the $0.30 minimum local effort required for SEEK. See KRS (1)(b). In levying this rate, any increase in ad valorem taxes on real property beyond the 4% annual limitation imposed by KRS (8) is not subject to the recall provisions of that Section. See KRS (1)(d). Growth Nickels. KRS allowed certain growth districts to levy an additional equivalent tax rate of $0.05 per $100 of property assessment for debt service and new facilities. KRS contained a sunset provision which caused this original growth district nickel to expire. Nevertheless, the General Assembly in subsequent biennial budgets has authorized growth districts to levy additional growth nickel levies. The 2008 General Assembly amended KRS to authorize school districts that levied growth nickels in prior years based on budget language to continue to levy those nickels in future years. KENTUCKY DEPARTMENT OF EDUCATION SUPERVISION KRS provides that a local school district budget failing to provide payments for rentals in connection with outstanding revenue bonds for school purposes shall be disapproved by the State Department of Education. State Department of Education approval of a bond issue and its associated financial, educational and construction plans is required before its issuance and must have been received before the sale of the issue. The State Department of Education s supervision also extends to other areas of local school finance, including supervision of general operations such as the examination of business methods and accounts of a school district, requirements of prompt, detailed reports of receipts and expenditures and the annual approval of an operating budget as a prerequisite to such operation. All local boards who have entered into contracts for the issuance of bonds must arrange for insurance protection in an amount equal to the full insurable value of the buildings or to the continuous retention of such insurance. This State Department of Education supervision and control is believed to be a major contribution toward the maintenance of the Commonwealths record of no defaults in payment of its revenue bonds for school purposes. Kentucky law requires that annual budgets of local school boards provide for rental payments for debt service in order for such budgets to be approved by the State Department of Education. 12

19 BIENNIAL BUDGET FOR PERIOD ENDING JUNE 30, 2016 The General Assembly of the Commonwealth, during its 2014 Regular Session, adopted the State/Executive Branch Budget for the biennium ending June 30, 2016 (the Budget ). The Budget was approved by the Governor, subject to certain line item vetoes. Inter alia, the Budget provides $99,334,000 in FY and $108,270,000 in FY to pay debt service on existing and future bond issues; $100,000,000 of the Commission s previous Offers of Assistance made during the last biennium; and authorizes $100,000,000 in additional Offers of Assistance for the current biennium to be funded in the Budget for the biennium ending June 30, REVENUE SOURCES WITHIN THE FAYETTE COUNTY SCHOOL DISTRICT Capital Outlay Allotment The Commonwealth s Minimum Foundation Program provides for annual payments to all school districts for capital construction or acquisition. Monies from the Capital Outlay Allotment Fund are not directly pledged for debt service on the Series 2015 Bonds, but as a practical matter, and to the extent needed, have been, and it is expected will continue to be, applied to debt service through rental payments on lease agreements. KRS establishes a formula which results in the allocation of funds for capital expenditures in school districts at $100 per ADA pupil of the SEEK allotment for the current biennium which is required to be segregated into the Capital Outlay Allotment Fund, which should be used only for (1) direct payment of construction costs; (2) debt service on voted and funding bonds; (3) lease rental payments in support of bond issues; (4) reduction of deficits resulting from over expenditures for emergency capital construction; and (5) a reserve for each of the categories enumerated in 1 through 4 above. The capital outlay allotments for the most recent five year period can be found in Appendix A. General Property and Motor Vehicle Tax The Board levies a tax on $100 of valuation on real estate, personal property and motor vehicles in the District. See Appendix A for the most recent five-year period of tax rates assessed and receipts. Utility Tax The Board levies a 3% utility gross receipts license tax (for school purposes) on the gross receipts derived from the furnishing, within Fayette County, of telephone, telegraph, electric power, water and gas, subject to certain exemptions. Once levied, the tax remains in effect from year to year unless and until the Board requests its discontinuance. See Appendix A for a summary of recent years receipts from the tax. Special Voted Building Fund Tax On April 1, 1951, voters of the District voted to levy, for a period of 20 years, a special voted building fund tax under the authority of KRS (since repealed) at the annual rate of $0.32 upon each $100 of taxable property within the District (based on an average assessment rate of 30%). On January 12, 1957, this tax was extended by vote from 20 to 25 years. On May 25, 1965, the tax was extended to 1995, and on December 7, 1989, the tax was extended indefinitely by the voters of the District. See Appendix A for the current rate for the tax and the District s receipts for the tax in its most recent years. KRS (1) requires school districts that levy a special voted building tax to commit at least $.05 of said tax for capital purposes. See STATE SUPPORT FOR EDUCATION for additional details. 5 Cent Building Fund Tax Pursuant to KRS , on August 27, 2007, after gaining the support of the community at large, the Board adopted and levied a $.055 real property tax increase for debt service, new school facilities and/or major renovations to existing facilities. Little opposition to the tax occurred at a public hearing and no petition was filed for recall after passage. The increase generates an estimated $ million in revenue based on assessments. 13

20 Occupational License Tax On September 3, 1985, the Board, pursuant to the provisions of KRS et seq., levied an occupational license tax for schools of 0.5% on salaries, wages, commissions and other compensation of individuals for work done and services performed or rendered in Fayette County by residents of Fayette County and on the net profits of all businesses, professions and occupations (with certain statutory exemptions) from activities conducted in Fayette County. See Appendix A for a recent history of the District s revenues from the tax. SEEK Program Fund The SEEK Program Fund allocates biennial appropriations from the General Assembly to each Kentucky school district. The base level is determined for each fiscal year by dividing the total SEEK appropriation by the statewide total of pupils in average daily attendance. Each district s share of the SEEK Program is subject to adjustment to reflect several factors. See STATE SUPPORT FOR EDUCATION for more details. See Appendix A for a recent history of the SEEK Program Fund appropriations to the District. Homestead Exemption STATE AND LOCAL TAX LIMITATIONS Section 170 of the Kentucky Constitution was amended by the voters of the Commonwealth at the General Election held December 2, 1971, to exempt from property taxes the first $6,500 of single-unit residential property of taxpayers 65 years of age or older. Following that election, the 1972 General Assembly amended KRS Chapter 132 to permit counties and school districts to adjust their local tax revenues through increases in taxes on non-exempt property by amounts equivalent to the revenues lost through application of this homestead exemption. In subsequent sessions of the General Assembly the single-unit qualification has been enlarged so as to provide for the exemption to apply to real property held by legal or equitable title, by the entireties, jointly, in common, as a condominium maintained as the permanent residence of the owner; and that the $6,500 exemption shall be construed to mean $6,500 in terms of the purchasing power of the dollar in Every two years thereafter, if the cost of living index of the U.S. Department of Labor has changed as much as one percent, the maximum exemption shall be adjusted accordingly. The local general property tax rate on non-exempt property has been adjusted so as to recover tax revenues equivalent to the revenues lost through application of the homestead exemption. The amount of the individual exemption as of January 1, 2015 was $36,900. General Limitations on Taxation Ad Valorem Property Taxation. KRS requires each school district to levy annually an ad valorem tax on all property within the district within the limits prescribed in KRS for general school purposes. See also KRS KRS authorizes each board of education to restrict between $0.04 and $0.20 of the general tax rate to be used for building purposes, which funds are to be placed in a school building fund to fund the acquisition, construction or renovation of school buildings and facilities. The portion of a school district s general tax rate committed to its building fund shall come within the maximum school tax levy provided by KRS KRS provides three limitations on each school district s general property tax rate. First, KRS (2) and (7) provide that each school district may not levy a general tax rate that will increase real property tax revenue from that received in the prior year without providing public notice and holding a public hearing. Second, KRS (8) provides that a school district seeking to levy a property tax rate that will increase revenue from real property by more than 4% from the prior year must provide additional public notice that the excess rate is subject to voter recall. Ten percent of the voters can petition that the increase above 4% be put to a recall vote. See KRS Third, KRS (1) and (9) prohibit a school district from levying a general property tax rate that exceeds the maximum rate that could have been levied on all property in the prior year (the Subsection (1) Tax Rate ) without prior voter approval. A school district can levy a general tax rate in excess of the Subsection (1) Tax Rate only under three circumstances: (1) to the extent necessary to levy the $0.30 equivalent tax rate for the required local effort (KRS (9)(a)); (2) to the extent necessary to levy taxes to obtain full Tier I funding (KRS (1)(a)); and (3) with voter approval in accordance with the provisions of KRS (2)(a). 14

