NEW ISSUE BOOK-ENTRY ONLY. Dated: July 28, 2016 Interest Due: April 15 and October 15

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1 NEW ISSUE BOOK-ENTRY ONLY $14,765,000 WASHINGTON COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY School Revenue Bonds, Series of 2016 (A. W. Beattie Career Center Project) (Allegheny County, Pennsylvania) Dated: July 28, 2016 Interest Due: April 15 and October 15 RATING: S&P: AA (Stable Outlook) (Insured) Moody s: A1 (Underlying) See Rating herein In the opinion of Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, interest on the Bonds (including, in the case of Bonds sold at an original issue discount, the difference between the initial offering price and par) is excluded from gross income for Federal income tax purposes. Bond Counsel is also of the opinion that interest on the Bonds is not a specific item of tax preference under 57 of the Internal Revenue Code of 1986, as amended (the Code ) for purposes of Federal individual or corporate alternative minimum taxes. The Bonds, and the interest income therefrom, are free from taxation for purposes of personal income, corporate net income and personal property taxes within the Commonwealth of Pennsylvania. (See TAX MATTERS herein.). Principal Due: October 15, as shown on inside cover First Interest Payment: October 15, 2016 The School Revenue Bonds (A. W. Beattie Career Center Project), Series of 2016, in the aggregate principal amount of $14,765,000 (the Bonds ), will be issued in fully registered form, without coupons, in denominations of $5,000 or any integral multiple thereof. The Bonds will be registered in the name of Cede & Co., as the registered owner and nominee of The Depository Trust Company ( DTC ), New York, New York. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or any integral multiple thereof only under the book-entry only system maintained by DTC through its brokers and dealers who are, or act through, DTC Participants. The purchasers of the Bonds will not receive physical delivery of the Bonds. For so long as any purchaser is the beneficial owner of a Bond, that purchaser must maintain an account with a broker or a dealer who is, or acts through, a DTC Participant to receive payment of principal of and interest on the Bonds. See BOOK-ENTRY ONLY SYSTEM herein. If, under the circumstances described herein, Bonds are ever issued in certificated form, the Bonds will be subject to registration of transfer, exchange and payment as described herein. The principal of the Bonds will be paid to the registered owners or assigns, when due, upon presentation and surrender of the Bonds to ZB, National Association, (the Trustee ), acting as trustee and sinking fund depository, at its designated office in Pittsburgh, Pennsylvania. Interest on the Bonds is payable initially on October 15, 2016 and thereafter semiannually on April 15 and October 15 of each year, until the principal sum thereof is paid. Payment of interest on the Bonds will be made by check drawn on the Trustee mailed to the registered owners of the Bonds as of the Record Date (see The Bonds infra). THE BONDS ARE LIMITED OBLIGATIONS OF THE WASHINGTON COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (THE AUTHORITY ). NEITHER THE PRINCIPAL OR REDEMPTION PRICE OF THE BONDS, NOR THE INTEREST ACCRUING THEREON, SHALL CONSTITUTE A GENERAL INDEBTEDNESS OF THE AUTHORITY OR AN INDEBTEDNESS OF THE COMMONWEALTH OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN AVONWORTH SCHOOL DISTRICT, DEER LAKES SCHOOL DISTRICT, FOX CHAPEL AREA SCHOOL DISTRICT, HAMPTON TOWNSHIP SCHOOL DISTRICT, NORTH ALLEGHENY SCHOOL DISTRICT, NORTH HILLS SCHOOL DISTRICT, NORTHGATE SCHOOL DISTRICT,PINE- RICHLAND SCHOOL DISTRICT AND SHALER AREA SCHOOL DISTRICT (THE SCHOOL DISTRICTS )) WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER; CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY OR THE GENERAL CREDIT OR TAXING POWER OF THE COMMONWEALTH OR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE SCHOOL DISTRICTS); OR BE DEEMED TO BE A GENERAL OBLIGATION OF THE AUTHORITY OR AN OBLIGATION OF THE COMMONWEALTH OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE SCHOOL DISTRICTS). THE AUTHORITY HAS NO TAXING POWER. The Bonds are subject to redemption prior to maturity as further described herein. Proceeds of the Bonds will be loaned to the Joint Operating Committee of the A.W. Beattie Career Center (the Joint Operating Committee of JOC ) and will be used to currently refund all of the outstanding State Public School Building Authority s, School Revenue Bonds, Series of 2008 (A.W. Beattie Career Center Project) and to pay the costs and expenses of issuing and insuring the Bonds. The Bonds are an authorized investment for fiduciaries in the Commonwealth pursuant to the Pennsylvania Probate, Estate and Fiduciaries Code, Act of June 30, 1972, No. 164, P.L. 508, as amended and supplemented. The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Bonds by Build America Mutual Assurance Company ( BAM ). MATURITIES, AMOUNTS, RATES AND PRICES/YIELDS See Inside Front Cover The Bonds are offered when, as and if issued, subject to withdrawal or modification of the offer without notice, and subject to the approving legal opinion of Dinsmore & Shohl LLP, of Pittsburgh, Pennsylvania, Bond Counsel, to be furnished upon delivery of the Bonds. Certain other legal matters will be passed upon for the Authority by its Counsel, Houston Harbaugh, P.C., Pittsburgh, Pennsylvania, for the JOC by its Solicitor, Weiss Burkardt Kramer LLC, Pittsburgh, Pennsylvania. Public Financial Management, Inc., Harrisburg, Pennsylvania, is acting as Financial Advisor to the JOC in connection with the issuance of the Bonds. It is expected that the Bonds will be available for delivery in New York, New York, on or about July 28, Official Statement Dated: June 23, 2016

2 $14,765,000 WASHINGTON COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY School Revenue Bonds, Series of 2016 (A.W. Beattie Career Center Project) (Allegheny County, Pennsylvania) Bonds Dated: July 28, 2016 Principal Due: October 15, as shown below Interest Due: April 15 and October 15 First Interest Payment: October 15, 2016 MATURITIES, AMOUNTS, INTEREST RATES, INITIAL OFFERING YIELDS AND CUSIPS Maturity Date (October 15) Principal Interest Initial Offering CUSIP Year Amounts Rates Yields Numbers (1) 2016 $1,025, % 0.500% 93859SAA , SAB , SAC , SAD ,020, SAE ,070, SAF ,125, SAG ,180, SAH ,240, SAJ ,290, SAK ,315, SAL ,340, SAM ,370, SAN5 (1) The above CUSIP (Committee on Uniform Securities Identification Procedures) numbers have been assigned by an organization not affiliated with the Authority or the Underwriter, 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 Authority nor the Underwriter has 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.

3 Washington County Industrial Development Authority MEMBERS OF THE AUTHORITY John E. Artuso, Chairman Todd Ashmore, Vice Chairman Joseph M. Trifaro, Secretary William Stein, Treasurer Steve Johnson, Assistant Secretary/Treasurer COUNSEL TO THE AUTHORITY HOUSTON HARBAUGH, P.C. Pittsburgh, Pennsylvania BOND COUNSEL DINSMORE & SHOHL LLP Pittsburgh, Pennsylvania TRUSTEE ZB, National Association Pittsburgh, Pennsylvania AUTHORITY ADDRESS WASHINGTON COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY 375 Southpointe Blvd, Suite 240 Canonsburg, Pennsylvania 15317

4 WASHINGTON COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY School Revenue Bonds, Series of 2016 A.W. Beattie Career Center Project) (Allegheny County, Pennsylvania) MEMBER SCHOOL DISTRICTS AVONWORTH SCHOOL DISTRICT Dr. Thomas Ralston, Superintendent DEER LAKES SCHOOL DISTRICT Dr. Janell Logue-Belden, Superintendent FOX CHAPEL AREA SCHOOL DISTRICT Dr. Gene Freeman, Superintendent HAMPTON TOWNSHIP SCHOOL DISTRICT Dr. John C. Hoover, Superintendent NORTH HILLS SCHOOL DISTRICT Dr. Patrick J. Mannarino, Superintendent NORTHGATE SCHOOL DISTRICT Ms. Caroline Johns, Superintendent PINE-RICHLAND SCHOOL DISTRICT Dr. Brian Miller, Superintendent SHALER AREA SCHOOL DISTRICT Mr. Sean Aiken, Superintendent NORTH ALLEGHENY SCHOOL DISTRICT Dr. Robert J. Scherrer, Superintendent SUPERINTENDENT OF RECORD Dr. Patrick J. Mannarino North Hills School District EXECUTIVE DIRECTOR Eric C. Heasley DIRECTOR OF FINANCE Cathy Hill SOLICITOR TO THE CAREER CENTER Ira Weiss, Esquire Weiss Burkardt Kramer, LLC BOND COUNSEL DINSMORE & SHOHL LLP Pittsburgh, Pennsylvania FINANCIAL ADVISOR PUBLIC FINANCIAL MANAGEMENT, INC. Harrisburg, Pennsylvania UNDERWRITER JANNEY MONTGOMERY SCOTT LLC Pittsburgh, Pennsylvania CAREER CENTER ADDRESS 9600 Babcock Boulevard Allison Park, Pennsylvania 15101

5 No dealer, broker, salesman or other person has been authorized by the Authority, the JOC or the School Districts to give information or to make any representations, other than those contained in this Official Statement, and if given or made, such other 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, nor shall there be any sale of the Bonds in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. The information set forth herein has been obtained from the Authority, the JOC and the School Districts and from other sources which are believed to be reliable, but the Authority, the JOC, and the School Districts do not guarantee the accuracy or completeness of information from sources other than the Authority, the JOC and the School Districts. 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 any of the information set forth herein since the date hereof. The Authority, the JOC and the School Districts have deemed this Official Statement to be final for the purposes of Rule 15c2-12(b)(3) of the Securities and Exchange Commission. Build America Mutual Assurance Company ( BAM ) makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, BAM 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 BAM, supplied by BAM and presented under the heading Bond Insurance and Appendix M - Specimen Municipal Bond Insurance Policy. TABLE OF CONTENTS Page INTRODUCTION... 1 PURPOSE OF THE ISSUE... 1 THE AUTHORITY... 2 THE BONDS... 3 Description... 3 Payment of Principal and Interest... 3 Transfer, Exchange and Registration of Bonds... 3 REDEMPTION OF BONDS... 4 Optional Redemption... 4 Notice of Redemption... 4 Security and Source of Payment State Aid... 4 Additional Bonds... 5 BOOK-ENTRY ONLY SYSTEM... 6 SUMMARIES OF CERTAIN PROVISIONS... 8 OF THE LOAN AGREEMENT AND THE INDENTURE... 8 The Loan Agreement... 8 The Indenture MUNICIPAL BOND INSURANCE A.W. BEATTIE CAREER CENTER CAREER CENTER FINANCES LABOR RELATIONS Pension Program INFORMATION REGARDING THE SCHOOL DISTRICTS TAXING POWERS OF THE SCHOOL DISTRICTS COMMONWEALTH AID TO THE SCHOOL DISTRICTS ABSENCE OF LITIGATION CONTINUING DISCLOSURE UNDERTAKING RATING Page UNDERWRITING LEGAL OPINION FINANCIAL ADVISOR MISCELLANEOUS JOINT OPERATING COMMITTEE CERTIFICATION APPENDIX A - AVONWORTH SCHOOL DISTRICT APPENDIX B - DEER LAKES SCHOOL DISTRICT APPENDIX C - FOX CHAPEL AREA SCHOOL DISTRICT APPENDIX D - HAMPTON TOWNSHIP SCHOOL DISTRICT APPENDIX E - NORTH ALLEGHENY SCHOOL DISTRICT APPENDIX F - NORTH HILLS SCHOOL DISTRICT APPENDIX G - NORTHGATE SCHOOL DISTRICT APPENDIX H - PINE-RICHLAND SCHOOL DISTRICT APPENDIX I - SHALER AREA SCHOOL DISTRICT APPENDIX J - BOND COUNSEL OPINION SCHOOL REVENUE BONDS, SERIES OF 2016 APPENDIX K - FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX L - AUDITED FIANCIAL STATEMENTS FOR THE CAREER CENTER APPENDIX M - SPECIMEN MUNICIPAL BOND INSURANCE POLICY i

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7 OFFICIAL STATEMENT $14,765,000 WASHINGTON COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY School Revenue Bonds, Series of 2016 (A. W. Beattie Career Center Project) (Allegheny County, Pennsylvania) INTRODUCTION This Official Statement, including the cover page and inside cover page hereof and Appendices hereto, is furnished by the Washington County Industrial Development Authority (the Authority or WCIDA ) and the Joint Operating Committee of the A. W. Beattie Career Center Board (the Joint Operating Committee or JOC ), Allegheny County, Pennsylvania, in connection with the offering of the Authority s $14,765,000 aggregate principal amount School Revenue Bonds (A. W. Beattie Career Center Project), Series of 2016, dated as of July 28, 2016 (the Bonds ). The Bonds are authorized to be issued pursuant to the Economic Development Financing Law of the Commonwealth of Pennsylvania, Act of August 23, 1967, P.L. 251, as amended (the Act ), and are secured by a Trust Indenture dated as of July 28, 2016, (the Indenture ), entered into between the Authority and ZB, National Association, Pittsburgh, Pennsylvania, as Trustee (the Trustee ). The Bonds are secured by the terms of the Indenture between the Authority and the Trustee, and are payable solely from the specified payments by each of the School Districts under the terms of the Loan Agreement, dated as of July 28, 2016 (the Loan Agreement ), between the Authority, the Joint Operating Committee of the Career Center and each of the School Districts. Each School District has been duly organized and is validly existing under the laws of the Commonwealth, particularly the Section 633 of the Pennsylvania Public School Code of 1949, as amended by Act 154 of 1998 (the School Code ), and is authorized by law to enter into a loan agreement with the Authority and to make loan payments under the loan agreement and to include in its annual budget amounts sufficient to meet such payments. The Bonds will be payable from, and secured by an assignment of the amounts payable to the Authority by Avonworth School District, Deer Lakes School District, Fox Chapel Area School District, Hampton Township School District, North Allegheny School District, North Hills School District, Northgate School District, Pine-Richland School District and Shaler Area School District (collectively, the School Districts ), as borrowers under the Loan Agreement and the respective General Obligation Notes, Series of 2016 (the Notes ) issued by each one of the School Districts. PURPOSE OF THE ISSUE Proceeds of the Bonds will be used for and towards the current refunding of the State Public School Building Authority s, School Revenue Bonds, Series of 2008 (A.W. Beattie Career Center Project), currently outstanding in the aggregate principal amount of $15,345,000 (the 2008 Bonds ), and paying all costs of issuance of the Bonds. The 2008 Bonds will be called for optional redemption, at a redemption price of 100% of principal amount plus accrued interest, pursuant to the optional redemption provisions applicable to the 2008 Bonds on October 15, The following is a summary of the sources and uses of the proceeds from the issuance of the Bonds. SOURCES: Bond Proceeds... $14,765, Net Original Issue Premium... 1,234, Total... $15,999, USES: Amount to Call the 2008 Bonds... $15,674, Cost of Issuance (1) , Total... $15,999, (1) Includes legal, financial advisor, printing, rating, bond discount, municipal bond insurance premium, CUSIP, trustee and miscellaneous costs. 1

8 THE AUTHORITY The Washington County Industrial Development Authority (the Authority ) is a public instrumentality and a body corporate and politic, duly organized, existing and in good standing under the laws of the Commonwealth of Pennsylvania (the Commonwealth ) and is authorized under the Act, which declares it to be the policy of the Commonwealth to promote the health, safety, morals, employment, business opportunities and general welfare of the people of the Commonwealth by providing for the creation of industrial and commercial development authorities which shall exist and operate as public instrumentalities of the Commonwealth for the public purpose of alleviating unemployment, maintaining employment at a high level, eliminating and preventing blight, and creating and developing new business opportunities by the construction, improvement, rehabilitation, revitalization and financing of industrial, specialized, commercial, manufacturing and research and development enterprises and to promote and establish educational facilities. Resolutions authorizing the issuance of the Bonds have been adopted by the Board of the Authority. The Authority has no taxing power and no source of funds for payment of the Bonds, other than the underlying contractual obligations made by the Career Center. The Authority does not and will not in the future monitor the financial condition of the Career Center or otherwise monitor payment of the Bonds or compliance with the documents relating thereto. The Authority will rely entirely upon the Trustee to carry out its respective responsibilities under the Indenture and the Loan Agreement. The Authority has other assets and may obtain additional assets in the future. However, such assets are not pledged to secure payment of the Bonds, and the Authority has no obligation or expectation of making such assets subject to the lien of the Bond Indenture. None of the Authority or its attorneys, agents or independent contractors have furnished, reviewed, investigated or verified the information contained in this Official Statement other than the information contained in this section. The Authority has determined that no financial or operating data concerning the Authority is material to any decision to purchase, hold or sell the Bonds, and the Authority will not provide any such information. The Authority has not, and will not, undertake any responsibilities to provide continuing disclosure with respect to the Bonds or the security therefor, and the Authority will have no liability to holders of the Bonds with respect to any such disclosures. There is not now pending or, to the knowledge of the Authority, threatened any litigation restraining or enjoining the issuance or delivery of the Bonds or questioning or affecting the validity of the Bonds or the proceedings or authority under which the Bonds are to be issued. None of the creation, organization or existence of the Authority or the title of any of the present members or other officials of the Board of the Authority to their respective offices is being contested. There is no litigation pending or, to its knowledge, threatened, which in any manner questions the right of the Authority to enter into the Indenture or the Loan Agreement or secure the Bonds in the manner provided in the Indenture and the Act. As described above, the Authority has the power to and has issued bonds and notes for the purpose of financing projects for other facilities which are payable from the revenues of the particular project. Revenue bonds and notes issued by the Authority for other projects may have been or may be in default as to principal and interest. The source of payment, however, for any such defaulted bonds is separate and distinct from the source of payment for the Bonds and, therefore, any default on such bonds is not considered a material fact with respect to the payment of the Bonds offered hereby. The Authority has not prepared or assisted in the preparation of this Official Statement except for the statements under this section in respect of the Authority, and except as aforesaid. The Authority is not responsible for any statements made herein, and will not participate in, nor otherwise be responsible for, the offer, sale or distribution of the Bonds. Accordingly, except as aforesaid, the Authority disclaims responsibility for the disclosure set forth herein made in connection with the offer, sale and distribution of the Bonds. THE BONDS AND THE INTEREST THEREON SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OF THE COMMONWEALTH OF PENNSYLVANIA, OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE AUTHORITY AND THE COUNTY OF WASHINGTON, PENNSYLVANIA. NEITHER THE COMMONWEALTH OF PENNSYLVANIA, NOR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE AUTHORITY AND THE COUNTY OF WASHINGTON, PENNSYLVANIA SHALL BE OBLIGATED TO PAY PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS OR OTHER COSTS INCIDENT THERETO EXCEPT FROM THE REVENUES AND RECEIPTS PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF (EXCEPT THE SCHOOL DISTRICTS), INCLUDING THE AUTHORITY AND THE COUNTY OF WASHINGTON, PENNSYLVANIA, IS PLEDGED TO THE PAYMENT OF PRINCIPAL OF THE BONDS OR INTEREST THEREON OR OTHER COSTS INCIDENT THERETO. THE AUTHORITY HAS NO TAXING POWER. 2

9 THE BONDS Description The aggregate principal amount of the Bonds is $14,765,000. The Bonds will be issued in fully registered form in denominations of $5,000 and integral multiples thereof. The Bonds will be dated as of July 28, 2016, and will bear interest at the rates and mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. Interest on the Bonds will be payable initially on October 15, 2016 and semiannually on April 15 and October 15 of each year thereafter until the principal sum thereof is paid. 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 Bonds certificates, and beneficial ownership of the Bonds will be evidenced only by book entries. See BOOK ENTRY ONLY SYSTEM herein. Payment of Principal and Interest So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payments of principal of, redemption premium, if any, 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 Authority with respect to, and to the extent of, principal, redemption premium, if any, and interest so paid. If the use of the Book-Entry Only System for the Bonds is discontinued for any reason, Bonds certificates will be issued to the Beneficial Owners of the Bonds and payment of principal, redemption premium, if any, and interest on the Bonds shall be made as described in the following paragraphs. Principal of certificated Bonds will be paid to the registered owners thereof or assigns, when due, upon surrender of such Bonds at the designated corporate trust office of the Trustee. Interest is payable to the registered owner of a Bond from the interest payment date next preceding the date of registration and authentication of the Bond, unless: (a) such Bond is registered and authenticated as of an interest payment date, in which event such Bond shall bear interest from said interest payment date, or (b) such Bond is registered and authenticated after a Record Date (hereinafter defined) and before the next succeeding interest payment date, in which event such Bond shall bear interest from such interest payment date, or (c) such Bond is registered and authenticated on or prior to the Record Date preceding October 15, 2016, in which event such Bond shall bear interest from July 28, 2016, or (d) as shown by the records of the Trustee, interest on such Bond 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 shall be paid initially on October 15, 2016 and thereafter, semiannually on April 15 and October 15 of each year, until the principal sum is paid. Interest on a certificated Bond is payable by check drawn on the Trustee, which shall be mailed to the registered owner whose name and address shall appear, at the close of business on the last calendar day (whether or not a day on which the Trustee is open for business) of the month immediately preceding each interest payment date (the "Record Date"), on the registration books maintained by the Trustee, irrespective of any transfer or exchange of the Bond subsequent to such Record Date and prior to such interest payment date, unless WCIDA shall be in default in payment of interest due on such interest payment date. In the event of any such default, such defaulted interest shall be payable to the person in whose name the Bond is registered at the close of business on a special record date for the payment of such defaulted interest established to be fixed by the Trustee, such special record date to be not more than fifteen (15) days nor less than ten (10) days prior to the date of payment of defaulted interest. If the date for payment of the principal of or interest on any Bonds shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the Commonwealth of Pennsylvania are authorized 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 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. Transfer, Exchange and Registration of Bonds Subject to the provisions described below under Book-Entry Only System, certificate Bonds are transferable by the registered owner thereof in person or by his attorney duly authorized in writing or legal representative at the office of the Trustee at its designated corporate trust office, but only in the manner, subject to the limitations and upon payment of charges provided by the Indenture, and upon surrender and cancellation of such Bond accompanied by a duly executed instrument of transfer in form and with guarantee of signature satisfactory to the Trustee. Upon such transfer, a new Bond or Bonds of the same maturity and of authorized denomination or denominations, for the same aggregate principal amount and bearing the same rate of interest, will be issued to the transferee in exchange therefor at the earliest practicable time. In like manner each Bond may be exchanged by the registered owner or by his duly authorized attorney or other legal representative for Bonds of the same maturity and of authorized denomination or denominations in the same aggregate principal amount and bearing the same rate of interest. Any such transfer or exchange as described herein shall be made without charge, except for the payment of any taxes or other governmental charges relating thereto. No exchange or transfer shall be required to be made (i) between the Record Date and the related Interest Payment Date, (ii) during a period beginning at the opening of business (15) days before the date of the mailing notice of redemption of Bonds selected for redemption and ending at the close of business on the day of such mailing, or (iii) for 3

10 any Bonds so selected for redemption in whole or in part. WCIDA and the Trustee may treat and consider the person in whose name a Bond is registered as the absolute owner thereof for the purpose for receiving payment of, or on account of, the principal or redemption price thereof and the interest due thereon and for all other purposes whatsoever. Optional Redemption REDEMPTION OF BONDS In the manner and upon the terms and conditions provided in the Indenture, the Bonds stated to mature on and after October 15, 2025, are subject to redemption prior to maturity at the option of the Authority, at the direction of the Joint Operating Committee, or the School Districts in any order of maturities either as a whole, or in part, at any time on or after October 15, 2024, and, if in part, by lot within a maturity, at a redemption price equal to 100% of the principal amount thereof, together with accrued interest to the date fixed for redemption. Notice of Redemption Notice of any redemption shall be given by depositing a copy of the redemption notice by first class mail not more than sixty (60) days and not less than thirty (30) days prior to the date fixed for redemption addressed to each of the registered owners of Bonds to be redeemed, in whole or in part at the addresses shown on the registration books; provided, however, that failure to give such notice by mailing, or any defect therein or in the mailing thereof shall not affect the validity of any proceeding for redemption of other Bonds called for redemption as to which proper notice has been given. On the date designated for redemption, notice having been provided as aforesaid, and money for payment of the principal and accrued interest being held by the Trustee, interest on the Bonds and portions thereof so called for redemption shall cease to accrue and such Bonds or portions thereof shall cease to be entitled to any benefit or security of the Indenture, and registered owners of such Bonds or portions thereof so called for redemption shall have no rights with respect to such Bonds, except to receive payment of the principal of and accrued interest on such Bonds to the date fixed for redemption. Manner of Redemption If a Bond is of a denomination larger than $5,000, a portion of such Bond may be redeemed. For the purposes of redemption, a Bond shall be treated as representing that number of Bonds which is obtained by dividing the principal amount thereof by $5,000, each $5,000 portion of such Bonds being subject to redemption. In the case of partial redemption of a Bond, payment of the redemption price shall be made only upon surrender of such Bond in exchange for Bonds of authorized denominations in aggregate principal amount equal to the unredeemed portion of the principal amount thereof. If the redemption date for any Bonds shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the Commonwealth of Pennsylvania are authorized by law or executive order to close, then the date for payment of the principal, premium, if any, and interest upon such redemption shall be the next succeeding day which is not a Saturday, Sunday, legal holiday or a day on which such banking institutions are authorized to close, and payment on such date shall have the same force and effect as if made on the nominal date of redemption. Security and Source of Payment State Aid The Authority will enter into a Loan Agreement dated as of July 28, 2016, (the Loan Agreement ) with the School Districts and the Joint Operating Committee pursuant to which the Authority will lend the proceeds of the Bonds to the School Districts for the purpose of financing the Project. Under the Loan Agreement, each School District will agree to repay its proportionate share of such loan in such amounts and at such times as will provide sufficient funds to meet their related share of the debt service requirements on the Bonds. Each School District will deliver its general obligation promissory note dated as of July 28, 2016 (the Notes ) to the Authority evidencing its obligations under the Loan Agreement. The Bonds will be secured under the Indenture by the assignment and pledge to the Trustee of the payments under the Notes and the Loan Agreement. The full faith, credit and taxing power of the School Districts have been pledged for the timely payment of all amounts due under the Notes. The payments due under the Notes are payable from the respective School Districts tax and other general revenues, from whatever source derived, which include ad valorem taxes (limited as to rate) and State reimbursement. See School Tax Data and Taxpayer Relief Act herein. The Authority, at the time of the settlement for Bonds, will assign all its right (except the right to indemnification, the right to payment of certain fees and expenses, if any, and the right to receive notices), title and interest in the Notes and Loan Agreement and the payments thereunder to the Trustee. The Bonds will be secured by and payable under the Indenture from the funds held by the Trustee and payments made pursuant to the Notes and Loan Agreement. The execution of the Notes by the School Districts constitutes the issuance of general obligation debt by such School Districts and must be approved by the Department of Community and Economic Development. This approval will be obtained prior to issuance and delivery of the Bonds. 4

11 Provisions of the Public School Code of 1949, as amended (the Public School Code ) require that, should any school district fail to make its required debt service payments with respect to a general obligation note such as the Notes, the Secretary of Education of the Commonwealth is required to withhold from such school district out of any subsidy payment of any type due such school district, an amount equal to the debt service payments owed by such school district. Any amounts so withheld are assigned to the sinking fund depository for the general obligation bonds or notes issued to finance such school s project. These withholding provisions are not part of any contract with the holder of the bonds or notes, and may be amended by future legislation. The Public School Code also provides that in the event a school district is in default with respect to the general obligation debt or lease rental debt to a municipal authority or the Authority, there shall be a withholding from subsidy payments of amounts necessary to remedy such defaults, on an equal basis with default payments under such debt. In addition, the Local Government Unit Debt Act (the Act ) prescribes certain other remedies. In the event of failure of a school district to pay principal of or interest on general obligation notes such as the Notes for a period of 30 days from when it becomes due and payable, the holder of the note shall have the right to recover the amount due by bringing an action in assumpsit in the Court of Common Pleas in the county in which the school district is located. The Debt Act provides that any judgment shall have an appropriate priority upon moneys next coming into the treasury of the school district. The Debt Act further provides that upon a default in the payment of principal or interest, which continues at least 30 days, holders of at least 25% of such defaulted debt may appoint a trustee to represent them. The Debt Act provides certain other remedies and further qualified the above-described remedies. See DEBT AND DEBT LIMITS in each Appendix A through I for descriptions of the outstanding debt of each of the School Districts. All public school subsidies in the Commonwealth are subject to appropriation by the General Assembly. Although the Constitution of the Commonwealth provides that the General Assembly shall provide for the maintenance and support of a thorough and efficient system of public education to serve the needs of the Commonwealth, the General Assembly is not legally obligated to appropriate such subsidies and there can be no assurance that it will do so in the future. The allocation formula pursuant to which the Commonwealth distributes such subsidies to the various school districts throughout the Commonwealth may be amended at any time by the General Assembly. Moreover, the Commonwealth s ability to make such disbursements will be dependent upon its own financial condition. At various times in the past, the enactment of budget and appropriation laws by the Commonwealth has been delayed, resulting in interim borrowing by school districts pending the authorization and payment of state aid. Consequently, there can be no assurance that financial support from the Commonwealth for schools, either for capital projects or education programs in general will continue at present levels or that moneys will be payable to a school district if indebtedness of such school is not paid when due Pennsylvania Budget Impasse Pennsylvania was without a current budget until December 29, 2015, when the Governor signed a partial state budget for the fiscal year that commenced on July 1, The Governor line item vetoed approximately $6 billion of the $30 billion budget approved by both houses of the legislature. The partial state budget contained an amount of approximately six months of basic education funding for all school districts for the fiscal year. On February 9, 2016, the proposed state budget for fiscal year was introduced by the Governor and the budgetary process for the fiscal year commenced. On March 17, 2016 the General Assembly passed a state budget which provided basic education funding to Commonwealth school districts for the fiscal year, which is at least equal to the funding school districts received in the prior fiscal year. On March 27, 2016 that budget became law when the Governor failed to sign or veto the bill within the ten (10) day period prescribed under the laws of the Commonwealth. Future budget impasses may affect the timeliness or amount of payments by the Commonwealth under the withholding provisions of Section 633 of the Public School Code. The Authority has no taxing power. Neither the general credit of the Authority nor the credit or taxing power of the United States of America, the Commonwealth of Pennsylvania or any political subdivision (other than the School Districts) thereof is pledged for the payment of principal of, or the interest on, the Bonds; nor shall any of the Bonds be deemed obligations of the United States of America, the Commonwealth of Pennsylvania of any political subdivisions thereof (other than the School Districts). Additional Bonds The Authority may issue Additional Bonds on parity with the Bonds (other than with respect to certain funds under the Indenture). In connection with the issuance of Additional Bonds, additional funds may be established under the Indenture for the benefit of such additional series of bonds. In such event, the holders of the Bonds will have no claims or right to any such funds. For a further description of the conditions under which such Additional Bonds may be issued, see SUMMARIES OF CERTAIN PROVISIONS OF THE LOAN AGREEMENT AND THE INDENTURE- The Indenture herein. 5

12 BOOK-ENTRY ONLY SYSTEM Portions of the following information concerning The Depository Trust Company ( DTC ) and DTC's book-entry-only system have been obtained from DTC. The Authority (sometimes herein referred to as the Issuer ), CCTI, the Financial Advisor, and the Underwriter make no representation as to the accuracy of such information. The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the securities (the Securities ). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for the Securities, in the aggregate principal amount of such issue, 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 3.6 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 ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ( 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 Securities 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 Securities, except in the event that use of the book-entry system for the Securities is discontinued. To facilitate subsequent transfers, all Securities 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 Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities: DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities 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 Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit bas agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 6

