OFFICIAL STATEMENT. Rating: AA (stable outlook) (insured)

Transcription

1 New Issue Book-Entry Only OFFICIAL STATEMENT Rating: AA (stable outlook) (insured) AGM (insured) In the opinion of Stevens & Lee, P.C., Scranton, Pennsylvania, Bond Counsel, assuming continuing compliance by the School District with certain covenants to comply with provisions of the Internal Revenue Code of 1986, as amended (the Code ), and any applicable regulations thereunder, interest on the Bonds is not includible in gross income under Section 103(a) of the Code and interest on the Bonds is not an item of tax preference for purposes of the federal individual and corporate alternative minimum taxes. See TAX EXEMPTION AND OTHER TAX MATTERS in this Official Statement. Other provisions of the Code may affect the purchasers and holders of the Bonds. See TAX EXEMPTION AND OTHER TAX MATTERS - Federal Tax Laws herein for a brief description of these provisions. Under the laws of the Commonwealth of Pennsylvania, the Bonds and interest on the Bonds shall be free from taxation for State and local purposes within the Commonwealth of Pennsylvania, but this exemption does not extend to gift, estate, succession or inheritance taxes or any other taxes not levied or assessed directly on the Bonds or the interest thereon. Under the laws of the Commonwealth of Pennsylvania, profits, gains or income derived from the sale, exchange or other disposition of the Bonds shall be subject to State and local taxation within the Commonwealth of Pennsylvania. 21,550,000 SCHOOL DISTRICT OF THE CITY OF SCRANTON Lackawanna County, Pennsylvania 6,565,000 General Obligation Notes, Series A of ,985,000 General Obligation Bonds, Series B of 2015 Dated: Date of Delivery Interest Payable: June 15 and December 15 Due: June 15, as shown on the inside front cover First Interest Payment: June 15, 2015 Denomination: Integral multiples of 5,000 Form: Book-Entry MATURITY SCHEDULE (See Inside Front Cover) Legal Investment for Fiduciaries in Pennsylvania: The Bonds are a legal investment for fiduciaries in the Commonwealth of Pennsylvania under the Probate, Estate and Fiduciaries Code, Act of June 30, 1972, No. 164, PL. 508 as amended and supplemented. Payable: The General Obligation Notes, Series A of 2015, in the aggregate principal amount of 6,565,000 (the Series A Notes ) and the General Obligation Bonds, Series B of 2015, in the aggregate principal amount of 14,985,000 (the Series B Bonds and together with the Series A Notes, the Bonds ) of the School District of the City of Scranton (the School District ), in Lackawanna County, Pennsylvania, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. Purchases of the Bonds will be made only in book-entry form, and purchasers will not receive certificates representing their interests in the Bonds. So long as DTC, or its nominee, Cede & Co., is the registered owner of the Bonds, payments of the principal and interest on the Bonds will be made by the Paying Agent directly to DTC. Disbursement of such payments to the DTC Participants is the responsibility of DTC, and disbursements of such payments to Beneficial Owners of the Bonds is the responsibility of the DTC Participants and the Indirect Participants. See BOOK-ENTRY ONLY SYSTEM herein. Redemption: The Bonds are subject to redemption prior to their stated maturity dates as set forth herein. Purpose: Proceeds of the Series A Notes will be used to provide funds to: (1) refund a portion of the School District s General Obligation Bonds, Series A of 2006; (2) refund a portion of the School District s General Obligation Bonds, Series B of 2006; (3) refund a portion of the School District s General Obligation Bonds, Series A of 2007; (4) refund a portion of the School District s General Obligation Bonds, Series B of 2007; (5) refund a portion of the School District s General Obligation Bonds, Series C of 2007; (6) refund a portion of the School District s General Obligation Bonds, Series A of 2011; (7) refund a portion of the School District s General Obligation Bonds, Series C of 2011; (8) refund a portion of the School District s Federally Taxable General Obligation Bonds, Series D of 2011; and (9) pay related costs, including the costs of issuing and insuring the Series A Notes. Proceeds of the Series B Bonds will be used to provide funds for the following: (1) advance refund the unrefunded balance of the School District s General Obligation Bonds, Series A of 2006; (2) advance refund the unrefunded balance of the School District s General Obligation Bonds, Series B of 2006; (3) planning, designing and constructing improvements to School District facilities; (4) purchasing capital equipment for use by the School District; (5) funding additional capital projects within the School District as approved by the Board of School Directors; and (6) pay related costs, including the costs of issuing and insuring the Series B Bonds. Security: The Bonds are payable from tax and other general revenues of the School District. The School District has covenanted that it will provide in its budget in each year, and will appropriate from its general revenues in each such year, the amount of the debt service on the Bonds for such year and will duly and punctually pay or cause to be paid from funds in the sinking funds established in the Resolution adopted by the School District