21 KRS provides limitations on the levy of each school district s ad valorem tax rate on personal property, in addition to those governing the setting of the general tax rate. Permissive Taxation. KRS authorizes each school district to levy up to three permissive taxes in additional to ad valorem taxes. Permissive taxes consist of utility gross receipts license taxes, excise taxes, and occupational license taxes. The authority to levy these taxes is found in KRS Before a school district can levy any of these permissive taxes, it must give public notice of its proposed levy and conduct a public hearing to explain the reason for the tax and to hear comments and complaints regarding the proposed levy. See KRS The levy of any of the permissive taxes is subject to petition and recall by the qualified voters in the school district. See KRS Once levied, a permissive tax remains in effect until the district reduces the rate. See KRS Utility gross receipts license tax for schools. KRS authorizes a utility gross receipts license tax for schools not to exceed 3% of the gross receipts derived from the furnishing of communications services, electric power, water, and natural, artificial and mixed gas. Amounts received for utilities that are resold are exempt. There also is a limited exemption for energy or energy-producing fuels used in the course of manufacturing, processing, mining or refining. KRS added the gross receipts derived from the sale of cable television and direct satellite television to the class of utilities subject to the utility tax. Occupational license tax for schools. KRS authorizes the levy of an occupational license tax for schools on: (1) the salaries or wages of individuals for work done in a county; and (2) the net profits of all businesses, professions, or occupations from activities conducted in a county. Exempted from the tax are public service companies that pay an ad valorem tax, insurance companies, banks, trust companies, savings and loan associations, and income received by members of the Kentucky National Guard for training. The occupational tax rate cannot exceed 0.5% and must be a single uniform rate. Any county with 300,000 or more residents is authorized to levy a rate not to exceed 0.75%. See KRS Excise tax for schools. KRS authorizes an excise tax for schools not to exceed 20% of a county resident s state individual income tax liability. EMPLOYEE PENSIONS The Corporation has no employees and therefore no pension obligations. The Board s employees receive retirement and other benefits through either the Kentucky Teachers Retirement System ( KTRS ) or Kentucky s County Employee Retirement System ( CERS ). The Board does not fund benefits provided to its certified full-time employees pursuant to KTRS. Those benefits are funded using employee contributions and contributions by Kentucky state government. The Board does fund a portion of the benefits provided to its non- certified full-time employees under CERS, as further discussed below. KTRS: The Board s certified full-time employees participate in KTRS, which is a cost-sharing multiple-employer defined benefit plan administered by the Kentucky Retirement System, an agency of the Commonwealth. KTRS provides retirement, death and disability benefits to participants and their beneficiaries. Benefits are funded through employee contributions and contributions by the state legislature. Participants hired before July 1, 2008 must contribute % of their annual covered compensation and participants hired on or after that date must contribute %. The Commonwealth provides matching contributions as required by Kentucky Revised Statutes and The payments made by the Commonwealth on behalf of the District s certified employees, amounting to $27,659,642 are reflected in the accompanying financial statements as both revenues and expenses/expenditures. The Commonwealth requires payments for federally funded employees to be made by such federal funds; for the fiscal year ended June 30, 2014, this funding amounted to approximately $1,667,000. KTRS issues a publicly available financial report that includes financial statements and required supplementary information on the Plan. That report may be obtained by writing to Kentucky Teachers Retirement System, 479 Versailles Road, Frankfort, Kentucky

22 CERS: The Board s non- certified full-time employees participate in CERS, which is a cost-sharing multiple-employer defined benefit pension plan administered by the Kentucky Retirement System ( KRS ), an agency of the Commonwealth. CERS provides retirement, death and disability benefits to participants and their beneficiaries. Benefits are funded through employee and employer contributions to CERS. Employees who had an established account with KRS or KTRS before September 1, 2008 must contribute 5.0% of their eligible compensation to CERS while employees hired after that date must contribute 6.0%. The Board s contribution rate is determined by the Board of Trustees of the Kentucky Retirement System and was as follows for the past five fiscal years: Fiscal Year Employer Contribution Rate July 1, 2010 to June 30, % July 1, 2011 to June 30, % July 1, 2012 to June 30, % July 1, 2013 to June 30, % July 1, 2014 to June 30, % The amount of the Board s annual contributions for the same fiscal years were: Fiscal Year Employer Contribution July 1, 2010 to June 30, 2011 $ 8,848,000 July 1, 2011 to June 30, 2012 $10,513,000 July 1, 2012 to June 30, 2013 $11,320,000 July 1, 2013 to June 30, 2014 $10,945,000 July 1, 2014 to June 30, 2015 $ 9,880,000 Kentucky s General Assembly approves and provides any cost-of-living adjustments that are made for CERS participants. The Kentucky Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for CERS. That report may be obtained by writing to Kentucky Retirement Systems, Perimeter Park West, 1260 Louisville Road, Frankfort, Kentucky (k) and 403(b) Defined Contribution Plans. The Board sponsors 401(k) and 403(b) defined contribution plans for all eligible employees. Employees may contribute to the plans up to the maximum amount permitted under federal law. The Board does not contribute funds to either plan. Tax Treatment of Interest; Ad Valorem Taxation TAX MATTERS It is the opinion of Bond Counsel, Stoll Keenon Ogden PLLC, Louisville, Kentucky, assuming the correctness and accuracy of certain representations and warranties of the Corporation and the Board made in connection with the issuance of the Series 2015 Bonds, that under existing laws, interest on the Series 2015 Bonds (a) is excluded from gross income for federal and Kentucky income tax purposes and (b) is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. However, it should be noted that with respect to corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on such corporations. The opinion set forth in the first sentence of this paragraph are subject to the conditions, among others (as set out in Appendix F, reference to which is made), that the representations and warranties of the Corporation and the Board referred to above are accurate and that the Corporation and the Board comply with all requirements of the Code, which must be satisfied subsequent to the issuance of the Series 2015 Bonds in order that interest thereon be excluded from gross income for federal income tax purposes. The Corporation and the Board have covenanted to comply with such requirements. Failure to comply with certain of such requirements, or a determination that certain of such representations and warranties are inaccurate, could cause the interest on any series of the Series 2015 Bonds to be so included in gross income retroactive to the date 16