13 Redemption proceeds, distributions, and dividend payments on the Securities 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 Issuer or Agent, on 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, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to Tender Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to Tender Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Securities to Tender Agent's DTC account. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof. NEITHER THE AUTHORITY NOR THE TRUSTEE SHALL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE TRUSTEE AS BEING A BONDHOLDER WITH RESPECT TO EITHER: (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT; (2) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (3) THE DELIVERY OR THE TIMELINESS OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE TO BE GIVEN TO THE OWNER OF THE BONDS; OR (4) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS BONDHOLDER. Neither the Authority nor the Trustee shall have any responsibility or obligation to any DTC Participant or Indirect Participant with respect to: (i) the accuracy of the records of DTC, its nominee or any DTC Participant or Indirect Participant with respect to any beneficial ownership interest in any Bonds; (ii) the delivery to any DTC Participant or Indirect Participant or any other Person, other than the registered owner of a Bond, as shown in the Bond Register, of any notice with respect to any Bond, including, without limitation, any notice of redemption; (iii) the selection by DTC or any DTC Participant or Indirect Participant of any person to receive payment in the event of a partial redemption of Bonds; (iv) the payment to any DTC Participant or Indirect Participant or any other Person other than the registered owner of a Bond, as shown in the Bond Register, of any amount with respect to the principal of, redemption price, or interest on, any Bond; or (v) any consent given by DTC as registered owner. 7

14 Prior to the discontinuation of the book-entry only system as described herein, the Authority and the Trustee may treat DTC and any successor securities depository to be the absolute owner of the Bonds for all purposes, including, without limitation: (i) (ii) the payment of principal of redemption price or interest on the Bonds; giving notices of redemption and other matters with respect to the Bonds; (iii) registering transfers with respect to the Bonds; and (iv) the selection of Bonds for redemption. The Beneficial Owners of the Bonds have no right to a securities depository for the Bonds. DTC or any successor securities depository may resign as depository for the Bonds by giving notice to the Trustee and discharging its responsibilities under applicable law. In addition, the Authority, or the Authority at the request of the CCTI, may remove DTC or a successor securities depository for any reason at any time. In such event, the Authority shall (i) appoint a securities depository qualified to act as such under Section 17(a) of the Securities Exchange Act of 1934, notify the prior securities depository of the appointment of such successor depository and transfer separate bond certificates to such successor securities depository or (ii) notify the securities depository of the availability through the securities depository of bond certificates and transfer one or more separate bond certificates to Depository Participants having Bonds credited to their accounts at the securities depository. In such event, such Bonds shall no longer be restricted to being registered in the registration books of the Authority in the name of the securities depository or its nominee, but may be registered in the name of the successor securities depository or its nominee, or in whatever name or names the Depository Participants receiving such Bonds shall designate, in accordance with the provisions of the Indenture. Discontinuance of Book-Entry Only System The book-entry only system for registration of the ownership of the Bonds may be discontinued at any time if: (i) DTC determines to resign as securities depository for the Bonds; or (ii) the Authority determines that continuation of the system of book-entry transfers through DTC (or through a successor securities depository) is not in the best interests of the Beneficial Owners. In either such event (unless the Authority appoints a successor securities depository), Bonds will then be delivered in registered certificate form to such persons, and in such maturities and principal amounts, as may be designated by DTC, but without any liability on the part of the Authority, or the Trustee for the accuracy of such designation. Whenever DTC requests the Authority or the Trustee to do so, the Authority or the Trustee shall cooperate with DTC in taking appropriate action after reasonable notice to arrange for another securities depository to maintain custody of certificates evidencing the Bonds. THE AUTHORITY, CCTI AND THE TRUSTEE CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC, THE DIRECT PARTICIPANTS OR THE INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE BONDS (I) PAYMENTS OF PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS, (II) CERTIFICATES REPRESENTING AN OWNERSHIP INTEREST OR OTHER CONFIRMATION OF BENEFICIAL OWNERSHIP INTERESTS IN THE BONDS, OR (III) REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS NOMINEE, AS THE REGISTERED OWNER OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. SUMMARIES OF CERTAIN PROVISIONS OF THE LOAN AGREEMENT AND THE INDENTURE The following pages contain descriptions of certain provisions of the Loan Agreement and the Indenture. The Bonds are secured by the Indenture and are payable from payments due under the Loan Agreement. These descriptions are brief summaries and do not purport to be and should not be regarded as complete statements of the terms of either the Loan Agreement or the Indenture or as complete synopses thereof. Reference is made to the documents in their entirety, copies of which may be obtained from the Trustee, for a complete statement of the terms and conditions therein. The Loan Agreement In connection with the issuance of Bonds, the Authority will enter into the Loan Agreement with the School Districts and the Joint Operating Committee pursuant to which the Authority will loan the proceeds of the Bonds to the JOC on behalf of the School Districts. The Loan Agreement requires the School Districts to make loan repayments to the Authority in the amounts sufficient to pay the debt service on the Bonds. The School Districts are obligated under the Loan Agreement to pay only their respective shares, as set forth below. The failure of one School District to pay its proportionate share will not increase the liabilities or obligations of any other School District, or require it to remedy such a payment default. Representations, Warranties and Covenants: The School Districts make certain representations, warranties and covenants under the Loan Agreement, including without limitation, with respect to the existence and authority of the School Districts, the enforceability of the Loan Agreement and Notes and the absence of material litigation. 8

15 Source of Debt Service Payments: The debt service payments are payable by the School Districts from their revenues from whatever source derived which include ad valorem taxes (limited as to rate) and State reimbursements. Each School District has covenanted to include payments due each fiscal year in its operating budget for such fiscal year during the term of the Loan Agreement and to make the loan payments required to be paid to the Authority with respect to such School District s Note and the Loan Agreement. The obligations of the each of the School Districts under the Loan Agreement and their proportionate share is shown on the following table: School District Proportionate Share Principal Amount Avonworth 3.71% $593,912 Deer Lakes 5.04% $807,111 Fox Chapel Area 15.56% $2,494,268 Hampton Township 8.62% $1,380,985 North Allegheny 24.28% $3,892,084 North Hills 14.64% $2,346,792 Northgate 3.20% $512,960 Pine-Richland 11.26% $1,804,978 Shaler Area 13.71% $2,196,912 Source: Preliminary debt service schedules. Assignment of Loan Agreement: The loan payments shall be paid directly to the Trustee under an assignment by the Authority to the Trustee of such payments for the benefit and security of the Bondholders under the Indenture. Unconditional Obligation: The obligations of the School Districts to pay the principal and interest due under the Notes and Loan Agreement and all other sums payable under the Loan Agreement are absolute and unconditional. The payments are required to be made in full directly to the Trustee, as assignee, when due without delay or diminution for any cause whatsoever, including without limitation thereto, destruction of any School facilities, and without right of set-off for default on the part of the Authority under the Loan Agreement. Events of Default: Any one or more of the following events shall constitute an Event of Default under the Loan Agreement: (a) a School District fails to make any payment required under its respective Note; (b) a School District or the Joint Operating Committee shall fail or refuse to comply with its tax covenants set forth in the Loan Agreement; (c) a School District or the Joint Operating Committee shall default in the due and punctual performance of any other of the covenants and agreements contained in the Loan Agreement and such default shall continue for 60 days after written notice specifying such default and requiring the same to be remedied shall have been given to the School District or the Joint Operating Committee by the Authority; (d) if an Event of Default shall have occurred and be continuing under the Indenture and as a result of such Event or Default the Bonds shall have been declared due and payable by acceleration in accordance with the Indenture; or (e) the School Districts and the Joint Operating Committee shall fail, discontinue or unreasonably delay in carrying out the Project and shall fail to remedy such failure, discontinuance or delay within 30 days of notice thereof by the Authority. Remedies: If an Event of Default has occurred and is continuing: (a) The Authority (or the Trustee as its assignee) may, in addition to its other rights and remedies as may be provided in the Loan Agreement or may exist at the time at law or in equity, exercise any one or more of the following remedies: (i) (ii) upon notice to the School Districts, declare all sums due or to become due under the Loan Agreement and under the Notes to be immediately due and payable; or by suit, action or proceeding at law or in equity, enforce all rights of the Authority, and require the School Districts and the Joint Operating Committee to carry out any 9

16 agreements with or for the benefit of the owners of the Bonds and to perform their duties under the Act, the Loan Agreement and the Notes; or (b) Upon the occurrence of an Event of Default described in paragraph (a) under Events of Default above, the Authority shall, in addition to the exercise of any other remedy hereunder, notify the Secretary of the Department of Education of such Event of Default and request the Secretary, in accordance with the appropriate provisions of Pennsylvania law, to notify the defaulting School Districts of their obligations under the Loan Agreement and to withhold out of any appropriation due such School Districts under the Pennsylvania School Code an amount equal to the sum or sums owing by such School Districts to the Authority under the Loan Agreement and under the respective Notes, and shall pay over the amount so withheld to the Trustee, as sinking fund depository for the Notes, on behalf of the Authority. The Indenture Limited Obligations of the Authority: The Bonds are limited obligations of the Authority and are secured solely by a pledge and assignment to the Trustee of the loan payments and other revenues or income derived by or for the Authority from or with respect to the Loan Agreement and all moneys to be paid over to the Trustee under the provisions of the Indenture. The Authority has no taxing power. Neither the general credit of the Authority nor the credit or taxing power of the United States of America, the Commonwealth of Pennsylvania, the County of Washington or any political subdivision thereof (other than the School Districts) is pledged for the payment of the principal of, or the interest on the Bonds; nor shall the Bonds be deemed to be obligations of the Authority, the Commonwealth of Pennsylvania, the County of Washington or any political subdivision thereof (other than the School Districts). The School Districts are empowered to levy ad volorem taxes, in order to make the payments in the amounts required under the Notes and the Loan Agreement as described herein subject to certain limitations (see Limitations on the Taxing Powers of the School Districts-Act 1 Special Session of 2006 (Taxpayer Relief Act) herein. Pledge and Assignment of Certain Revenues: The Authority has pledged to the Trustee, in the Indenture, a security interest in all loan payments, and other sums payable under the Loan Agreement, for the benefit and security of the registered owners of the Bonds issued under such Indenture. Revenue Fund: All payments under the Loan Agreement are required to be deposited in the Revenue Fund established with the Trustee at the times set forth in the Indenture. All moneys in the Revenue Fund are required to be transferred by the Trustee at the times set forth in the Indenture to the various other Funds established under the Indenture. Debt Service Fund: There is established under the Indenture a Debt Service Fund from moneys in the Revenue Fund, on or before each April 15 and October 15, commencing October 15, 2016 moneys in an amount sufficient to make the interest payments due on the Bonds on each such date and to make principal payments (including mandatory sinking fund redemption) due on the Bonds on October 15 of each year commencing October 15, Rebate Fund: The Trustee shall establish a Rebate Fund. The Authority, upon the written request of the JOC, will periodically, and upon retirement of the last Bond, determine the sum required to be deposited in the Rebate Fund (if any) and direct the Trustee to transfer such sum from the other funds and accounts established under the Indenture. The Authority will direct the Trustee to pay to the United States Government the sums on deposit in the Rebate Fund at the times and in the amounts (if any) required by the Internal Revenue Code of 1986, as amended, and all extant regulations promulgated thereunder. Investment of Funds: Moneys held in the Revenue Fund and the Debt Service Fund thereunder will be invested in accordance with the Indenture. Additional Bonds: The Indenture permits under certain circumstances and conditions, the issuance of additional bonds for the purposes of refunding any series of outstanding bonds of the Authority issued on behalf of the School Districts or to finance any project of the School Districts authorized by the School Code for which the Authority is authorized to issue bonds under the Act. Default and Remedies: The Act provides remedies to the Bondholders in the event of default or failure on the part of the Authority to fulfill its covenants under the Indenture. Under the Indenture, in the event of any default therein, the Trustee may enforce, and upon written request of the holders of 25% in principal amount of the Bonds then outstanding accompanied by indemnity as provided in the Indenture, shall enforce, for the benefit of all Bondholders all their rights of entry, of bringing suit, action or proceeding at law or in equity and of having a receiver appointed. Neither the Trustee nor any receiver, however, may sell, assign, mortgage, or otherwise dispose of any assets of the Authority. For more complete statement of rights and remedies of the Bondholders and for limitations thereon, reference is made to the Indenture. 10

17 Modifications and Amendments: Amendments to the Indenture are permitted without consent of Bondholders for certain purposes, including the imposition of additional restrictions and conditions respecting the issuance of bonds, the addition of covenants and agreements by the Authority, the modification of the Indenture to conform the same with governmental regulations (so long as the rights of the Bondholders issued thereunder are not adversely affected thereby), the curing of any ambiguity, defect or inconsistency in the Indenture, and the making of provision for matters which are necessary or desirable and which do not adversely affect the interests of Bondholders. Certain other modifications may be made to the Indenture, but only with the consent of the Issuer and the owners of not less than 66 2/3% in principal amount of Outstanding Bonds (as defined in the Indenture) issued thereunder. Insurance Provisions: Certain rights are granted to BAM under the Indenture. These rights include, among others, the approval of amendments, consents in addition to bondholder consents, control and direction of remedies, receipt and copies of notices, and third-party beneficiary status. Bond Insurance Policy MUNICIPAL BOND INSURANCE Concurrently with the issuance of the Bonds, Build America Mutual Assurance Company ( BAM ) will issue its Municipal Bond Insurance Policy for the Bonds (the Policy ). The Policy guarantees the scheduled payment of principal of and interest on the Bonds when due as set forth in the form of the Policy included as an appendix to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. Build America Mutual Assurance Company BAM is a New York domiciled mutual insurance corporation. BAM provides credit enhancement products solely to issuers in the U.S. public finance markets. BAM will only insure obligations of states, political subdivisions, integral parts of states or political subdivisions or entities otherwise eligible for the exclusion of income under section 115 of the U.S. Internal Revenue Code of 1986, as amended. No member of BAM is liable for the obligations of BAM. The address of the principal executive offices of BAM is: 200 Liberty Street, 27th Floor, New York, New York 10281, its telephone number is: , and its website is located at: BAM is licensed and subject to regulation as a financial guaranty insurance corporation under the laws of the State of New York and in particular Articles 41 and 69 of the New York Insurance Law. BAM s financial strength is rated AA/Stable by S&P Global Ratings, a Standard & Poor s Financial Services LLC business ( S&P ). An explanation of the significance of the rating and current reports may be obtained from S&P at The rating of BAM should be evaluated independently. The rating reflects the S&P s current assessment of the creditworthiness of BAM and its ability to pay claims on its policies of insurance. The above rating is not a recommendation to buy, sell or hold the Bonds, and such rating is subject to revision or withdrawal at any time by S&P, including withdrawal initiated at the request of BAM in its sole discretion. Any downward revision or withdrawal of the above rating may have an adverse effect on the market price of the Bonds. BAM only guarantees scheduled principal and scheduled interest payments payable by the issuer of the Bonds on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the Policy), and BAM does not guarantee the market price or liquidity of the Bonds, nor does it guarantee that the rating on the Bonds will not be revised or withdrawn. Capitalization of BAM BAM s total admitted assets, total liabilities, and total capital and surplus, as of March 31, 2016 and as prepared in accordance with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services were $475.0 million, $41.6 million and $433.4 million, respectively. BAM is party to a first loss reinsurance treaty that provides first loss protection up to a maximum of 15% of the par amount outstanding for each policy issued by BAM, subject to certain limitations and restrictions. BAM s most recent Statutory Annual Statement, which has been filed with the New York State Insurance Department and posted on BAM s website at is incorporated herein by reference and may be obtained, without charge, upon request to BAM at its address provided above (Attention: Finance Department). Future financial statements will similarly be made available when published. BAM makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, BAM 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 BAM, supplied by BAM and presented under the heading BOND INSURANCE. 11

18 Additional Information Available from BAM Credit Insights Videos. For certain BAM-insured issues, BAM produces and posts a brief Credit Insights video that provides a discussion of the obligor and some of the key factors BAM s analysts and credit committee considered when approving the credit for insurance. The Credit Insights videos are easily accessible on BAM's website at buildamerica.com/creditinsights/. (The preceding website address is provided for convenience of reference only. Information available at such address is not incorporated herein by reference.) Credit Profiles. Prior to the pricing of bonds that BAM has been selected to insure, BAM may prepare a pre-sale Credit Profile for those bonds. These pre-sale Credit Profiles provide information about the sector designation (e.g. general obligation, sales tax); a preliminary summary of financial information and key ratios; and demographic and economic data relevant to the obligor, if available. Subsequent to closing, for any offering that includes bonds insured by BAM, any pre-sale Credit Profile will be updated and superseded by a final Credit Profile to include information about the gross par insured by CUSIP, maturity and coupon. BAM pre-sale and final Credit Profiles are easily accessible on BAM's website at buildamerica.com/obligor/. BAM will produce a Credit Profile for all bonds insured by BAM, whether or not a pre-sale Credit Profile has been prepared for such bonds. (The preceding website address is provided for convenience of reference only. Information available at such address is not incorporated herein by reference.) Disclaimers. The Credit Profiles and the Credit Insights videos and the information contained therein are not recommendations to purchase, hold or sell securities or to make any investment decisions. Credit-related and other analyses and statements in the Credit Profiles and the Credit Insights videos are statements of opinion as of the date expressed, and BAM assumes no responsibility to update the content of such material. The Credit Profiles and Credit Insight videos are prepared by BAM; they have not been reviewed or approved by the issuer of or the underwriter for the Bonds, and the issuer and underwriter assume no responsibility for their content. BAM receives compensation (an insurance premium) for the insurance that it is providing with respect to the Bonds. Neither BAM nor any affiliate of BAM has purchased, or committed to purchase, any of the Bonds, whether at the initial offering or otherwise. A. W. BEATTIE CAREER CENTER The governing body of the Career Center is the Joint Operating Committee (the JOC or the Board ) consisting of 18 members (2 from each School District) appointed annually. Each of the participating School Districts appoints members of the JOC. Officers of the JOC are appointed by the members. The JOC officers, their offices, and the School District they represent are set forth below: Officers of the Joint Operating Committee NAME APPOINTING SCHOOL DISTRICT OFFICE Larry Vasko Hampton Township School District President Daniel O Keefe Northgate School District Vice-President Beau Blaser Avonworth School District Board Secretary James Fisher Shaler Area School District Treasurer 12

19 The preliminary allocation of capital expenditures and debt service of the nine School Districts is as follows: Member School District Total Cost State Share* Local Share Avonworth School District $593,912 $125,256 $468,656 Deer Lakes School District $807,111 $177,675 $629,435 Fox Chapel Area School District $2,494,268 $526,041 $1,968,227 Hampton Township School District $1,380,985 $315,365 $1,065,619 North Allegheny School District $3,892,084 $820,841 $3,071,243 North Hills School District $2,346,792 $494,938 $1,851,854 Northgate School District $512,960 $150,505 $362,455 Pine -Richland School District $1,804,978 $419,955 $1,385,023 Shaler Area School District $2,196,912 $606,590 $1,590,322 TOTALS $16,030,000 $3,637,166 $12,392,834 *State Share to be received as reimbursement on bond issue semi-annual payments and differs for each District. Estimated, subject to change. A.W. Beattie Career Center Course/Programs for the school year Advanced Computer Programming Advertising Design Agile Robotics/Advanced Manufacturing Automotive Collision Technology Automotive Technology Carpentry/Building Construction Computer Systems Technology Cosmetology Culinary Arts Dental Careers Early Childhood Education Emergency Response Technology Health and Nursing Sciences Heating, Ventilating and Air-Conditioning (HVAC) Network Engineering Technology Pastry Arts Pharmacy Mandarin Chinese Source: Career Center Adult Education A year-round non-credit adult education program that provides employment-related training classes, professional certifications, vocational and personal enrichment courses. 13

20 CAREER CENTER FINANCES Introduction The Career Center budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Director and Business Manager and submitted to the School Districts of the Career Center for approval prior to the beginning of each fiscal year on July 1. Financial Reporting The Career Center s financial statements are audited annually by an independent certified public accountant, as required by Commonwealth law. Summary and Discussion of Financial Results A summary of Comparative General Fund balance sheet and changes in fund balances for the Career Center is presented in the following Tables. A summary of Comparative General Fund balance sheet and changes in fund balances for the Career Center is presented in Table 1 and revenues and expenditures as shown on Table 2 which follow. TABLE 1 A. W. BEATTIE CAREER CENTER GENERAL FUND BALANCE SHEET (Fiscal Years Ending June 30) ASSETS Cash and Cash Equivalents... $67,723 $1,252,572 $176,003 $131,806 $126,632 Investments... 1,486, , , ,966 1,120,430 Due from Other Governments... 48, , , , ,880 Due from Other Member Districts ,598 15,068 Due from Other Funds ,188 Prepaid Expenses... 21, Other Receivables... 88,106 32,022 96,113 6,131 6,436 TOTAL ASSETS... $1,711,267 $1,581,178 $1,281,841 $960,756 $1,680,634 LIABILITIES Due to Other Funds... $0 $0 $16,277 $0 $0 Current Portion of Long-Term Debt , Accounts Payable... 17,290 19,049 46,951 24, ,269 Accrued Salaries and Benefits , , , , ,241 Payroll Deductions and Withholdings , , , ,568 Other Current Liabilities ,960 52,041 TOTAL LIABILITIES , , , , ,119 Fund Balances Nonspendable... $21,061 $0 $0 $3,000 $3,000 Unassigned... 1,383,298 1,220, , , ,055 Total Fund Balances... $1,404,359 $1,220,422 $824,826 $397,188 $960,055 TOTAL LIABILITIES AND FUND BALANCES... $1,711,267 $1,581,178 $1,281,841 $960,756 $1,681,174 Source: Annual Financial Reports. 14

21 TABLE 2 A. W. BEATTIE CAREER CENTER GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE* (Fiscal Years Ending June 30) REVENUE: (1) Total Local Sources... $6,403,995 $4,611,958 $5,934,489 $6,409,142 $7,494,413 $7,588,147 Total State Sources , , , , ,567 1,051,292 Total Federal Sources , , , , , ,000 Total Other Sources TOTAL REVENUE... $7,483,135 $5,675,993 $7,047,143 $7,589,418 $8,777,901 $8,914,439 Actual Budget EXPENDITURES: Instruction... $3,891,290 $3,355,228 $3,338,932 $3,897,528 $3,982,333 4,236,296 Support Services , ,279 2,348,794 2,191,842 2,370,655 2,653,737 Administrative and Financial Support Services , , Operation and Maintenance of Plant Services , , Operation of Noninstructional Services , , , , , ,400 Debt Service... 1,577,820 1,579,550 1,575,319 1,579,319 1,579,175 1,583,006 Capital Outlays... 63, Refund of prior year revenues Budgetary Reserve ,000 TOTAL EXPENDITURES... $7,621,250 $7,410,900 $7,491,624 $7,930,660 $8,235,838 $9,039,439 SURPLUS (DEFICIT) OF REVENUES OVER EXPENDITURES... (138,115) (1,734,907) (444,481) (341,242) 542,063 (125,000) OTHER FINANCING SOURCES (USES) Operating Transfers In... $0 $1,550,970 $109,627 $0 $0 Operating Transfers Out (60,742) (18,000) 0 TOTAL OTHER FINANCING SOURCES... $0 $1,550,970 $48,885 (18,000) $0 Net Changes in Fund Balance... (138,115) (183,937) (395,596) (359,242) 542,063 Beginning Fund Balance... $1,542,474 $1,404,359 $1,220,422 $824,826 $397,188 Ending Fund Balance... $1,404,359 $1,220,422 $824,826 $397,188 $960,055 *Totals may not add due to rounding. (1) Budget, as adopted by the Career Center on June 25, Source: Annual Financial Reports and Budget. 15

22 TABLE 3 A. W. BEATTIE CAREER CENTER DEBT SERVICE REQUIREMENTS * Series of 2016 Total Year Principal Interest Requirements $1,025,000 $361,967 $1,386, , ,075 1,387, , ,150 1,385, , ,400 1,387, ,020, ,650 1,387, ,070, ,400 1,385, ,125, ,525 1,385, ,180, ,900 1,382, ,240, ,400 1,382, ,290,000 98,500 1,388, ,315,000 72,450 1,387, ,340,000 45,063 1,385, ,370,000 15,413 1,385,413 Totals $14,765,000 $3,251,892 $18,016,892 * Totals may not add due to rounding. LABOR RELATIONS There are presently 70 full-time employees of the Career Center, including 35 teachers, 3 administrators, and 32 support personnel including secretaries, custodial staff, cafeteria staff, maintenance staff, teachers aides, and business supervision. The Career Center's full teachers are represented by the A. W. Beattie Career Center Education Association, an affiliate of the Pennsylvania State Educational Association (PSEA), under a contract which expires June 30, Pension Program Technical schools in Pennsylvania are required to participate in a statewide pension program administered by the State Public School Employees Retirement System ( PSERS ). All of the Technical School's full-time employees and part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year, participate in the program. A Pennsylvania Supreme Court decision removed the hourly de minmis requirement for part-time employees regarding participation in the program. Beginning July 1, 1976, certain revisions were made in the pension program. The Retirement Board, previously under the Department of Education of the Commonwealth, became an independent agency. However, the program is still guaranteed by the Commonwealth. Currently, each party to the program contributes a fixed percentage of the employee's salary. Employees belonging to the Public School Employees Retirement System ( PSERS ) prior to July 22, 1983 contribute 5.25% of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February 17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at 7.50% of the employee s salary for those employees hired on or after July 1, Act 9 also provides an option for those employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50% if they were hired on or after July 22, Act 120 of 2010 ( Act 120 ) was passed by the General Assembly on September 1 and signed by Governor Rendell on November 23, The benefit reductions contained in this legislation will only impact individuals who become new members of PSERS on or after July 1, New members will have the option of selecting one of 2 new classes. The members selecting class T-E will contribute a base rate of 7.5% with shared risk contribution levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F will contribute a base rate of 10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier of 2.5%. In accordance with Senate Bill 1042 enacted on July 6, 2010, the employer rate was recertified at 5.64% for fiscal year , 8.65% for fiscal year and 12.36% for fiscal year The rate for fiscal year has been set at 16.93% of payroll and the rate for fiscal year has been set at 21.40%. The employer contribution rate for fiscal year will be 25.84%. The rate applies to salary and wages earned from July 1, 2015, through June 30, This rate was determined by PSERS actuary and reflects the rate caps established by Act 120 of The rate was certified by the PSERS Board of Trustees at its meeting on December 9, In addition, the employer contribution rate may change if pension legislation is enacted prior to June 30, The employer contribution rate for fiscal year consists of 25% for pension costs and 0.84% for premium assistance payments. Please see the Public School Employee s Retirement System website indicated below for the most recent projection of employer contribution rates. 16

23 The Career Center and the Commonwealth are responsible for paying a portion of the employer s share. School entities are initially responsible for paying 100% of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. The Career Center contributions are made on a quarterly basis and employee contributions are deducted monthly for each paycheck and remitted quarterly. Recent Career Center payments have been as follows: $283, , , , (budgeted) 878,500 The Career Center is current in all payments. The PSERS complete report is available on the PSERS website on the Internet: Source: PSERS Financial Highlights. Other Post-Employment Benefits The Career Center is obligated under collective bargaining agreements to provide in the future health insurance coverage for current and future retired employees, and to provide retirement severance pay for existing employees. The Career Center became subject to the requirements of GASB Statements No. 43 and 45 commencing with the Career Center s annual financial statements for the fiscal year ending June 30, INFORMATION REGARDING THE SCHOOL DISTRICTS Please refer to Appendices A through I for information concerning each of the School Districts. 17

24 TAXING POWERS OF THE SCHOOL DISTRICTS Subject to certain limitations imposed by the Taxpayer Relief Act (described below), each of the School Districts are empowered by the School Code and other statutes to levy the following taxes: 1. A basic annual tax on all real property taxable for school purposes, not to exceed 25 mills on each dollar of assessed valuation, to be used for general school purposes. 2. An unlimited ad valorem tax on the property taxable for school purposes to provide funds: a. for minimum salaries and increments of the teaching and supervisory staff; b. to pay rentals due any municipality authority or non-profit corporation or due the State Public School Building Authority; c. to pay interest and principal on any indebtedness incurred pursuant to the Local Government Unit Debt Act, or any prior or subsequent act governing the incurrence of indebtedness of the school district; and d. to pay for the amortization of a bond or note issue which provided a school building prior to the first Monday of July, An annual per capita tax on each resident or inhabitant over 18 years of age of not less than $1.00 and not more than $ Additional taxes subject to division with other political subdivisions authorized to levy similar taxes on the same person, subject, business, transaction or privilege, under Act No. 511, enacted December 31, 1965, as amended ( The Local Tax Enabling Act ). These taxes, which may include, among others, an additional per capita tax, a wage and other earned income tax, a real estate transfer tax, a gross receipts tax, a local services tax and an occupation tax, shall not exceed, in the aggregate, an amount equal to the product of the market valuation of real estate in the School District (as certified by the State Tax Equalization Board of the Commonwealth STEB ) multiplied by twelve mills. All local taxing authorities are required by the Local Tax Enabling Act to exempt disabled veterans and members of the armed forces reserve who are called to active duty at any time during the tax year from any local services tax and to exempt from any local services tax levied at a rate in excess of $10 those persons whose total income and net profits from all sources within the political subdivision is less than $12,000 for the tax year. The Local Tax Enabling Act also authorizes, but does not require, taxing authorities to exempt from per capita, occupation, and earned income taxes and any local services tax levied at a rate of $10 or less per year, any person whose total income from all sources is less than $12,000 per year. Limitations on Local Taxes Under the Taxpayer Tax Relief Act a school district may not levy any new tax for the support of the public schools or increase the rate of any tax for school purposes by more than the Index (defined below), unless in each case either (a) such increase is approved by the voters in the school district at a public referendum or (b) one of the exceptions summarized below is applicable and the use of such exception is approved by the Pennsylvania Department of Education (PDE): 1. to pay interest and principal on indebtedness originally incurred (i) prior to September 4, 2004, in the case of a school district which had elected to become subject to the provisions of the prior Homeowner Tax Relief Act, Act 72 of 2004, or (ii) prior to June 27, 2006, in the case of a school district which had not elected to become subject to Act 72 of 2004; to pay interest and principal on any indebtedness approved by the voters at referendum (electoral debt); and to pay interest and principal on debt refunding or refinancing debt for which one of the above exceptions is permitted, as long as the refunding or refinancing incurs no additional debt other than for costs and expenses related to the refunding or refinancing and the funding of appropriate debt service reserves; 2. to pay costs incurred in providing special education programs and services to students with disabilities, under specified circumstances; and 3. to make payments into the State Public School Employees Retirement System when the increase in the estimated payments between the current year and the upcoming year is greater than the Index, as determined by PDE in accordance with the provisions of Act 1. Any revenue derived from an increase in the rate of any tax allowed under the exception numbered 1 above may not exceed the anticipated dollar amount of the expenditure, and any revenue derived from an increase in the rate of any tax allowed pursuant to any other exception enumerated above may not exceed the rate increase required, as determined by PDE. If a school district s petition or request to increase taxes by more than the Index pursuant to one or more of the allowable exceptions is not approved, the school district may submit the proposed tax increase to a referendum. 18