on December 8, 2014, authorizing and securing the Bonds, or from any other of its revenue funds, the principal of every Bond and the interest thereon at the dates and place and in the manner stated in the Bonds, and for such budgeting, appropriation and payment the School District irrevocably has pledged its full faith, credit and taxing power, which taxing power includes the power to levy ad valorem taxes on all taxable property with the School District, within limitations provided by law (see Security for the Bonds and PENNSYLVANIA ACTS AFFECTING CERTAIN TAXING POWERS OF LOCAL SCHOOL DISTRICTS-Taxpayer Relief Act (Act 1), as Amended herein). THE SCHOOL DISTRICT HAS NO UNDERLYING RATING AND THE RATINGS ON THE BONDS ARE BASED ON THE ISSUANCE OF THE BOND INSURANCE POLICY AND THE RATING OF THE STATE INTERCEPT PROGRAM OF THE COMMONWEALTH. THE SCHOOL DISTRCT HAS INCURRED AN OPERATING DEFICIT IN EACH OF THE PAST THREE FISCAL YEARS THROUGH DECEMBER 31, REFERENCE IS MADE TO RISK FACTORS DISCUSSED IN THIS OFFICIAL STATEMENT (SEE BONDHOLDERS RISKS HEREIN). AN INVESTMENT IN THE BONDS INVOLVES A DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD READ THE ENTIRE OFFICIAL STATEMENT, AND IN PARTICULAR THE SECTIONS SECURITY FOR THE BONDS, BONDHOLDERS RISKS AND APPENDIX A BEFORE DECIDING TO PURCHASE ANY OF THE BONDS. Bond Insurance: The scheduled payment of principal of and interest on the Series A Notes and Series B Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Series A Notes and Series B Bonds by ASSURED GUARANTY MUNICIPAL CORP. ( AGM ). The Bonds are offered when, as and if issued by the School District and accepted by the Underwriters, subject to prior sale or withdrawal or to modification of the offer without notice, and subject to receipt of the approving legal opinion of Stevens & Lee, P.C., Scranton, Pennsylvania, Bond Counsel. Certain legal matters will be passed upon for the School District by its counsel, John Minora, Esq., Scranton, Pennsylvania, and for the Underwriters by their counsel, McNees Wallace & Nurick LLC, Lancaster, Pennsylvania. It is expected that the Bonds will be available for delivery, through the facilities of DTC, on or about February 27, The date of this Official Statement is February 19, 2015.

2 6,565,000 SCHOOL DISTRICT OF THE CITY OF SCRANTON Lackawanna County, Pennsylvania General Obligation Notes, Series A of 2015 Dated: Date of Delivery Interest Payable: June 15 and December 15 Due: June 15 as shown below First Interest Payment: June 15, 2015 Denomination: Integral multiples of 5,000 Form: Book-Entry MATURITY SCHEDULE Initial Principal Interest Offering Year Amount Rate Price CUSIP (1) , % % TX , TY , TZ , UA1 25, % Series A Term Notes Due June 15, % UB9 1,325, % Series A Term Notes Due June 15, % UC7 3,070, % Series A Term Notes Due June 15, % UD5 14,985,000 SCHOOL DISTRICT OF THE CITY OF SCRANTON Lackawanna County, Pennsylvania General Obligation Bonds, Series B of 2015 Dated: Date of Delivery Interest Payable: June 15 and December 15 Due: June 15 as shown below First Interest Payment: June 15, 2015 Denomination: Integral multiples of 5,000 Form: Book-Entry MATURITY SCHEDULE Initial Initial Principal Interest Offering Principal Interest Offering Year Amount Rate Price CUSIP (1) Year Amount Rate Price CUSIP (1) , % % UF , % % UM , UG , UN ,010, UH , UP ,055, UJ ,120, UQ ,090, UK ,200, UR ,130, UL7 2,365, % Series B Term Bonds Due June 15, % US2 2,405, % Series B Term Bonds Due June 15, % UT0 (1) The above CUSIP (Committee on Uniform Securities Identification Procedures) numbers have been assigned by an organization not affiliated with the School District or the Underwriters and such parties are not responsible for the selection or use of the CUSIP numbers. The CUSIP numbers are included solely for the convenience of bondholders and no representation is made as to the correctness of such CUSIP numbers. CUSIP numbers assigned to securities may be changed during the term of such securities based on a number of factors including, but not limited to, the refunding or defeasance of such issue or the use of secondary market financial products. Neither the School District or the Underwriters have agreed to, and there is no duty or obligation to, update this Official Statement to reflect any change or correction in the CUSIP numbers set forth above. ii

3 No dealer, broker, salesperson or other person has been authorized by School District of the City of Scranton, Lackawanna County, Pennsylvania (the School District ) or the Underwriters to give any information or make any representations with respect to the Bonds other than those contained in this Official Statement and if given or made, such information or representations must not be relied upon. 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 Bonds, by any person in any state or jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale prior to registration or qualification of the Bonds pursuant to the applicable securities laws of any such state or jurisdiction. The information set forth herein has been obtained from the School District and other sources that are believed to be reliable, but the Underwriters do not guarantee the accuracy or completeness of such information and such information is not to be construed as a representation by the Underwriters. Any statements herein involving matters of opinion or forecasts of the occurrence of future events or circumstances, whether or not expressly so stated, are intended as such and not as representation of fact. 