23 of issuance of the corresponding series of the Series 2015 Bonds. Bond Counsel expresses no opinion regarding other federal and Kentucky income tax consequences arising with respect to the Series 2015 Bonds. Reference is made to Appendix F, Forms of Bond Counsel Opinions, and to LEGAL MATTERS herein. Prospective purchasers of the Series 2015 Bonds should be aware that: (i) (ii) (iii) (iv) With respect to insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(i) reduces the deduction for loss reserves by 15% of the sum of certain items, including interest on the Series 2015 Bonds. Interest on the Series 2015 Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Section 884 of the Code. Passive investment income, including interest on the Bonds, may be subject to federal income taxation under section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income. Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining gross income, receipts or accruals of interest of the Series 2015 Bonds. Bond Counsel is further of the opinion that the Series 2015 Bonds are exempt from ad valorem taxation by the Commonwealth and its political subdivisions. Tax Treatment of Original Issue Discount The initial public offering prices to be paid for certain Series 2015 Bonds may be less than the amounts payable on such Series 2015 Bonds at their respective stated maturities, as indicated by the respective yields shown on the inside cover page of this Official Statement (the Discount Bonds ). An amount equal to the difference between the initial public offering price of a Discount Bond (assuming, without representing, that the underwriters have purchased the Discount Bonds for contemporaneous sale to the public and a substantial amount of the Discount Bonds of the stated maturity are sold to the public at such price) and the amount payable at stated maturity constitutes interest to the initial purchaser of such Discount Bond. A portion of such interest, allocable to the holding period of such Discount Bond by the initial purchaser, will, upon the disposition of such Discount Bond (including by reason of its payment at stated maturity), be treated as interest excludable from gross income, rather than as taxable gain, for federal income tax purposes. Such interest is considered to be accrued over the term of a Discount Bond on the basis of a constant interest rate compounded at the end of each accrual period (with straight line interpolation between compounding dates) at the yield to stated maturity on such Discount Bond. However, such interest may be required to be taken into account in determining the alternative minimum taxable income of a corporation, for purposes of calculating a corporation s alternative minimum tax imposed by the Code, and the amount of the branch profits tax applicable to certain foreign corporations doing business in the United States, even though there will not be a corresponding cash payment. In addition, the accrual of such interest may result in certain other collateral federal income tax consequences to, among others, financial institutions, property and casualty insurance companies, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement Benefits, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Moreover, in the event of the redemption, sale or other taxable disposition of a Discount Bond before stated maturity, the amount realized by such owner in excess of the basis of such Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Discount Bond was held) is treated as gain for federal income tax purposes. Owners of Discount Bonds should consult with their own tax advisors with respect to the determination for federal income tax purposes of accrued interest upon disposition of Discount Bonds and with respect to the state and local tax consequences of owning Discount Bonds. It is possible that, under the applicable provisions 17

24 governing determination of state and local income taxes, accrued interest on Discount Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. Tax Treatment of Original Issue Premium The initial public offering prices to be paid for certain Series 2015 Bonds may be greater than the amounts payable at maturity with respect to such Series 2015 Bonds, as indicated by the respective yields shown on the inside cover page of this Official Statement (the Premium Bonds ). The difference between (a) the amount payable at maturity of the Premium Bonds and (b) the initial offering price to the public (excluding bond houses and brokers) at which a substantial amount of the Premium Bonds of such maturities are sold will constitute original issue premium ( OIP ). Under certain circumstances, as a result of the tax cost reduction requirements of the Code relating to the amortization of bond premium, the owner of a Premium Bond may realize a taxable gain upon its disposition even though the Premium Bond is sold or redeemed for an amount not greater than the owner s original acquisition cost. Owners of Premium Bonds should consult their own tax advisors with respect to the determination for federal income tax purposes of the amount of OIP properly accruable each year with respect to such Premium Bonds, other tax consequences of owning Premium Bonds and the local tax consequences of holding such Premium Bonds. Other Tax Matters The Internal Revenue Service (the Service ) has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of any series of the Series 2015 Bonds. If an audit is commenced, under current procedures the Service may treat the Corporation as a taxpayer and the holders of the Series 2015 Bonds may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of any series of the Series 2015 Bonds until the audit is concluded, regardless of the ultimate outcome. The opinion of Bond Counsel will be based on current legal authorities and cover certain matters not directly addressed by such authorities, and represent the judgment of Bond Counsel concerning the proper treatment of the Series 2015 Bonds for federal income tax purposes. The opinion of Bond Counsel will not be binding on the Service, state taxing authorities, or the courts, and will not be a guarantee of federal tax treatment described therein. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Corporation or the District, the effect of changes to the Code and applicable regulations, state or local law, the interpretation thereof or the enforcement thereof by the Service or state taxing authorities. Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the Series 2015 Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Series 2015 Bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Series 2015 Bond owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes. PENDING LEGISLATION The holders of the Series 2015 Bonds should be aware that proposals to alter or eliminate the exclusion of interest on tax-exempt bonds from gross income for some or all taxpayers have been made in the past and may again be made in the future by both the executive and legislative branches of the federal government. Such proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Series 2015 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Series 2015 Bonds. Prospective purchasers of the Series 2015 Bonds should consult their own tax advisors regarding any such pending or 18