25 The Index (to be determined and reported by PDE by September of each year for application to the following fiscal year) is the average of the percentage increase in the statewide average weekly wage, as determined by the State Department of Labor and Industry for the preceding calendar year, and the employment cost index for elementary and secondary schools, as reported by the federal Bureau of Labor Statistics for the preceding 12-month period beginning July 1 and ending June 30. If and when a school district has a Market Value/Income Aid Ratio greater than 0.40 for the prior school year, however, the Index is adjusted upward by multiplying the unadjusted Index by the sum of 0.75 and such Aid Ratio. A board of school directors may submit, but is not required to submit, a referendum question to the voters at the municipal election seeking approval to levy or increase the rate of an EIT or impose PIT for the purpose of funding homestead and farmstead exclusions, but the proposed rate of the EIT or PIT shall not exceed the rate that is required to provide the maximum homestead and farmstead exclusions allowable under law. The information set forth above is a summary of the Taxpayer Relief Act, which is not intended to be an exhaustive discussion of the provisions or consequences of the Taxpayer Relief Act, nor a legal interpretation of any provision of the Taxpayer Relief Act. Any prospective purchaser of the Bonds should independently research and analyze the Taxpayer Relief Act as a part of any decision to purchase the Bonds. Limitation on Estimated Ending Unassigned Fund Balances Pennsylvania Act No (enacted December 23, 2003) prohibits a school district from increasing real property taxes unless the school district has adopted a budget for such school year that includes an estimated ending unreserved undesignated fund balance which is not more than a specified percentage of the total budgeted expenditures, as set forth below: Estimated Ending Unassigned Fund Balance Total Budgeted Expenditures as a Percentage of Total Budgeted Expenditures Less than or equal to $11,999, % Between $12,000,000 and $12,999, % Between $13,000,000 and $13,999, % Between $14,000,000 and $14,999, % Between $15,000,000 and $15,999, % Between $16,000,000 and $16,999, % Between $17,000,000 and $17,999, % Between $18,000,000 and $18,999, % Greater than or equal to $19,000, % Estimated Ending Unassigned Fund Balance is defined in Act as that portion of the fund balance which is appropriable for expenditure or not legally or otherwise segregated for a specific or tentative future use, projected for the close of the school year for which a school district s budget was adopted and held in the general fund accounts of the school district. COMMONWEALTH AID TO THE SCHOOL DISTRICTS Pennsylvania school districts receive financial assistance from the Commonwealth in a number of forms, all subject to statutory provisions and annual appropriation by the Pennsylvania General Assembly. A basic instructional subsidy is allocated to all school districts based on (1) the per pupil market value of assessable real property in the school district; (2) the per pupil earned income in the school district; and (3) the school district's tax effort, as compared with the tax effort of other school districts in the Commonwealth. School districts also receive Commonwealth aid for special education, pupil transportation, vocational education, and health services, among other things. Exceptions are: (1) for area vocational-technical school construction, either current market value aid ratio or.5000, whichever is greater, will be used: (2) for school districts eligible under density factor, the district's applicable permanent capital account reimbursement fraction, current market value aid ratio or.5000, whichever is the greatest, will be used. Lack of Funding in State Budget for Debt Service Subsidies As of June 23, 2016, the Budget for the Commonwealth did not contain an appropriation for process known as the Planning and Construction Workbook or PlanCon reimbursement for any school districts in Pennsylvania to be paid during the fiscal year ending June 30, On March 23, 2016, Governor Wolf vetoed House Bill 1327, also known as the Fiscal Code, for fiscal year Contained within the Fiscal Code was legislation adopted by the General Assembly that authorized borrowings to fund the PlanCon appropriation for the fiscal year. With the veto of the Fiscal Code for fiscal year , there is currently no appropriation for any Pennsylvania school district related to PlanCon reimbursement for fiscal year On April 14, 2016 House Bill 1589 ( HB1589 ) was presented to the Governor for consideration after adoption by the General Assembly. HB1589 contains language similar to that of the previous Fiscal Code that the Governor vetoed on March 23, 2016 including the authorization for a borrowing to fully fund the PlanCon appropriation for the fiscal year. As of April 22, 2016, the Governor publically announced that he will not sign or veto the bill and thus HB1589 has become law. There is no certainty that any PlanCon reimbursement will be paid in fiscal year , or will be appropriated for any future fiscal years. 19

26 In addition, legislation has been introduced from time to time in the Pennsylvania General Assembly containing language that would revise, alter or possibly discontinue the PlanCon program for Pennsylvania school districts. As of June 23, 2016 none of these proposed changes have been signed into law. To the extent that any future legislation contains changes and alterations to the PlanCon program as it currently is structured, the amount of PlanCon reimbursement to the School District may be positively or negatively affected, which could impact the amount of School District funds needed to be allocated by the School District to pay debt service or its debt obligations. ABSENCE OF LITIGATION There is no litigation of any nature now pending or, to the knowledge of the Authority, threatened against the Authority seeking to restrain or enjoin the issuance, sale, execution or delivery of the Bonds or in any way contesting or affecting the validity of the Bonds, the Indenture, or any proceedings of the Authority taken in connection with the issuance or sale of the Bonds, the pledge or application of any moneys or security provided for the payment of the Bonds, or the existence or powers of the Authority. There is no litigation currently pending or, to the knowledge of the Joint Operating Committee, threatened against the Joint Operating Committee which could have a material adverse affect on its financial condition or which could affect the validity or enforceability of the Loan Agreement, or any proceedings of the Joint Operating Committee taken in connection with the authorization of the Loan Agreement or the Project, or which in any way contests the existence or powers of the Career Center. At the time of settlement, each of the School Districts will each deliver a certificate stating that there is no litigation currently pending or, to the knowledge of such individual School District, threatened against such School District which could have a material adverse affect on its financial condition or which could affect the validity or enforceability of the Loan Agreement, the Note issued by such School District, or any proceedings of such School District taken in connection with the same, or which in any way contests the existence or powers of such School District. State Tax Matters TAX MATTERS In the opinion of Bond Counsel, the Bonds, and the interest income therefrom, are free from taxation for purposes of personal income, corporate net income and personal property taxes within the Commonwealth of Pennsylvania. The residence of a holder of a Bond in a state other than Pennsylvania, or being subject to tax in a state other than Pennsylvania, may result in income or other tax liabilities being imposed by such other state or its political subdivisions based on the interest or other income from the Bonds. Federal Income Tax Matters In the opinion of Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, interest on the Bonds (including, in the case of Bonds sold at an original issue discount, the difference between the initial offering price and par) is excluded from gross income for Federal income tax purposes. Bond Counsel is also of the opinion that interest on the Bonds is not a specific item of tax preference under Section 57 of the Internal Revenue Code of 1986, as amended (the Code ) for purposes of Federal individual or corporate alternative minimum taxes. Original Issue Discount The Bonds that mature on October 15, 2025 through and including October 15, 2028 (collectively, the Tax-Exempt Discount Bonds ) are being offered and sold to the public at an original issue discount ( OID ) from the amounts payable at their maturity. OID is the excess of the stated redemption price of a bond at maturity (par) over the price to the public at which a substantial amount of bonds of the same maturity are sold pursuant to the initial offering. Under the Code, OID on each Tax- Exempt Discount Bond will accrue over its term and the amount of accretion will be based on the yield to maturity, compounded semi-annually. The amount of OID that accrues during each semi-annual period will do so ratably within that period on a daily basis. With respect to an initial purchaser of a Tax-Exempt Discount Bond at its initial offering price, the portion of OID that accrues during the period that such purchaser owns such Bond is added to the purchaser's tax basis for purposes of determining gain or loss at the maturity, redemption, sale, or other disposition of that Tax-Exempt Discount Bond and thus, in practical effect, is treated as interest, which is excludable from gross income for federal income tax purposes. Holders of Tax-Exempt Discount Bonds should consult their own tax advisors as to the effect of OID with respect to their federal tax liability. 20

27 Original Issue Premium The Bonds that mature on October 15, 2017 through and including October 15, 2024 (collectively, the Tax-Exempt Premium Bonds ) are being sold at an original issue premium ( OIP ). An amount equal to the excess of the issue price of a Tax-Exempt Premium Bond over its stated redemption price at maturity constitutes OIP on such Tax-Exempt Premium Bond. An initial purchaser of a Tax-Exempt Premium Bond must amortize any OIP over such Tax-Exempt Premium Bond s term using constant yield principles, based on the purchaser s yield to maturity (or, in the case of Tax-Exempt Premium Bonds callable prior to their maturity, by amortizing the OIP to the call date, based on the purchaser s yield to the call date and giving effect to any call premium). As OIP is amortized, the amount of the amortization offsets a corresponding amount of interest for the period and the purchaser s basis in such Tax-Exempt Premium Bond is reduced by a corresponding amount resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Tax-Exempt Premium Bond prior to its maturity. Even though the purchaser s basis may be reduced, no federal income tax deduction is allowed. Purchasers of the Tax-Exempt Premium Bonds should consult with their tax advisors with respect to the determination and treatment of OIP for federal income tax purposes and with respect to the state and local tax consequences of owning a Tax- Exempt Premium Bond. Continuing Compliance The Code imposes various terms, restrictions, conditions and requirements relating to the exclusion from gross income for Federal income tax purposes of interest on obligations such as the Bonds. The Authority has covenanted to comply with all such requirements, including non-arbitrage requirements under Section 148 of the Code, that are necessary to ensure that interest on the Bonds will not be includable in gross income for Federal income tax purposes. Failure to comply with these covenants could result in interest on the Bonds being includable in gross income for Federal income tax purposes and such inclusion could be required retroactively to the date of issuance of the Bonds. The opinion of Bond Counsel assumes compliance with the aforesaid covenants. Moreover, Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the taxexempt status of the interest on the Bonds. Certain requirements and procedures contained or referred to in the Resolution and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Such changes or actions could constitute an exchange or other tax event with respect to the Bonds, which could result in gain or loss to the holder of a Bond, and a consequent tax liability. Pursuant to its continuing disclosure obligations made pursuant to SEC Rule 15c2-12 (see Continuing Disclosure Undertaking herein), the Authority may be required to provide notice of such changes or actions, as Material Events under said Rule. However, holders of the Bonds should consult their own tax advisors as to the effect of such changes or actions with respect to their federal tax liability. Collateral Tax Liabilities Although Bond Counsel has rendered an opinion that interest on the Bonds is excludable from gross income for Federal and Pennsylvania income tax purposes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may result in other collateral effects on a Bondholder s Federal, state or local tax liabilities. The nature and extent of these other tax consequences may depend upon the particular tax status of the Bondholder or the Bondholder s other items of income or deduction. Bond Counsel expresses no opinions regarding any tax consequences other than what is set forth in its opinion; each Bondholder or potential Bondholder is urged to consult with its own tax advisors with respect to the effects of purchasing, holding or disposing of the Bonds on its tax liabilities. For example, corporations are required to include interest on the Bonds in determining adjusted current earnings under Section 56(c) of the Code, which may increase the amount of any alternative minimum tax owed. Other tax consequences for certain taxpayers include, without limitation, increasing the federal tax liability of certain foreign corporations subject to the branch profits tax imposed by Section 884 of the Code, increasing the federal tax liability of certain insurance companies under Section 832 of the Code, increasing the federal tax liability of certain S corporations subject to Sections 1362 and 1375 of the Code, increasing the federal tax liability of certain individual recipients of social security or railroad retirement benefits under Section 86 of the Code, limiting the use of the Earned Income Credit under Section 32 of the Code, limiting the use of the refundable credit for coverage under a qualified health plan under Section 36B of the Code, and denying an interest expense deduction to certain financial institutions under Section 265 of the Code (unless, and in the circumstance when, the Bonds have been designated by the issuer as qualified tax-exempt obligations ). Change in Law; Adverse Determinations From time to time, certain legislative proposals may be introduced, or are pending, in the Congress of the United States or the various state legislatures, including some that carry retroactive effective dates, that, if, enacted, could alter or amend the federal and state tax matters described above or affect the market value of the Bonds. No prediction can be made whether or in what form any such proposal or proposals might be enacted into law or whether, if enacted, the same would apply to bonds issued prior to enactment. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation. 21

28 The Internal Revenue Service (the Service ) regularly audits 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. No prediction can be made whether or not the Service will commence an audit of the Bonds. If an audit is commenced, under current procedures, the Service may treat the Authority as a taxpayer and the Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Bonds until such time as the audit is concluded, regardless of the ultimate outcome. Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, such as the Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Bondholder who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or to any Bondholder 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 FOREGOING IS NOT INTENDED AS AN EXHAUSTIVE LIST OF THE PROVISIONS OF FEDERAL, STATE AND LOCAL TAX LAWS WHICH MAY HAVE AN EFFECT ON INDIVIDUALS AND CORPORATIONS HOLDING THE BONDS OR RECEIVING INTEREST THEREON. PROSPECTIVE PURCHASERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE EFFECT ON THEIR FEDERAL, STATE OR LOCAL TAX LIABILITY AND GENERAL FINANCIAL AFFAIRS OF HOLDING THE BONDS OR RECEIVING INTEREST THEREON. CONTINUING DISCLOSURE UNDERTAKING In accordance with the requirements of Rule 15c-12 (the Rule ) promulgated by the Securities and Exchange Commission ( SEC ), and the Resolution, the Career Center and each of the School Districts, will execute and deliver a written continuing disclosure obligation with respect to the Bonds. See the form of the Continuing Disclosure Agreement (the Certificate ) in Appendix K to this Official Statement. Under the terms of the Certificate, the Career Center and School Districts will undertake to file with the Municipal Securities Rulemaking Board (the MSRB ) financial and other information concerning the Career Center and School Districts (annual audited financial statements and notice of certain events affecting the Career Center and the School Districts). The School Districts will provide financial information to the Career Center for filing with the MSRB. The obligations of the Career Center and the School Districts with respect to continuing disclosure shall terminate upon the prior redemption or payment in full of all of the Bonds. The MSRB has been designated by the SEC to be the central and sole repository for continuing disclosure information filed by issuers of municipal securities since July 1, Information and notices filed by municipal issuers (and other Participating persons with respect to municipal securities issues) are made available through the MSRB s Electronic Municipal Market Access (EMMA) System, which may be accessed on the internet at Existing Continuing Disclosure Filing History The Career Center has previously entered into a Continuing Disclosure Agreement with respect to its previously issued bond issue that is currently outstanding. The Career Center s filing history of its annual financial and operating information during the past five (5) years is outlined in the table below. Fiscal Year Filing Financial Statements Budget Ending Deadline Filing Date EMMA ID [1] Filing Date EMMA ID [1] 6/30/ /27/2011 7/1/2014 EA /5/2014 EA /30/ /27/2012 7/1/2014 EA /5/2014 EA /30/ /27/2013 3/21/2016 ES /2/2016 ES /30/ /27/2014 4/22/2015 ER /22/2015 ER /30/ /27/ /12/2015 [2] ER /23/2015 ER Notes [1] Submission ID is the EMMA Submission ID for each filing. To access a filing, insert the Submission ID to the end of the web address below: [2] Filing of Career Center s Draft Audited Financial Statements, the final report was filed to EMMA on March 21, 2016 (EMMA ID ES628948). 22

29 Based on the information above, the Career Center s annual financial and operating filing history over the past five (5) years can be summarized as follows: For fiscal year ending June 30, 2011 the Career Center filed the audited financial statements on July 1, 2014 and the budget report on December 5, For fiscal year ending June 30, 2012 the Career Center filed the audited financial statements on July 1, 2014 and the budget report on December 5, For fiscal year ending June 30, 2013 the Career Center filed the audited financial statements on March 21, 2016 and the budget report on June 2, For fiscal year ending June 30, 2014 the Career Center filed the audited financial statements and the budget report on April 22, For fiscal year ending June 30, 2015 the Career Center filed the draft audited financial statements on December 12, 2015, the finalized version was filed on March 21, The budget report was filed on December 23, Bond Insurance Rating Downgrades and Upgrades by S&P and/or Moody s The Career Center s 2008 Bonds that have been outstanding during the past five (5) years have been insured by a bond insurance company that has received rating downgrades and upgrades by both S&P and Moody s. This information was publicly available from widely accepted information sources at the time of their respective downgrades or upgrades. For each of the School District s continuing disclosure undertakings with respect to its own outstanding indebtedness during the past 5 years please refer to the appropriate Appendix. RATING S&P Global Ratings, a business unit of Standard & Poor s Financial Services LLC ( S&P ) is expected to assign its municipal bond rating of AA (Stable Outlook) to this issue of Bonds with the understanding that upon delivery of the Bonds, a policy insuring the payment when due of principal of and interest on the Bonds will be issued by BAM. Moody s Investors Service, Inc., has assigned an underlying rating of A1 on the Bonds. Moody s Investors Service, Inc., 7 World Trade Center at 250 Greenwich Street, New York, New York Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that any such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by the rating agency, if circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds. UNDERWRITING The Underwriter has agreed to purchase the Bonds from the Authority, subject to certain conditions precedent, and will purchase all of the Bonds if any of such Bonds are purchased. The Bonds will be purchased for a purchase price of $15,921,687.30, equal to the par amount of the Bonds less an underwriter s discount of $77, plus a net original issue premium of $1,234,055.90, plus accrued interest, if any from the dated date of the Bonds to the date of delivery of the Bonds. LEGAL OPINION The Bonds are offered with the approving legal opinion of Dinsmore & Shohl LLP, Pittsburgh, Pennsylvania, Bond Counsel to the Career Center. Certain other legal matters will be passed upon for the Authority by Houston Harbaugh, P.C., Pittsburgh, Pennsylvania, for the JOC by its Solicitor, Weiss Burkardt Kramer, LLC., Pittsburgh, Pennsylvania, Solicitor to the Career Center. FINANCIAL ADVISOR The Career Center has retained Public Financial Management, Inc., Harrisburg, Pennsylvania, as its financial advisor (the Financial Advisor ) in connection with the preparation, authorization and issuance of the Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Official Statement. Public Financial Management, Inc. is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. 23

30 MISCELLANEOUS The Authority has no responsibility for the JOC s or the School Districts compliance with the Continuing Disclosure Agreement or for the contents of, or any omissions from, the financial information, operating data, or notices provided thereunder. The references herein to the Indenture, the Loan Agreement, statutes and other materials are only brief outlines of certain provisions thereof and do not purport to summarize or describe all the provisions thereof, copies of which will be furnished by the Trustee upon request. The information contained in this Official Statement has been compiled or prepared from official and other sources deemed to be reliable and, although not guaranteed as to the completeness or accuracy, is believed to be correct as of this date. Statements involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. The information contained in this Official Statement should not be construed as representing all the conditions affecting the Authority, the JOC, the School Districts, or the Bonds. The Authority has not assisted in the preparation of this Official Statement, except for the statements under the section captioned THE AUTHORITY herein and, except for that section, the Authority is not responsible for any statements made in this Official Statement. Except for the authorization, execution and delivery of documents required to affect the issuance of the Bonds, the Authority has not otherwise assisted in the public offer, sale or distribution of the Bonds. Accordingly, except as foresaid, the Authority assumes no responsibility for the disclosures set forth in this Official Statement. The Authority and the Joint Operating Committee have authorized the execution and distribution of this Official Statement. The Authority has not assisted in the preparation of this Official Statement, except for the statements under the section captioned THE AUTHORITY and LITIGATION (insofar as the statements therein pertain to the Authority herein and, except for such sections, the Authority is not responsible for any statements made in this Official Statement. WASHINGTON COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY By: /s/ John E. Artuso Chairman JOINT OPERATING COMMITTEE CERTIFICATION This Official Statement has been prepared under the direction of the Joint Operating Committee by Public Financial Management, Inc., Harrisburg, Pennsylvania, in its capacity as Financial Advisor to the Joint Operating Committee. The information set forth in this Official Statement has been obtained from the Joint Operating Committee and from other sources believed to be reliable. Insofar as any statement herein includes matters of opinion or estimates about future conditions, it is not intended as representation of fact, and there is no guarantee that it is, or will be, realized. Summaries or descriptions of provisions of the Bonds, the Indenture, the Loan Agreement, and all references to other materials not purporting to be quoted in full are only brief outlines of some of the provisions thereof. Reference is hereby made to the complete documents, copies of which will be furnished by the Joint Operating Committee or the Financial Advisor upon request. The information assembled in this Official Statement is not to be construed as a contract with holders of the Bonds. The Joint Operating Committee has authorized the distribution of this Official Statement. APPROVED: Joint Operating Committee of the A. W. Beattie Career Center Allegheny County, Pennsylvania By: /s/ Larry Vasko President, Joint Operating Committee 24

31 APPENDIX A AVONWORTH SCHOOL DISTRICT Allegheny County, Pennsylvania Descriptive, Financial and Economic Information

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33 AVONWORTH SCHOOL DISTRICT Allegheny County, Pennsylvania THE SCHOOL DISTRICT Introduction The School District is comprised of the Boroughs of Ben Avon, Ben Avon Heights and Emsworth and the Townships of Kilbuck and Ohio, all located in the northwestern section of Allegheny County, Pennsylvania. The School District is approximately seven miles northwest of Pittsburgh, Pennsylvania along the north bank of the Ohio River, and shares common boundaries with Glenfield Borough, Aleppo Township and Sewickley Heights Borough to the west; Franklin Park Borough to the north; Ross Township and Avalon Borough to the east and Neville Township to the south. The area served by the School District encompasses 11 square miles. The municipalities comprising the School District Ben Avon, Ben Avon Heights and Emsworth Boroughs and Kilbuck and Ohio Townships are largely residential in nature and serve, to a large extent, as bedroom communities for employees and executives who commute to Pittsburgh. The municipalities are well zoned and efficiently managed, with very little business or industrial development. Administration The present School District is governed by a nine-member Board of School Directors (the School Board ), elected to four year terms. The Superintendent is the chief administrative officer of the School District, with overall responsibility for all aspects of operations, including education and finance. The Business Manager is responsible for budget and financial operations. Both officials are appointed by the School Board. School Facilities The School District presently operates two elementary schools, one middle school and one high school, all as described on the following table. Students in grades may also attend the A. W. Beattie Career Center. TABLE A-1 AVONWORTH SCHOOL DISTRICT SCHOOL FACILITIES Original Addition/ Rated Construction Renovation Pupil Building Date Date(s) Grades Capacity Enrollment Elementary: Avonworth Primary Center K Avonworth Elementary Secondary: Avonworth Middle Avonworth Senior High Source: School District Officials. A-1

34 Student enrollment trends for the School District are illustrated by the following five-year record of actual enrollments, as reported by School District officials. Actual Enrollments TABLE A-2 AVONWORTH SCHOOL DISTRICT ENROLLMENT TRENDS Projected Enrollments School School Year Elementary Secondary Total Year Elementary Secondary Total , , , , , , , , , ,634 Source: School District officials. Introduction SCHOOL DISTRICT FINANCES The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and Business Manager and submitted to the School Board for approval prior to the beginning of the fiscal year on July 1. Financial Reporting The School District keeps its books and prepares its financial reports according to a modified accrual basis. Major accrual items are payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues receivable from other governmental units.. The School District s financial statements are audited annually by a firm of independent certified public accountants, as required by State law. The firm of Hosack, Specht, Muetzel & Wood LLP, Pittsburgh, Pennsylvania serves as School District auditor. Budgeting Process in School Districts under the Taxpayer Relief Act In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1. Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days public notice of its intent to adopt the final budget. If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district s Index (see The Taxpayer Relief Act or Act 1 herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The Taxpayer Relief Act. A-2

35 With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see The Taxpayer Relief Act or Act 1 herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses. If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index. Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days public notice be given of the board s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution. Summary and Discussion of Financial Results Table A-3 shows revenues and expenditures for the past 5 years, and the budget. The budget for the school year, as adopted June 8, 2015, projected total revenues of $27,311,655 and expenditures of $27,737,753, which included a budgetary reserve of $200,000. A-3

36 Revenue The School District received $26,742,663 in revenue in and has budgeted revenue of $27,311,655 in Local sources contributed an increasing share of total revenue in the past five years, from 75.5 percent in to 76.5 percent in Revenue from Commonwealth sources contributed an increasing share of total revenue from 20.6 percent to 22.7 percent over this period. Federal sources contributed a decreasing share of total revenue from 3.9 percent to 0.9 percent over this period. TABLE A-3 AVONWORTH SCHOOL DISTRICT SUMMARY OF SCHOOL DISTRICT GENERAL FUND REVENUES AND EXPENDITURES (For years ending June 30) Actual Budgeted REVENUE: (1) Total Revenue from Local Sources $16,579,599 $16,816,324 $18,380,312 $18,847,467 $20,445,302 $20,821,900 Total Revenue from State Sources $4,530,188 $5,047,602 $5,347,259 $5,636,832 $6,069,365 $6,287,755 Total Revenue from Federal Sources $857,047 $300,522 $302,146 $261,949 $227,996 $202,000 Total Revenue $21,966,834 $22,164,448 $24,029,717 $24,746,248 $26,742,663 $27,311,655 EXPENDITURES: Instruction $12,411,501 $12,076,282 $13,106,401 $13,904,984 $14,867,886 $15,756,838 Support Services 6,684,212 6,705,558 6,978,143 7,517,957 7,863,415 8,066,836 Noninstructional Services 807, , , , , ,984 Student Transportation Services Capital Outlay Other Support Services Debt Service 1,330,646 2,268,152 2,379,822 2,453,434 2,839,823 2,796,095 Refund of Prior Year's Receipts 30,277 14,619 3,615 39, ,954 0 Budgetary Reserve ,000 Total Expenditures $21,264,334 $21,841,544 $23,305,226 $24,820,146 $26,556,763 $27,737,753 SURPLUS (DEFICIT) OF REVENUES OVER EXPENDITURES $702,500 $322,904 $724,491 ($73,898) $185,900 ($426,098) OTHER FINANCING SOURCES (USES) Sale/Comp. for Capital Assets $0 $0 $0 $71,345 $15,000 Payments to Refunded Bond Escrow Agent Transfers Out (591,603) 0 (220,000) 0 (15,000) Total Other Financing Sources (Uses) ($591,603) $0 ($220,000) $71,345 $0 Net Changes in Fund Balance $110,897 $322,904 $504,491 ($2,553) $185,900 Fund Balance - Beginning of Year $2,420,551 $2,531,448 $2,854,352 $3,358,843 $3,356,290 Fund Balance - End of Year $2,531,448 $2,854,352 $3,358,843 $3,356,290 $3,542,190 (1) Budget, as adopted June 8, Source: School District Audited Financial Statements and Budget. A-4

37 Tax Levy Trends Table A-4 shows the recent trend of tax rates levied by the School District. Table A-5 shows the comparative trend of real property tax rates for the School District, Allegheny County and the municipalities within the School District. TABLE A-4 AVONWORTH SCHOOL DISTRICT TAX RATES Real Wage & Estate Local Estate Income Transfer Services Amusement Year (mills) (%) (%) ($) (%) Source: School District officials. TABLE A-5 AVONWORTH SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES (Mills on Assessed Value) School District Ben Avon Borough Ben Avon Heights Borough Emsworth Borough Kilbuck Township Ohio Township Allegheny County Source: Local Government Officials. Real Property Tax The real property tax (excluding delinquent collections) produced $16,466,612 in , approximately 61.6 percent of revenues. The School District fiscal year is from July 1 through June 30 and tax bills are issued on July 1 of each year. Taxpayers who remit within two months of July 1 receive a 2 percent discount, and those who remit subsequent to October 1 are assessed a 10 percent penalty. For the fiscal year, eligible taxpayers could opt into the installment method of payment for their school taxes. Installment payments are based upon three (3) one-third payments of the base tax amount. The due dates for installment payments are September 30, October 31 and November 30. The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. The last countywide assessment became effective January 1, A-5

38 TABLE A-6 AVONWORTH SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA Market Assessed Year Value Value Ratio $705,724,679 $645,981, % ,544, ,513, % ,716, ,749, % ,354, ,283, % ,775, ,068, % Compound Average Annual Percentage Change % 8.04% Source: Pennsylvania State Tax Equalization Board TABLE A-7 AVONWORTH SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY Market Assessed Market Assessed Value Value Value Value School District... $750,354,430 $852,283,632 $877,775,910 $951,068,876 Ben Avon Borough... 95,585, ,761, ,018, ,273,256 Ben Avon Heights Borough... 34,720,206 40,282,800 36,731,169 38,685,600 Emsworth Borough... 79,140, ,560,450 95,699, ,681,250 Kilbuck Township... 56,887,709 56,285,326 70,516,095 61,729,326 Ohio Township ,020, ,393, ,810, Allegheny County... 62,481,101,686 73,859,149,175 71,425,187,108 80,525,498,273 Source: Pennsylvania State Tax Equalization Board. TABLE A-8 AVONWORTH SCHOOL DISTRICT ASSESSMENT BY LAND USE Residential... $534,499,479 $551,410,279 $556,304,959 $671,171,686 $777,907,930 Lots... 18,760,891 17,754,624 17,654,254 12,014,920 11,867,820 Industrial... 2,407,610 2,407,610 2,407,610 4,384,200 3,778,800 Commercial... 85,418,866 88,044,854 88,518, ,588, ,229,926 Agriculture... 3,191,100 3,192,600 3,161,200 3,209,300 2,982,000 Land... 1,703,785 1,703,685 1,703,685 1,915,000 3,302,400 Total... $645,981,731 $664,513,652 $669,749,762 $852,283,632 $951,068,876 Source: Pennsylvania State Tax Equalization Board A-6

39 TABLE A-9 AVONWORTH SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA Current Year Total Current Collections Total Collections Assessed Gross Adjusted Collections as a Collections as Year Valuation Mills Levy Amount Percent Amount (1) Percent $716,882, $14,287,640 $13,695, % $14,064, % ,218, ,446,360 14,079, % 14,607, % ,842, ,932,044 15,319, % 15,834, % ,204, ,500,026 15,328, % 15,833, % ,480, ,148,028 16,466, % 17,080, % (1) Includes delinquent realty taxes collected. Source: School District officials. The ten largest real property taxpayers, together with assessed values, are shown in Table A-10. The aggregate assessed value of these ten highest assessed properties totals approximately 9.5 percent of total assessed value. The property owners listed below may own additional parcels which are not set forth in the table. TABLE A-10 AVONWORTH SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS Assessed Owner Property Type Value Bear Run Associates Apartment Complex $19,192,200 TRT DDR Mt. Nebo Retail Management 13,645,800 Sam's Real Estate Trust Wholesale Warehouse 10,061,500 Target Corporation Retail Management 8,865,900 Overland Associates Real Estate 7,824,700 Camp Home Business Trust Retail Management 7,600,000 One Bets Drive LP Industrial 6,054,300 Diamond Run Club Golf Course 5,796,500 Five Mile Development Group Office Building 5,631,400 Mt. Nebo Commons Office Building 4,900,000 $89,072,300 Source: School District officials. A-7

40 DEBT AND DEBT LIMITS Debt Statement Table A-11 shows the debt of the School District as of June 23, 2016, including the issuance of the Bonds. TABLE A-11 AVONWORTH SCHOOL DISTRICT DEBT STATEMENT * (As of June 23, 2016) NONELECTORAL DEBT Gross Outstanding General Obligation Bonds, Series A-1 of $9,925,000 General Obligation Bonds, Series A-2 of ,430,000 General Obligation Bonds, Series B of ,700,000 General Obligation Bonds, Series of ,095,000 General Obligation Bonds, Series of ,235,000 General Obligation Bonds, Series of ,115,000 General Obligation Bonds, Series B of ,023 TOTAL NONELECTORAL DEBT... $37,450,023 LEASE RENTAL DEBT Washington County Industrial Development Authority (A.W. Beattie Career Center Project) School Revenue Bonds, Series of 2016 (1)... $547,043 TOTAL LEASE RENTAL DEBT... $547,043 TOTAL PRINCIPAL OF DIRECT DEBT... $37,997,066 *Includes the Bonds offered through this Official Statement. (1) 3.705% pro rata share of $14,765,000 principal amount outstanding. A-8

41 Debt Limit and Remaining Borrowing Capacity The statutory borrowing limit of the School District under the Act is computed as a percentage of the School District s Borrowing Base. The Borrowing Base is defined as the annual arithmetic average of total Revenues (as defined by the Act) for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing base and borrowing capacity as follows: Total Revenues for $23,798,544 Total Revenues for $24,440,621 Total Revenues for $26,490,889 Total... $74,730,054 Annual Arithmetic Average (Borrowing Base)... $24,910,018 Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District's Borrowing Base produces the following products: Remaining Legal Net Debt Borrowing Limit Outstanding* Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $56,047,540 $37,997,066 $18,050,474 *Includes the Bonds offered through this Official Statement, does not reflect credits against gross indebtedness that may be claimed for a portion of principal of debt estimated to be reimbursed by Commonwealth Aid. Future Financing The School District does not anticipate issuing additional long-term debt in the immediate future. School District Employees LABOR RELATIONS There are presently 175 employees of the School District, including 123 teachers, 15 administrators and 37 classified support personnel. Within the School District work force there are two bargaining units: the Avonworth Education Association ("AEA") and the Avonworth Education Support Professional Association ("AESPA"). AEA is affiliated with the Pennsylvania State Education Association ("PSEA"). The Local chapter represents the teachers, librarians, guidance counselors, psychologists and school nurses. The AEA contract expires June 30, The AESPA is affiliated with the PSEA and represents the clerical employees, paraprofessionals, food service employees and custodians. The AESPA has a four year contract which expires June 30, The School Board considers its employee relations to be good. A-9