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 have been no changes in the affairs of the School District since the date hereof. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE ORDER AND PLACEMENT OF MATERIALS IN THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES, ARE NOT TO BE DEEMED A DETERMINATION OF REVELENCE, MATERIALITY OR IMPORTANCE, AND THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICIES MUST BE CONSIDERED IN ITS ENTIRETY. THE OFFERING OF THE BONDS IS MADE ONLY BY THE MEANS OF THIS ENTIRE OFFICIAL STATEMENT. THE UNDERWRITERS HAVE PROVIDED THE FOLLOWING SENTENCE FOR INCLUSION IN THIS OFFICIAL STATEMENT. THE UNDERWRITERS HAVE REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT PURSUANT TO ITS RESPONSIBILITIES TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS, BUT THE UNDERWRITERS DO NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. Assured Guaranty Municipal Corp. ( AGM ) makes no representation regarding the Series A Notes and Series B Bonds or the advisability of investing in the Series A Notes and Series B Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading BOND INSURANCE and Appendix F - Specimen Municipal Bond Insurance Policy. iii

4 TABLE OF CONTENTS SUMMARY STATEMENT... vi INTRODUCTION... 1 PURPOSE OF THE ISSUE... 2 SOURCES AND USES OF FUNDS... 3 Refunding Project... 3 MATHEMATICAL VERIFICATION... 4 DESCRIPTION OF THE BONDS... 4 Transfer, Exchange and Registration of Bonds 5 REDEMPTION PROVISIONS... 5 Optional Redemption... 5 Mandatory Redemption... 5 Extraordinary Mandatory Redemption... 6 Notice of Redemption... 6 BOOK-ENTRY ONLY SYSTEM... 6 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS... 8 Pledge of the School District s Full Faith, Credit and Taxing Power... 8 Sinking Funds... 8 Intercept of Commonwealth Appropriations... 9 Commonwealth Enforcement of Debt Service Payments9 Actions in the Event of Default BONDHOLDERS RISKS Ratings on Bonds Based on the Issuance of the Bond Insurance Policy and the Rating of the State Aid Intercept Program State Intercept Timing Outstanding Debt Operating Deficits School District s Ability to Generate Revenues Ability to Raise Taxes Adverse Legislative Changes BOND INSURANCE BOND INSURANCE RISK FACTORS TAX EXEMPTION AND OTHER TAX MATTERS Federal Tax Laws Tax Exemption Regulations, Future Legislation MISCELLANEOUS Interest Rate Swap Agreement No Litigation Legal Opinions Ratings Continuing Disclosure Undertaking Continuing Disclosure Filing History Future Continuing Disclosure Compliance Underwriting Other Appendix A - Summaries of Financial Factors of the School District... A-1 Appendix B - Description of the School District... B-1 Appendix C - Audited Financial Statements of the School District Fiscal Year Ending December 31, C-1 Appendix D Proposed Forms of Opinions of Bond Counsel... D-1 Appendix E Proposed Form of Continuing Disclosure Certificate... E-1 Appendix F Specimen of Bond Insurance Policy... F-1 Appendix G - Bond Amortization Schedule... G-1 iv

5 SCHOOL DISTRICT OF THE CITY OF SCRANTON Lackawanna County, Pennsylvania BOARD OF SCHOOL DIRECTORS Said Douaihy... President Robert Sheridan... Vice President Virginia Orr... (non-voting member) Secretary Robert Casey... Member Kyle Donahue... Member Paul Duffy... Member Armand Martinelli... Member Mark McAndrew... Member Carol Oleski... Member Dr. Lyn Ruane... Member SCHOOL ADMINISTRATION John Marichak... Acting Superintendent Gregg Sunday... Deputy Superintendent of Finance Patrick Laffey... Assistant Business Manager BOND COUNSEL Stevens & Lee, P.C. Scranton, Pennsylvania SCHOOL DISTRICT SOLICITOR John Minora, Esquire Scranton, Pennsylvania UNDERWRITERS RBC Capital Markets, LLC Philadelphia, Pennsylvania Boenning & Scattergood, Inc. Conshohocken, Pennsylvania UNDERWRITERS COUNSEL McNees Wallace & Nurick LLC Lancaster, Pennsylvania PAYING AGENT The Fidelity Deposit and Discount Bank Dunmore, Pennsylvania FINANCIAL ADVISOR CaseCon Capital Inc Scranton, Pennsylvania SCHOOL DISTRICT ADDRESS 425 North Washington Avenue Scranton, PA v

6 SUMMARY STATEMENT This Summary Statement is subject in all respects to more complete information in this Official Statement. No person is authorized to detach this Summary Statement from this Official Statement or otherwise use it without the entire Official Statement. Issuer School District of the City of Scranton, Lackawanna County, Pennsylvania Bonds ,565,000 aggregate principal amount of General Obligation Notes, Series A of 2015, dated the date of delivery, maturing, or subject to mandatory sinking fund redemption, in various principal amounts (as herein described) on June 15 of the years 2016 through 2034, inclusive, with interest payable initially on June 15, 2015, and thereafter semiannually on June 15 and December 15 of each year. 14,985,000 aggregate principal amount of General Obligation Bonds, Series B of 2015, dated the date of delivery, maturing, or subject to mandatory sinking fund redemption, in various principal amounts (as herein described) on June 15 of the years 2016 through 2031, inclusive, with interest payable initially on June 15, 2015, and thereafter semiannually on June 15 and December 15 of each