25 proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. LEGAL MATTERS Certain legal matters incident to the authorization and validity of each series of the Series 2015 Bonds will be the subject of an approving opinion or opinions of Stoll Keenon Ogden PLLC, Louisville, Kentucky, Bond Counsel, which will be available at the time of delivery of each series of the Series 2015 Bonds. Reference is made to Appendix F, Forms of Bond Counsel Opinions. Certain legal matters will be passed on for the Corporation and the Board by their Special Counsel, George F. Allgeier, Jr., Lexington, Kentucky. The information contained in this Official Statement under to the headings THE SERIES 2015 BONDS, AUTHORITY AND SECURITY, MISCELLANEOUS RESOLUTION AND LEASE PROVISIONS, STATE AND LOCAL TAX LIMITATIONS, TAX MATTERS and CONTINUING DISCLOSURE UNDERTAKING has been reviewed by Bond Counsel to determine that such information conforms in substance to the proceedings and laws relating to the issuance of the Series 2015 Bonds that are summarized in such information (see REFERENCE TO DOCUMENTS hereinafter); but Bond Counsel has not undertaken to review the accuracy or completeness of statements and data otherwise contained in this Official Statement, including the Appendices, and expresses no opinion thereon and assumes no responsibility in connection therewith. CONTINUING DISCLOSURE UNDERTAKINGS The Board will agree in a Continuing Disclosure Certificate for each series of the Series 2015 Bonds dated as of the date of issuance of such series (collectively, the Continuing Disclosure Certificates ) to file or to cause to be filed, in accordance with the requirements of the Rule, the following: (a) with the MSRB, or any successor thereto for purposes of the Rule, through the continuing disclosure service portal provided by the EMMA system as described in 1934 Act Release No , or any similar system that is acceptable to the Securities and Exchange Commission, certain annual financial information and operating data, generally consistent with the financial information and operating data contained in Appendix A hereof, together with audited financial statements. Such information is expected to be available on or before January 1 of each year for the fiscal year ending on the preceding June 30 and will be made available, in addition to the MSRB, to each holder of the Series 2015 Bonds who makes written request for such information; provided that audited financial statements, if not available on January 1, will be filed when available. The audited financial statements and other financial statements will be prepared on a basis of accounting prescribed by the Kentucky Department of Education from time to time. The records of the Board are maintained and the budgetary process is based on the modified accrual basis of accounting, which was adopted by the Board during the 1997 fiscal year. The Board maintains its accounting records generally in accordance with the principles of fund accounting. Financial statements are prepared in accordance with generally accepted accounting principles ( GAAP ), although the Board s budgetary process accounts for certain transactions on a basis other than GAAP. Reference is made to the notes to the Board s audited financial statements for a detailed description of the accounting principles pursuant to which the Board s financial statements will be prepared. (b) with the MSRB through EMMA, notice of the occurrence of any of the following events with respect to the Series 2015 Bonds in a timely manner not in excess of ten business days after the occurrence of such event: (a) principal and interest payment delinquencies, (b) non-payment related defaults, if material, (c) unscheduled draws on debt service reserves reflecting financial difficulties, (d) unscheduled draws on credit enhancements reflecting financial difficulties, (e) substitution of credit or liquidity providers, or their failure to perform, (f) 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 material notices or determinations with respect to the tax status of the Series 2015 Bonds, or other material events affecting the tax status of the Series 2015 Bonds, (g) modifications to rights of holders of Series

26 Bonds, if material, (h) Series 2015 Bond calls, if material, and tender offers, (i) defeasances, (j) release, substitution or sale of property securing repayment of the Series 2015 Bonds, if material, (k) rating changes, (l) bankruptcy, insolvency, receivership or similar event of the Board, (m) the consummation of a merger, consolidation, or acquisition involving the Board or the sale of all or substantially all of the assets of the Board, 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 (n) appointment of a successor or additional trustee or the change of a trustee, if material; provided that the Board, as the case may be, may from time to time choose to provide notice of the occurrence of certain other events, in addition to those listed above, if, in the judgment of such entity, any such other event is material with respect to the Series 2015 Bonds; but the Board does not undertake to commit to provide any such notice of the occurrence of any material event except those events listed above. (c) in a timely manner, with the MSRB through EMMA, notice of a failure by the Board to file the required financial information on or before the date specified in its Continuing Disclosure Certificates. The Board reserves the right to modify from time to time the specific types of information filed or the format of the presentation of such information, to the extent necessary or appropriate in the judgment of the Board, provided that the Board agrees that any such modification will be done in a manner consistent with the Rule. The Board reserves the right to terminate its obligation to file annual financial information and notices of material events as set forth above, if and when the Board no longer remains an obligated person with respect to the Series 2015 Bonds within the meaning of the Rule. The Board acknowledges that its undertaking pursuant to the Rule described under this heading is intended to be for the benefit of the holders (including beneficial owners) of the Series 2015 Bonds and shall be enforceable by any holder of Series 2015 Bonds, provided that a Bondholder s right to enforce the provisions of this undertaking shall be limited to a right to obtain specific performance of the Board s obligations pursuant to the provisions of this undertaking, and any failure by the Board to comply with the provisions of this undertaking shall not be an event of default with respect to the Series 2015 Bonds under the Series 2015 Bond Resolutions or the Series 2015 Leases. The Board has complied in all material respects with its previous undertakings under the Rule except (a) the Board filed its operating data and audited financial statements for its 2009 and 2010 fiscal years beyond the times permitted for filing by the governing Continuing Disclosure Certificates (143 and 11 days late, respectively), (b) the Board failed to timely file failure to file notices for the late filings until February 4, 2015, (c) the Board filed a combined notice of two virtually simultaneous rating downgrades beyond the time permitted for filing by the governing Continuing Disclosure Certificates (182 days late), and (d) the Board failed to timely file a failure to file notice for the notice until January 6, Purchase of the Series 2015 Bonds shall be conditioned upon the receipt by the initial purchaser of the Series 2015 Bonds, at or before the delivery of the Series 2015 Bonds, of evidence that the Board has made the continuing disclosure undertaking described above, in the forms of Continuing Disclosure Certificates, for the benefit of the holders of the Series 2015 Bonds. See KENTUCKY SCHOOL FACILITIES CONSTRUCTION COMMISSION herein with respect to certain annual disclosure obligations of the Commonwealth pursuant to the Rule. MATERIAL LITIGATION There is no controversy or litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution, or delivery of the Series 2015 Bonds, or in any way contesting or affecting the validity of the Series 2015 Bonds or any proceedings of the Corporation or the Board taken with respect to the issuance or sale thereof, or the pledge or application of any moneys or security provided for the payment of the Series 2015 Bonds or the due existence or powers of the Corporation or the Board. Four of the Board s employees have been sued in their official capacities in connection with the alleged abuse of several students by a former employee of the Board. To date the Board has not been named a defendant in the lawsuit. The former employee previously pled guilty to criminal charges in connection with the alleged abuse. The Board s insurer has denied coverage for the plaintiffs claims under the applicable claims-made policy and 20