42 Pension Program School Districts in Pennsylvania are required to participate in a statewide pension program administered by the Public School Employees Retirement System (PSERS). All of the School District's full-time employees, part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. However, a Pennsylvania Supreme Court decision has removed the hourly de minimis requirement for current members of PSERS regarding the purchase of credit for their part-time school service rendered prior to their being members of PSERS, for purposes of increasing their pension benefits. Beginning July 1, 1976, certain revisions were made in the pension program. The Retirement Board, previously under the Department of Education of the Commonwealth, became an independent agency. However, the program is still guaranteed by the Commonwealth. Currently, each party to the program contributes a fixed percentage of the employee's salary. Employees belonging to the Public School Employees Retirement System ( PSERS ) prior to July 22, 1983 contribute 5.25% of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February 17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at 7.50% of the employee s salary for those employees hired on or after July 1, Act 9 also provides an option for those employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50% if they were hired on or after July 22, Act 120 of 2010 ( Act 120 ) was passed by the General Assembly on September 1 and signed by former Governor Rendell on November 23, The benefit reductions contained in this legislation only impact individuals who become new members of PSERS on or after July 1, New members will have the option of selecting one of 2 new classes. The members selecting class T-E will contribute a base rate of 7.5% with shared risk contribution levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F will contribute a base rate of 10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier of 2.5%. In accordance with Senate Bill 1042 enacted on July 6, 2010, the employer rate was recertified at 5.64% for fiscal year , 8.65% for fiscal year and 12.36% for fiscal year The rate for fiscal year was 16.93% of payroll and the rate for fiscal year was 21.40%. The employer contribution rate for fiscal year is 25.84%. The rate applies to salary and wages earned from July 1, 2015, through June 30, This rate was determined by PSERS actuary and reflects the rate caps established by Act 120 of The rate was certified by the PSERS Board of Trustees at its meeting on December 9, In addition, the employer contribution rate may change if pension legislation is enacted prior to June 30, The employer contribution rate for fiscal year consists of 25% for pension costs and 0.84% for premium assistance payments. Please see the Public School Employee s Retirement System website indicated below for the most recent projection of employer contribution rates. The School District and the Commonwealth are responsible for paying a portion of the employer s share. School entities are initially responsible for paying 100% of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. The School District contributions are made on a quarterly basis and employee contributions are deducted monthly for each paycheck and remitted quarterly. Recent School District payments have been as follows: $583, $874, $1,299, $1,808, $2,464, (budgeted) $2,917,657 The School District is current in all payments. The PSERS complete report is available on the PSERS website on the Internet: Source: PSERS Financial Highlights. Other Post-Employment Benefits The School District is obligated under collective bargaining agreements to provide in the future health insurance coverage for current and future retired employees, and to provide retirement severance pay for existing employees. The School District will become subject to the requirements of GASB Statements No. 43 and 45 commencing with the School District s annual financial statements for the fiscal year ending June 30, A-10

43 Existing Continuing Disclosure Filing History The School District has previously entered into Continuing Disclosure Agreements with respect to each one of its previously issued bond issues that are currently outstanding. The School District s filing history of its annual financial and operating information during the past five (5) years is outlined in the table below. Fiscal Year Filing Financial Statements Budget Operating Data Ending Deadline [1] Filing Date EMMA ID [2] Filing Date EMMA ID [2] Filing Date EMMA ID [2] 6/30/ /27/2011 4/20/2012 ER /25/2014 ER /24/2014 ER /30/ /27/2012 1/22/2013 ER /11/2013 ER /24/2014 ER /30/ /27/ /30/2013 ER /3/2014 EA /24/2014 ER /30/ /27/ /12/2014 [3] EP /12/2014 EP /12/2014 EP /30/ /27/ /30/2015 ES /15/2015 EP /30/2015 ES Notes [1] For these purposes, assumes the shortest filing deadline of the School District s previous Continuing Disclosure Agreements [2] Submission ID is the EMMA Submission ID for each filing. To access a filing, insert the Submission ID to the end of the web address below: [3] Filing of Draft Audited Financial Statements, final audit report was filed to EMMA on January 5, Based on the information above, the School District s annual financial and operating filing history over the past five (5) years can be summarized as follows: For fiscal year ending June 30, 2011, the School District filed the audited financial statements on April 20, 2012, the budget on June 25, 2014 and operating data was field on June 24, For fiscal year ending June 30, 2012, the School District filed the audited financial statements on January 22, 2013, the budget on June 11, 2013 and the operating data on June 24, For fiscal year ending June 30, 2013, the School District filed the audited financial statements on December 30, 2013, the budget on January 3, 2014 and the operating data on June 24, For fiscal year ending June 30, 2014, the School District filed the draft financial statements, budget and operating data on December 12, 2014 and the final audit was filed on January 5, For fiscal year ending June 30, 2015, the School District the audited financial statements and operating data were filed on December 30, 2015 and the budget was filed on December 15, Failure to Provide Annual Financial Information As outlined in the table above, the School District failed to provide certain annual financial information in a timely manner during the past (5) five years. The School District filed a Failure to Provide Annual Financial Information notice to EMMA on June 25, Bond Insurance Rating Downgrades and Upgrades by S&P and/or Moody s Some of the School District s bond issues that have been outstanding during the past five (5) years have been insured by various bond insurance companies that have received rating downgrades and upgrades by both S&P and Moody s. This information was publicly available from widely accepted information sources at the time of their respective downgrades or upgrades. For informational purposes, the School District has filed a summary of rating upgrades and downgrades relating to certain bond insurance companies. A-11

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45 APPENDIX B DEER LAKES SCHOOL DISTRICT Allegheny County, Pennsylvania Descriptive, Financial and Economic Information

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47 DEER LAKES SCHOOL DISTRICT Allegheny County, Pennsylvania THE SCHOOL DISTRICT Introduction Deer Lakes School District, Allegheny County, Pennsylvania (the School District ), is located in the northeastern portion of Allegheny County, Pennsylvania (the County ). The School District lies some twenty miles northeast of the City of Pittsburgh, which is the county seat of the County. The School District is bordered to the north by the County of Butler, to the south by the Townships of Indiana and Springdale, to the east by the Township of Fawn and the Allegheny River and to the west by the Townships of Hampton and Richland. The School District serves the Townships of East Deer, Frazer and West Deer (collectively, the Component Municipalities ). The Component Municipalities of the School District encompass a combined land area of 40.6 square miles. Administration The present School District is governed by a nine-member Board of School Directors (the School Board ), elected to four year terms. The Superintendent is the chief administrative officer of the School District, with overall responsibility for all aspects of operations, including education and finance. The Business Manager is responsible for budget and financial operations. Both officials are appointed by the School Board. School Facilities The School District presently operates two elementary schools, one middle school and one high school, all as described on the following table. Students in grades may also attend the A. W. Beattie Career Center. TABLE B-1 DEER LAKES SCHOOL DISTRICT SCHOOL FACILITIES Original Addition/ Rated Construction Renovation Pupil Building Date Date(s) Grades Capacity Enrollment Elementary: Curtisville Elementary K East Union Elementary / Secondary: Deer Lakes Middle School /1975/ Deer Lakes High School Source: School District Officials. B-1

48 Student enrollment trends for the School District are illustrated by the following five-year record of actual enrollments, as reported by School District officials. TABLE B-2 DEER LAKES SCHOOL DISTRICT ENROLLMENT TRENDS Actual Enrollments Projected Enrollments School Year Elementary Secondary Total School Year Elementary Secondary Total ,100 1, ,026 1, ,082 1, ,003 1, ,056 1, , ,060 1, ,008 1, ,075 1, ,012 1,730 Source: School District officials. Introduction SCHOOL DISTRICT FINANCES The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and Business Manager and submitted to the School Board for approval prior to the beginning of the fiscal year on July 1. Financial Reporting The School District keeps its books and prepares its financial reports according to a modified accrual basis. Major accrual items are payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues receivable from other governmental units.. The School District s financial statements are audited annually by a firm of independent certified public accountants, as required by State law. The firm of Hosack, Specht, Muetzel & Wood LLP, Pittsburgh, Pennsylvania serves as School District auditor. Budgeting Process in School Districts under the Taxpayer Relief Act In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1. Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days public notice of its intent to adopt the final budget. If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district s Index (see The Taxpayer Relief Act or Act 1 herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The Taxpayer Relief Act. B-2

49 With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see The Taxpayer Relief Act or Act 1 herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses. If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index. Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days public notice be given of the board s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution. Summary and Discussion of Financial Results Table B-3 shows revenues and expenditures for the past 5 years, and the budget. The budget for the school year, as adopted June 23, 2015, projected total revenues of $34,345,437 and expenditures of $34,692,364. B-3

50 Revenue The School District received $34,625,188 in revenue in and has budgeted revenue of $34,345,437 in Local sources contributed an increasing share of total revenue in the past five years, from 63.3 percent in to 64.8 percent in Revenue from Commonwealth sources contributed an increasing share of total revenue from 31.4 percent to 33.7 percent over this period. Federal sources contributed a decreasing share of total revenue from 5.4 percent to 1.5 percent over this period. TABLE B-3 DEER LAKES SCHOOL DISTRICT COMPARATIVE STATEMENT OF GOVERNMENTAL FUND REVENUES AND EXPENDITURES (For years ending June 30) REVENUE: (1) Total Local Sources: $20,207,312 $21,442,546 $20,591,945 $20,772,470 $22,424,517 $21,611,417 Total State Sources: 10,020,519 10,457,303 10,661,676 11,184,385 11,682,453 12,373,403 Total Federal Sources: 1,714, , , , , ,617 Total Other Sources: TOTAL REVENUE $31,942,379 $32,506,376 $31,581,971 $32,314,212 $34,625,188 $34,345,437 Actual Budget EXPENDITURES: Instruction $17,544,627 $15,511,989 $15,938,214 $16,095,641 $16,313,982 17,864,302 Support Services 10,944,019 10,167,084 10,559,862 10,775,269 11,412,519 12,275,515 Operation of Noninstructional Services 533, , , , , ,243 Facilities Acquisition, Constr. & Imprv. Services Debt Service 4,226,112 4,098,275 3,400,356 3,265,689 3,934,773 3,948,304 Fund Transfers Capital Outlay 0 189,733 38,480 11, Refund of prior year revenues , Budgetary Reserve TOTAL EXPENDITURES $33,248,360 $30,498,478 $30,459,140 $30,691,874 $32,215,866 $34,692,364 SURPLUS (DEFICIT) OF REVENUES OVER EXPENDITURES (1,305,981) 2,007,898 1,122,831 1,622,338 2,409,322 (346,927) OTHER FINANCING SOURCES (USES): Transfers In Transfer Out (175,142) (50,000) (189,886) (249,331) (143,034) TOTAL OTHER FINANCING SOURCES (USES) (175,142) (50,000) (189,886) (249,331) (143,034) Net Changes in Fund Balances (1,481,123) 1,957, ,945 1,373,007 2,266,288 Beginning Fund Balance $3,052,464 $1,571,341 $4,232,947 $5,165,892 $6,538,899 Prior Period Adjustment 0 703, Ending Fund Balance $1,571,341 $4,232,947 $5,165,892 $6,538,899 $8,805,187 (1) Budget, as adopted June 23, Source: School District Annual Financial Reports and Budget. B-4

51 Tax Levy Trends Table B-4 shows the recent trend of tax rates levied by the School District. Table B-5 shows the comparative trend of real property tax rates for the School District, Allegheny County and the municipalities within the School District. TABLE B-4 DEER LAKES SCHOOL DISTRICT TAX RATES Real Estate Earned Local Services Per Capita Real Estate Transfer Income Tax Tax (mills) (%) (%) ($) ($) Source: School District officials. TABLE B-5 DEER LAKES SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES (Mills on Assessed Value) School District East Deer Township Frazer Township West Deer Township Allegheny County Source: Local Government Officials. Real Property Tax The real property tax (excluding delinquent collections) produced $18,225,204 in , approximately 52.6 percent of revenues. The School District fiscal year is from July 1 through June 30 and tax bills are issued on July 1 of each year. Taxpayers who remit within two months of July 1 receive a 2 percent discount, and those who remit subsequent to October 1 are assessed a 10 percent penalty. For the fiscal year, eligible taxpayers could opt into the installment method of payment for their school taxes. Installment payments are based upon three (3) one-third payments of the base tax amount. The due dates for installment payments are August 31, October 31 and December 15. The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. The last countywide assessment became effective January 1, B-5

52 TABLE B-6 DEER LAKES SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA Market Assessed Year Value Value Ratio $895,925,579 $833,261, % ,438, ,663, % ,852, ,848, % ,852,282 1,025,532, % ,003,728,389 1,126,800, % Compound Average Annual Percentage Change % 6.22% Source: Pennsylvania State Tax Equalization Board TABLE B-7 DEER LAKES SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY Market Assessed Market Assessed Value Value Value Value School District... $891,852,282 $1,025,532,663 $1,003,728,389 $1,126,800,763 East Deer Township... 46,368,546 65,873,800 58,849,891 73,471,700 Frazer Township ,730, ,091, ,088, ,304,583 West Deer Township ,753, ,567, ,790, ,024,480 Allegheny County... 62,481,101,686 73,859,149,175 71,425,187,108 80,525,498,273 Source: Pennsylvania State Tax Equalization Board. TABLE B-8 DEER LAKES SCHOOL DISTRICT ASSESSMENT BY LAND USE Residential... $490,031,592 $492,533,187 $495,030, ,420,710 $716,471,310 Lots... 17,490,681 17,126,701 21,375,601 22,309,170 20,428,670 Industrial... 6,170,700 6,121,000 6,139,500 12,022,600 11,106,400 Commercial ,920, ,680, ,343, ,445, ,387,500 Agriculture... 16,063,510 16,037,210 15,928,610 20,443,600 21,672,700 Land... 5,528,450 5,108,850 4,976,250 7,836,183 7,678,983 Mineral... 55,200 55,200 55,200 55,200 55,200 Total... $833,205,823 $819,663,138 $830,848,968 $1,025,532,663 $1,126,800,763 Source: Pennsylvania State Tax Equalization Board B-6

53 TABLE B-9 DEER LAKES SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA Current Current Year Total Total Collections Collections Collections Collections Year Levy Amount as Percent Amount (1) as Percent $17,732,798 $16,428, % $17,224, % ,823,591 17,074, % 18,350, % ,144,471 17,198, % 18,303, % ,353,683 17,333, % 18,181, % ,679,866 18,225, % 19,671, % (1) Includes delinquent realty taxes collected. Source: School District officials. The ten largest real property taxpayers, together with assessed values, are shown in Table B-10. The aggregate assessed value of these ten highest assessed properties totals approximately 20.1 percent of total assessed value. The property owners listed below may own additional parcels which are not set forth in the table. TABLE B-10 DEER LAKES SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS Owner Assessed Value Pittsburgh Mills Limited Partnership $138,361,100 Alaskan Property Management* 13,036,900 Walmart Real Estate Business Trust 12,250,000 Pitt Village LP 11,887,500 Sams Real Estate Business Trust 9,800,000 Fraizer Mills Hospitality Associates LP 9,303,900 May Department Stores Company 9,200,000 Lowes Home Centers Inc 9,082,600 Pittsburgh Mills Limited Partnership 7,500,000 Pitt Village LP 6,198,700 Totals $226,890,700 *Taxpayer appealing assessed value. Source: School District officials. B-7

54 DEBT AND DEBT LIMITS Debt Statement Table B-11 shows the debt of the School District as of June 23, 2016, including the issuance of the Bonds. TABLE B-11 DEER LAKES SCHOOL DISTRICT DEBT STATEMENT * (As of June 23, 2016) NONELECTORAL DEBT Gross Outstanding General Obligation Bonds, Series of $1,935,000 General Obligation Bonds, Series of ,225,000 General Obligation Bonds, Series A of ,930,000 General Obligation Bonds, Series B of ,470,000 General Obligation Bonds, Series of ,955,000 TOTAL NONELECTORAL DEBT... $53,515,000 LEASE RENTAL DEBT Washington County Industrial Development Authority (A.W. Beattie Career Center Project) School Revenue Bonds, Series of 2016 (1)... $743,418 TOTAL LEASE RENTAL DEBT... $743,418 TOTAL PRINCIPAL OF DIRECT DEBT... $54,258,418 *Includes the Bonds offered through this Official Statement. (1) 5.035% pro rata share of $14,765,000 principal amount outstanding. B-8

55 Debt Limit and Remaining Borrowing Capacity The statutory borrowing limit of the School District under the Act is computed as a percentage of the School District s Borrowing Base. The Borrowing Base is defined as the annual arithmetic average of total Revenues (as defined by the Act) for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing base and borrowing capacity as follows: Total Revenues for $31,170,926 Total Revenues for $31,836,051 Total Revenues for $34,072,680 Total... $97,079,657 Annual Arithmetic Average (Borrowing Base)... $32,359,886 Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District's Borrowing Base produces the following products: Remaining Legal Net Debt Borrowing Limit Outstanding* Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $72,809,743 $54,258,418 $18,551,325 *Includes the Bonds offered through this Official Statement, does not reflect credits against gross indebtedness that may be claimed for a portion of principal of debt estimated to be reimbursed by Commonwealth Aid. Future Financing The School District does not anticipate issuing additional long-term debt in the immediate future. School District Employees LABOR RELATIONS There are approximately 313 employees of the School District, including 180 teachers, librarians and administrators, and 133 support personnel. The support personnel include secretaries, custodial staff, cafeteria staff, maintenance staff, teachers aides, and business supervision. The School District s teachers are represented by the Deer Lakes Education Association (the Association ), an affiliate of the Pennsylvania State Education Association ( PSEA ), under a contract with the School District which expires June 20, Support personnel are represented by the Deer Lakes School Educational Support Personnel Association, under a contract which expires June 30, 2020, and the Service Employees International Union, Local 3, under a contract which expires June 30, B-9

56 Pension Program School Districts in Pennsylvania are required to participate in a statewide pension program administered by the Public School Employees Retirement System (PSERS). All of the School District's full-time employees, part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. However, a Pennsylvania Supreme Court decision has removed the hourly de minimis requirement for current members of PSERS regarding the purchase of credit for their part-time school service rendered prior to their being members of PSERS, for purposes of increasing their pension benefits. Beginning July 1, 1976, certain revisions were made in the pension program. The Retirement Board, previously under the Department of Education of the Commonwealth, became an independent agency. However, the program is still guaranteed by the Commonwealth. Currently, each party to the program contributes a fixed percentage of the employee's salary. Employees belonging to the Public School Employees Retirement System ( PSERS ) prior to July 22, 1983 contribute 5.25% of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February 17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at 7.50% of the employee s salary for those employees hired on or after July 1, Act 9 also provides an option for those employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50% if they were hired on or after July 22, Act 120 of 2010 ( Act 120 ) was passed by the General Assembly on September 1 and signed by former Governor Rendell on November 23, The benefit reductions contained in this legislation only impact individuals who become new members of PSERS on or after July 1, New members will have the option of selecting one of 2 new classes. The members selecting class T-E will contribute a base rate of 7.5% with shared risk contribution levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F will contribute a base rate of 10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier of 2.5%. In accordance with Senate Bill 1042 enacted on July 6, 2010, the employer rate was recertified at 5.64% for fiscal year , 8.65% for fiscal year and 12.36% for fiscal year The rate for fiscal year was 16.93% of payroll and the rate for fiscal year was 21.40%. The employer contribution rate for fiscal year is 25.84%. The rate applies to salary and wages earned from July 1, 2015, through June 30, This rate was determined by PSERS actuary and reflects the rate caps established by Act 120 of The rate was certified by the PSERS Board of Trustees at its meeting on December 9, In addition, the employer contribution rate may change if pension legislation is enacted prior to June 30, The employer contribution rate for fiscal year consists of 25% for pension costs and 0.84% for premium assistance payments. Please see the Public School Employee s Retirement System website indicated below for the most recent projection of employer contribution rates. The School District and the Commonwealth are responsible for paying a portion of the employer s share. School entities are initially responsible for paying 100% of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. The School District contributions are made on a quarterly basis and employee contributions are deducted monthly for each paycheck and remitted quarterly. Recent School District payments have been as follows: $864, $1,210, $1,756, $2,367, $3,022, (budgeted) $3,623,792 The School District is current in all payments. The PSERS complete report is available on the PSERS website on the Internet: Source: PSERS Financial Highlights. Other Post-Employment Benefits The School District is obligated under collective bargaining agreements to provide in the future health insurance coverage for current and future retired employees, and to provide retirement severance pay for existing employees. The School District became subject to the requirements of GASB Statements No. 43 and 45 commencing with the School District s annual financial statements for the fiscal year ending June 30, B-10

57 Existing Continuing Disclosure Filing History The School District has previously entered into Continuing Disclosure Agreements with respect to each one of its previously issued bond issues that are currently outstanding. The School District s filing history of its annual financial and operating information during the past five (5) years is outlined in the table below. Fiscal Year Filing Financial Statements Budget Operating Data Ending Deadline [1] Filing Date EMMA ID [2] Filing Date EMMA ID [2] Filing Date EMMA ID [2] 6/30/ /27/2011 4/3/2012 EP /14/2011 [3] 11/14/2011 [3] 6/30/ /27/2012 2/28/2013 ER /28/2013 ER /23/2012 [4] 6/30/ /27/2013 2/13/2014 ER /12/2014 ER /4/2013 [5] 6/30/ /27/ /18/2014 ER /18/2014 ER /18/2014 ER /30/ /27/ /22/2015 ER /31/2016 EP /22/2015 ER Notes [1] For these purposes, assumes the shortest filing deadline of the School District s previous Continuing Disclosure Agreements [2] Submission ID is the EMMA Submission ID for each filing. To access a filing, insert the Submission ID to the end of the web address below: [3] Included in an Official Statement of the School District posted to EMMA on November 14, 2011 and a Notice of Reference to Other Submitted Documents was posted to EMMA on 5/31/2016. [4] Included in an Official Statement of the School District posted to EMMA on May 23, 2012 and a Notice of Reference to Other Submitted Documents was posted to EMMA on 5/31/2016. [5] Included in an Official Statement of the School District posted to EMMA on April 4, 2013 and a Notice of Reference to Other Submitted Documents was posted to EMMA on 5/31/2016. Based on the information above, the School District s annual financial and operating filing history over the past five (5) years can be summarized as follows: For fiscal year ending June 30, 2011, the School District filed the audit report on April 3, 2012, the summary of the budget and operating data were contained within an Official Statement posted to EMMA on November 14, A Notice of Reference to Other Submitted Documents was filed to EMMA on May 31, For fiscal year ending June 30, 2012, the School District filed the audit report and budget report on February 28, 2013, the operating data was contained within an Official Statement posted to EMMA on May 23, A Notice of Reference to Other Submitted Documents was filed to EMMA on May 31, For fiscal year ending June 30, 2013, the School District filed the audit report and budget report on February 13, 2014 and the operating data was contained within an Official Statement posted to EMMA on April 4, A Notice of Reference to Other Submitted Documents was filed to EMMA on May 31, For fiscal year ending June 30, 2014, the School District filed the audit report, budget report and operating data on December 18, For fiscal year ending June 30, 2015, the School District filed the audit report and operating data on December 22, 2015 and the budget report on May 31, Failure to Provide Annual Financial Information As outlined in the table above, the School District failed to provide certain annual financial information in a timely manner during the past (5) five years. The School District filed a Failure to Provide Annual Financial Information notice to EMMA on May 31, 2016 Bond Insurance Rating Downgrades and Upgrades by S&P and/or Moody s Some of the School District s bond issues that have been outstanding during the past five (5) years have been insured by various bond insurance companies that have received rating downgrades and upgrades by both S&P and Moody s. This information was publicly available from widely accepted information sources at the time of their respective downgrades or upgrades. B-11

58 Pennsylvania Act 150 School District Intercept Program Enhanced Rating Downgrade July 2012 Certain bond issues of the School District received an enhanced rating downgrade from Aa3 to A1 from Moody s Investors Service on July 17, 2012 as a result of the downgrade of Pennsylvania Act 150 School District Intercept Program; however, a Notice of Material Event was not posted to EMMA by the School District until May 31, Pennsylvania Act 150 School District Intercept Program Enhanced Rating Downgrade July 2014 Certain bond issues of the School District received an enhanced rating downgrade from A1 to A2 from Moody s Investors Service on July 22, 2014 as a result of the downgrade of Pennsylvania Act 150 School District Intercept Program; however, a Notice of Material Event was not posted to EMMA by the School District until May 31, Pennsylvania Act 150 School District Intercept Program Enhanced Rating Downgrade September 2015 Certain bond issues of the School District received an enhanced rating downgrade from A2 to A3 from Moody s Investors Service on September 10, 2015 as a result of the downgrade of Pennsylvania Act 150 School District Intercept Program; however, a Notice of Material Event was not posted to EMMA by the School District until May 31, B-12

59 APPENDIX C FOX CHAPEL AREA SCHOOL DISTRICT Allegheny County, Pennsylvania Descriptive, Financial and Economic Information

60 [ THIS PAGE INTENTIONALLY LEFT BLANK ]

61 FOX CHAPEL AREA SCHOOL DISTRICT Allegheny County, Pennsylvania THE SCHOOL DISTRICT Introduction Fox Chapel Area School district, Allegheny County, Pennsylvania (the School District ), is comprised of the Boroughs of Aspinwall, Blawnox, Fox Chapel and Sharpsburg and the Townships of Indiana and O Hara (collectively, the Component Municipalities ). The School District was formed during the school year as a result of the merger of the School Districts of the Boroughs of Aspinwall and Blawnox and the Townships of Indiana and O Hara. The School District of the Borough of Sharpsburg, having the same geographical boundaries as the outer boundaries of the six Component Municipalities of the School District, was incorporated as part of the School District in The School District is located in the northern portion of Allegheny County, Pennsylvania, approximately eight miles northeast of the City of Pittsburgh and forty miles south of the City of Butler. The Component Municipalities encompass a combined land are of 33.7 square miles. Administration The present School District is governed by a nine-member Board of School Directors (the School Board ), elected to four year terms. The Superintendent is the chief administrative officer of the School District, with overall responsibility for all aspects of operations, including education and finance. The Administrative Assistant for Business Affairs is responsible for budget and financial operations. Both officials are appointed by the School Board. School Facilities The School District presently operates four elementary schools, a middle school and one senior high school, all as described on the following table. Students in grades may also attend the A. W. Beattie Career Center. TABLE C-1 FOX CHAPEL AREA SCHOOL DISTRICT SCHOOL FACILITIES Original Addition/ Rated Construction Renovation Pupil Building Date Date(s) Grades Capacity Enrollment Elementary: Fairview , 1992 K Hartwood , 2005 K Kerr , 1958, 1975, 1992, 2001 K O'Hara , 2001 K Elementary/Secondary: Dorseyville Middle School , Secondary: Fox Chapel Area High School , 1988, ,396 Source: School District Officials. C-1

62 Student enrollment trends for the School District are illustrated by the following four-year record of actual enrollments, as reported by School District officials. Actual Enrollments TABLE C-2 FOX CHAPEL AREA SCHOOL DISTRICT ENROLLMENT TRENDS Projected Enrollments School School Year Elementary Secondary Total Year Elementary Secondary Total ,888 2,468 4, ,704 2,440 4, ,865 2,451 4, ,663 2,440 4, ,825 2,422 4, ,602 2,424 4, ,784 2,373 4, ,567 2,387 3, ,801 2,367 4, ,545 2,315 3,860 Source: School District officials. Introduction SCHOOL DISTRICT FINANCES The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and Administrative Assistant for Business Affairs and submitted to the School Board for approval prior to the beginning of the fiscal year on July 1. Financial Reporting The School District keeps its books and prepares its financial reports according to a modified accrual basis. Major accrual items are payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues receivable from other governmental units.. The School District s financial statements are audited annually by a firm of independent certified public accountants, as required by State law. The firm of Hosack, Specht, Muetzel & Wood LLP, Pittsburgh, Pennsylvania serves as School District auditor. Budgeting Process in School Districts under the Taxpayer Relief Act In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1. Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days public notice of its intent to adopt the final budget. If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district s Index (see The Taxpayer Relief Act or Act 1 herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The Taxpayer Relief Act. C-2

63 With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see The Taxpayer Relief Act or Act 1 herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses. If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index. Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days public notice be given of the board s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution. Summary and Discussion of Financial Results Table C-3 shows revenues and expenditures for the past 5 years, and the budget. The budget for the school year, as adopted June 15, 2015, projected total revenues of $91,885,930 and expenditures of $99,016,424, which included a budgetary reserve of $6,277,570. Revenue The School District received $87,005,032 in revenue in and has budgeted revenue of $91,885,930 in Local sources contributed an decreasing share of total revenue in the past five years, from 82.3 percent in to 81.2 percent in Revenue from Commonwealth sources contributed am increasing share of total revenue from 15.4 percent to 18.1 percent over this period. Federal sources contributed a decreasing share of total revenue from 2.2 percent to 0.7 percent over this period. C-3

64 TABLE C-3 FOX CHAPEL AREA SCHOOL DISTRICT SUMMARY OF SCHOOL DISTRICT GENERAL FUND REVENUES AND EXPENDITURES (For years ending June 30) REVENUE: (1) Total Local Sources: $64,900,931 $65,572,340 $67,039,513 $69,161,136 $70,673,676 $72,817,718 Total State Sources: 12,168,056 12,791,429 13,123,510 14,358,805 15,749,455 17,124,855 Total Federal Sources: 1,764,381 1,080, , , , ,071 Total Other Sources: ,085,286 TOTAL REVENUE $78,833,368 $79,444,165 $81,119,695 $84,083,615 $87,005,032 $91,885,930 Actual Budget EXPENDITURES: Instruction $45,634,612 $45,873,468 $48,302,369 $50,209,893 $52,574,429 55,933,700 Support Services 22,227,245 23,020,487 23,947,137 24,888,779 25,832,279 28,618,787 Operation of Noninstructional Services 1,887,459 1,959,380 2,082,410 2,093,493 2,335,953 2,562,396 Facility Acquisition, Construction, and Improvement ,764 Capital Outlay 142, , ,942 47, ,134 0 Debt Service 413, ,840 4,817,242 4,899,518 5,029,476 5,330,207 Fund Transfers Refund of prior year revenues 113,166 28,537 69, , ,321 38,000 Budgetary Reserve ,277,570 TOTAL EXPENDITURES $70,418,218 $71,721,746 $79,923,759 $82,271,173 $86,491,592 $99,016,424 SURPLUS (DEFICIT) OF REVENUES OVER EXPENDITURES 8,415,150 7,722,419 1,195,936 1,812, ,440 (7,130,494) OTHER FINANCING SOURCES (USES) Issuance of Capital Leases 480, , , , ,950 Transfers In Sale/Compensation of Capital Assets 685 3,814 3,000 18,706 49,785 Transfers Out (5,877,391) (4,734,189) (34,934) (27,889) (26,553) TOTAL OTHER FINANCING SOURCES (USES) (5,396,705) (4,052,452) 509, , ,182 Net Changes In Fund Balances 3,018,445 3,669,967 1,705,487 2,414,981 1,198,622 Beginning Fund Balance $13,955,796 $16,974,241 $20,644,208 $22,349,695 $24,764,676 Prior Period Adjustment $16,974,241 $20,644,208 $22,349,695 $24,764,676 $25,963,298 (1) Budget, as adopted June 15, Source: School District Audited Financial Statements and Budget. C-4

65 Tax Levy Trends Table C-4 shows the recent trend of tax rates levied by the School District. Table C-5 shows the comparative trend of real property tax rates for the School District, Allegheny County and the municipalities within the School District. TABLE C-4 FOX CHAPEL AREA SCHOOL DISTRICT TAX RATES Real Estate Wage and Local Services Real Estate Transfer Income Tax (mills) (%) (%) ($) Source: School District officials. TABLE C-5 FOX CHAPEL AREA SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES (Mills on Assessed Value) School District Aspinwall Borough Blawnox Borough Fox Chapel Borough Indiana Township O'Hara Township Sharpsburg Borough Allegheny County Source: Local Government Officials. Real Property Tax The real property tax (excluding delinquent collections) produced $59,396,136 in , approximately 68.3 percent of revenues. The School District fiscal year is from July 1 through June 30 and tax bills are issued on July 1 of each year. Taxpayers who remit within two months of July 1 receive a 2 percent discount, and those who remit subsequent to October 31 are assessed a 10 percent penalty. For the fiscal year, eligible taxpayers could opt into the installment method of payment for their school taxes. Installment payments are based upon three (3) one-third payments of the base tax amount. The due dates for installment payments are August 31, October 31 and November 30. The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. The last countywide assessment became effective January 1, C-5