year. Redemption The Bonds are subject to redemption prior to their stated maturity dates as set forth herein. Form Book-Entry form. Application of Proceeds Proceeds of the Series A Notes will be used to provide funds to: (1) refund a portion of the School District s General Obligation Bonds, Series A of 2006; (2) refund a portion of the School District s General Obligation Bonds, Series B of 2006; (3) refund a portion of the School District s General Obligation Bonds, Series A of 2007; (4) refund a portion of the School District s General Obligation Bonds, Series B of 2007; (5) refund a portion of the School District s General Obligation Bonds, Series C of 2007; (6) refund a portion of the School District s General Obligation Bonds, Series A of 2011; (7) refund a portion of the School District s General Obligation Bonds, Series C of 2011; (8) refund a portion of the School District s Federally Taxable General Obligation Bonds, Series D of 2011; and (9) pay related costs, including the costs of issuing and insuring the Series A Notes. Proceeds of the Series B Bonds will be used to provide funds for the following: (1) advance refund the unrefunded balance of the School District s General Obligation Bonds, Series A of 2006; (2) advance refund the unrefunded balance of the School District s General Obligation Bonds, Series B of 2006; (3) planning, designing and constructing improvements to School District facilities; (4) purchasing capital equipment for use by the School District; (3) funding additional capital projects within the School District as approved by the Board of School Directors; and (5) pay related costs, including the costs of issuing and insuring the Series B Bonds. Security The Bonds are general obligations of the School District of the City of Scranton. Ratings... See Ratings herein. Bond Insurance... The Bonds carry the commitment of Assured Guaranty Municipal Corp. ( AGM or the Bond Insurer ), which assures payment of principal and interest to the holders of the Bonds. See BOND INSURANCE herein. vi

7 OFFICIAL STATEMENT Relating To 21,550,000 SCHOOL DISTRICT OF THE CITY OF SCRANTON Lackawanna County, Pennsylvania 6,565,000 General Obligation Notes, Series A of ,985,000 General Obligation Bonds, Series B of 2015 INTRODUCTION This Official Statement, including the cover page, inside cover page and the Appendices attached hereto, is furnished in connection with the offering by the School District of the City of Scranton, Lackawanna County, Pennsylvania (the "School District") of its General Obligation Notes, Series A of 2015, in the aggregate principal amount of 6,565,000 (the Series A Notes ) and General Obligation Bonds, Series B of 2015, in the aggregate principal amount of 14,985,000 (the Series B Bonds and together with the Series A Notes, the Bonds ). The Bonds are being issued pursuant to a Resolution of the Board of School Directors of the School District, adopted on December 8, 2014 (the "Resolution"), and in accordance with the Act of the General Assembly of the Commonwealth of Pennsylvania, known as the Local Government Unit Debt Act, 53 Pa. C.S. Chapters as reenacted, amended and supplemented (the Debt Act ). The Bonds shall be dated the date of delivery and issued in fully registered form, without coupons, in the denomination of 5,000 or any integral multiple thereof. Interest on the Bonds is payable semiannually on June 15 and December 15 of each year, commencing June 15, Interest on any Bond is payable by check mailed to the registered owner at the address as it appears on the registration books on the appropriate Record Date (hereinafter defined). The principal of the Bonds is payable at the corporate trust office of The Fidelity Deposit and Discount Bank, located in Dunmore, Pennsylvania (the "Paying Agent"). The Bonds are only transferable on the registration books maintained by the Paying Agent upon presentation and surrender thereof (see Description of the Bonds herein ). The Bonds are subject to optional redemption as stated herein. When issued, the Bonds will be registered in the name of Cede & Co., as nominee for the Depository Trust Company ( DTC ), New York, New York. Purchasers of the Bonds (the Beneficial Owners ) will not receive any physical delivery of bond certificates and beneficial ownership of the Bonds will be evidenced only by book entries. See BOOK- ENTRY ONLY SYSTEM herein. The information which follows contains summaries of the Resolution, the School District's Budget and the School District's Financial Statements. Such summaries do not purport to be complete and reference is made to the Resolution, the School District's Budget and the School District's Financial Statements, copies of which are on file and available for examination at the offices of the School District. The Bonds are general obligations of the School District, which has pledged its full faith, credit and taxing power to pay the principal of and interest on the Bonds. The Bonds will be issued in accordance with the laws of the Commonwealth of Pennsylvania (the Commonwealth ), including the Debt Act. Copies of the Resolution may be obtained from the School District. Neither the delivery of the Official Statement nor any sale of the Bonds made hereunder shall, under any circumstances, create an implication that there have been no changes in the affairs of the School District, or in the communities or areas within the School District, since the date of the Official Statement or the earliest date as of which certain information contained herein is given. 1