27 the Board is considering whether to contest the denial. The litigation is in the early stages of discovery and no reasonable estimate of the Board s potential liability, if any, can be made at this time. VERIFICATION OF MATHEMATICAL ACCURACY (SERIES 2015B BONDS ONLY) Chris D. Berens, CPA, PC (the Verification Agent ) will verify from the information provided to them the mathematical accuracy as of the date of the closing on the Series 2015B Bonds of (1) the computations contained in the provided schedules to determine that the anticipated revenues from the securities and cash deposits listed in the Financial Advisor s schedules, to be held in escrow, will be sufficient to pay, when due, the principal, interest and call premium payment requirements, if any, of the Refunded Series 2007A Bonds and (2) the computations of yield on both the securities and the Series 2015B Bonds contained in the provided schedules used by Bond and Tax Counsel in its determinations that the interest on the Series 2015B Bonds is exempt from gross income for federal tax purposes. The Verification Agent will express no opinion on the assumptions provided to them, nor as to the exclusion of interest from gross income on the Series 2015B Bonds. The Series 2015A Bonds UNDERWRITING The Series 2015A Bonds were purchased (pending delivery on or about September 30, 2015) at a competitive sale held on September 2, 2015, by, as underwriter, at a purchase price of $, representing % of par value. The initial public offering prices set forth on the inside cover page of this Official Statement may be changed by the Underwriter and the Underwriter may offer and sell the Series 2015A Bonds to certain dealers (including dealers depositing Series 2015A Bonds into investment trusts) and others at prices lower than the offering prices set forth on the inside cover page. The Series 2015B Bonds The Series 2015B Bonds were purchased (pending delivery on or about September 23, 2015) at a competitive sale held on September 2, 2015, by, as underwriter, at a purchase price of $, representing % of par value. The initial public offering prices set forth on the inside cover page of this Official Statement may be changed by the Underwriter and the Underwriter may offer and sell the Series 2015B Bonds to certain dealers (including dealers depositing Series 2015B Bonds into investment trusts) and others at prices lower than the offering prices set forth on the inside cover page. FINANCIAL ADVISOR J.J.B. Hilliard, W.L. Lyons, LLC, Louisville, Kentucky ( Hilliard Lyons ), has been employed as Financial Advisor in connection with the issuance of the Series 2015 Bonds. Hilliard Lyons fee for services rendered with respect to the sale of the Series 2015 Bonds is contingent upon the issuance and delivery thereof. RATINGS The Series 2015 Bonds have been assigned an underlying rating of by Moody s Investors Service, Inc. ( Moody s ) and by Standard & Poor s Ratings Services ( S&P ), respectively. The Series 2015 Bonds have also been assigned a rating of by Moody s based on the Kentucky School District Enhancement Program ( KSDE ). Any explanation of the significance of such ratings may be obtained only from Moody s or S&P. The Board and the Corporation furnished to Moody s and S&P certain information and materials about the Series 2015 Bonds and themselves. Generally, rating agencies base their ratings on such information and materials and on investigations, studies and assumptions by the rating agencies. There is no assurance that such ratings will continue for any given period of time or that they may not be lowered or withdrawn entirely by Moody s or S&P. Any downward change in or withdrawal of such rating could have an adverse effect on the market price of the Series 2015 Bonds. 21

28 Additionally, due to the ongoing uncertainty regarding the debt of the United States of America, including without limitation, the general economic conditions in the country, and other political and economic developments that may affect the financial condition of the United States government, the United States debt limit, and the bond ratings of the United States and its instrumentalities, obligations issued by state and local governments, such as the Series 2015 Bonds, could be subject to a rating downgrade. Furthermore, if a significant default or other financial crisis should occur in the affairs of the United States or of any of its agencies or political subdivisions, then such event could also adversely affect the market for and ratings, liquidity, and market value of outstanding debt obligations, such as the Series 2015 Bonds. REFERENCE TO DOCUMENTS All foregoing summaries and descriptions of provisions set forth in the Series 2015 Bond Resolutions, the Series 2015 Leases, the Continuing Disclosure Certificates and related documents, and all references to other documents and materials not purported to be quoted in full, are brief outlines of certain provisions of such documents, reference to which documents is hereby made and copies of which will be furnished by the Corporation upon written request. MISCELLANEOUS Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the holders of any of the Series 2015 Bonds. [Signature Page To Follow] 22

29 This Official Statement has been duly approved, executed and delivered by the Corporation and the Board. Dated September, 2015 FAYETTE COUNTY SCHOOL DISTRICT FINANCE CORPORATION By: President FAYETTE COUNTY BOARD OF EDUCATION By: Chairperson KENTUCKY SCHOOL FACILITIES CONSTRUCTION COMMISSION By: Executive Director 23

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31 APPENDIX A FAYETTE COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION Tax Base and Operating Data

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33 TAX BASE INFORMATION Property Subject to Taxation The following table summarizes the assessed valuation of all classes of property subject to taxation by the Board: Year Real Estate, Tangible & Franchise Motor Vehicle Total Assessed Value $26,055,341,421 $2,017,674,715 $28,073,016, ,485,417,295 1,942,208,626 27,427,625, ,241,599,276 1,907,014,389 27,148,613, ,958,166,561 1,812,027,836 26,770,194, ,686,167,132 1,749,651,556 26,435,818,688 Source: Fayette County School District History of Assessment Rates The following presents the assessment rates for the last five fiscal years for property subject to taxation by the Board: General Fund Building Fund Motor Vehicle Utilities (as a percent) 3.0% 3.0% 3.0% 3.0% 3.0% Occupational (as a percent) 0.5% 0.5% 0.5% 0.5% 0.5% Source: Fayette County School District Tax Receipts The following presents real estate, tangible, personal and public service and motor vehicle tax receipts in the District for the last five tax years: Fiscal Year Taxes Collected Taxes Budgeted Percent Collected $186,931,537 $186,837, % ,508, ,299, ,430, ,743, ,280, ,725, ,807, ,945, Source: Fayette County School District A-1

34 Top Ten Taxpayers for Fiscal Year Taxable Property Taypayer Assessed Value Fayette Mall SPE LLC $117,000,000 Fourth Quarter Properties 94,755,300 Sir Forty 57 LLC 52,500,000 Lexmark International Inc. 48,898,600 War Admiral Place LLC 47,231,200 Weingarten Realty Inc. 45,900,500 Fayette Plaza CMBS LLC 40,000,000 Inland American Lodging LLC 39,330,000 Beaumont Lexington 37,525,300 Mid American Apts LLC 37,400,000 Source: Department of Finance of Lexington-Fayette Urban County Government OPERATING AND FINANCIAL DATA The District serves the public educational needs of the entire County. School enrollment and average daily attendance for each of the past five years are summarized below: Average Year Enrollment Daily Attendance (est.) 39,552 37, ,112 36, ,307 34, ,725 34, ,661 33,390 Source: Fayette County School District (The remainder of this page intentionally left blank.) A-2