66 TABLE C-6 FOX CHAPEL AREA SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA Market Assessed Year Value Value Ratio $2,664,340,771 $2,598,829, % ,690,039,034 2,621,703, % ,775,440,141 2,639,726, % ,776,248,601 3,223,644, % ,053,185,591 3,381,629, % Compound Average Annual Percentage Change % 5.41% Source: Pennsylvania State Tax Equalization Board TABLE C-7 FOX CHAPEL AREA SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY Market Assessed Market Assessed Value Value Value Value School District... $2,776,248,601 $3,223,644,752 $3,053,185,591 $3,381,629,798 Aspinwall Borough ,919, ,709, ,719, ,148,671 Blawnox Borough... 61,868,850 68,726,880 71,963,868 74,395,700 Fox Chapel Borough ,017,337 1,134,254,918 1,059,187,251 1,165,511,931 Indiana Township ,267, ,634, ,292, ,024,324 O'Hara Township ,666,642 1,127,909,577 1,055,565,686 1,194,088,527 Sharpsburg Borough... 81,508, ,409, ,457, ,460,645 Allegheny County... 62,481,101,686 73,859,149,175 71,425,187,108 80,525,498,273 Source: Pennsylvania State Tax Equalization Board. TABLE C-8 FOX CHAPEL AREA SCHOOL DISTRICT ASSESSMENT BY LAND USE Residential... $2,132,282,370 $2,150,101,061 $2,168,063,721 2,578,109,208 $2,739,596,566 Lots... 32,882,683 33,597,383 32,683,033 18,880,300 37,823,470 Industrial ,611, ,022, ,511, ,292, ,138,192 Commercial ,087, ,490, ,103, ,905, ,289,770 Agriculture... 13,622,400 14,293,100 14,166,400 11,987,100 11,293,400 Land... 4,308,500 4,165,000 4,165,000 4,435,800 4,454,600 Mineral... 33,800 33,800 33,800 33,800 33,800 Total... $2,598,795,655 $2,621,669,306 $2,639,692,416 $3,223,644,752 $3,381,629,798 Source: Pennsylvania State Tax Equalization Board C-6

67 TABLE C-9 FOX CHAPEL AREA SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA Current Current Year Total Total Collections Collections Collections Collections Year Levy Amount as Percent Amount (1) as Percent $57,970,992 $54,113, % $56,262, % ,283,478 55,161, % 56,851, % ,584,006 55,522, % 57,437, % ,159,031 57,738, % 59,969, % ,396,136 58,265, % 61,123, % (1) Includes delinquent realty taxes collected. Source: School District officials. The ten largest real property taxpayers, together with assessed values, are shown in Table C-10. The aggregate assessed value of these ten highest assessed properties totals approximately 4.0 percent of total assessed value. The property owners listed below may own additional parcels which are not set forth in the table. TABLE C-10 FOX CHAPEL AREA SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS Assessed Owner Value Stag II O'Hara LLC $21,796,500 Yacht Club Communities 18,129,600 Westinghouse Process Control Inc. 14,573,000 Advantage Health Hammerville Rehabilitation 14,200,000 Aerotech, Inc. 13,168,000 McKnight Alpha Drive LP 13,050,000 Chapel Harbors ALF 12,355,900 Zoll Lifecor Corp 10,500,000 Pittsburgh Field Club 8,800,000 CBS (PA) ORS Inc. 8,177,300 $134,750,300 Source: School District officials. C-7

68 DEBT AND DEBT LIMITS Debt Statement Table C-11 shows the debt of the School District as of June 23, 2016, including the issuance of the Bonds. TABLE C-11 FOX CHAPEL AREA SCHOOL DISTRICT DEBT STATEMENT * (As of June 23, 2016) NONELECTORAL DEBT Gross Outstanding General Obligation Bonds, Series of $43,525,000 TOTAL NONELECTORAL DEBT... $43,525,000 LEASE RENTAL DEBT Washington County Industrial Development Authority (A. W. Beattie Career Center Project) School Revenue Bonds, Series of 2016 (1)... $2,297,434 TOTAL LEASE RENTAL DEBT... $2,297,434 TOTAL PRINCIPAL OF DIRECT DEBT... $45,822,434 *Includes the Bonds offered through this Official Statement. (1) 15.56% pro rata share of $14,765,000 principal amount outstanding. C-8

69 Debt Limit and Remaining Borrowing Capacity The statutory borrowing limit of the School District under the Act is computed as a percentage of the School District s Borrowing Base. The Borrowing Base is defined as the annual arithmetic average of total Revenues (as defined by the Act) for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing base and borrowing capacity as follows: Total Revenues for $80,393,094 Total Revenues for ,356,647 Total Revenues for ,235,420 Total... $249,985,162 Annual Arithmetic Average (Borrowing Base)... $83,328,387 Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District's Borrowing Base produces the following products: Remaining Legal Net Debt Borrowing Limit Outstanding* Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $187,488,871 $45,822,434 $141,666,437 *Includes the Bonds offered through this Official Statement, does not reflect credits against gross indebtedness that may be claimed for a portion of principal of debt estimated to be reimbursed by Commonwealth Aid. Future Financing The School District does not anticipate issuing additional long-term debt in the immediate future. School District Employees LABOR RELATIONS There are approximately 623 administrative professional instructional and classified support personnel. Teachers, librarians, guidance counselors and nurses are represented for purposes of collective bargaining by the Fox Chapel Area Educators Association. This collective bargaining agreement has been extended to June 30, Secretaries, instructional aides and clerks are represented for purposes of collective bargaining by the Fox Chapel Area Education Support Professionals Association. This collective bargaining agreement has been extended to June 30, Maintenance and custodial personnel are represented for purposes of collectively bargaining b Local 3 of the Service Employees International Union; the expiration date of this collective bargaining agreement has been extended through June 30, C-9

70 Pension Program School Districts in Pennsylvania are required to participate in a statewide pension program administered by the Public School Employees Retirement System (PSERS). All of the School District's full-time employees, part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. However, a Pennsylvania Supreme Court decision has removed the hourly de minimis requirement for current members of PSERS regarding the purchase of credit for their part-time school service rendered prior to their being members of PSERS, for purposes of increasing their pension benefits. Beginning July 1, 1976, certain revisions were made in the pension program. The Retirement Board, previously under the Department of Education of the Commonwealth, became an independent agency. However, the program is still guaranteed by the Commonwealth. Currently, each party to the program contributes a fixed percentage of the employee's salary. Employees belonging to the Public School Employees Retirement System ( PSERS ) prior to July 22, 1983 contribute 5.25% of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February 17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at 7.50% of the employee s salary for those employees hired on or after July 1, Act 9 also provides an option for those employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50% if they were hired on or after July 22, Act 120 of 2010 ( Act 120 ) was passed by the General Assembly on September 1 and signed by former Governor Rendell on November 23, The benefit reductions contained in this legislation only impact individuals who become new members of PSERS on or after July 1, New members will have the option of selecting one of 2 new classes. The members selecting class T-E will contribute a base rate of 7.5% with shared risk contribution levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F will contribute a base rate of 10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier of 2.5%. In accordance with Senate Bill 1042 enacted on July 6, 2010, the employer rate was recertified at 5.64% for fiscal year , 8.65% for fiscal year and 12.36% for fiscal year The rate for fiscal year was 16.93% of payroll and the rate for fiscal year was 21.40%. The employer contribution rate for fiscal year is 25.84%. The rate applies to salary and wages earned from July 1, 2015, through June 30, This rate was determined by PSERS actuary and reflects the rate caps established by Act 120 of The rate was certified by the PSERS Board of Trustees at its meeting on December 9, In addition, the employer contribution rate may change if pension legislation is enacted prior to June 30, The employer contribution rate for fiscal year consists of 25% for pension costs and 0.84% for premium assistance payments. Please see the Public School Employee s Retirement System website indicated below for the most recent projection of employer contribution rates. The School District and the Commonwealth are responsible for paying a portion of the employer s share. School entities are initially responsible for paying 100% of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. The School District contributions are made on a quarterly basis and employee contributions are deducted monthly for each paycheck and remitted quarterly. Recent School District payments have been as follows: $2,198, ,515, ,027, ,954, ,099, (budgeted) 11,336,076 The School District is current in all payments. The PSERS complete report is available on the PSERS website on the Internet: Source: PSERS Financial Highlights. Other Post-Employment Benefits The School District is obligated under collective bargaining agreements to provide in the future health insurance coverage for current and future retired employees, and to provide retirement severance pay for existing employees. The School District became subject to the requirements of GASB Statements No. 43 and 45 commencing with the School District s annual financial statements for the fiscal year ending June 30, C-10

71 Existing Continuing Disclosure Filing History The School District has previously entered into Continuing Disclosure Agreements with respect to each one of its previously issued bond issues that are currently outstanding. The School District s filing history of its annual financial and operating information during the past five (5) years is outlined in the table below. Fiscal Year Filing Financial Statements Budget Operating Data Ending Deadline [1] Filing Date EMMA ID [2] Filing Date EMMA ID [2] Filing Date EMMA ID [2] 6/30/ /27/2011 4/23/2012 ER /20/2012 ER /16/2014 EP /30/ /27/2012 1/15/2013 EP /15/2013 EP /16/2014 EP /30/ /27/2013 1/2/2014 ER /18/2016 ER /16/2014 EP /30/ /27/ /16/2014 EP /16/2014 EP /16/2014 EP /30/ /27/ /30/2015 ES /30/2015 ES /30/2015 ES Notes [1] For these purposes, assumes the shortest filing deadline of the School District s previous Continuing Disclosure Agreements [2] Submission ID is the EMMA Submission ID for each filing. To access a filing, insert the Submission ID to the end of the web address below: Based on the information above, the School District s annual financial and operating filing history over the past five (5) years can be summarized as follows: For fiscal year ending June 30, 2011, the School District filed the audit report on April 23, 2012, the budget report on April 20, 2012 and the operating data on December 16, For fiscal year ending June 30, 2012, the School District filed the audit report and budget report on January 15, 2013 and the operating data on December 16, For fiscal year ending June 30, 2013, the School District filed the audit report on January 2, 2014, the budget report on May 18, 2016 and the operating data on December 16, For fiscal year ending June 30, 2014, the School District filed the audit report, the budget report and the operating data on December 16, For fiscal year ending June 30, 2015, the School District filed the audit report, the budget report and the operating data on December 30, Failure to Provide Annual Financial Information As outlined in the table above, the School District failed to provide certain annual financial information in a timely manner during the past (5) five years. The School District filed a Failure to Provide Annual Financial Information notice to EMMA on May 18, Bond Insurance Rating Downgrades and Upgrades by S&P and/or Moody s Some of the School District s bond issues that have been outstanding during the past five (5) years have been insured by various bond insurance companies that have received rating downgrades and upgrades by both S&P and Moody s. This information was publicly available from widely accepted information sources at the time of their respective downgrades or upgrades. For informational purposes, the School District has recently filed a summary of rating upgrades and downgrades relating to certain bond insurance companies. C-11

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73 APPENDIX D HAMPTON TOWNSHIP SCHOOL DISTRICT Allegheny County, Pennsylvania Descriptive, Financial and Economic Information

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75 HAMPTON TOWNSHIP SCHOOL DISTRICT Allegheny County, Pennsylvania THE SCHOOL DISTRICT Introduction The Hampton Township School District is a school district of the third class. School districts within the Commonwealth of Pennsylvania are classified as first, second, third or fourth class, according to population. Hampton Township School District is located in the northern part of Allegheny County, situated approximately fifteen miles north of the City of Pittsburgh. The School District is bordered by Pine-Richland, North Allegheny, Shaler Area, Fox Chapel Area and Deer Lakes School Districts and is coterminous with the municipality of Hampton Township (the Township ). Administration The present School District is governed by a nine-member Board of School Directors (the School Board ), elected to four year terms. The Superintendent is the chief administrative officer of the School District, with overall responsibility for all aspects of operations, including education and finance. The Business Manager is responsible for budget and financial operations. Both officials are appointed by the School Board. School Facilities The School District presently operates three elementary schools, one middle school and one high school, all as described on the following table. Students in grades may also attend the A. W. Beattie Career Center. TABLE D-1 HAMPTON TOWNSHIP SCHOOL DISTRICT SCHOOL FACILITIES Original Addition/ Rated Construction Renovation Pupil Building Date Date(s) Grades Capacity Enrollment Elementary: Central Elementary K Poff Elementary K Wyland Elementary K Secondary: Hampton Middle Hampton High School , Source: School District Officials. D-1

76 Student enrollment trends for the School District are illustrated by the following five-year record of actual enrollments, as reported by School District officials. Actual Enrollments TABLE D-2 HAMPTON TOWNSHIP SCHOOL DISTRICT ENROLLMENT TRENDS Projected Enrollments School School Year Elementary Secondary Total Year Elementary Secondary Total ,491 1,610 3, ,400 1,500 2, ,463 1,627 3, ,400 1,525 2, ,434 1,595 3, ,400 1,550 2, ,415 1,552 2, ,400 1,575 2, ,400 1,508 2, ,400 1,600 3,000 Source: School District officials. Introduction SCHOOL DISTRICT FINANCES The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and Business Manager and submitted to the School Board for approval prior to the beginning of the fiscal year on July 1. Financial Reporting The School District keeps its books and prepares its financial reports according to a modified accrual basis. Major accrual items are payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues receivable from other governmental units.. The School District s financial statements are audited annually by a firm of independent certified public accountants, as required by State law. The firm of Hosack, Specht, Muetzel & Wood LLP, Pittsburgh, Pennsylvania serves as School District auditor. Budgeting Process in School Districts under the Taxpayer Relief Act In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1. Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days public notice of its intent to adopt the final budget. If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district s Index (see The Taxpayer Relief Act or Act 1 herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The Taxpayer Relief Act. D-2

77 With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see The Taxpayer Relief Act or Act 1 herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses. If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index. Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days public notice be given of the board s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution. Summary and Discussion of Financial Results Table D-3 shows revenues and expenditures for the past 5 years, and the budget. The budget for the school year, as adopted June 8, 2015, projected total revenues of $46,572,487 and expenditures of $47,496,987, which included a budgetary reserve of $90,000. D-3

78 Revenue The School District received $45,461,334 in revenue in and has budgeted revenue of $46,572,487 in Local sources contributed a decreasing share of total revenue in the past five years, from 73.0 percent in to 72.9 percent in Revenue from Commonwealth sources contributed an increasing share of total revenue from 22.8 percent to 26.6 percent over this period. Federal sources contributed a decreasing share of total revenue from 4.2 percent to 0.5 percent over this period. TABLE D-3 HAMPTON TOWNSHIP SCHOOL DISTRICT COMPARATIVE STATEMENT OF GOVERNMENTAL FUND REVENUES AND EXPENDITURES (For years ending June 30) REVENUE: (1) Total Local Sources: $31,252,474 $30,872,669 $31,348,626 $31,955,679 $33,128,015 $33,301,964 Total State Sources: 9,775,088 10,610,157 10,737,416 11,316,697 12,111,353 12,971,523 Total Federal Sources: 1,803, , , , , ,000 Total Other Sources: TOTAL REVENUE $42,831,554 $42,028,966 $42,760,077 $43,500,047 $45,461,334 $46,572,487 Actual Budget EXPENDITURES: Instruction $23,107,646 $22,483,590 $23,838,857 $24,060,083 $25,291,012 $26,455,582 Support Services 11,704,379 11,829,523 12,270,543 12,756,630 13,439,734 10,189,209 Operation of Noninstructional Services 1,147,027 1,030,247 1,042,379 1,096,223 1,152,661 4,292,501 Capital Outlay Debt Service 35,786 30,809 26,577 38,885 35,506 0 Fund Transfers ,132,235 Refund of prior year revenues Student Activities ,262,460 Other Expenditures ,000 Budgetary Reserve ,000 TOTAL EXPENDITURES $35,994,838 $35,374,169 $37,178,356 $37,951,821 $39,918,913 $47,496,987 SURPLUS (DEFICIT) OF REVENUES OVER EXPENDITURES 6,836,716 6,654,797 5,581,721 5,548,226 5,542,421 (924,500) OTHER FINANCING SOURCES (USES) Capital Lease Transfers In Sale/Compensation for Capital Assets 2, ,570 4,198 Transfers Out (5,062,746) (5,315,000) (5,878,750) (6,162,552) (5,235,545) TOTAL OTHER FINANCING SOURCES (USES) (5,060,646) (5,314,200) (5,878,750) (6,153,982) (5,231,347) Net Changes in Fund Balances 1,776,070 1,340,597 (297,029) (605,756) 311,074 Beginning Fund Balance $7,870,846 $9,646,916 $10,987,513 $10,690,484 $10,084,728 Prior Period Adjustment Ending Fund Balance $9,646,916 $10,987,513 $10,690,484 $10,084,728 $10,395,802 (1) Budget, as adopted June 8, Source: School District Annual Financial Reports and Budget. D-4

79 Tax Levy Trends Table D-4 shows the recent trend of tax rates levied by the School District. Table D-5 shows the comparative trend of real property tax rates for the School District, Allegheny County and the municipalities within the School District. TABLE D-4 HAMPTON TOWNSHIP SCHOOL DISTRICT TAX RATES Real Estate Wage and Real Estate Transfer Income (mills) (%) (%) Source: School District officials. TABLE D-5 HAMPTON TOWNSHIP SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES (Mills on Assessed Value) School District Hampton Township Allegheny County Source: Allegheny County website. Real Property Tax The real property tax (excluding delinquent collections) produced $27,225,174 in , approximately 59.9 percent of revenues. The School District fiscal year is from July 1 through June 30 and tax bills are issued on July 1 of each year. Taxpayers who remit within two months of July 1 receive a 2 percent discount, and those who remit subsequent to October 1 are assessed a 10 percent penalty. For the fiscal year, eligible taxpayers could opt into the installment method of payment for their school taxes. Installment payments are based upon three (3) one-third payments of the base tax amount. The due dates for installment payments are September 30, October 31 and November 30. The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. The last countywide assessment became effective January 1, D-5

80 TABLE D-6 HAMPTON TOWNSHIP SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA Market Assessed Year Value Value Ratio $1,242,884,167 $1,191,828, % ,259,210,484 1,206,615, % ,303,997,120 1,218,327, % ,303,997,120 1,546,436, % ,457,316,063 1,647,039, % Compound Average Annual Percentage Change % 6.68% Source: Pennsylvania State Tax Equalization Board TABLE D-7 HAMPTON TOWNSHIP SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY Market Assessed Market Assessed Value Value Value Value School District... $1,303,997,120 $1,546,436,125 $1,457,316,063 $1,647,039,725 Allegheny County... 62,481,101,686 73,859,149,175 71,425,187,108 80,525,498,273 Source: Pennsylvania State Tax Equalization Board. TABLE D-8 HAMPTON TOWNSHIP SCHOOL DISTRICT ASSESSMENT BY LAND USE Residential... $1,044,931,941 $1,059,579,691 $1,066,249,591 1,310,228,825 $1,427,667,025 Lots... 15,239,436 15,054,576 14,700,096 15,690,900 14,504,100 Industrial... 3,702,470 3,702,470 3,702,470 5,503,600 5,051,600 Commercial ,935, ,210, ,991, ,560, ,492,000 Agriculture... 4,768,430 4,889,130 4,504,130 5,926,900 5,988,000 Land... 1,250,500 1,179,100 1,179,700 1,525,600 1,337,000 Total... $1,191,828,737 $1,206,615,727 $1,218,327,337 $1,546,436,125 $1,647,039,725 Source: Pennsylvania State Tax Equalization Board D-6

81 TABLE D-9 HAMPTON TOWNSHIP SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA Current Year Total Current Collections Total Collections Assessed Gross Adjusted Collections as a Collections as Year Valuation Mills Levy Amount Percent Amount (1) Percent $1,287,266, $26,018,630 $24,867, % $25,652, % ,302,250, ,944,776 25,715, % 26,431, % ,303,308, ,044,689 25,822, % 26,532, % ,620,194, ,640,759 26,326, % 26,734, % ,650,523, ,600,288 27,225, % 27,225, % (1) Includes delinquent realty taxes collected. Source: School District officials. The ten largest real property taxpayers, together with assessed values, are shown in Table D-10. The aggregate assessed value of these ten highest assessed properties totals approximately 4.3 percent of total assessed value. The property owners listed below may own additional parcels which are not set forth in the table. TABLE D-10 HAMPTON TOWNSHIP SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS Assessed Owner Property Type Value Coventry Square Associates Apartments $20,000,000 Shoppers Plaza Land Company, LLC Commercial 14,235,000 St. Margaret Nursing Home Medical/Residential 8,118,000 PPG Industries Inc. Office/Research 6,500,000 Allison Park Facility Medical/Residential 4,700,000 Route 8 Holding Co., Inc. Commercial 4,554,400 Sierra Properties Commercial 3,401,400 Stone Lodge, Inc. Country Club 3,400,000 Conceptual Development Inc. Commercial 3,100,000 Hutchison, Timothy Residential 2,900,000 $70,908,800 D-7

82 DEBT AND DEBT LIMITS Debt Statement Table D-11 shows the debt of the School District as of June 23, 2016, including the issuance of the Bonds. TABLE D-11 HAMPTON TOWNSHIP SCHOOL DISTRICT DEBT STATEMENT * (As of June 23, 2016) NONELECTORAL DEBT Gross Outstanding General Obligation Bonds, Series A of $9,200,000 General Obligation Bonds, Series B of ,000 General Obligation Bonds, Series of ,800,000 General Obligation Bonds, Series of 2007 (VRDB's)... 18,350,000 General Obligation Bonds, Series A of ,495,000 General Obligation Bonds, Series B of ,495,000 General Obligation Bonds, Series of ,165 TOTAL NONELECTORAL DEBT... $52,887,165 LEASE RENTAL DEBT Washington County Industrial Development Authority (A. W. Beattie Career Center Project) School Revenue Bonds, Series of 2016 (1)... $1,272,005 TOTAL LEASE RENTAL DEBT... $1,272,005 TOTAL PRINCIPAL OF DIRECT DEBT... $54,159,170 *Includes the Bonds offered through this Official Statement. (1) 8.615% pro rata share of $14,765,000 principal amount outstanding. D-8

83 Debt Limit and Remaining Borrowing Capacity The statutory borrowing limit of the School District under the Act is computed as a percentage of the School District s Borrowing Base. The Borrowing Base is defined as the annual arithmetic average of total Revenues (as defined by the Act) for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing base and borrowing capacity as follows: Total Revenues for $45,798,302 Total Revenues for ,012,758 Total Revenues for ,951,616 Total... $137,762,676 Annual Arithmetic Average (Borrowing Base)... $45,920,892 Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District's Borrowing Base produces the following products: Remaining Legal Net Debt Borrowing Limit Outstanding* Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $103,322,007 $54,159,170 $49,162,837 *Includes the Bonds offered through this Official Statement, does not reflect credits against gross indebtedness that may be claimed for a portion of principal of debt estimated to be reimbursed by Commonwealth Aid Future Financing The School District does not anticipate issuing additional long-term debt in the immediate future. School District Employees LABOR RELATIONS Date of Description of Number of Contract Name of Union Personnel Included Employees Expiration Hampton Township Teachers Association Professionals 206 6/30/2021 Hampton Cafeteria Association Non-professionals 9 6/30/2016 Hampton Custodial Association Non-professionals 40 6/30/2021 Hampton Township Educational Support Personnel Association Clerical 74 6/30/2019 D-9

84 Pension Program School Districts in Pennsylvania are required to participate in a statewide pension program administered by the Public School Employees Retirement System (PSERS). All of the School District's full-time employees, part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. However, a Pennsylvania Supreme Court decision has removed the hourly de minimis requirement for current members of PSERS regarding the purchase of credit for their part-time school service rendered prior to their being members of PSERS, for purposes of increasing their pension benefits. Beginning July 1, 1976, certain revisions were made in the pension program. The Retirement Board, previously under the Department of Education of the Commonwealth, became an independent agency. However, the program is still guaranteed by the Commonwealth. Currently, each party to the program contributes a fixed percentage of the employee's salary. Employees belonging to the Public School Employees Retirement System ( PSERS ) prior to July 22, 1983 contribute 5.25% of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February 17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at 7.50% of the employee s salary for those employees hired on or after July 1, Act 9 also provides an option for those employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50% if they were hired on or after July 22, Act 120 of 2010 ( Act 120 ) was passed by the General Assembly on September 1 and signed by former Governor Rendell on November 23, The benefit reductions contained in this legislation only impact individuals who become new members of PSERS on or after July 1, New members will have the option of selecting one of 2 new classes. The members selecting class T-E will contribute a base rate of 7.5% with shared risk contribution levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F will contribute a base rate of 10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier of 2.5%. In accordance with Senate Bill 1042 enacted on July 6, 2010, the employer rate was recertified at 5.64% for fiscal year , 8.65% for fiscal year and 12.36% for fiscal year The rate for fiscal year was 16.93% of payroll and the rate for fiscal year was 21.40%. The employer contribution rate for fiscal year is 25.84%. The rate applies to salary and wages earned from July 1, 2015, through June 30, This rate was determined by PSERS actuary and reflects the rate caps established by Act 120 of The rate was certified by the PSERS Board of Trustees at its meeting on December 9, In addition, the employer contribution rate may change if pension legislation is enacted prior to June 30, The employer contribution rate for fiscal year consists of 25% for pension costs and 0.84% for premium assistance payments. Please see the Public School Employee s Retirement System website indicated below for the most recent projection of employer contribution rates. The School District and the Commonwealth are responsible for paying a portion of the employer s share. School entities are initially responsible for paying 100% of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. The School District contributions are made on a quarterly basis and employee contributions are deducted monthly for each paycheck and remitted quarterly. Recent School District payments, net of reimbursement, have been as follows: $617, $927, $1,350, $1,850, $2,390, (budgeted) $2,990,000 The School District is current in all payments. The PSERS complete report is available on the PSERS website on the Internet: Source: PSERS Financial Highlights. Other Post-Employment Benefits The School District is obligated under collective bargaining agreements to provide future health insurance coverage for current and future retired employees, and to provide retirement severance pay for existing employees. The School District became subject to the requirements of GASB Statements No. 43 and 45 commencing with the School District s annual financial statements for the fiscal year ending June 30, D-10

85 Existing Continuing Disclosure Filing History The School District has previously entered into Continuing Disclosure Agreements with respect to each one of its previously issued bond issues that are currently outstanding. The School District s filing history of its annual financial and operating information during the past five (5) years is outlined in the table below. Fiscal Year Filing Financial Statements Budget Operating Data Ending Deadline [1] Filing Date EMMA ID [2] Filing Date EMMA ID [2] Filing Date EMMA ID [2] 6/30/ /27/2011 8/29/2012 EP /10/2016 ER /29/2012 EP /30/ /27/2012 7/17/2013 ER /19/2013 ER /17/2013 ER /30/ /27/ /19/2013 ER /19/2013 ER /20/2013 ER /30/ /27/ /22/2014 ER /1/2015 EP /8/2014 EA /30/ /27/ /22/2015 ER /1/2015 EP /2/2015 EP Notes [1] For these purposes, assumes the shortest filing deadline of the School District s previous Continuing Disclosure Agreements [2] Submission ID is the EMMA Submission ID for each filing. To access a filing, insert the Submission ID to the end of the web address below: Based on the information above, the School District s annual financial and operating filing history over the past five (5) years can be summarized as follows: For fiscal year ending June 30, 2011, the School District filed the audit report and operating data on August 29, 2012 and the budget report on June 10, For fiscal year ending June 30, 2012, the School District filed the audit report and operating data on July 17, 2013 and the budget report on December 19, For fiscal year ending June 30, 2013, the School District filed the audit report and the budget report on December 19, 2013 and the operating data on December 20, For fiscal year ending June 30, 2014, the School District filed the audit report on December 22, 2014, the budget report on December 1, 2015 and the operating data on December 8, For fiscal year ending June 30, 2015, the School District filed the audit report on December 22, 2015, the budget report on December 1, 2015 and the operating data on December 2, Failure to Provide Annual Financial Information As outlined in the table above, the School District failed to provide certain annual financial information in a timely manner during the past (5) five years. The School District filed a Failure to Provide Annual Financial Information notice to EMMA on June 10, Bond Insurance Rating Downgrades and Upgrades by S&P and/or Moody s Some of the School District s bond issues that have been outstanding during the past five (5) years have been insured by various bond insurance companies that have received rating downgrades and upgrades by both S&P and Moody s. This information was publicly available from widely accepted information sources at the time of their respective downgrades or upgrades. For informational purposes, the School District has recently filed a summary of rating upgrades and downgrades relating to certain bond insurance companies. D-11

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87 APPENDIX E NORTH ALLEGHENY SCHOOL DISTRICT Allegheny County, Pennsylvania Descriptive, Financial and Economic Information

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89 NORTH ALLEGHENY SCHOOL DISTRICT Allegheny County, Pennsylvania INTRODUCTION THE SCHOOL DISTRICT North Allegheny School District is composed of the Boroughs of Bradford Woods and Franklin Park, the Town of McCandless and the Township of Marshall. These municipalities are residential in nature and primarily serve as home communities for the employees and executives who commute to Pittsburgh. The four municipalities are in the northern part of Allegheny County and are zoned with proper controls for residential, light industrial, education, religious, research and commercial structures. The School District encompasses a land area of approximately 46 square miles. Administration The present School District is governed by a nine-member Board of School Directors (the School Board ), elected to four year terms. The Superintendent is the chief administrative officer of the School District, with overall responsibility for all aspects of operations, including education and finance. The Business Manager is responsible for budget and financial operations. Both officials are appointed by the School Board. School Facilities The School District presently operates seven elementary schools, three middle schools, and two high schools, all as described on the following table. Students in grades may also attend the A. W. Beattie Career Center. TABLE E-1 NORTH ALLEGHENY SCHOOL DISTRICT SCHOOL FACILITIES Original Most Recent Rated Construction Renovation Pupil Building Date or Addition Grades Capacity Enrollment Elementary: Bradford Woods K Franklin K Ingomar K McKnight K Peebles K Hosack K Marshall K Secondary: Carson Middle Ingomar Middle Marshall Middle North Allegheny Intermediate High North Allegheny Senior High , Source: School District Officials. E-1

90 Student enrollment trends for the School District are illustrated by the following five-year record of actual enrollments, as reported by School District officials. Actual Enrollments TABLE E-2 NORTH ALLEGHENY SCHOOL DISTRICT ENROLLMENT TRENDS Projected Enrollments School School Year Elementary Secondary Total Year Elementary Secondary Total ,574 4,641 8, ,426 4,767 8, ,533 4,650 8, ,295 4,806 8, ,583 4,674 8, ,553 4,676 8, ,484 4,683 8,167 Source: School District officials. Introduction SCHOOL DISTRICT FINANCES The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and Business Manager and submitted to the School Board for approval prior to the beginning of the fiscal year on July 1. Financial Reporting The School District keeps its books and prepares its financial reports according to a modified accrual basis. Major accrual items are payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues receivable from other governmental units.. The School District s financial statements are audited annually by a firm of independent certified public accountants, as required by State law. The firm of Maher Duessel, Certified Public Accountants, Pittsburgh, Pennsylvania serves as School District auditor. Budgeting Process in School Districts under the Taxpayer Relief Act In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1. Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days public notice of its intent to adopt the final budget. If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district s Index (see The Taxpayer Relief Act or Act 1 herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The Taxpayer Relief Act. E-2