8 PURPOSE OF THE ISSUE Proceeds of the Series A Notes will be used to provide funds to: (1) refund a portion of the School District s General Obligation Bonds, Series A of 2006 (the 2006 A Bonds ), consisting of the June 15, 2015 maturity of the 2006 A Bonds in the aggregate principal amount of 295,000 and the interest due on the 2006 A Bonds on June 15 and December 15, 2015 (the Refinanced 2006 A Bonds ); (2) refund a portion of the School District s General Obligation Bonds, Series B of 2006 (the 2006 B Bonds ), consisting of the June 15, 2015 maturity of the 2006 B Bonds in the aggregate principal amount of 510,000 and the interest due on the 2006 B Bonds on June 15, 2015 and December 15, 2015 (the Refinanced 2006 B Bonds ); (3) refund a portion of the School District s General Obligation Bonds, Series A of 2007 (the 2007 A Bonds ), consisting of the July 15, 2015 maturity of the 2007 A Bonds in the aggregate principal amount of 55,000 and the interest due on the 2007 A Bonds on July 15, 2015 (the Refunded 2007 A Bonds ); (4) refund a portion of the School District s General Obligation Bonds, Series B of 2007 (the 2007 B Bonds ), consisting of the July 15, 2015 maturity of the 2007 B Bonds in the aggregate principal amount of 25,000 and the interest due on the 2007 B Bonds on July 15, 2015 (the Refunded 2007 B Bonds ); (5) refund a portion of the School District s General Obligation Bonds, Series C of 2007 (the 2007 C Bonds ), consisting of the July 15, 2015 maturity of the 2007 C Bonds in the aggregate principal amount of 45,000 and the interest due on the 2007 C Bonds on July 15, 2015 (the Refunded 2007 C Bonds ); (6) refund a portion of the School District s General Obligation Bonds, Series A of 2011 (the 2011 A Bonds ), consisting of the April 1, 2015 and October 1, 2015 maturities of the 2011 A Bonds in the aggregate principal amount of 1,220,000 and the interest due on the 2011 A Bonds on April 1, 2015 and October 1, 2015 (the Refunded 2011 A Bonds ); (7) refund a portion of the School District s General Obligation Bonds, Series C of 2011 (the 2011 C Bonds ), consisting of the April 1, 2015 maturity of the 2011 C Bonds in the aggregate principal amount of 295,000 and the interest due on the 2011 C Bonds due on April 1, 2015 and October 1, 2015 (the Refunded 2011 C Bonds ); (8) refund a portion of the School District s Federally Taxable General Obligation Bonds, Series D of 2011 (the 2011 D Bonds ), consisting of the April 1, 2015 maturity of the 2011 D Bonds in the aggregate principal amount of 595,000 and the interest due on the 2011 D Bonds due on April 1, 2015 and October 1, 2015 (the Refunded 2011 D Bonds and together with the Refunded 2006 A Bonds (herein defined), Refunded 2006 B Bonds (herein defined), Refunded 2007 A Bonds, Refunded 2007 B Bonds, Refunded 2007 C Bonds, Refunded 2011 A Bonds and Refunded 2011 C Bonds, the Refunded Bonds ); and (9) pay related costs, including the costs of issuing and insuring the Series A Notes. Proceeds of the Series B Bonds will be used to provide funds for the following: (1) advance refund the unrefunded balance of the 2006 A Bonds, consisting of 7,175,000 aggregate principal amount of the 2006 A Bonds maturing in the years 2016 through and including 2031 (the Advance Refunded 2006 A Bonds and together with the Refinanced 2006 A Bonds, the Refunded 2006 A Bonds ); (2) advance refund the unrefunded balance of the 2006 B Bonds, consisting 3,550,000 aggregate principal amount of the 2006 B Bonds maturing in the years 2016 through and including 2021 (the Advance Refunded 2006 B Bonds and together with the Refinanced 2006 B Bonds, the Refunded 2006 B Bonds ); (3) planning, designing and constructing improvements to School District facilities; (4) purchasing capital equipment for use by the School District; (5) funding additional capital projects within the School District as approved by the Board of School Directors; and (6) pay related costs, including the costs of issuing and insuring the Series B Bonds. [THIS PORTION OF PAGE INTENTIONALLY LEFT BLANK] 2

9 SOURCES AND USES OF FUNDS Series A Notes Series B Bonds Total Sources of Funds Par Amount of the Bonds... 6,565, ,985, ,550, Net Original Issue (Discount)/Premium... (65,858.60) 348, , Total Estimated Sources of Funds... 6,499, ,333, ,832, Uses of Funds Improvement Project Fund Deposit ,987, ,987, Refunded 2006 A Bonds Refunding Requirement , ,343, ,985, Refunded 2006 B Bonds Refunding Requirement , ,622, ,291, Refunded 2007 A Bonds Refunding Requirement , , Refunded 2007 B Bonds Refunding Requirement , , Refunded 2007 C Bonds Refunding Requirement , , Refunded 2011 A Bonds Refunding Requirement... 1,362, ,362, Refunded 2011 C Bonds Refunding Requirement... 1,350, ,350, Refunded 2011 D Bonds Refunding Requirement , , Costs of Issuance (1) , , , Total Uses of Funds... 