35 Summary of Major Fund Balances The District maintains its books and records on the modified accrual basis method of accounting. This practice is the accounting method prescribed by the Kentucky Department of Education for local school districts. The following table summarizes, on a modified accrual basis, the activity of the major funds used by the District for the fiscal years ending June 30. General Fund FISCAL YEARS Working Budget (1) Actual Beginning Balance $ 25,711,319 $ 33,047,544 $ 40,468,179 $ 57,329,932 $ 59,303,483 Adjustments in Beginning Balance - 3,400,000 16,353,655 1,150,000 3,140,950 Adjusted Beginning Balance $ 25,711,319 $ 36,447,544 $ 56,821,834 $ 58,479,932 $ 62,444,433 Revenues From Local Sources General Property Tax 151,112, ,579, ,845, ,455, ,474,983 Revenue in Lieu of Taxes 11,781-12,972 20,990 - Public Service Companies 4,910,666 4,284,148 3,997,480 3,287,652 4,250,163 Delinquent Tax 1,250,000 1,744,469 1,875,774 1,870,326 1,138,850 Utilities Tax 22,616,123 22,764,924 21,782,444 21,391,794 20,791,801 Motor Vehicle Tax 10,498,365 10,567,157 10,286,597 9,704,577 9,041,538 Occupational License Tax 33,711,903 33,534,785 30,686,726 30,216,866 29,575,337 Omitted Property Tax 1,250,000 1,029,925 1,736, ,698 1,775,401 Earnings on Investments 165, , , , ,131 Rental of School Facilities and Other Local Sources 3,733,880 5,548,786 5,795,626 3,899,352 4,096,188 Total Revenues from Local Sources $ 229,260,115 $ 222,210,291 $ 209,180,401 $ 197,700,187 $ 189,434,392 State Funding SEEK Program 93,668,689 88,289,863 85,263,612 84,097,929 74,848,616 Miscellaneous 1,284,408 1,349,353 1,336,956 1,289,883 1,286,212 Revenue for/on Behalf Payments 70,000,000 66,859,864 64,831,137 61,504,643 57,327,101 Total State Funding $ 164,953,097 $ 156,499,080 $ 151,431,705 $ 146,892,455 $ 133,461,929 Federal Funding Medicaid Reimbursement 183, , , ,497 97,450 Total Federal Funding $ 183,000 $ 180,350 $ 133,493 $ 242,497 $ 97,450 Other Sources Capital Lease Proceeds - 1,486,037 1,887, Transfers 1,088,408 1,088,408 1,247,001 1,771,423 1,256,207 Sale of Land and Improvements Total Other Sources $ 1,088,408 $ 2,574,445 $ 3,134,802 $ 1,771,423 $ 1,256,207 Total Receipts Plus Beginning Balance $ 421,195,939 $ 417,911,710 $ 420,702,235 $ 405,086,494 $ 386,694,411 Expenditures Instruction 245,182, ,521, ,977, ,294, ,286,369 Student Support Services 21,324,999 20,443,899 21,194,738 19,548,886 17,554,361 Instructional Staff Support Services 16,084,505 16,878,899 16,950,065 16,278,949 15,727,042 District Administrative Support Services 8,080,290 6,661,834 6,622,171 5,332,846 4,640,190 School Administrative Support Services 23,890,923 21,858,553 20,316,952 19,429,225 17,804,006 Business Support Services 25,782,356 22,987,011 23,368,783 20,935,833 19,854,465 Pupil Transportation 19,424,578 21,919,519 21,751,683 19,757,255 19,022,475 Operation of Plant 42,122,552 39,658,701 40,606,528 39,975,616 36,168,373 Fund Transfers 1,394,012 1,760,796 3,167,742 1,817,808 4,962,135 Contingency 16,193, Community Services 205, Debt Service 1,509,377 1,509,377 1,698,786 1,247,790 1,345,063 Total Expenditures $ 421,195,939 $ 392,200,391 $ 387,654,691 $ 364,618,315 $ 329,364,479 Ending Balance $ - $ 25,711,319 $ 33,047,544 $ 40,468,179 $ 57,329,932 Source: Fayette County School District (1) The District is required, by Kentucky Department of Education policy, to submit a budget that results in a zero based ending fund balance. A-3

36 SPECIAL VOTED BUILDING FUND TAX FISCAL YEARS Working Budget (2) Actual Beginning Balance $ 1,025,283 $ 2,407,487 $ 1,426,282 $ 291,309 $ 762,161 Adjustments in Beginning Balance Adjusted Beginning Balance (1) $ 1,025,283 $ 2,407,487 $ 1,426,282 $ 291,309 $ 762,161 Receipts Building Fund Tax General Property (Real Estate, Tangible Property) 27,328,310 26,808,276 26,592,974 26,219,484 26,431,570 Motor Vehicles 968, , , , ,366 Other Misc. Receipts 7,078 18,189 15,749 9,127 22,025 Total Tax Receipts $ 28,303,872 $ 27,774,179 $ 27,518,892 $ 27,120,933 $ 27,396,961 Total Cash Balance & Receipts $ 29,329,155 $ 30,181,666 $ 28,945,174 $ 27,412,242 $ 28,159,122 Expenditures Miscellaneous Expenditures 29,329,155 29,156,383 26,537,687 25,985,960 27,867,813 Total Expenditures $ 29,329,155 $ 29,156,383 $ 26,537,687 $ 25,985,960 $ 27,867,813 Ending Balance, as of June 30 $ - $ 1,025,283 $ 2,407,487 $ 1,426,282 $ 291,309 Source: Fayette County School District (1) Adjustments reflect transfers to or from other funds. (2) The District is required, by Kentucky Department of Education policy, to submit a budget that results in a zero based ending fund balance. (The Remainder of This Page Intentionally Left Blank) A-4

37 CAPITAL OUTLAY FUND FISCAL YEARS Working Budget Actual (2) Beginning Balance $ 27,417 $ 1 $ 2,401,987 $ 430 $ 1,159,918 Adjustments in Beginning Balance Adjusted Beginning Balance (1) $ 27,418 $ 1 $ 2,401,987 $ 430 $ 1,159,918 Receipts Capital Outlay Allotment 3,551,300 3,521,343 3,460,470 3,399,458 3,368,625 Other 3,500 3,091 7,031 2,529 2,770 Total Receipts $ 3,554,800 $ 3,524,434 $ 3,467,501 $ 3,401,987 $ 3,371,395 Total Receipts & Cash Balance $ 3,582,218 $ 3,524,435 $ 5,869,488 $ 3,402,417 $ 4,531,313 Expenditures Debt Service on Bonds 3,582,218 3,497,018 5,869,487 1,000,430 4,530,883 Other Total Expenditures $ 3,582,218 $ 3,497,018 $ 5,869,487 $ 1,000,430 $ 4,530,883 Ending Balance, as of June 30 $ - $ 27,417 $ 1 $ 2,401,987 $ 430 Source: Fayette County School District (1) Adjustments reflect transfers to or from other funds. (2) The District is required, by Kentucky Department of Education policy, to submit a budget that results in a zero based ending fund balance. Seek Allotment The following represents the SEEK allotment provided to the Board for the last five years (est.) SEEK Funds $93,668,689 $88,289,863 $85,263,612 $84,097,929 $74,848,616 Source: Fayette County School District (The Remainder of This Page Intentionally Left Blank) A-5