91 With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see The Taxpayer Relief Act or Act 1 herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses. If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index. Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days public notice be given of the board s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution. Summary and Discussion of Financial Results Table E-3 shows revenues and expenditures for the past 5 years, and the budget. The budget for the school year, as adopted June 24, 2015, projected total revenues equaling expenditures of $143,596,091. E-3

92 Revenue The School District received $136,541,353 in revenue in and has budgeted revenue of $143,596,091 in Local sources contributed an increasing share of total revenue in the past five years, from 78.0 percent in to 78.5 percent in Revenue from Commonwealth sources contributed an increasing share of total revenue from 18.3 percent to 20.7 percent over this period. Federal sources contributed a decreasing share of total revenue from 3.7 percent to 0.7 percent over this period. TABLE E-3 NORTH ALLEGHENY SCHOOL DISTRICT COMPARATIVE STATEMENT OF GOVERNMENTAL FUND REVENUES AND EXPENDITURES (For years ending June 30) Actual Budget REVENUE: (1) Total Local Sources: $92,056,304 $98,576,011 $102,017,101 $104,800,628 $107,236,612 $110,738,874 Total State Sources: 21,606,687 23,066,651 24,133,708 25,832,382 28,292,908 30,993,654 Total Federal Sources: 4,384,547 2,151,215 1,854, ,620 1,011,833 1,863,563 Total Other Sources: TOTAL REVENUE $118,047,538 $123,793,877 $128,005,701 $131,615,630 $136,541,353 $143,596,091 EXPENDITURES: Instruction $71,456,745 $70,916,054 $71,449,707 $75,680,034 $78,080,572 84,361,063 Support Services 34,446,081 34,239,378 35,350,799 36,571,521 39,613,273 40,639,968 Operation of Noninstructional Services 2,843,478 2,858,241 3,026,850 3,217,392 3,216,633 2,925,868 Facilities Acquisition, Constr. & Imprv. Services 46, , ,829 1,320,865 29,916 25,000 Debt Service Principal 5,705,224 6,101,401 6,465,022 7,588,475 7,938,309 14,618,342 Debt Service Interest 5,815,316 5,835,196 5,170,041 5,064,537 3,948,859 0 Interfund ,025,850 Capital Outlays Refund of prior year revenues TOTAL EXPENDITURES $120,313,585 $120,594,479 $121,638,248 $129,442,824 $132,827,562 $143,596,091 Other Expenditures and Financing Uses Transfers In $0 $0 $0 $0 $3 Transfers Out (33,212) (1,259,029) (5,933,978) (2,186,765) (6,273,116) Proceeds from Refunding Bonds $0 $34,425,000 $0 $64,105,000 0 Bond Premium on Refunding Bonds $0 $0 $0 $799,167 0 Payment to Bond Holders $0 (32,975,000) $0 (62,945,000) 0 Proceeds from basis swap terminations $0 $2,370,000 $0 0 0 Payment for amendment to swap agreement $0 (2,370,000) $0 0 0 Proceeds from Capital Lease $0 $0 $0 $0 $813,772 Proceeds from Sale of Assets $0 $0 $28,675 $33,707 $51,235 Refund of Prior year Receipts (9,348) (20,112) (29,316) (2,366) (28,043) Total Other Financing Sources (Uses) (42,560) $170,859 (5,934,619) (196,257) (5,436,149) SURPLUS (DEFICIT) OF REVENUES OVER EXPENDITURES (2,308,607) 3,370, ,834 1,976,549 (1,722,358) Beginning Fund Balance $13,999,266 $11,690,659 $15,060,916 $15,493,750 $17,470,299 Prior Period Adjustment Ending Fund Balance $11,690,659 $15,060,916 $15,493,750 $17,470,299 $15,747,941 (1) Budget, as adopted June 24, Source: School District Annual Financial Reports and Budget. E-4

93 Tax Levy Trends Table E-4 shows the recent trend of tax rates levied by the School District. Table E-5 shows the comparative trend of real property tax rates for the School District, Allegheny County and the municipalities within the School District. TABLE E-4 NORTH ALLEGHENY SCHOOL DISTRICT TAX RATES Real Estate Wage and Per Capita Real Estate Transfer Income Tax (mills) (%) (%) ($) Source: School District officials. TABLE E-5 NORTH ALLEGHENY SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES (Mills on Assessed Value) School District Bradford Woods Borough Franklin Park Borough Marshall Township McCandless Township Source: Local Government Officials. Real Property Tax The real property tax (excluding delinquent collections) produced $89,838,627 in , approximately 65.8 percent of revenues. The School District fiscal year is from July 1 through June 30 and tax bills are issued on July 1 of each year. Taxpayers who remit within two months of July 1 receive a 2 percent discount, and those who remit subsequent to October 1 are assessed a 10 percent penalty. For the fiscal year, eligible taxpayers could opt into the installment method of payment for their school taxes. Installment payments are based upon three (3) one-third payments of the base tax amount. The due dates for installment payments are August 31, October 31 and December 31. The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. The last countywide assessment became effective January 1, E-5

94 TABLE E-6 NORTH ALLEGHENY SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA Market Assessed Year Value Value Ratio $3,983,826,238 $3,939,514, % ,902,085,698 3,871,710, % ,153,688,721 3,950,484, % ,154,332,081 4,911,430, % ,727,926,430 5,321,029, % Compound Average Annual Percentage Change % 6.20% Source: Pennsylvania State Tax Equalization Board. TABLE E-7 NORTH ALLEGHENY SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY Market Assessed Market Assessed Value Value Value Value School District... $4,154,332,081 $4,911,430,021 $4,727,926,430 $5,321,029,571 Bradford Woods Borough ,831, ,326, ,785, ,024,033 Franklin Park Borough... 1,158,317,825 1,393,149,174 1,350,680,380 1,525,478,741 Marshall Township ,544,124 1,112,692,920 1,058,586,374 1,187,121,820 McCandless Township... 1,912,638,241 2,282,261,194 2,199,874,509 2,476,404,977 Allegheny County... 62,481,101,686 73,859,149,175 71,425,187,108 80,525,498,273 Source: Pennsylvania State Tax Equalization Board. TABLE E-8 NORTH ALLEGHENY SCHOOL DISTRICT ASSESSMENT BY LAND USE Residential... $3,186,885,502 $3,240,463,564 $3,261,018,794 3,971,648,284 $4,357,481,477 Lots... 50,012,672 47,393,622 66,534,422 45,106,500 42,624,300 Industrial... 32,084,750 32,084,750 32,084,750 31,976,100 30,966,900 Commercial ,249, ,558, ,796, ,002, ,040,794 Agriculture... 25,245,100 25,183,100 25,022,400 23,317,700 25,813,200 Land... 7,037,500 6,027,100 6,027,100 4,378,500 4,102,900 Mineral Total... $3,939,514,544 $3,871,710,845 $3,950,484,056 $4,911,430,021 $5,321,029,571 Source: Pennsylvania State Tax Equalization Board E-6

95 TABLE E-9 NORTH ALLEGHENY SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA Current Current Year Total Total Total Collections Collections Collections Collections Year Flat Billing Amount as Percent Amount (1) as Percent $77,665,531 $76,430, % $79,016, % ,785,939 81,190, % 84,436, % ,265,005 85,147, % 87,162, % ,151,439 86,002, % 88,266, % ,380,287 87,983, % 91,222, % (1) Includes delinquent realty taxes collected. Source: School District officials. The ten largest real property taxpayers, together with assessed values, are shown in Table E-10. The aggregate assessed value of these ten highest assessed properties totals approximately 5.2 percent of total assessed value. The property owners listed below may own additional parcels which are not set forth in the table. TABLE E-10 NORTH ALLEGHENY SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS Assessed Owner Property Type Value Ericsson Drive Associates LP Commercial Office Building $59,407,300 Sippel Enterprises, LP Commercial Developer 35,975,500 Zell Two Inc. Pittsburgh Office Research Park 33,048,400 UPMC Passavant Hospital 26,815,100 Elliot Norman W. & Irma H. Pine Creek Shopping Center 23,771,300 Mitsubishi Electric Power Products, Inc. Electrical and Electronic Products 20,338, Hickory Hills Trust Commercial Real Estate 19,982,600 MEDRAD, Inc. Diagnostic and Therapeutic Medical Equipment 19,000,000 Capreit Pittsburgh Limited Partnership Apartment Building 20,248,300 Terra North Associates McIntyre Square 19,775,300 $278,362,100 Source: School District Officials. E-7

96 DEBT AND DEBT LIMITS Debt Statement Table E-11 shows the debt of the School District as of June 23, 2016, including the issuance of the Bonds. TABLE E-11 NORTH ALLEGHENY SCHOOL DISTRICT DEBT STATEMENT * (As of June 23, 2016) NONELECTORAL DEBT Gross Outstanding General Obligation Bonds, Series of $34,770,000 General Obligation Bonds, Refunding Series of 2014A... 6,795,000 General Obligation Note, Series of 2014 (1)... 31,010,000 General Obligation Bonds, Refunding Series B of ,410,000 General Obligation Bonds, Refunding Series of ,130,000 General Obligation Note, Series A of 2011 (2)... 13,975,000 General Obligation Note, Series B of 2011 (2)... 10,220,000 General Obligation Note, Series of 2008 (3)... 18,110,000 TOTAL NONELECTORAL DEBT... $131,420,000 LEASE RENTAL DEBT State Public School Building Authority (A.W. Beattie Career Center Project) School Revenue Bonds, Series of 2008(2)... $3,584,942 TOTAL LEASE RENTAL DEBT... $3,584,942 TOTAL PRINCIPAL OF DIRECT DEBT... $135,004,942 *Includes the Bonds offered through this Official Statement. (1) Secures payment of the Butler County General Authority Variable Rate Demand Revenue Bonds (North Allegheny School District Project), Series (2) Secures payment of the Butler County General Authority Variable Rate Demand Revenue Bonds (North Allegheny School District Project), Series 2011A and 2011B. (3) Secures payment of the State Public School Building Authority Variable Rate Demand Revenue Bonds (North Allegheny School District Project), Series (4) % pro rata share of $14,765,000 principal amount outstanding. Interest Rate Management Plans Related to Outstanding School District Debt On September 24, 2003, the Governor of the Commonwealth of Pennsylvania signed into law legislation that empowers local government units, including school districts, to enter into qualified interest rate management agreements such as swaps and swaptions as a tool to manage interest rate risk. The School District has a portfolio of existing interest rate management agreements ( Agreements ) referencing certain outstanding indebtedness. The School District currently has five outstanding agreements, which are considered as interest rate hedge vehicles. The list below provides a brief description of each D Pay Fixed Rate Swap Interest rate hedge; associated with the State Public School Building Authority Variable Rate Demand Revenue Bonds (North Allegheny School District Project), Series 2008; 2001A Pay Fixed Rate Swap Interest rate hedge; associated with the Butler County General Authority Variable Rate Demand Revenue Bonds (North Allegheny School District Project), Series 2011A; 2002A Pay Fixed Rate Swap - Interest rate hedge; associated with the Butler County General Authority Variable Rate Demand Revenue Bonds (North Allegheny School District Project), Series 2011B; and E-8

97 2004 C Pay Fixed Rate Swap - Interest rate hedge; associated with the Butler County General Authority Variable Rate Demand Revenue Bonds (North Allegheny School District Project), Series C Constant Maturity Swap - Interest rate hedge; associated with the Butler County General Authority Variable Rate Demand Revenue Bonds (North Allegheny School District Project), Series The counterparty for all of the School District s Agreement is PNC Bank, National Association. The following table summarizes the Agreements described above, as of the date of this Official Statement. Outstanding Notional Effective Swap Counterparty Amount Date Status Fixed Rate Floating Rate Formula 1997D PNC Bank, N.A. $18,100,000 5/1/2008 Exercised 4.311% (1) 68% of 1 Month LIBOR 2001A PNC Bank, N.A. $13,975,000 11/1/2011 Exercised 4.116% (1) 68% of 1 Month LIBOR 2002A PNC Bank, N.A. $10,220,000 11/1/2011 Exercised 4.465% (1) 68% of 1 Month LIBOR 2004C PNC Bank, N.A. $31,010,000 5/1/2014 Exercised 5.250% 68% of 1 Month LIBOR 2004C PNC Bank, N.A. $31,010,000 5/1/2014 Exercised % USD-ISDA- Swap Rate CMS (1) On September 29, 2011, the School District terminated a 2001A Constant Maturity Swap, a 2002A Constant Maturity Swap and the 1997D Constant Maturity Swap. The fixed rates noted above are the revised fixed rates resulting from the constant maturity swap terminations and related amendments. E-9

98 Debt Limit and Remaining Borrowing Capacity The statutory borrowing limit of the School District under the Act is computed as a percentage of the School District s Borrowing Base. The Borrowing Base is defined as the annual arithmetic average of total Revenues (as defined by the Act) for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing base and borrowing capacity as follows: Total Revenues for $126,442,766 Total Revenues for ,472,372 Total Revenues for ,120,225 Total... $392,035,363 Annual Arithmetic Average (Borrowing Base)... $130,678,454 Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District's Borrowing Base produces the following products: Remaining Legal Net Debt Borrowing Limit Outstanding* Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $294,026,523 $135,004,942 $159,021,581 *Includes the Bonds offered through this Official Statement, does not reflect credits against gross indebtedness that may be claimed for a portion of principal of debt estimated to be reimbursed by Commonwealth Aid. Future Financing The School District does not anticipate issuing additional long-term debt in the immediate future. School District Employees LABOR RELATIONS There are presently 1,041 employees of the School District, including 618 teachers and other professionals, as well as 388 support personnel. The support personnel include secretaries, transportation employees, custodial staff and teachers' aides. The School District teachers are represented by the North Allegheny Federation of Teachers (the "NAFT"), Local 2091, American Federation of Teachers, AFL-CIO under a five-year contract which expires on June 30, Pension Program School Districts in Pennsylvania are required to participate in a statewide pension program administered by the Public School Employees Retirement System (PSERS). All of the School District's full-time employees, part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. However, a Pennsylvania Supreme Court decision has removed the hourly de minimis requirement for current members of PSERS regarding the purchase of credit for their part-time school service rendered prior to their being members of PSERS, for purposes of increasing their pension benefits. E-10

99 Beginning July 1, 1976, certain revisions were made in the pension program. The Retirement Board, previously under the Department of Education of the Commonwealth, became an independent agency. However, the program is still guaranteed by the Commonwealth. Currently, each party to the program contributes a fixed percentage of the employee's salary. Employees belonging to the Public School Employees Retirement System ( PSERS ) prior to July 22, 1983 contribute 5.25% of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February 17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at 7.50% of the employee s salary for those employees hired on or after July 1, Act 9 also provides an option for those employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50% if they were hired on or after July 22, Act 120 of 2010 ( Act 120 ) was passed by the General Assembly on September 1 and signed by former Governor Rendell on November 23, The benefit reductions contained in this legislation only impact individuals who become new members of PSERS on or after July 1, New members will have the option of selecting one of 2 new classes. The members selecting class T-E will contribute a base rate of 7.5% with shared risk contribution levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F will contribute a base rate of 10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier of 2.5%. In accordance with Senate Bill 1042 enacted on July 6, 2010, the employer rate was recertified at 5.64% for fiscal year , 8.65% for fiscal year and 12.36% for fiscal year The rate for fiscal year was 16.93% of payroll and the rate for fiscal year was 21.40%. The employer contribution rate for fiscal year is 25.84%. The rate applies to salary and wages earned from July 1, 2015, through June 30, This rate was determined by PSERS actuary and reflects the rate caps established by Act 120 of The rate was certified by the PSERS Board of Trustees at its meeting on December 9, In addition, the employer contribution rate may change if pension legislation is enacted prior to June 30, The employer contribution rate for fiscal year consists of 25% for pension costs and 0.84% for premium assistance payments. Please see the Public School Employee s Retirement System website indicated below for the most recent projection of employer contribution rates. The School District and the Commonwealth are responsible for paying a portion of the employer s share. School entities are initially responsible for paying 100% of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. The School District contributions are made on a quarterly basis and employee contributions are deducted monthly for each paycheck and remitted quarterly. Recent School District payments have been as follows: $1,908, $2,707, $3,856, $5,343, $7,067, (budgeted) $8,655,000 The School District is current in all payments. The PSERS complete report is available on the PSERS website on the Internet: Source: PSERS Financial Highlights. Other Post-Employment Benefits The School District is obligated under collective bargaining agreements to provide future health insurance coverage for current and future retired employees, and to provide retirement severance pay for existing employees. The School District became subject to the requirements of GASB Statements No. 43 and 45 commencing with the School District s annual financial statements for the fiscal year ending June 30, E-11

100 Existing Continuing Disclosure Filing History The School District has previously entered into Continuing Disclosure Agreements with respect to each one of its previously issued bond issues that are currently outstanding. The School District s filing history of its annual financial and operating information during the past five (5) years is outlined in the table below. Fiscal Year Filing Financial Statements Budget Operating Data Ending Deadline [1] Filing Date EMMA ID [2] Filing Date EMMA ID [2] Filing Date EMMA ID [2] 6/30/ /27/2011 1/13/2012 ER /29/2015 EA /10/2013 6/30/ /27/2012 2/12/2013 EA /29/2015 EA /10/2013 6/30/ /27/ /13/2013 ER /13/2013 ER /17/2013 6/30/ /27/ /17/2014 ER /16/2014 EP /22/2014 [3] [3] [3] [3] ER ER ER ER /30/ /27/ /21/2015 EP /14/2015 EA /21/2015 EP Notes [1] For these purposes, assumes the shortest filing deadline of the School District s previous Continuing Disclosure Agreements [2] Submission ID is the EMMA Submission ID for each filing. To access a filing, insert the Submission ID to the end of the web address below: [3] Incomplete filing. Outstanding data was filed on August 5, 2015 (EMMA ID EA602600). Based on the information above, the School District s annual financial and operating filing history over the past five (5) years can be summarized as follows: For fiscal year ending June 30, 2011, the School District field the audit report on January 13, 2012, the budget report on July 29, 2015 and a portion of the operating data was filed on June 10, 2013 with the remainder filed on August 5, For fiscal year ending June 30, 2012, the School District filed the audit report on February 12, 2013, the budget report on July 29, 2015 and a portion of the operating data was filed on June 10, 2013 with the remainder filed on August 5, For fiscal year ending June 30, 2013, the School District filed the audit report on December 13, 2013, the budget on August 13, 2013 and a portion of the operating data was filed on December 17, 2013 with the remainder filed on August 5, For fiscal year ending June 30, 2014, the School District filed the audit report on December 17, 2014, the budget report on July 16, 2014 and a portion of the operating data was filed on December 22, 2014 with the remainder filed on August 5, For fiscal year ending June 30, 2014, the School District filed the audit report on December 21, 2015, the budget report on July 14, 2015 and the operating data on December 21, Failure to Provide Annual Financial Information As outlined in the table above, the School District failed to provide certain annual financial information in a timely manner during the past (5) five years. The School District filed a Failure to Provide Annual Financial Information notice to EMMA on June 10, 2013 and August 5, E-12

101 APPENDIX F NORTH HILLS SCHOOL DISTRICT Allegheny County, Pennsylvania Descriptive, Financial and Economic Information

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103 NORTH HILLS SCHOOL DISTRICT Allegheny County, Pennsylvania THE SCHOOL DISTRICT The North Hills School District is located in Allegheny County, adjacent to and north of the city of Pittsburgh, and is comprised of the Township of Ross and the Borough of West View. Encompassing an area of 14.6 square miles, the School District is primarily a residential suburb of Pittsburgh. Administration The present School District is governed by a nine-member Board of School Directors (the School Board ), elected to four year terms. The Superintendent is the chief administrative officer of the School District, with overall responsibility for all aspects of operations, including education and finance. The Business Manager is responsible for budget and financial operations. Both officials are appointed by the School Board. School Facilities The School District presently operates four elementary school, one middle school and one high school, all as described on the following table. Students in grades may also attend the A. W. Beattie Career Center. TABLE F-1 NORTH HILLS SCHOOL DISTRICT SCHOOL FACILITIES Elementary: Original Addition/ Rated Construction Renovation Pupil Date Date(s) Grades Capacity Enrollment Highcliff Elementary , 2009 K West View Elementary /1958/1998 K Ross Elementary K McIntrye Elementary , 2009 K Secondary: Middle School / , High School ,840 1,461 Source: School District Officials. F-1

104 Student enrollment trends for the School District are illustrated by the following five-year record of actual enrollments, as reported by School District officials. Actual Enrollments TABLE F-2 NORTH HILLS SCHOOL DISTRICT ENROLLMENT TRENDS F-2 Projected Enrollments School School Year Elementary Secondary Total Year Elementary Secondary Total ,078 2,131 4, ,382 1,956 4, ,128 2,116 4, ,389 1,895 4, ,174 2,090 4, ,437 1,877 4, ,224 2,040 4, ,436 1,929 4, ,296 2,034 4, ,449 2,021 4,470 Introduction SCHOOL DISTRICT FINANCES The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and Director of Finance and Operation and submitted to the School Board for approval prior to the beginning of the fiscal year on July 1. Financial Reporting The School District keeps its books and prepares its financial reports according to a modified accrual basis. Major accrual items are payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues receivable from other governmental units.. The School District s financial statements are audited annually by a firm of independent certified public accountants, as required by State law. The firm of Hosack, Specht, Muetzel & Wood LLP, Pittsburgh, Pennsylvania serves as School District auditor. Budgeting Process in School Districts under the Taxpayer Relief Act In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1. Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days public notice of its intent to adopt the final budget. If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district s Index (see The Taxpayer Relief Act or Act 1 herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The Taxpayer Relief Act. With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see The Taxpayer Relief Act or Act 1 herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses.

105 If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index. Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days public notice be given of the board s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution. Summary and Discussion of Financial Results Table F-3 shows revenues and expenditures for the past 5 years, and the budget. The budget for the school year, as adopted June 4, 2015, projected total revenues of $73,762,680 and expenditures of $74,277,665, which included a budgetary reserve of $550,000. F-3

106 Revenue The School District received $72,630,985 in revenue in and has budgeted revenue of $73,762,680 in Local sources contributed a decreasing share of total revenue in the past five years, from 76.5 percent in to 75.6 percent in Revenue from Commonwealth sources contributed an increasing share of total revenue from 20.3 percent to 23.1 percent over this period. Federal sources contributed a decreasing share of total revenue from 3.2 percent to 1.3 percent over this period. TABLE F-3 NORTH HILLS SCHOOL DISTRICT COMPARATIVE STATEMENT OF GOVERNMENTAL FUND REVENUES AND EXPENDITURES (For years ending June 30) REVENUE: (1) Total Local Sources $50,953,953 $52,971,675 $54,967,763 $54,035,462 $54,913,500 $55,139,082 Total State Sources 13,529,813 14,009,385 14,679,706 15,536,396 16,786,372 17,743,598 Total Federal Sources 2,160, ,914 1,002, , , ,000 TOTAL REVENUE $66,643,988 $67,747,974 $70,649,952 $70,486,354 $72,630,985 $73,762,680 Actual Budget EXPENDITURES: Instruction $37,661,667 $36,164,442 $36,525,078 $39,611,573 $41,514,306 44,189,097 Support Services 18,423,914 17,877,788 17,949,444 18,274,968 19,042,032 20,032,420 Operation of Noninstrucitonal Services 1,507,618 1,388,586 1,480,103 1,467,218 1,319,039 1,397,687 Capital Outlay 20,100 16,955 3,382 Refund of prior year revenues 77,681 65,074 9,536 52, ,364 Debt Service 5,072,317 6,959,545 8,431,194 8,146,332 8,261,952 8,108,461 Budgetary Reserve ,000 TOTAL EXPENDITURES $62,743,197 $62,455,435 $64,415,455 $67,569,769 $70,317,075 $74,277,665 Revenues in Excess of (less) Expenditures $3,900,791 $5,292,539 $6,234,497 $2,916,585 $2,313,910 ($514,985) Other Financing Uses Interfund Operating Transfer In $0 $0 $0 $3,920 Sale/Compensation for Fixed Assets $450 $22,327 Transfers Out (10,720,585) (3,325,904) (2,381,807) (1,126,015) (810,000) Total other Financing Sources (Uses) (10,720,135) (3,303,577) (2,381,807) (1,126,015) (806,080) Net Changes in Fund Balance (6,819,344) 1,988,962 3,852,690 1,790,570 1,507,830 Beginning Fund Balance 11,519,322 4,699,978 6,688,940 10,541,630 12,332,200 Ending Fund Balance 4,699,978 6,688,940 10,541,630 12,332,200 $13,840,030 (1) Budget, as adopted June 4, Source: School District Annual Financial Reports and Budget. F-4

107 Tax Levy Trends Table F-4 shows the recent trend of tax rates levied by the School District. Table F-5 shows the comparative trend of real property tax rates for the School District, Allegheny County and the municipalities within the School District. TABLE F-4 NORTH HILLS SCHOOL DISTRICT TAX RATES Real Estate Wage and Local Services Mercantile Amusement Real Estate Transfer Income Tax Tax Tax (mills) (%) (%) ($) (mills) (%) Source: School District officials. TABLE F-5 NORTH HILLS SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES (Mills on Assessed Value) School District Ross Township West View Borough Allegheny County Source: Local Government Officials. Real Property Tax The real property tax (excluding delinquent collections) produced $43,902,927 in , approximately 60 percent of revenues. The School District fiscal year is from July 1 through June 30 and tax bills are issued on July 1 of each year. Taxpayers who remit within two months of July 1 receive a 2 percent discount, and those who remit subsequent to October 1 are assessed a 10 percent penalty. Since the fiscal year, eligible taxpayers can opt into the installment method of payment for their school taxes. Installment payments are based upon four (4) payments of the base tax amount. The due dates for installment payments are August 31, September 30, October 31 and November 30. The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. The last countywide assessment became effective January 1, F-5

108 TABLE F-6 NORTH HILLS SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA Market Assessed Year Value Value Ratio $2,126,349,690 $2,069,260, % ,147,932,866 2,085,090, % ,193,558,934 2,082,545, % ,193,626,751 2,581,993, % ,477,405,671 2,783,456, % Compound Average Annual Percentage Change % 6.11% Source: Pennsylvania State Tax Equalization Board. TABLE F-7 NORTH HILLS SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY Market Assessed Market Assessed Value Value Value Value North Hills School District... $2,193,626,751 $2,581,993,610 $2,477,405,671 $2,783,456,476 Ross Township... 1,959,499,582 2,294,216,625 2,201,594,993 2,464,973,891 West View Borough ,127, ,776, ,810, ,482,585 Allegheny County... 62,481,101,686 73,859,149,175 71,425,187,108 80,525,498,273 Source: Pennsylvania State Tax Equalization Board. TABLE F-8 NORTH HILLS SCHOOL DISTRICT ASSESSMENT BY LAND USE Residential $1,536,918,221 $1,538,546,521 $1,539,135,918 1,786,371,525 $1,994,400,825 Lots 28,282,723 28,131,123 27,711,623 24,601,650 24,109,000 Industrial 3,035,200 3,035,200 3,035,200 3,614,500 3,614,500 Commercial 498,183, ,530, ,841, ,675, ,515,851 Agriculture 1,503,100 1,509,900 1,483,700 1,426,800 1,512,700 Land 1,337,560 1,337,560 1,337,560 1,303,600 1,303,600 Total $2,069,260,184 $2,085,090,584 $2,082,545,156 $2,581,993,610 $2,783,456,476 Source: Pennsylvania State Tax Equalization Board F-6

109 TABLE F-9 NORTH HILLS SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA Current Year Total Current Collections Total Collections Assessed Gross Adjusted Collections as a Collections as Year Valuation Mills Levy Amount Percent Amount (1) Percent $2,238,109, $44,560,768 $42,194, % $44,202, % ,256,824, ,190,192 44,788, % 46,804, % ,254,055, ,921,225 45,509, % 47,353, % ,855,734, ,718,838 44,921, % 46,643, % ,801,315, ,350,704 45,335, % 47,356, % (1) Includes delinquent realty taxes collected. Source: School District officials. The ten largest real property taxpayers, together with assessed values, are shown in Table F-10. The aggregate assessed value of these ten highest assessed properties totals approximately 9.6 percent of total assessed value. The property owners listed below may own additional parcels which are not set forth in the table. TABLE F-10 NORTH HILLS SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS Assessed Owner Property Type Value Penn Ross Joint Venture Retail Store/Shopping Center $90,984,900 Gumberg Stanley R & Trustee Retail Store/Shopping Center 53,540,100 Sear Roebuck & Co Retail Store/Shopping Center 18,998,000 Deaktor Development North LP Apartments 18,944,700 Nordstrom Inc Retail Store/Shopping Center 17,192,700 Mc Intyre Square Associates Retail Store/Shopping Center 17,145,400 May Department Stores Company Retail Store/Shopping Center 15,450,000 Ross Presbyterian Senior Housing LP Church/Commercial 13,326,100 LRC Northway Mall Acquisitions LLC Retail Store/Shopping Center 12,000,000 Sobol Bernard H & Evelyn B Sobol (Trustee) Apartments 11,157,700 $268,739,600 Source: School District Officials. F-7

110 DEBT AND DEBT LIMITS Debt Statement Table F-11 shows the debt of the School District as of June 23, 2016, including the issuance of the Bonds. TABLE F-11 NORTH HILLS SCHOOL DISTRICT DEBT STATEMENT * (As of June 23, 2016) Gross Outstanding NONELECTORAL DEBT General Obligation Note, Series of $8,615,000 General Obligation Bonds, Series of 2010B (BABs)... 25,930,000 General Obligation Bonds, Series of ,515,000 General Obligation Bonds, Series of ,165,000 General Obligation Bonds, Series of 1997 (CABS)... 8,013,817 TOTAL NONELECTORAL DEBT... $71,241,817 LEASE RENTAL DEBT Washington County Industrial Development Authority (A.W. Beattie Career Center Project) School Revenue Bonds, Series of 2016 (1)... $2,161,596 TOTAL LEASE RENTAL DEBT... $2,161,596 TOTAL PRINCIPAL OF DIRECT DEBT... $73,403,413 *Includes the Bonds offered through this Official Statement. (1) % pro rata share of $14,765,000 principal amount outstanding. F-8

111 Debt Limit and Remaining Borrowing Capacity The statutory borrowing limit of the School District under the Act is computed as a percentage of the School District s Borrowing Base. The Borrowing Base is defined as the annual arithmetic average of total Revenues (as defined by the Act) for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing base and borrowing capacity as follows: Total Revenues for $69,410,685 Total Revenues for ,253,187 Total Revenues for ,340,906 Total... $210,004,778 Annual Arithmetic Average (Borrowing Base)... $70,001,593 Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District's Borrowing Base produces the following products: Remaining Legal Net Debt Borrowing Limit Outstanding* Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $ 157,503,584 $73,403,413 $84,100,171 *Includes the Bonds offered through this Official Statement, does not reflect credits against gross indebtedness that may be claimed for a portion of principal of debt estimated to be reimbursed by Commonwealth Aid. Future Financing The School District does not anticipate issuing additional long term (non-refunding) debt in the near future. School District Employees LABOR RELATIONS There are 736 employees of the School District, including 388 teachers, librarians and administrators, and 348 support personnel. The support personnel includes secretaries, custodial staff, cafeteria staff, maintenance staff, teachers aides, and business supervision. The School District s teachers are represented by the North Hills Education Association (the Association ), an affiliate of the Pennsylvania State Education Association ( PSEA ), under a contract with the School District which expires August 23, The current contract expires for Para Professionals, Teachers Aides, Licensed Practical Nurses, Computer Technicians and Clerks are under a contract which expires June 30, The Service Employees International Union, Local 3 represents custodial and food service employers, under a contract which expires June 30, 2020 for custodians and June 30, 2017 for Food Service personnel. Pension Program School Districts in Pennsylvania are required to participate in a statewide pension program administered by the Public School Employees Retirement System (PSERS). All of the School District's full-time employees, part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. However, a Pennsylvania Supreme Court decision has removed the hourly de minimis requirement for current members of PSERS regarding the purchase of credit for their part-time school service rendered prior to their being members of PSERS, for purposes of increasing their pension benefits. F-9