6,499, ,333, ,832, (1) Includes legal fees, underwriters discount, paying agent fees, verification agent fee, financial advisory fee, rating fee, insurance premium, CUSIP, printing and miscellaneous fees. Refunding Project Upon delivery of the Series A Notes, a portion of the proceeds of the Series A Notes will be deposited with Bankers Trust Company, Harrisburg, Pennsylvania, as paying agent for the 2007 A Bonds in an amount sufficient to pay the principal and interest due on the Refunded 2007 A Bonds in Upon delivery of the Series A Notes, a portion of the proceeds of the Series A Notes will be deposited with Bankers Trust Company, Harrisburg, Pennsylvania, as paying agent for the 2007 B Bonds in an amount sufficient to pay the principal and interest due on the 2007 B Bonds in Upon delivery of the Series A Notes, a portion of the proceeds of the Series A Notes will be deposited with Bankers Trust Company, Harrisburg, Pennsylvania, as paying agent for the 2007 C Bonds in an amount sufficient to pay the principal and interest due on the 2007 C Bonds in Upon delivery of the Series A Notes, a portion of the proceeds of the Series A Notes will be deposited with Bankers Trust Company, Harrisburg, Pennsylvania, as paying agent for the 2011 A Bonds in an amount sufficient to pay the principal and interest due on the 2011 A Bonds in Upon delivery of the Series A Notes, a portion of the proceeds of the Series A Notes will be deposited with Community Bank, N.A., Scranton, Pennsylvania, as paying agent for the 2011 C Bonds in an amount sufficient to pay the principal and interest due on the 2011 C Bonds in Upon delivery of the Series a Notes, a portion of the proceeds of the Series A Notes will be deposited with Community Bank, N.A., Scranton, Pennsylvania, as paying agent for the 2011 D Bonds in an amount sufficient pay the principal and interest due on the 2011 D Bonds in Upon the delivery of the Bonds, the School District will deposit a portion of the proceeds of the Series A Notes and Series B Bonds with The Fidelity Deposit and Discount Bank, Dunmore, Pennsylvania (the 2006 A Escrow Agent ), as escrow agent for the 2006 A Bonds under an Escrow Agreement between the School District and the 2006 A Escrow Agent (the 2006 A Escrow Agreement ). The proceeds deposited under the 2006 A Escrow Agreement will be used to purchase United States Treasury obligations (the Government Securities ) which will mature and bear interest payable in the amounts and at the times necessary to pay, when due, upon maturity or upon mandatory redemption, the principal and the interest on the Refunded 2006 A Bonds to and including June 15, 2016, and to redeem all the remaining Refunded 2006 A Bonds outstanding on June 15, Upon the delivery of the Bonds, the School District will deposit a portion of the proceeds of the Series A Notes and Series B Bonds with The Fidelity Deposit and Discount Bank, Dunmore, Pennsylvania (the 2006 B Escrow Agent ), as escrow agent for the 2006 B Bonds under an Escrow Agreement between the School District and the 2006 B Escrow Agent 3

10 (the 2006 B Escrow Agreement ). The proceeds deposited under the 2006 B Escrow Agreement will be used to purchase United States Treasury obligations (the Government Securities ) which will mature and bear interest payable in the amounts and at the times necessary to pay, when due, upon maturity or upon mandatory redemption, the principal and the interest on the Refunded 2006 B Bonds to and including June 15, 2016, and to redeem all the remaining Refunded 2006 B Bonds outstanding on June 15, MATHEMATICAL VERIFICATION The arithmetical accuracy of the mathematical computations supporting the adequacy of the funds deposited with the 2006 A Escrow Agent and 2006 B Escrow Agent, together with the investment earnings thereon, and an initial cash deposit, if necessary, to effect the payment of the principal of and interest on the Refunded 2006 A Bonds and Refunded 2006 B Bonds until their respective maturity dates and the arithmetical accuracy of the mathematical computations supporting the conclusion of Bond Counsel that the Bonds will not be "arbitrage bonds" under Section 103(c) of the Internal Revenue Code of 1986, as amended, will be verified by Capital Markets Management LLC, Ligonier, Pennsylvania, as a condition to the delivery of the Bonds. DESCRIPTION OF THE BONDS So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payments of principal of and interest on the Bonds, when due, are to be made to DTC and all such payments shall be valid and effective to satisfy fully and to discharge the obligations of the School District with respect to, and to the extent of, principal and interest so paid. If the use of the Book-Entry Only System for the Bonds is discontinued for any reason, bond certificates will be issued to the Beneficial Owners of the Bonds and payment of principal and interest on the Bonds shall be made as described in the following paragraphs. Principal of the Bonds will be paid to the registered owner of each Bond, when due, upon surrender thereof at the corporate trust office of the Paying Agent located in Dunmore, Pennsylvania. The Bonds will bear interest payable initially on June 15, 2015, and thereafter, semiannually on June 15 and December 15 of each year (each an Interest Payment Date ), as set forth on the inside cover page hereof. The Bonds mature on the dates and in the amounts shown on the inside cover page. Each Bond shall bear interest from the Interest Payment Date next preceding the date of registration and authentication of such Bonds, unless (a) such Bonds are registered and authenticated as of an Interest Payment Date, in which event such Bonds shall bear