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39 APPENDIX B FAYETTE COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION Outstanding Bonds of the District

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41 OUTSTANDING BONDS OF THE DISTRICT The bonds outstanding of the District as of September 2, 2015 are presented below. TOTAL DISTRICT BONDS Final Original Bonds Retired Bonds Dated Date of Bond Issue Maturity Amount Issued or Defeased Outstanding September 15, 2004, Series A 12/1/2016 $ 13,505,000 $ 10,090,000 $ 3,415,000 May 15, 2007, Series A (1) 5/1/ ,450,000 1,660,000 34,790,000 July 30, 2009, Series B 8/1/2018 8,955,000 5,745,000 3,210,000 February 9, 2010, Series A 4/1/ ,440,000 3,280,000 10,160,000 August 18, 2010, Series B (2) 8/1/ ,175,000 8,990,000 34,185,000 June 14, 2011, Series A 6/1/ ,175,000 7,570,000 44,605,000 January 31, 2012, Series B 6/1/ ,590, ,000 15,785,000 June 7, 2012, Series A 4/1/ ,310, ,000 41,960,000 July 17, 2012, Series B 7/1/ ,730,000 6,645,000 50,085,000 July 10, 2013, Series A 10/1/ ,270, ,000 49,040,000 March 31, 2014, Series A 6/1/ ,260,000 1,665,000 28,595,000 November 20, 2014B 11/1/ ,935,000-13,935,000 July 28, 2015, Series C 7/1/ ,425,000-21,425,000 July 14, 2015, Series D 8/1/ ,665, ,665,000 September 3, 2015E (3) 6/1/2020 7,935,000-7,935,000 Total $ 507,820,000 $ 47,030,000 $ 460,790,000 SCHOOL FACILITIES CONSTRUCTION COMMISSION PARTICIPATION BONDS (4) Final Original Bonds Retired Bonds Dated Date of Bond Issue Maturity Amount Issued or Defeased Outstanding May 15, 2007, Series A (1) 5/1/2027 $ 4,798,380 $ 1,463,156 $ 3,335,224 July 30, 2009, Series B 8/1/ , , ,507 June 14, 2011, Series A 6/1/2031 8,511,610 1,231,671 7,279,939 June 7, 2012, Series A 4/1/2023 6,487,357 91,553 6,395,804 July 10, 2013, Series A 10/1/2033 2,462,082 79,391 2,382,691 March 31, 2014, Series A 6/1/2029 2,249, ,300 2,108,142 July 28, 2015, Series C 7/1/ , ,175 July 14, 2015, Series D 8/1/2035 6,769,051-6,769,051 Total $ 32,287,436 $ 3,359,903 $ 28,927,533 DISTRICT PARTICIPATION BONDS Final Original Bonds Retired Bonds Dated Date of Bond Issue Maturity Amount Issued or Defeased Outstanding September 15, 2004, Series A 12/1/2016 $ 13,505,000 $ 10,090,000 $ 3,415,000 May 15, 2007, Series A (1) 5/1/ ,651, ,844 31,454,776 July 30, 2009, Series B 8/1/2018 8,421,661 5,392,168 3,029,493 February 9, 2010, Series A 4/1/ ,440,000 3,280,000 10,160,000 August 18, 2010, Series B (2) 8/1/ ,175,000 8,990,000 34,185,000 June 14, 2011, Series A 6/1/ ,663,390 6,338,329 37,325,061 January 31, 2012, Series B 6/1/ ,590, ,000 15,785,000 June 7, 2012, Series A 4/1/ ,822, ,447 35,564,196 July 17, 2012, Series B 7/1/ ,730,000 6,645,000 50,085,000 July 10, 2013, Series A 10/1/ ,807, ,609 46,657,309 March 31, 2014, Series A 6/1/ ,010,558 1,523,700 26,486,858 November 20, /1/ ,935,000-13,935,000 July 28, 2015, Series C 7/1/ ,948,825-20,948,825 July 14, 2015, Series D 8/1/ ,895,949-94,895,949 September 3, 2015, Series E (3) 6/1/2020 7,935,000-7,935,000 Total $ 475,532,564 $ 43,670,097 $ 431,862,467 Source: Fayette County School District (1) Portions of this financing will be refunded through the issuance of the Series 2015B Bonds. See "The Refunding Plans" for more details. (2) All of the outstanding 2010B Bonds will be redeemed through the issuance of the Series 2015A Bonds. See "The Refunding Plans" for more details. (3) The Series 2015E Bonds are scheduled to close September 3, (4) The Bonds of the School Facilities Construction Commission, a state agency, are subject to state biennial appropriations. B-1

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43 APPENDIX C FAYETTE COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION Demographic and Economic Data

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45 LEXINGTON AND FAYETTE COUNTY, KENTUCKY Lexington, located in the heart of central Kentucky s Bluegrass Region, is the state s second largest metropolitan area. Fayette County covers a land area of 285 square miles of gently rolling terrain. The urbanized central city is surrounded by a scenic countryside of world famous horse farms. Lexington-Fayette County had a census population of 308,428 in Lexington is the principal trade center of central Kentucky as well as an industrial, educational, medical, and cultural center for the entire Bluegrass Region. Its central location and excellent transportation system have been major factors in the city s growth and development. Lexington is located 78 miles east of Louisville, Kentucky; 83 miles south of Cincinnati, Ohio; 174 miles north of Knoxville, Tennessee; and 338 miles east of St. Louis, Missouri. The Economic Framework The total number of Fayette County residents employed as of January 2015 was 156,549. In 2014, Manufacturing firms in the county reported 12,237 employees; trade, transportation and utilities provided 33,845 jobs; public administration, financial activities and informational services provided 12,828 jobs; 78,057 people were employed in service occupations; agriculture, forestry, fishing and hunting provided 1,746 jobs; and contract construction firms provided 7,671 jobs. Labor Supply There is a current estimated labor supply of 32,270 persons available for industrial jobs in the labor market area. In addition, from 2014 through 2017, approximately 41,840 young persons in the area will become 18 years of age and potentially available for industrial jobs. Transportation Interstate 75, a major north-south corridor, and Interstate 64, a major east-west route, intersect north and east of downtown Lexington. In addition, five U.S. highways serve Lexington and two multi-lane parkways are located within 22 miles of the city. Approximately 42 trucking companies serve Lexington and 7 companies maintain a terminal locally. CSX Transportation and the Norfolk Southern Corporation each provide main line rail service to Lexington. Commercial airline service is available locally at Blue Grass Airport. The largest employers in the county are listed below for 2014: Firm Product Average Employment University of Kentucky Higher education 12,430 Toyota Manufacturing 7,900 Fayette County Public Schools K-12 education 5,427 Kentucky Health Healthcare 3,610 Transportation Cabinet Government 3,292 Kentucky One Health Healthcare 3,000 Xerox Fortune 500 developer, manufacturer, and supplier of printing 3,000 and imaging solutions Lexington-Fayette Urban Co Govt Local government 2,821 Eastern Kentucky University Higher Education 2,167 Lexmark International, Inc. Fortune 500 developer, manufacturer, and supplier of printing and imaging solutions 2,154 Sources: Greater Lexington Chamber of Commerce C-1