112 Beginning July 1, 1976, certain revisions were made in the pension program. The Retirement Board, previously under the Department of Education of the Commonwealth, became an independent agency. However, the program is still guaranteed by the Commonwealth. Currently, each party to the program contributes a fixed percentage of the employee's salary. Employees belonging to the Public School Employees Retirement System ( PSERS ) prior to July 22, 1983 contribute 5.25% of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February 17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at 7.50% of the employee s salary for those employees hired on or after July 1, Act 9 also provides an option for those employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50% if they were hired on or after July 22, Act 120 of 2010 ( Act 120 ) was passed by the General Assembly on September 1 and signed by former Governor Rendell on November 23, The benefit reductions contained in this legislation only impact individuals who become new members of PSERS on or after July 1, New members will have the option of selecting one of 2 new classes. The members selecting class T-E will contribute a base rate of 7.5% with shared risk contribution levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F will contribute a base rate of 10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier of 2.5%. In accordance with Senate Bill 1042 enacted on July 6, 2010, the employer rate was recertified at 5.64% for fiscal year , 8.65% for fiscal year and 12.36% for fiscal year The rate for fiscal year was 16.93% of payroll and the rate for fiscal year was 21.40%. The employer contribution rate for fiscal year is 25.84%. The rate applies to salary and wages earned from July 1, 2015, through June 30, This rate was determined by PSERS actuary and reflects the rate caps established by Act 120 of The rate was certified by the PSERS Board of Trustees at its meeting on December 9, In addition, the employer contribution rate may change if pension legislation is enacted prior to June 30, The employer contribution rate for fiscal year consists of 25% for pension costs and 0.84% for premium assistance payments. Please see the Public School Employee s Retirement System website indicated below for the most recent projection of employer contribution rates. The School District and the Commonwealth are responsible for paying a portion of the employer s share. School entities are initially responsible for paying 100% of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. The School District contributions are made on a quarterly basis and employee contributions are deducted monthly for each paycheck and remitted quarterly. Recent School District payments have been as follows: $1,885, ,697, ,750, ,207, ,758, (budgeted) 8,726,759 The School District is current in all payments. The PSERS complete report is available on the PSERS website on the Internet: Source: PSERS Financial Highlights. Other Post-Employment Benefits The School District is obligated under collective bargaining agreements to provide future health insurance coverage for current and future retired employees, and to provide retirement severance pay for existing employees. The School District became subject to the requirements of GASB Statements No. 43 and 45 commencing with the School District s annual financial statements for the fiscal year ending June 30, F-10

113 Existing Continuing Disclosure Filing History The School District has previously entered into Continuing Disclosure Agreements with respect to each one of its previously issued bond issues that are currently outstanding. The School District s filing history of its annual financial and operating information during the past five (5) years is outlined in the table below. Fiscal Year Filing Financial Statements Budget Operating Data Ending Deadline [1] Filing Date EMMA ID [2] Filing Date EMMA ID [2] Filing Date EMMA ID [2] 6/30/ /27/2011 6/9/2016 ER /15/2016 ER /15/2016 ER /30/ /27/2012 6/9/2016 ER /9/2016 ER /15/2016 ER /30/ /27/2013 6/9/2016 ER /9/2016 ER /15/2016 ER /30/ /27/2014 6/9/2016 ER /9/2016 ER /15/2016 ER /30/ /27/2015 6/9/2016 ER /9/2016 ER /15/2016 ER Notes [1] For these purposes, assumes the shortest filing deadline of the School District s previous Continuing Disclosure Agreements [2] Submission ID is the EMMA Submission ID for each filing. To access a filing, insert the Submission ID to the end of the web address below: Based on the information above, the School District s annual financial and operating filing history over the past five (5) years can be summarized as follows: For fiscal year ending June 30, 2011 the School District the audit report on June 9, 2016, and the budget report and operating data on June 15, For fiscal year ending June 30, 2012 through June 30, 2015, the School District the audit reports and budgets report on June 9, 2016 and operating data on June 15, Failure to Provide Annual Financial Information As outlined in the table above, the School District failed to provide certain annual financial information in a timely manner during the past (5) five years. The School District filed a Failure to Provide Annual Financial Information notice to EMMA on June 9, Bond Insurance Rating Downgrades and Upgrades by S&P and/or Moody s Some of the School District s bond issues that have been outstanding during the past five (5) years have been insured by various bond insurance companies that have received rating downgrades and upgrades by both S&P and Moody s. This information was publicly available from widely accepted information sources at the time of their respective downgrades or upgrades. For informational purposes, the School District has recently filed a summary of rating upgrades and downgrades relating to certain bond insurance companies. F-11

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115 APPENDIX G NORTHGATE SCHOOL DISTRICT Allegheny County, Pennsylvania Descriptive, Financial and Economic Information

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117 NORTHGATE SCHOOL DISTRICT Allegheny County, Pennsylvania THE SCHOOL DISTRICT Introduction The Northgate School District is located approximately six miles northwest from the downtown district of the City of Pittsburgh. The School District is comprised of the towns of Bellevue and Avalon, two residential communities located in Allegheny County directly northwest from the City of Pittsburgh and north of the Ohio River. Both are older communities where most of the available land has been developed. Most of the population commutes to the City of Pittsburgh or its surrounding industrial areas for employment. Bellevue is about one square mile in area while Avalon is slightly smaller. Topographically, the land rises above the Ohio River and is a series of hills and ravines. Administration The present School District is governed by a nine-member Board of School Directors (the School Board ), elected to four year terms. The Superintendent is the chief administrative officer of the School District, with overall responsibility for all aspects of operations, including education and finance. The Business Manager is responsible for budget and financial operations. Both officials are appointed by the School Board. School Facilities The School District presently operates two elementary schools, and a combined middle school and high school, all as described on the following table. Students in grades may also attend the A. W. Beattie Career Center. TABLE G-1 NORTHGATE SCHOOL DISTRICT SCHOOL FACILITIES Original Addition/ Rated Construction Renovation Pupil Building Date Date(s) Grades Capacity Enrollment Elementary: Avalon Elementary K Bellevue Elementary K Secondary: Northgate Senior High Source: School District Officials. G-1

118 Student enrollment trends for the School District are illustrated by the following five-year record of actual enrollments, as reported by School District officials. Actual Enrollments TABLE G-2 NORTHGATE SCHOOL DISTRICT ENROLLMENT TRENDS Projected Enrollments School School Year Elementary Secondary Total Year Elementary Secondary Total , , , , , , , , , ,120 Source: School District officials. Introduction SCHOOL DISTRICT FINANCES The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and Business Manager and submitted to the School Board for approval prior to the beginning of the fiscal year on July 1. Financial Reporting The School District keeps its books and prepares its financial reports according to a modified accrual basis. Major accrual items are payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues receivable from other governmental units. The School District s financial statements are audited annually by a firm of independent certified public accountants, as required by State law. The firm of Cottrill, Arbutina & Associates, P.C., Pittsburgh, Pennsylvania serves as School District auditor. Budgeting Process in School Districts under the Taxpayer Relief Act In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1. Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days public notice of its intent to adopt the final budget. If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district s Index (see The Taxpayer Relief Act or Act 1 herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The Taxpayer Relief Act. G-2

119 With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see The Taxpayer Relief Act or Act 1 herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses. If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index. Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days public notice be given of the board s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution. Summary and Discussion of Financial Results Table G-3 shows revenues and expenditures for the past 5 years, and the budget. The budget for the school year, as adopted June 15, 2015, projected total revenues of $21,276,944 and expenditures of $21,627,587. G-3

120 Revenue The School District received $22,022,409 in revenue in and has budgeted revenue of $21,276,944 in Local sources contributed an increasing share of total revenue in the past five years, from 59.0 percent in to 60.6 percent in Revenue from Commonwealth sources contributed an increasing share of total revenue from 32.2 percent to 33.9 percent over this period. Federal and other sources contributed a decreasing share of total revenue from 8.8 percent to 5.5 percent over this period. TABLE G-3 NORTHGATE SCHOOL DISTRICT COMPARATIVE STATEMENT OF GOVERNMENTAL FUND REVENUES AND EXPENDITURES (For years ending June 30) REVENUE: (1) Total Local Sources $11,547,985 $12,163,192 $12,422,172 $12,590,513 $13,350,362 $12,657,214 Total State Sources 6,310,405 6,637,491 6,803,201 7,212,568 7,466,830 7,642,277 Total Federal Sources 1,718, ,679 1,134,035 1,176,941 1,143, ,453 Total Other Sources 6,577 1,546, ,858 0 TOTAL REVENUE $19,583,443 $20,962,453 $20,359,408 $20,980,022 $22,022,409 $21,276,944 Actual Budget EXPENDITURES: Instruction $12,265,430 $11,242,877 $12,338,334 $11,263,999 $11,535,735 $13,098,449 Support Services 5,667,498 5,764,903 5,670,049 5,859,806 6,448,193 6,840,363 Operation of Noninstructional Services 476, , , , , ,407 Facs., Acq., Constr. & Imprv. Services 77,228 89,036 50,858 87, , ,000 Debt Service 936, , , , , ,368 Fund Transfers Tax Anticipation Note Payments 1,500,000 Refund of prior year revenues 89,705 87, , , ,904 TOTAL EXPENDITURES $19,513,271 $20,130,749 $19,444,707 $18,664,895 $19,944,771 $21,627,587 SURPLUS (DEFICIT) OF REVENUES OVER EXPENDITURES 70, , ,701 2,315,127 2,077,638 (350,643) Beginning Fund Balance $1,311,247 $1,381,419 $2,213,123 $3,297,793 $5,612,918 Prior Period Adjustment ,969 (2) 0 Ending Fund Balance $1,381,419 $2,213,123 $3,297,793 $5,612,918 $7,690,556 (1) Budget, as adopted June 15, Source: School District Annual Financial Reports and Budget. G-4

121 Tax Levy Trends Table G-4 shows the recent trend of tax rates levied by the School District. Table G-5 shows the comparative trend of real property tax rates for the School District, Allegheny County and the municipalities within the School District. TABLE G-4 NORTHGATE SCHOOL DISTRICT TAX RATES Real Estate Wage and Local Services Real Estate Transfer Income Tax Per Capita (mills) (%) (%) ($) ($) Source: School District officials. TABLE G-5 NORTHGATE SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES (Mills on Assessed Value) School District Avalon Borough Bellevue Borough Allegheny County Source: Local Government Officials. Real Property Tax The real property tax (excluding delinquent collections) produced $11,543,061 in , approximately 52.4 percent of revenues. The School District fiscal year is from July 1 through June 30 and tax bills are issued on July 1 of each year. Taxpayers who remit within two months of July 1 receive a 2 percent discount, and those who remit subsequent to October 1 are assessed a 10 percent penalty. For the fiscal year, eligible taxpayers could opt into the installment method of payment for their school taxes. Installment payments are based upon three (3) one-third payments of the base tax amount. The due dates for installment payments are September 30, October 31 and November 30. The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. The last countywide assessment became effective January 1, G-5

122 TABLE G-6 NORTHGATE SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA Market Assessed Year Value Value Ratio $342,529,714 $363,757, % ,284, ,482, % ,372, ,478, % ,551, ,009, % ,835, ,268, % Compound Average Annual Percentage Change % 6.24% Source: Pennsylvania State Tax Equalization Board. TABLE G-7 NORTHGATE SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY Market Assessed Market Assessed Value Value Value Value School District $352,551,371 $450,009,536 $411,835,423 $492,268,636 Avalon Borough 128,389, ,370, ,767, ,625,680 Bellevue Borough 224,161, ,639, ,067, ,642,956 Allegheny County 62,481,101,686 73,859,149,175 71,425,187,108 80,525,498,273 Source: Pennsylvania State Tax Equalization Board. TABLE G-8 NORTHGATE SCHOOL DISTRICT ASSESSMENT BY LAND USE Residential... $311,931,036 $311,299,436 $311,642, ,594,080 $354,139,080 Lots... 2,631,400 2,449,300 2,470,200 3,105,200 3,029,900 Industrial , , , Commercial... 48,967,475 48,505,975 49,138, ,306, ,096,256 Agriculture ,400 3,400 Land Total... $363,757,211 $362,482,011 $363,478,911 $450,009,536 $492,268,636 Source: Pennsylvania State Tax Equalization Board G-6

123 TABLE G-9 NORTHGATE SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA Current Year Total Current Collections Total Collections Assessed Gross Adjusted Collections as a Collections as Year Valuation Mills Levy Amount Percent Amount (1) Percent $399,686, $10,333,753 $9,482, % $10,257, % ,686, ,733,477 9,716, % 10,651, % ,653, ,789,777 9,724, % 10,541, % ,070, ,825,680 10,135, % 10,991, % ,244, ,602,633 10,475, % 11,543, % (1) Includes delinquent realty taxes collected. Source: School District officials. The ten largest real property taxpayers, together with assessed values, are shown in Table G-10. The aggregate assessed value of these ten highest assessed properties totals approximately 5.3 percent of total assessed value. The property owners listed below may own additional parcels which are not set forth in the table. TABLE G-10 NORTHGATE SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS Assessed Owner Value MORGAN AVALON LLC $5,300,000 KINGSTON CORP 3,300,000 FARABAUGH SCOTT A 3,283,000 TIFFANY ASSOCIATES 2,284,400 DELTA INVESTMENTS 2,161,600 METOWERS ASSOCIATES 2,060,000 BALKEY MARTHA H 1,985,000 QUEENAV INC 1,935,000 SUBURBAN GENERAL SERVICE CORP 1,934,400 D & D COMPANY PROPERTIES 1,900,800 Source: School District Officials. $26,144,200 G-7

124 DEBT AND DEBT LIMITS Debt Statement Table G-11 shows the debt of the School District as of June 23, 2016, including the issuance of the Bonds. TABLE G-11 NORTHGATE SCHOOL DISTRICT DEBT STATEMENT * (As of June 23, 2016) NONELECTORAL DEBT Gross Outstanding General Obligation Bonds, Series of $754,250 TOTAL NONELECTORAL DEBT... $754,250 LEASE RENTAL DEBT Washington County Industrial Development Authority (A. W. Beattie Career Center Project) School Revenue Bonds, Series of 2016 (1)... $472,480 TOTAL LEASE RENTAL DEBT... $472,480 TOTAL PRINCIPAL OF DIRECT DEBT... $1,226,730 *Includes the Bonds offered through this Official Statement. (1) 3.20 % pro rata share of $14,765,000 principal amount outstanding. G-8

125 Debt Limit and Remaining Borrowing Capacity The statutory borrowing limit of the School District under the Act is computed as a percentage of the School District s Borrowing Base. The Borrowing Base is defined as the annual arithmetic average of total Revenues (as defined by the Act) for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing base and borrowing capacity as follows: Total Revenues for $20,239,698 Total Revenues for ,862,055 Total Revenues for ,829,902 Total... $62,931,655 Annual Arithmetic Average (Borrowing Base)... $20,977,218 Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District's Borrowing Base produces the following products: Remaining Legal Net Debt Borrowing Limit Outstanding* Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $47,198,741 $1,226,730 $45,972,011 *Includes the Bonds offered through this Official Statement, does not reflect credits against gross indebtedness that may be claimed for a portion of principal of debt estimated to be reimbursed by Commonwealth Aid. Future Financing The School District does not anticipate issuing additional long-term debt in the immediate future. School District Employees LABOR RELATIONS There are 163 employees of the School District, including 103 teachers, librarians and administrators, and 60 support personnel. The support personnel includes secretaries, custodial staff, cafeteria staff, maintenance staff, teachers aides, and business supervision. The School District s teachers are represented by the Northgate Education Association (the Association ), an affiliate of the Pennsylvania State Education Association ( PSEA ), under a contract with the School District which expires June 30, Support personnel are represented by Northgate Education Support Professional Association, an affiliate of PSEA, under a contract which expires June 30, Pension Program School Districts in Pennsylvania are required to participate in a statewide pension program administered by the Public School Employees Retirement System (PSERS). All of the School District's full-time employees, part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. However, a Pennsylvania Supreme Court decision has removed the hourly de minimis requirement for current members of PSERS regarding the purchase of credit for their part-time school service rendered prior to their being members of PSERS, for purposes of increasing their pension benefits. G-9

126 Beginning July 1, 1976, certain revisions were made in the pension program. The Retirement Board, previously under the Department of Education of the Commonwealth, became an independent agency. However, the program is still guaranteed by the Commonwealth. Currently, each party to the program contributes a fixed percentage of the employee's salary. Employees belonging to the Public School Employees Retirement System ( PSERS ) prior to July 22, 1983 contribute 5.25% of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February 17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at 7.50% of the employee s salary for those employees hired on or after July 1, Act 9 also provides an option for those employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50% if they were hired on or after July 22, Act 120 of 2010 ( Act 120 ) was passed by the General Assembly on September 1 and signed by former Governor Rendell on November 23, The benefit reductions contained in this legislation only impact individuals who become new members of PSERS on or after July 1, New members will have the option of selecting one of 2 new classes. The members selecting class T-E will contribute a base rate of 7.5% with shared risk contribution levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F will contribute a base rate of 10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier of 2.5%. In accordance with Senate Bill 1042 enacted on July 6, 2010, the employer rate was recertified at 5.64% for fiscal year , 8.65% for fiscal year and 12.36% for fiscal year The rate for fiscal year was 16.93% of payroll and the rate for fiscal year was 21.40%. The employer contribution rate for fiscal year is 25.84%. The rate applies to salary and wages earned from July 1, 2015, through June 30, This rate was determined by PSERS actuary and reflects the rate caps established by Act 120 of The rate was certified by the PSERS Board of Trustees at its meeting on December 9, In addition, the employer contribution rate may change if pension legislation is enacted prior to June 30, The employer contribution rate for fiscal year consists of 25% for pension costs and 0.84% for premium assistance payments. Please see the Public School Employee s Retirement System website indicated below for the most recent projection of employer contribution rates. The School District and the Commonwealth are responsible for paying a portion of the employer s share. School entities are initially responsible for paying 100% of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. The School District contributions are made on a quarterly basis and employee contributions are deducted monthly for each paycheck and remitted quarterly. Recent School District payments have been as follows: $600, $821, $1,200, $1,467, $1,914, (budgeted) $2,417,303 The School District is current in all payments. The PSERS complete report is available on the PSERS website on the Internet: Source: PSERS Financial Highlights. Other Post-Employment Benefits The School District is obligated under collective bargaining agreements to provide future health insurance coverage for current and future retired employees, and to provide retirement severance pay for existing employees. The School District became subject to the requirements of GASB Statements No. 43 and 45 commencing with the School District s annual financial statements for the fiscal year ending June 30, G-10

127 Existing Continuing Disclosure Filing History The School District has previously entered into Continuing Disclosure Agreements with respect to each one of its previously issued bond issues that are currently outstanding. The School District s filing history of its annual financial and operating information during the past five (5) years is outlined in the table below. Fiscal Year Filing Financial Statements Budget Operating Data Ending Deadline [1] Filing Date EMMA ID [2] Filing Date EMMA ID [2] Filing Date EMMA ID [2] 6/30/ /27/2011 5/25/2016 EP /25/2016 EP /25/2016 EP /30/ /27/2012 5/25/2016 EP /25/2016 EP /25/2016 EP /30/ /27/2013 5/25/2016 EP /25/2016 EP /25/2016 EP /30/ /27/2014 5/25/2016 EP /25/2016 EP /25/2016 EP /30/ /27/2015 5/25/2016 EP /25/2016 EP /25/2016 EP Notes [1] For these purposes, assumes the shortest filing deadline of the School District s previous Continuing Disclosure Agreements [2] Submission ID is the EMMA Submission ID for each filing. To access a filing, insert the Submission ID to the end of the web address below: Based on the information above, the School District s annual financial and operating filing history over the past five (5) years can be summarized as follows: For fiscal year ending June 30, 2011 through June 30, 2015, the School District on May 25, Failure to Provide Annual Financial Information As outlined in the table above, the School District failed to provide certain annual financial information in a timely manner during the past (5) five years. The School District filed a Failure to Provide Annual Financial Information notice to EMMA on May 24, Bond Insurance Rating Downgrades and Upgrades by S&P and/or Moody s Some of the School District s bond issues that have been outstanding during the past five (5) years have been insured by various bond insurance companies that have received rating downgrades and upgrades by both S&P and Moody s. This information was publicly available from widely accepted information sources at the time of their respective downgrades or upgrades. G-11

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129 APPENDIX H PINE-RICHLAND SCHOOL DISTRICT Allegheny County, Pennsylvania Descriptive, Financial and Economic Information

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131 PINE-RICHLAND SCHOOL DISTRICT Allegheny County, Pennsylvania THE SCHOOL DISTRICT INTRODUCTION The Pine-Richland School District is located in the extreme north-central part of Allegheny County in the southwestern part of Pennsylvania, bordering on the Butler County line approximately twenty miles north of Pittsburgh. The School District covers an area of approximately 31 square miles and is coterminous with the political boundaries of the Townships of Pine and Richland. The community originated as an agricultural society and remained primarily as such until the close of World War II, when it started to develop as an agricultural community. Because of its advantageous location with respect to the City of Pittsburgh and having a very adequate highway system, the community has developed gradually since the middle of the twentieth century and is presently one of the leading suburban communities in the North Hills region. The community has enjoyed a good level of economy throughout most of its existence and has experienced a varying population growth. The economy of the School District is greatly dependent upon the level of business and industrial activity in the Pittsburgh region and one might describe Pine and Richland Townships as Bedroom Communities serving commuters who are gainfully employed in Pittsburgh and Allegheny County. Administration The present School District is governed by a nine-member Board of School Directors (the School Board ), elected to four year terms. The Superintendent is the chief administrative officer of the School District, with overall responsibility for all aspects of operations, including education and finance. The Director of Financial & Operational Services is responsible for budget and financial operations. Both officials are appointed by the School Board. School Facilities The School District presently operates three elementary schools, one upper elementary school, one middle school and one high school, all as described on the following table. Students in grades may also attend the A. W. Beattie Career Center. TABLE H-1 PINE-RICHLAND SCHOOL DISTRICT SCHOOL FACILITIES Original Most RecentAddition/ Rated Construction Renovation Pupil Building Date Date(s) Grades Capacity Enrollment Elementary: Hance K Wexford K Richland K Eden Hall Upper Secondary: Pine-Richland Middle Pine-Richland High , Source: School District Officials. H-1

132 Student enrollment trends for the School District are illustrated by the following five-year record of actual enrollments, as reported by School District officials. Actual Enrollments TABLE H-2 PINE-RICHLAND SCHOOL DISTRICT ENROLLMENT TRENDS Projected Enrollments School School Year Elementary Secondary Total Year Elementary Secondary Total ,350 2,284 4, ,321 2,298 4, ,345 2,292 4, ,335 2,316 4, ,320 2,299 4, ,401 2,291 4, ,307 2,289 4, ,436 2,250 4, (1) 2,288 2,277 4, ,482 2,249 4,731 (1) As of October 1, Source: School District officials. Introduction SCHOOL DISTRICT FINANCES The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and Director of Financial & Operational Services and submitted to the School Board for approval prior to the beginning of the fiscal year on July 1. Financial Reporting The School District keeps its books and prepares its financial reports according to a modified accrual basis. Major accrual items are payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues receivable from other governmental units.. The School District s financial statements are audited annually by a firm of independent certified public accountants, as required by State law. The firm of Maher Duessel, CPA Pittsburgh, Pennsylvania serves as School District auditor. H-2

133 Budgeting Process in School Districts under the Taxpayer Relief Act In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1. Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days public notice of its intent to adopt the final budget. If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district s Index (see The Taxpayer Relief Act or Act 1 herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The Taxpayer Relief Act. With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see The Taxpayer Relief Act or Act 1 herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses. If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index. Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days public notice be given of the board s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution. Summary and Discussion of Financial Results Table H-3 shows revenues and expenditures for the past 5 years, and the budget. The budget for the school year, as adopted June 8, 2015, projected total revenues of $75,323,687 and expenditures of $76,745,362, which included a budgetary reserve of $550,000. H-3

134 Revenue The School District received $75,616,337 in revenue in and has budgeted revenue of $75,323,687 in Local sources contributed an increasing share of total revenue in the past five years, from 79.1 percent in to 79.4 percent in Revenue from Commonwealth sources contributed an increasing share of total revenue from 18.3 percent to 20.1 percent over this period. Federal sources contributed a decreasing share of total revenue from 2.6 percent to 0.5 percent over this period. TABLE H-3 PINE-RICHLAND SCHOOL DISTRICT COMPARATIVE STATEMENT OF GOVERNMENTAL FUND REVENUES AND EXPENDITURES (For years ending June 30) REVENUE: (1) Total Local Sources $50,449,487 $50,217,074 $54,144,004 $55,933,556 $60,065,941 $59,337,187 Total State Sources 11,651,979 12,245,310 12,668,561 13,820,829 15,189,652 15,671,763 Total Federal Sources 1,651, , , , , ,737 Total Other Sources TOTAL REVENUE $63,752,916 $63,049,326 $67,448,839 $70,150,587 $75,616,337 $75,323,687 Actual Budget EXPENDITURES: Instruction $33,880,551 $34,317,354 $36,463,048 $36,727,916 $43,223,246 43,505,045 Support Services 17,043,617 16,636,337 17,114,926 17,962,466 19,539,767 21,467,588 Operation of Noninstructional Services 1,758,233 1,433,734 1,434,034 1,497,567 1,681,081 1,772,820 Facilities Acquisition, Construction and Improvement ,575 Capital Outlay 211, , , , ,762 0 Debt Service Principal and Interest 8,515,449 8,468,163 8,581,506 9,475,187 9,317,544 9,239,334 Debt Service Bond Issue Cost 198, , Budgetary Reserve ,000 TOTAL EXPENDITURES $61,608,172 $61,147,344 $63,788,325 $65,803,927 $74,630,400 $76,745,362 SURPLUS (DEFICIT) OF REVENUES OVER EXPENDITURES 2,144,744 1,901,982 3,660,514 4,346, ,937 (1,421,675) OTHER FINANCING SOURCES (USES) Proceeds from Issuance of Debt 11,655,000 17,275, ,475,000 Bond Premium (Discount) 324,928 (166,760) ,430 Payments to Refunding Bond Escrow (11,771,848) (16,675,000) 0 0 (54,318,676) Refund of Prior Year Receipts (644,261) (55,483) (159,639) (204,560) 0 Transfers In 7, Transfers Out 0 (442,970) (260,109) (565,284) (2,760) TOTAL OTHER FINANCING SOURCES (USES) (429,181) (65,213) (419,748) (769,844) 427,994 Net Change in Fund Balance 1,715,563 1,836,769 3,240,766 3,576,816 1,413,931 Beginning Fund Balance $5,730,007 $7,445,570 $9,282,339 $12,523,105 $16,099,921 Prior Period Adjustment Ending Fund Balance $7,445,570 $9,282,339 $12,523,105 $16,099,921 $17,513,852 (1) Budget, as adopted June 8, Source: School District Annual Financial Reports and Budget. H-4

135 Tax Levy Trends Table H-4 shows the recent trend of tax rates levied by the School District. Table H-5 shows the comparative trend of real property tax rates for the School District, Allegheny County and the municipalities within the School District. TABLE H-4 PINE-RICHLAND SCHOOL DISTRICT TAX RATES Real Estate Earned Real Estate Transfer Income Per Capita(1) (mills) (%) (%) ($) Source: School District officials. (1) $5.00 under the Act 511 and $5.00 under 679 of the School Code. TABLE H-5 PINE-RICHLAND SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES (Mills on Assessed Value) School District Pine Township Richland Township Allegheny County Source: Local Government Officials. Real Property Tax The real property tax (excluding delinquent collections) produced $49,219,441 in , approximately 65.1 percent of revenues. The School District fiscal year is from July 1 through June 30 and tax bills are issued on July 1 of each year. Taxpayers who remit within two months of July 1 receive a 2 percent discount, and those who remit subsequent to October 1 are assessed a 10 percent penalty. For the fiscal year, eligible taxpayers could opt into the installment method of payment for their school taxes. Installment payments are based upon three (3) one-third payments of the base tax amount. The due dates for installment payments are September 30, October 31 and November 30. The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. The last countywide assessment became effective January 1, H-5

136 TABLE H-6 PINE-RICHLAND SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA Market Assessed Year Value Value Ratio $1,792,426,912 $1,797,442, % ,857,389,628 1,857,272, % ,925,623,850 1,865,654, % ,925,623,850 2,393,345, % ,316,916,116 2,648,440, % Compound Average Annual Percentage Change % 8.06% Source: Pennsylvania State Tax Equalization Board TABLE H-7 PINE-RICHLAND SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY Market Assessed Market Assessed Value Value Value Value School District $1,925,623,850 $2,393,345,067 $2,316,916,116 $2,648,440,864 Pine Township 1,182,391,642 1,476,270,677 1,445,138,951 1,645,177,464 Richland Township 743,232, ,074, ,777,165 1,003,263,400 Allegheny County 62,481,101,686 73,859,149,175 71,425,187,108 80,525,498,273 Source: Pennsylvania State Tax Equalization Board. TABLE H-8 PINE-RICHLAND SCHOOL DISTRICT ASSESSMENT BY LAND USE Residential $1,437,220,450 $1,490,295,739 $1,495,457,889 1,878,026,472 $2,149,149,035 Lots 35,105,815 35,620,490 34,563,940 28,559,244 27,013,044 Industrial 2,473,300 1,383,300 1,383,300 7,690,800 7,690,800 Commercial 296,000, ,673, ,075, ,267, ,974,485 Agriculture 21,892,860 21,296,360 21,887,027 19,035,400 17,810,100 Land 4,749,300 5,003,050 3,947,800 5,426,846 4,464,200 Mineral 339, , ,200 Total $1,797,442,575 $1,857,272,389 $1,865,654,456 $2,393,345,067 $2,648,440,864 Source: Pennsylvania State Tax Equalization Board H-6

137 TABLE H-9 PINE-RICHLAND SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA Current Total Current Year Total Total Flat Collections Collections Collections Collections Year Billing Amount as Percent Amount (1) as Percent $41,332,436 $39,632, % $41,683, % ,480,515 40,741, % 42,001, % ,110,483 43,333, % 44,396, % ,689,704 45,355, % 46,557, % ,375,162 47,693, % 49,219, % (1) Includes delinquent realty taxes collected. Source: School District officials. The ten largest real property taxpayers, together with assessed values, are shown in Table H-10. The aggregate assessed value of these ten highest assessed properties totals approximately 5.3 percent of total assessed value. The property owners listed below may own additional parcels which are not set forth in the table. TABLE H-10 PINE-RICHLAND SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS Assessed Owner Property Type Value Wexford Medical Mall* Medical Clinics/Offices $41,686,500 Richland Zamagias Limited Partnership* Shopping Mall 20,900,000 Northtowne Station LLC Shopping Center 10,575,000 North Hills Raquet Club Recreation 10,500,000 Blackhawk Pine Retail LLC Shopping Mall 9,976,000 Pine Communities Inc. Apartment Complex 9,896, Ovington Inc. Retail 9,670,000 Village of Pine LP* Shopping Center 9,000,000 BS&LR Acquisitions LP - ConnectedHealth* Medical Clinics/Offices 8,918,300 Gigliotti, Dominic & Maria* Office Buildings 8,749,800 $139,871,900 *Taxpayer appealing assessed value. Source: School District Officials. H-7

138 DEBT AND DEBT LIMITS Debt Statement Table H-11 shows the debt of the School District as of June 23, 2016, including the issuance of the Bonds. TABLE H-11 PINE-RICHLAND SCHOOL DISTRICT DEBT STATEMENT * (As of June 23, 2016) Gross Outstanding NONELECTORAL DEBT General Obligation Bonds, Refunding Series of $6,590,000 General Obligation Bonds, Refunding Series B of ,080,000 General Obligation Bonds, Refunding Series A of ,675,000 General Obligation Note, Series 2015A... 5,965,000 General Obligation Note, Series ,300,000 General Obligation Bonds, Refunding Series B of ,470,000 General Obligation Bonds, Refunding Series A of ,775,000 General Obligation Bonds, Series of ,305,000 General Obligation Refunding Bonds, Series B of ,120,000 General Obligation Bonds, Refunding Series A of ,710,000 General Obligation Bonds, Series of ,680,000 General Obligation Note, Refunding Series of ,930,000 General Obligation Bonds, Series A of ,961,000 General Obligation Bonds, Series B of ,037,639 Subtotal ,598,639 Less Debt Deemed Self-Liquidating... TOTAL NONELECTORAL DEBT... $118,598,639 LEASE RENTAL DEBT Washington County Industrial Development Authority (A. W. Beattie Career Center Project) School Revenue Bonds, Series of 2016 (1)... $1,662,539 TOTAL LEASE RENTAL DEBT... $1,662,539 TOTAL PRINCIPAL OF DIRECT DEBT... $120,261,178 *Includes the Bonds offered through this Official Statement. (1) % pro rata share of $14,765,000 principal amount outstanding. H-8