interest from said Interest Payment Date, or (b) the Bonds are registered and authenticated after a Record Date (herein defined) and before the next succeeding Interest Payment Date, in which event such Bonds shall bear interest from such Interest Payment Date, or (c) the Bonds are registered and authenticated on or prior to the Record Date preceding June 15, 2015, in which event such Bonds shall bear interest from the dated date of the Bonds, or (d) as shown by the records of the Paying Agent, interest on such Bonds shall be in default, in which event such Bonds shall bear interest from the date to which interest was last paid on such Bond. Interest on each Bond is payable by check drawn on the Paying Agent, which shall be mailed to the registered owner whose name and address shall appear, at the close of business on the 15th day (whether or not a business day) next preceding each Interest Payment Date (the Record Date ), on the registration books maintained by the Paying Agent, irrespective of any transfer or exchange of the Bonds subsequent to such Record Date and prior to such Interest Payment Date, unless the School District shall be in default of interest due on such Interest Payment Date. If the School District shall be in default in payment of interest due on any Interest Payment Date, such defaulted interest shall be payable to the person in whose name the Bonds are registered at the close of business on a special record date for the payment of such defaulted interest established by notice mailed by the Paying Agent to the registered owners of Bonds not less than ten (10) days preceding such special record date. Such notice shall be mailed to the persons in whose names the Bonds are registered at the close of business on the fifth (5th) day preceding the date of mailing. The principal of and interest on the Bonds are payable in lawful money of the United States of America If the date for the payment of the principal of or interest on any Bonds shall be a Saturday, Sunday, legal holiday or on a day on which banking institutions in the Commonwealth are authorized or required by law or executive order to close, then the date for payment of such principal or interest shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized or required to close, and payment on such date shall have the same force and effect as if made on the nominal date established for such payment. 4

11 Transfer, Exchange and Registration of Bonds Subject to the provisions described herein, under BOOK-ENTRY ONLY SYSTEM, Bonds are transferable or exchangeable by the registered owners thereof upon surrender of Bonds to the Paying Agent, at its corporate trust office located in Dunmore, Pennsylvania, accompanied by a written instrument or instruments in form, with instructions and with guaranty of signature satisfactory to the Paying Agent, duly executed by the registered owner of such Bond or his attorney-in-fact or legal representative. The Paying Agent shall enter any transfer of ownership of Bonds in the registration books and shall authenticate and deliver at the earliest practicable time in the name of the transferee or transferees a new fully registered bond or bonds of authorized denominations of the same series, maturity and interest rate for the aggregate principal amount which the registered owner is entitled to receive. The School District and the Paying Agent may deem and treat the registered owner of any Bond as the absolute owner thereof (whether or not a Bond shall be overdue) for the purpose of receiving payment of or on account of principal and interest and for all other purposes, and the School District and the Paying Agent shall not be affected by any notice to the contrary. The School District and the Paying Agent shall not be required: (a) to issue or to register the transfer of or exchange any Bond then considered for redemption during a period beginning at the close of business on the fifteenth (15th) day next preceding any date of selection of Bonds to be redeemed and ending at the close of business on the day on which the applicable notice of redemption is given or (b) to register the transfer of or exchange any portion of any of the Bonds selected for redemption in whole or in part until after the redemption date. Bonds may be exchanged for a like aggregate principal amount of Bonds or other authorized denominations of the same maturity and interest rate. REDEMPTION PROVISIONS Optional Redemption Series A Notes The Series A Notes stated to mature on or after June 15, 2024, are subject to redemption prior to maturity at the option of the School District in whole or, from time to time, in part, in any order of maturities as the School District shall select, at any time on or after June 15, 2023, at a price equal to 100% of the principal amount of the Series A Notes to be redeemed plus accrued interest thereon to the date fixed for such optional redemption. In the event that less than all Series A Notes of a particular maturity are to be redeemed, the Series A Notes of such maturity shall be drawn by lot by the Paying Agent. Series B Bonds The Series B Bonds stated to mature on or after June 15, 2024, are subject to redemption prior to maturity at the option of the School District in whole or, from time to time, in part, in any order of maturities as the School District shall select, at