46 Per Capita Income Median Family Income Fayette County Economic Statistics Average Weekly Wage Civilian Labor Force Unemployment Year Rate Employment 2015 (1) (1) (1) 4.3% (3) 163,612 (3) 156,549 (3) 2014 (1) $67,800 $ (2) , , $42,353 63, , , ,977 67, , , ,709 66, , ,601 Source: Kentucky Cabinet for Economic Development (1) Data not available (2) Estimated as of 3rd Quarter (3) Preliminary, as of January (The Remainder of This Page Intentionally Left Blank) C-2

47 APPENDIX D FAYETTE COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION Estimated District Debt Service Requirements on the Series 2015A Bonds; Estimated Commission and District Debt Service Requirements on the 2015B Bonds; and Estimated Total Annual District Debt Service Requirements

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49 FAYETTE COUNTY, KENTUCKY SCHOOL DISTRICT FINANCE CORPORATION SCHOOL BUILDING REFUNDING REVENUE BONDS SERIES 2015A ESTIMATED DEBT SERVICE REQUIREMENTS ON SERIES 2015A BONDS 100% District Date Principal Interest Total P+I Fiscal Total 2/01/ $331, $331, $331, /01/2016 $1,895, , ,387, /01/ , , ,861, /01/2017 1,930, , ,403, /01/ , , ,858, /01/2018 1,970, , ,424, /01/ , , ,859, /01/2019 2,015, , ,449, /01/ , , ,854, /01/2020 2,075, , ,479, /01/ , , ,852, /01/2021 2,135, , ,508, /01/ , , ,849, /01/2022 2,200, , ,541, /01/ , , ,849, /01/2023 2,270, , ,578, /01/ , , ,852, /01/2024 2,335, , ,609, /01/ , , ,848, /01/2025 2,400, , ,639, /01/ , , ,842, /01/2026 2,470, , ,673, /01/ , , ,839, /01/2027 2,540, , ,706, /01/ , , ,834, /01/2028 2,615, , ,743, /01/ , , ,830, /01/2029 2,695, , ,782, /01/ , , ,827, /01/2030 2,780, , ,825, ,825, Total $34,325, $8,692, $43,017, $43,017, J.J.B. Hilliard, W.L. Lyons Public Finance D-1

50 Commission FAYETTE COUNTY, KENTUCKY SCHOOL DISTRICT FINANCE CORPORATION SCHOOL BUILDING REFUNDING REVENUE BONDS SERIES 2015B ESTIMATED DEBT SERVICE REQUIREMENTS ON SERIES 2015B BONDS District Date Principal Interest Total P+I Principal Interest Total P+I Principal Interest Total P+I Fiscal Total 11/01/ $9, $9, $105, $105, $115, $115, /01/2016 $70, , , $659, , ,159, $730, , ,276, $1,391, /01/ , , , , , , /01/ , , , , , , , , , ,320, /01/ , , , , , , /01/ , , , , , , , , ,041, ,583, /01/ , , , , , , /01/ , , , , , , , , ,046, ,583, /01/ , , , , , , /01/ , , , , , , , , ,049, ,578, /01/ , , , , , , /01/ , , , , , ,161, , , ,491, ,012, /01/ , , , , , , /01/ , , , , , ,202, ,030, , ,536, ,043, /01/ , , , , , , /01/ , , , , , ,187, ,035, , ,526, ,017, /01/ , , , , , , /01/ , , , ,916, , ,372, ,240, , ,715, ,191, /01/ , , , , , , /01/ , , , ,022, , ,418, ,355, , ,767, ,179, /01/ , , , , , , /01/ , , , ,052, , ,388, ,395, , ,741, ,088, /01/2026-5, , , , , , /01/ , , , ,372, , ,542, ,725, , ,900, ,076, Total $3,210, $677, $3,888, $34,034, $10,144, $44,178, $37,245, $10,822, $48,067, $48,067, Total J.J.B. Hilliard, W.L. Lyons Public Finance D-2

51 FAYETTE COUNTY SCHOOL DISTRICT FINANCE CORPORATION SCHOOL BUILDING REFUNDING REVENUE BONDS, SERIES 2015A & B Fiscal Year Ended June 30 ESTIMATED ANNUAL DISTRICT DEBT SERVICE REQUIREMENTS Series 2015A Series 2015B Local Existing Net Debt Service (1) Principal Interest Total P+I Principal Interest Total P+I New Net Debt Service 2015 $29,681, $29,681, ,185, $331, $331, $659, $606, $1,265, ,782, ,596, $1,895, , ,861, , , ,194, ,651, ,682, ,930, , ,858, , , ,219, ,760, ,700, ,970, , ,859, , , ,219, ,779, ,823, ,015, , ,854, , , ,214, ,892, ,194, ,075, , ,852, , , ,648, ,696, ,178, ,135, , ,849, , , ,679, ,707, ,279, ,200, , ,849, , , ,653, ,783, ,841, ,270, , ,852, ,916, , ,827, ,522, ,824, ,335, , ,848, ,022, , ,815, ,489, ,850, ,400, , ,842, ,052, , ,725, ,418, ,879, ,470, , ,839, ,372, , ,713, ,431, ,565, ,540, , ,834, ,399, ,604, ,615, , ,830, ,434, ,295, ,695, , ,827, ,122, ,569, ,780, , ,825, ,394, ,858, ,858, ,710, ,710, ,839, ,839, ,336, ,336, Total $555,499, $34,325, $8,692, $43,017, $34,034, $10,144, $44,178, $642,694, Note: (1) Existing debt service excludes refunded Series 2007A and 2010 Debt Service. Fiscal Years 2015 and 2016 are net of Direct Pays already received on the Series 2010 Bonds. J.J.B. Hilliard, W.L. Lyons Public Finance D-3

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53 APPENDIX E FAYETTE COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION Audited Financial Statements for the Year Ended June 30, 2014

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55 District-wide and Fund Financial Statements and Required Supplementary Information 2014 Fayette County School District June 30, 2014