any time on or after June 15, 2023, at a price equal to 100% of the principal amount of the Series B Bonds to be redeemed plus accrued interest thereon to the date fixed for such optional redemption. In the event that less than all Series B Bonds of a particular maturity are to be redeemed, the Series B Bonds of such maturity shall be drawn by lot by the Paying Agent. Mandatory Redemption Series A Notes The Series A Notes maturing on June 15, 2024, June 15, 2031 and June 15, 2034 are subject to mandatory redemption prior to maturity at a redemption price equal to 100% of the principal amount thereof together with accrued interest thereon to the date fixed for redemption, on June 15 of each of the years and in the principal amounts as follows, as drawn by lot by the Paying Agent: Series A Term Notes Due June 15, 2024 Series A Term Notes Due June 15, , , , , , , , , * 5, , , * 670,000 * Maturity. 5

12 Series A Term Notes Due June 15, , ,020, * 1,090,000 * Maturity. Series B Bonds The Series B Bonds maturing on June 15, 2028 and June 15, 2031 are subject to mandatory redemption prior to maturity at a redemption price equal to 100% of the principal amount thereof together with accrued interest thereon to the date fixed for redemption, on June 15 of each of the years and in the principal amounts as follows, as drawn by lot by the Paying Agent: Series B Term Bonds Due June 15, 2028 Series B Term Bonds Due June 15, ,190, ,140, * 1,175, , * 645,000 * Maturity. Extraordinary Mandatory Redemption The Bonds are subject to extraordinary mandatory redemption prior to maturity on or after March 30, 2016, at the direction of the School District, as a whole or in part at any time, at 100% of the par amount thereof, plus accrued interest thereon to the date fixed for such extraordinary mandatory redemption to the extent that there are available amounts generated in the preceding fiscal year of the School District as determined by the School District under (d)(3)(iii) of the regulations promulgated pursuant to the Internal Revenue Code of 1986, as amended. Notice of Redemption As provided more fully in the Resolution and in the forms of the Bonds, notice of redemption of Bonds shall be given by mailing a copy of the redemption notice by first class mail, postage prepaid, no less than 30 days nor more than 60 days prior to the redemption date to the Registered Owners of Bonds to be redeemed at the addresses which appear in the Bond Register. Neither failure to mail such notice nor any defect in the notice so mailed or in the mailing thereof with respect to any one Bond will affect the validity of the proceedings for the redemption of any other Bond. If the School District shall have duly given notice of redemption and shall have deposited with the Paying Agent funds for the payment o the redemption price of the Bonds so called for redemption with accrued interest thereon to the date fixed for redemption, interest on such Bonds will cease to accrue after such redemption date. If at the time of mailing of the notice of redemption the School District shall not have deposited with the Paying Agent moneys sufficient to redeem all the Bonds called for redemption, such notice may state that it is conditional, that is, subject to the deposit of the redemption moneys with the Paying Agent no later than the opening of business on the redemption date, and such notice shall be of no effect unless such moneys are so deposited. BOOK-ENTRY ONLY SYSTEM The information in this section has been obtained from materials provided by DTC for such purpose. The School District (herein referred to as the Issuer ) and the Underwriters do not guaranty the accuracy or completeness of such information and such information is not to be construed as a representation of the School District or the Underwriters. The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or in such other name as may be requested by an authorized representative of DTC. One fully-registered certificate for the Bonds of each maturity will be issued in principal amount equal to the aggregate principal amount of such maturity, and will be deposited with DTC. 6

13 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 3.6 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 (the Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others, such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the Indirect Participants ). DTC has 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 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond (the 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 Owners entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of the Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices of Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Paying Agent and request that copies of the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds (or all Bonds of a particular maturity) are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue (or maturity) to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails on Omnibus Proxy to the Issuer 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). So long as the Bonds are held by DTC under a book-entry system, payments of the principal of and interest on the Bonds and, if applicable, any premium payable upon redemption thereof, 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 7