139 Debt Limit and Remaining Borrowing Capacity The statutory borrowing limit of the School District under the Act is computed as a percentage of the School District s Borrowing Base. The Borrowing Base is defined as the annual arithmetic average of total Revenues (as defined by the Act) for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing base and borrowing capacity as follows: Total Revenues for $66,348,716 Total Revenues for ,945,349 Total Revenues for ,314,497 Total... $209,608,562 Annual Arithmetic Average (Borrowing Base)... $69,869,520 Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District's Borrowing Base produces the following products: Remaining Legal Net Debt Borrowing Limit Outstanding* Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $157,206,421 $120,261,178 $36,945,243 *Includes the Bonds offered through this Official Statement, does not reflect credits against gross indebtedness that may be claimed for a portion of principal of debt estimated to be reimbursed by Commonwealth Aid. Future Financing The School District does not anticipate issuing additional long-term (non-refunding) debt in the immediate future. School District Employees LABOR RELATIONS There are presently 512 employees of the School District, including 335 teachers, counselors, nurses and librarians, 25 administrators and 129 classified support personnel including secretaries, clerks, custodians and teacher aides, 8 playground aides, 3 kindergarten dismissal aides and 12 administrative support personnel. The School District's teachers are represented by the Pine-Richland Area Education Association ("PREA"), an affiliate of the Pennsylvania State Education Association ("PSEA") under a contract which expires June 30, Support personnel are represented by Pennsylvania State Education Association, an affiliate of PSEA. The current contract expires June 30, Twenty-one administrators of the School District are covered under an Act 93 Agreement provided under the PA School Code of 1949 with the School District which expires on June 30, The other four administrators have negotiated individual contracts. The 12 administrative support personnel of the School District, while not unionized, have negotiated a compensation plan with the School District that expires on June 30, H-9

140 Pension Program School Districts in Pennsylvania are required to participate in a statewide pension program administered by the Public School Employees Retirement System (PSERS). All of the School District's full-time employees, part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. However, a Pennsylvania Supreme Court decision has removed the hourly de minimis requirement for current members of PSERS regarding the purchase of credit for their part-time school service rendered prior to their being members of PSERS, for purposes of increasing their pension benefits. Beginning July 1, 1976, certain revisions were made in the pension program. The Retirement Board, previously under the Department of Education of the Commonwealth, became an independent agency. However, the program is still guaranteed by the Commonwealth. Currently, each party to the program contributes a fixed percentage of the employee's salary. Employees belonging to the Public School Employees Retirement System ( PSERS ) prior to July 22, 1983 contribute 5.25% of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February 17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at 7.50% of the employee s salary for those employees hired on or after July 1, Act 9 also provides an option for those employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50% if they were hired on or after July 22, Act 120 of 2010 ( Act 120 ) was passed by the General Assembly on September 1 and signed by former Governor Rendell on November 23, The benefit reductions contained in this legislation only impact individuals who become new members of PSERS on or after July 1, New members will have the option of selecting one of 2 new classes. The members selecting class T-E will contribute a base rate of 7.5% with shared risk contribution levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F will contribute a base rate of 10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier of 2.5%. In accordance with Senate Bill 1042 enacted on July 6, 2010, the employer rate was recertified at 5.64% for fiscal year , 8.65% for fiscal year and 12.36% for fiscal year The rate for fiscal year was 16.93% of payroll and the rate for fiscal year was 21.40%. The employer contribution rate for fiscal year is 25.84%. The rate applies to salary and wages earned from July 1, 2015, through June 30, This rate was determined by PSERS actuary and reflects the rate caps established by Act 120 of The rate was certified by the PSERS Board of Trustees at its meeting on December 9, In addition, the employer contribution rate may change if pension legislation is enacted prior to June 30, The employer contribution rate for fiscal year consists of 25% for pension costs and 0.84% for premium assistance payments. Please see the Public School Employee s Retirement System website indicated below for the most recent projection of employer contribution rates. The School District and the Commonwealth are responsible for paying a portion of the employer s share. School entities are initially responsible for paying 100% of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. The School District contributions are made on a quarterly basis and employee contributions are deducted monthly for each paycheck and remitted quarterly. Recent School District payments, net of reimbursement, have been as follows: $700, $800, $1,600, $1,800, $3,500, (budgeted) $4,049,000 The School District is current in all payments. The PSERS complete report is available on the PSERS website on the Internet: Source: PSERS Financial Highlights. Other Post-Employment Benefits The School District provides post-retirement benefits for certain retirees for current and future health, pharmacy, dental, vision, and life insurance benefit expenses through a single-employer defined benefit plan. As of June 30, 2012, no future retirees from any employee class are eligible for post-employment healthcare. The School District is obligated to provide severance pay for existing employees as dictated by collective bargaining agreements and compensation plans. The School District became subject to the requirements of GASB Statements No. 43 and 45 commencing with the School District s annual financial statements for the fiscal year ending June 30, H-10

141 Existing Continuing Disclosure Filing History The School District has previously entered into Continuing Disclosure Agreements with respect to each one of its previously issued bond issues that are currently outstanding. The School District s filing history of its annual financial and operating information during the past five (5) years is outlined in the table below. Fiscal Year Filing Financial Statements Budget Operating Data Ending Deadline [1] Filing Date EMMA ID [2] Filing Date EMMA ID [2] Filing Date EMMA ID [2] 6/30/ /27/2011 1/9/2012 ER /10/2014 EP /10/2014 EP /30/ /27/ /21/2012 EA /10/2014 EP /10/2014 EP /30/ /27/ /16/2013 ER /10/2014 EP /10/2014 EP /30/ /27/ /16/2014 EP /10/2014 EP /18/2014 [3] EA /30/ /27/ /18/2015 EP /17/2015 ER Various [4] Various [4] Notes [1] For these purposes, assumes the shortest filing deadline of the School District s previous Continuing Disclosure Agreements [2] Submission ID is the EMMA Submission ID for each filing. To access a filing, insert the Submission ID to the end of the web address below: [3] Largest taxpayer data was filed on June 10, 2014 (EMMA ID EP657066). [4] Included in various filings on 7/28/2015 (EMMA ID EA598813), 11/5/2015 (EMMA ID EP702144), 12/21/2015 (EMMA ID EP714574) and (EMMA ID EP714728). Based on the information above, the School District s annual financial and operating filing history over the past five (5) years can be summarized as follows: For fiscal year ending June 30, 2011, the School District filed the audit on January 9, 2012 and the budget and operating data on April 10, For fiscal year ending June 30, 2012, the School District filed the audit on November 21, 2012 and the budget and operating data on April 10, For fiscal year ending June 30, 2013, the School District filed the audit on December 16, 2013 and the budget and operating data on April 10, For fiscal year ending June 30, 2014, the School District filed the audit report on December 16, 2014, the budget report on June 10, 2014, a portion of the operating data on June 10, 2014 and the remainder on November 18, For fiscal year ending June 30, 2014, the School District filed the audit report on December 18, 2015, the budget report on June 17, 2015 and various filings of the operating data on July 28, 2015, November 5, 2015 and December 21, The School District failed to file notices of certain insured, enhanced and underlying rating changes within the past five fiscal years. On June 5, 2014, a notice of failure to filed rating changes was filed to EMMA. On March 30, 2015, a notice of failure to file enhanced rating changes was filed to EMMA. H-11

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143 APPENDIX I SHALER AREA SCHOOL DISTRICT Allegheny County, Pennsylvania Descriptive, Financial and Economic Information

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145 SHALER AREA SCHOOL DISTRICT Allegheny County, Pennsylvania THE SCHOOL DISTRICT Administration The present School District is governed by a nine-member Board of School Directors (the School Board ), elected to four year terms. The Superintendent is the chief administrative officer of the School District, with overall responsibility for all aspects of operations, including education and finance. The Business Manager is responsible for budget and financial operations. Both officials are appointed by the School Board. School Facilities The School District presently operates six elementary schools, one middle school and one high school, all as described on the following table. Students in grades may also attend the A. W. Beattie Career Center. TABLE I-1 SHALER AREA SCHOOL DISTRICT SCHOOL FACILITIES Original Addition/ Rated Construction Renovation Pupil Building Date Date(s) Grades Capacity Enrollment Elementary: Burchfield Elementary /69/71/89/97 K Jeffery Elementary /79/86/89/97 K Marzolf Elementary /71/86/89/97 K Reserve Elementary /86/89/97 K Rogers Elementary /86/89/97 K Shaler Area Elementary /69/86/90/ ,147 1, Secondary: Shaler Area High School /96/ ,895 1,548 Shaler Area Middle School 1998 n/a 7-8 1, Source: School District Officials. I-1

146 Student enrollment trends for the School District are illustrated by the following five-year record of actual enrollments, as reported by School District officials. TABLE I-2 SHALER AREA SCHOOL DISTRICT ENROLLMENT TRENDS Actual Enrollments Projected Enrollments School Year Elementary Secondary Total School Year Elementary Secondary Total ,338 3,430 4, ,341 3,149 4, ,413 3,245 4, ,346 3,144 4, ,357 3,273 4, ,646 2,758 4, ,344 3,218 4, ,339 3,166 4,505 Source: School District officials. Introduction SCHOOL DISTRICT FINANCES The School District budgets and expends funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by the Superintendent and Business Manager and submitted to the School Board for approval prior to the beginning of the fiscal year on July 1. Financial Reporting The School District keeps its books and prepares its financial reports according to a modified accrual basis. Major accrual items are payroll taxes and pension fund contributions payable, loans receivable from other funds, and revenues receivable from other governmental units.. The School District s financial statements are audited annually by a firm of independent certified public accountants, as required by State law. The firm of Hosack, Specht, Muetzel & Wood LLP, Pittsburgh, Pennsylvania serves as School District auditor. Budgeting Process in School Districts under the Taxpayer Relief Act In General. School districts budget and expend funds according to procedures mandated by the Pennsylvania Department of Education. An annual operating budget is prepared by school district administrative officials on a uniform form furnished by such Department and submitted to the board of school directors for approval prior to the beginning of the fiscal year on July 1. Procedures for Adoption of the Annual Budget. Under the Taxpayer Relief Act, all school districts of the first class, second class, third class and fourth class (except as described below) must adopt a preliminary budget proposal (which must include estimated revenues and expenditures and proposed tax rates) no later than 90 days prior to the date of the election immediately preceding the fiscal year. The preliminary budget proposal must be printed and made available for public inspection at least 20 days prior to its adoption; the board of school directors may hold a public hearing on the budget; and the board must give at least 10 days public notice of its intent to adopt the final budget. If the adopted preliminary budget includes an increase in the rate of any tax levy, the preliminary budget must be submitted to the Pennsylvania Department of Education (PDE) no later than 85 days prior to the date of the election immediately preceding the fiscal year. PDE is to compare the proposed percentage increase in the rate of any tax with the school district s Index (see The Taxpayer Relief Act or Act 1 herein) and within 10 days, but not later than 75 days prior to the upcoming election, inform the school district whether the proposed percentage increase is less than or equal to the Index. If PDE determines that a proposed tax increase will exceed the Index, the school district must reduce the proposed tax increase, seek voter approval for the tax increase at the upcoming election, or seek approval to utilize one of the referendum exceptions authorized under The Taxpayer Relief Act. With respect to the utilization of any of the Taxpayer Relief Act referendum exceptions for which PDE approval is required (see The Taxpayer Relief Act or Act 1 herein), the school district must publish notice of its intent to seek PDE approval not less than one week before submitting its request for approval to PDE and, if PDE determines to schedule a public hearing on the request, a notice of the date, time and place of such hearing. PDE is required by the Taxpayer Relief Act to rule on the school district s request and inform the school district of its decision no later than 55 days prior to the upcoming election so that, if PDE denies the school district s request, the school district may submit a referendum question to the local election officials at least 50 days before the upcoming election, if it so chooses. I-2

147 If a school district seeks voter approval to increase taxes at a rate higher than the applicable Index, whether or not it first seeks approval to utilize one of the referendum exceptions available under the Taxpayer Relief Act, and the referendum question is not approved by a majority of the voters voting on the question, the board of school directors may not approve an increase in the tax rate greater than the applicable Index. Simplified Procedures in Certain Cases. The above budgetary procedures will not apply to a school district if the board of school directors adopts a resolution no later than 110 days prior to the election immediately preceding the upcoming fiscal year declaring that it will not increase any tax at a rate that exceeds the Index and that a tax increase at or below the rate of the Index will be sufficient to balance its budget. In that case, the Taxpayer Relief Act requires only that the proposed annual budget be prepared at least 30 days, and made available for public inspection at least 20 days, prior to its adoption, and that at least ten (10) days public notice be given of the board s intent to adopt the annual budget. No referendum exceptions are available to a school district adopting such a resolution. Summary and Discussion of Financial Results Table I-3 shows revenues and expenditures for the past 5 years, and the budget. The budget for the school year, as adopted June 24, 2015, projected total revenues and expenditures equaling of $79,611,042. I-3

148 Revenue The School District received $74,708,438 in revenue in and has budgeted revenue of $79,611,042 in Local sources contributed a decreasing share of total revenue in the past five years, from 65.4 percent in to 65.0 percent in Revenue from Commonwealth sources contributed an increasing share of total revenue from 29.3 percent to 33.7 percent over this period. Federal sources contributed a decreasing share of total revenue from 5.2 percent to 1.4 percent over this period. TABLE I-3 SHALER AREA SCHOOL DISTRICT COMPARATIVE STATEMENT OF GOVERNMENTAL FUND REVENUES AND EXPENDITURES (For years ending June 30) REVENUE: (1) Total Local Sources $46,853,961 $46,734,605 $46,835,957 $47,858,554 $48,525,158 $49,749,035 Total State Sources 20,986,921 22,144,086 23,072,025 24,287,122 25,170,053 26,687,945 Total Federal Sources 3,753,984 1,304,850 1,273, ,241 1,013,227 1,249,062 Total Estimated Beginning Fund - Balance Available ,925,000 TOTAL REVENUE $71,594,866 $70,183,541 $71,181,118 $73,102,917 $74,708,438 $79,611,042 Actual Budget EXPENDITURES: Instruction $40,982,487 $38,920,367 $40,177,108 $42,424,584 $45,222,766 47,729,626 Support Services 21,927,188 21,901,206 21,714,146 22,949,717 24,149,513 23,632,225 Operation of Noninstrucitonal Services 1,633,618 1,612,390 1,579,067 1,661,556 1,736,347 1,586,985 Capital Outlay 79, , Interfund ,400,000 Debt Service 298,380 53, , , , ,206 Refund of prior year revenues 64,606 9,570 26, ,079 0 TOTAL EXPENDITURES $64,985,279 $62,655,401 $63,736,108 $67,267,053 $71,692,537 $79,611,042 Other Financing Uses Interfund Operating Issuance of Refunding Notes $0 $0 $0 $0 $0 Proceeds from Capital Lease $0 $0 $0 $0 $0 Transfers In $0 $0 $0 $0 $0 Payment to Refunded Bond Escrow Agent $0 $0 $0 $0 $0 Transfers Out ($6,904,353) ($6,726,831) ($7,333,805) ($6,452,705) ($5,981,267) TOTAL Other Financing Sources (Uses) ($6,904,353) ($6,726,831) ($7,333,805) ($6,452,705) ($5,981,267) Total Expenditures and Other Financing Uses $58,080,926 $55,928,570 $56,402,303 $60,814,348 $65,711,270 $79,611,042 SURPLUS (DEFICIT) OF REVENUES OVER EXPENDITURES (294,766) 801, ,205 (616,841) (2,965,366) Beginning Fund Balance $7,254,203 $6,959,437 $7,760,746 $7,871,951 $7,255,110 Prior Period Adjustment Ending Fund Balance $6,959,437 $7,760,746 $7,871,951 $7,255,110 $4,289,744 (1) Budget, as adopted June 24, Source: School District Annual Financial Reports and Budget. I-4

149 Tax Levy Trends Table I-4 shows the recent trend of tax rates levied by the School District. Table I-5 shows the comparative trend of real property tax rates for the School District, Allegheny County and the municipalities within the School District. TABLE I-4 SHALER AREA SCHOOL DISTRICT TAX RATES Real Estate Wage and Occupational Real Estate Transfer Income Privilege Tax (mills) (%) (1) (%) (1) ($) (1) (1) School District Share of the Tax. Source: School District officials. TABLE I-5 SHALER AREA SCHOOL DISTRICT COMPARATIVE REAL PROPERTY TAX RATES (Mills on Assessed Value) School District Etna Borough Millvale Borough Reserve Township Shaler township Allegheny County Source: Local Government Officials. Real Property Tax The real property tax (excluding delinquent collections) produced $40,213,410 in , approximately 53.8 percent of revenues. The School District fiscal year is from July 1 through June 30 and tax bills are issued on July 1 of each year. Taxpayers who remit within two months of July 1 receive a 2 percent discount, and those who remit subsequent to October 1 are assessed a 10 percent penalty. For the fiscal year, eligible taxpayers could opt into the installment method of payment for their school taxes. Installment payments are based upon three (3) one-third payments of the base tax amount. The due dates for installment payments are September 30, October 31 and November 30. The following tables summarize recent trends of assessed and market valuations of real property and real property tax collection data. The last countywide assessment became effective January 1, I-5

150 TABLE I-6 SHALER AREA SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA Market Assessed Year Value Value Ratio $1,492,316,774 $1,673,023, % ,498,339,228 1,6,75,252, % ,112,027,349 2,112,027, % ,096,735,449 2,096,735, % ,140,842,149 2,140,842, % Source: School District Officials and Pennsylvania State Tax Equalization Board TABLE I-7 SHALER AREA SCHOOL DISTRICT REAL PROPERTY ASSESSMENT DATA BY MUNICIPALITY Market Assessed Market Assessed Value Value Value Value School District $2,096,735,449 $2,096,735,449 $2,140,842,149 $2,140,842,149 Etna Borough 115,884, ,884, ,884, ,884,120 Millvale Borough 93,518,729 93,518,729 93,518,729 93,518,729 Reserve Township 155,493, ,493, ,493, ,493,200 Shaler township 1,731,839,400 1,731,839,400 1,724,946,100 1,724,946,100 Source: School District Officials TABLE I-8 SHALER AREA SCHOOL DISTRICT REAL PROPERTY TAX COLLECTION DATA Current Year Total Current Collections Total Collections Assessed Gross Adjusted Collections as a Collections as Year Valuation Mills Levy Amount Percent Amount (1) Percent $1,667,736, $42,744,081 $40,580, % $42,832, % ,673,023, ,879,597 40,733, % 42,881, % ,675,252, ,936,712 40,755, % 42,673, % ,112,027, ,845,688 41,267, % 43,003, % ,096,735, ,744,334 42,252, % 43,942, % (1) Includes delinquent realty taxes collected. Source: School District officials. I-6

151 The ten largest real property taxpayers, together with assessed values, are shown in Table I-9. The aggregate assessed value of these ten highest assessed properties totals approximately 2.6 percent of total assessed value. The property owners listed below may own additional parcels which are not set forth in the table. TABLE I-9 SHALER AREA SCHOOL DISTRICT TEN LARGEST REAL PROPERTY TAXPAYERS Assessed Owner Property Type Value C&F Development Corp. Apartments Rental Properties $9,612,200 Shaler Associates Giant Eagle 8,969,900 Shaler Zamagias Limited Partnership K-Mart/Retail 8,625,000 Shalercrest Housing Assn. Housing 5,500,000 Dufftown Real Estate II Limited Partn. Industrial 5,050,400 Mount Royal Land Co. Shopping Center/Retail 4,362,000 DGZ Etna LP. Retail/Commercial 3,950,000 Walgreen Eastern Co. Pharmacy/Retail 3,045,100 Doppes August B & Linda Industrial 2,600,000 Executive Mart Partnership Retail/Commercial 2,369,000 $54,083,600 Source: School District Officials. I-7

152 DEBT AND DEBT LIMITS Debt Statement Table I-10 shows the debt of the School District as of June 23, 2016, including the issuance of the Bonds. TABLE I-10 SHALER AREA SCHOOL DISTRICT DEBT STATEMENT * (As of June 23, 2016) NONELECTORAL DEBT Gross Outstanding General Obligation Notes, Series A of $4,135,000 General Obligation Bonds, Series B of ,090,000 General Obligation Bonds, Series C of ,040,000 General Obligation Bonds, Series D of ,720,000 General Obligation Bonds, Series of ,000,000 General Obligation Notes, Series of ,135,000 General Obligation Bonds, Series A of ,000 General Obligation Bonds, Series of 2006 (CABS)... 11,213,324 General Obligation Bonds, Series A of 1997 (CABS)... 6,507,312 TOTAL NONELECTORAL DEBT... $78,960,636 LEASE RENTAL DEBT Washington County Industrial Development Authority (A. W. Beattie Career Center Project) School Revenue Bonds, Series of 2016 (1)... $2,023,543 TOTAL LEASE RENTAL DEBT... $2,023,543 TOTAL PRINCIPAL OF DIRECT DEBT... $80,984,179 *Includes the Bonds offered through this Official Statement. (1) % pro rata share of $14,765,000 principal amount outstanding. I-8

153 Swap Transactions On August 26, 2004, the School District issued $10,335,000 of variable rate demand bonds (the Series of 2004 Bonds ) to defease a portion of the Series of 2001 A bonds. In addition, the School District entered in to an interest rate swap. In the interest rate swap, the School District pays the swap counterparty a fixed interest rate of 4.01% semi-annually on the first of each March and September beginning March 1, In return, the swap counterparty pays the School District monthly commencing October 1, 2004 through and including the termination date of September 1, 2025, a floating rate. The floating rate paid by the swap counterparty will be set by application of the following formula: when the one-month London Interbank Offered Rate (LIBOR) is below 5.00%, the floating rate will be equal to the sum of 63% LIBOR plus.25% to be adjusted weekly to coincide with the weekly rate re-set on the Series of 2004 Bonds. For periods where one-month LIBOR is 5.00% or greater, this formula will be adjusted to equal 67% of one-month LIBOR. The beginning notional value of the swap is based on the principal amount of the Series of 2004 Bonds. The amortization of the notional amount will match the principal amortization of the Series of 2004 Bonds. On September 23, 2005, the School District entered into an additional interest rate swap under which the School District pays the swap counterparty a floating interest payment geared to the BMA Index and in return the swap counterparty pays a variable interest rate to the School District equal to 64% of the one month LIBOR rate. The 2005 swap relates to the School District s 1997 A Bonds and has a beginning notional value of $12,977,784. The amortization of the 2005 swap notional amount will match the principal amortization of these Series 1997 A Bonds. On October 10, 2006, the School District entered into an additional interest rate swap with respect to the 1997 A Bonds under which the School District pays the swap counterparty a floating interest rate payment geared to 60% of one month LIBOR plus.30% and in return the swap counterparty pays a variable interest rate to the School District equal to % of the 50 year LIBOR rate. The 2006 swap relates to the School District s 1997 A Bonds and has a beginning notional value of $13,713,138. The amortization of the 2006 swap notional amount will match the principal amortization of these Series 1997 A Bonds. On October 10, 2006, the School District entered into an additional interest rate swap under which the School District pays the swap counterparty a floating interest rate payment geared to the BMA Index and in return the swap counterparty pays a variable interest rate to the School District equal to % of the 5-year LIBOR rate. The 2006 swap relates to the School District s 2006 Bonds and has a beginning notional value of $36,595, The amortization of the 2006 swap notional amount will match the principal amortization of these Series 2006 Bonds. The second 2006 swap relating to the 2006 Bonds was amended in part by School District Resolution to substitute the 2006 Bonds being refunded with the Series A of 2006 Bonds at a beginning notional amount of $25,885,000, an amount equal to the aggregate principal amount of the Series A of 2006 Bonds. On March 14, 2008 the School District terminated the interest rate swap with respect to the 1997 A Bonds under which the School District paid the swap counterparty a floating interest rate payment geared to 64% of one month LIBOR plus.30% and in return the swap counterparty paid a variable interest rate to the School District equal to % of the 5-year LIBOR rate. On March 14, 2008 the School District amended the interest rate swaps relating to the School District s 2006 Bonds and Series A of 2006 Bonds under which the School District paid the swap counterparty floating interest rate payments based on the BMA Index and in return the swap counterparty paid a variable interest rate to the School District equal to % of the 5-year LIBOR rate. In its amended form, the School District will pay the swap counterparty floating interest rate payments based on the BMA Index and in return the swap counterparty will pay variable interest rate payments to the School District equal to 64% of one month LIBOR plus.30%. On June 26, 2009, the School District reinstated the swaps relating to the 1997A Bonds, the 2006 Bonds and the Series A of 2006 Bonds which swaps had been temporarily suspended on November 7, 2008 due to uncertain market conditions. On August 27, 2013 the School District issued its $9,700,000 General Obligation Note, Series of 2013 (the Series 2013 Note ) at a variable rate of 68% of one-month LIBOR to refund the Series of 2004 Bonds. The interest rate swap which previously related to the Series of 2004 Bonds was transferred and now relates to the Series 2013 Note. Concurrently with the issuance of the 2016 Bonds/Notes, the School District will enter into modifications of the swaps that currently relate to the 1997A Bonds, the 2006 Bonds and the 2006A Bonds to the extent necessary to reflect the refunding of certain bonds and relate them to the new issues. No changes in the economic or financial impact of the swaps on the School District is anticipated by the entry into these swap modifications. I-9

154 Debt Limit and Remaining Borrowing Capacity The statutory borrowing limit of the School District under the Act is computed as a percentage of the School District s Borrowing Base. The Borrowing Base is defined as the annual arithmetic average of total Revenues (as defined by the Act) for the three full fiscal years ended next preceding the date of incurring debt. The School District calculates its present borrowing base and borrowing capacity as follows: Total Revenues for $69,820,914 Total Revenues for ,757,952 Total Revenues for ,840,730 Total... $215,419,596 Annual Arithmetic Average (Borrowing Base)... $71,806,532 Under the Act as presently in effect, no school district shall incur any nonelectoral debt or lease rental debt, if the aggregate net principal amount of such new debt together with any other net nonelectoral debt and lease rental debt then outstanding, would cause the net nonelectoral debt plus net lease rental debt to exceed 225% of the Borrowing Base. The application of the aforesaid percentage to the School District's Borrowing Base produces the following products: Remaining Legal Net Debt Borrowing Limit Outstanding* Capacity Net Nonelectoral Debt and Lease Rental Debt Limit: 225% of Borrowing Base $161,564,697 $80,984,179 $80,580,518 *Includes the Bonds offered through this Official Statement, does not reflect credits against gross indebtedness that may be claimed for a portion of principal of debt estimated to be reimbursed by Commonwealth Aid. Future Financing The School District does not anticipate issuing additional long-term debt in the immediate future. School District Employees LABOR RELATIONS There are presently 558 regular employees of the School District, including 406 teachers and administrators, and 152 support personnel, including secretaries, maintenance staff and teacher aides. The Shaler Area Education Association, a Pennsylvania State Education Association affiliate, represents the teachers with a contract which will expire on August The custodial personnel and secretarial personnel are represented by Teamsters Local 205 under contracts which expire for custodial personnel, July 2021 and for clerical personnel, July Pension Program School Districts in Pennsylvania are required to participate in a statewide pension program administered by the Public School Employees Retirement System (PSERS). All of the School District's full-time employees, part-time employees who work more than 80 days in a school year, and hourly employees who work over 500 hours a year participate in the program. However, a Pennsylvania Supreme Court decision has removed the hourly de minimis requirement for current members of PSERS regarding the purchase of credit for their part-time school service rendered prior to their being members of PSERS, for purposes of increasing their pension benefits. Beginning July 1, 1976, certain revisions were made in the pension program. The Retirement Board, previously under the Department of Education of the Commonwealth, became an independent agency. However, the program is still guaranteed by the Commonwealth. Currently, each party to the program contributes a fixed percentage of the employee's salary. Employees belonging to the Public School Employees Retirement System ( PSERS ) prior to July 22, 1983 contribute 5.25% of their salary, and employees who joined the PSERS on or after July 22, 1983 contribute 6.25% of their salary. On February 17, 2002, Governor Ridge signed Act 9 which created a new membership class that sets the employee contribution rate at 7.50% of the employee s salary for those employees hired on or after July 1, Act 9 also provides an option for those employees hired prior to July 1, 2001 to elect a contribution rate of 6.50%, if they were hired before July 22, 1983, or 7.50% if they were hired on I-10

155 or after July 22, Act 120 of 2010 ( Act 120 ) was passed by the General Assembly on September 1 and signed by former Governor Rendell on November 23, The benefit reductions contained in this legislation only impact individuals who become new members of PSERS on or after July 1, New members will have the option of selecting one of 2 new classes. The members selecting class T-E will contribute a base rate of 7.5% with shared risk contribution levels between 7.5% and 9.5% and a pension multiplier of 2.0%. Members selecting class T-F will contribute a base rate of 10.3% with shared risk contribution levels between 10.3% and 12.3% and a pension multiplier of 2.5%. In accordance with Senate Bill 1042 enacted on July 6, 2010, the employer rate was recertified at 5.64% for fiscal year , 8.65% for fiscal year and 12.36% for fiscal year The rate for fiscal year was 16.93% of payroll and the rate for fiscal year was 21.40%. The employer contribution rate for fiscal year is 25.84%. The rate applies to salary and wages earned from July 1, 2015, through June 30, This rate was determined by PSERS actuary and reflects the rate caps established by Act 120 of The rate was certified by the PSERS Board of Trustees at its meeting on December 9, In addition, the employer contribution rate may change if pension legislation is enacted prior to June 30, The employer contribution rate for fiscal year consists of 25% for pension costs and 0.84% for premium assistance payments. Please see the Public School Employee s Retirement System website indicated below for the most recent projection of employer contribution rates. The School District and the Commonwealth are responsible for paying a portion of the employer s share. School entities are initially responsible for paying 100% of the employer share of contributions to PSERS. The Commonwealth reimburses the employer for one-half the payment for employees. The School District contributions are made on a quarterly basis and employee contributions are deducted monthly for each paycheck and remitted quarterly. Recent School District payments have been as follows: $1,953, $2,736, $4,033, $5,758, $7,507, (budgeted) $9,156,172 The School District is current in all payments. The PSERS complete report is available on the PSERS website on the Internet: Source: PSERS Financial Highlights. Other Post-Employment Benefits The School District is obligated under collective bargaining agreements to provide future health insurance coverage for current and future retired employees, and to provide retirement severance pay for existing employees. The School District became subject to the requirements of GASB Statements No. 43 and 45 commencing with the School District s annual financial statements for the fiscal year ending June 30, I-11

156 Existing Continuing Disclosure Filing History The School District has previously entered into Continuing Disclosure Agreements with respect to each one of its previously issued bond issues that are currently outstanding. The School District s filing history of its annual financial and operating information during the past five (5) years is outlined in the table below. Fiscal Year Filing Financial Statements Budget Operating Data Ending Deadline [1] Filing Date EMMA ID [2] Filing Date EMMA ID [2] Filing Date EMMA ID [2] 6/30/ /27/2011 4/30/2015 ER /30/2015 ER Various 6/30/ /27/2012 4/30/2015 ER /30/2015 ER Various 6/30/ /27/2013 4/30/2015 ER /30/2015 ER Various 6/30/ /27/2014 4/30/2015 ER /30/2015 ER Various 6/30/ /27/ /29/2015 [7] ES /1/2015 EP Various [3] [4] [5] [6] [8] Various [3] Various [4] Various [5] Various [6] Various [8] Notes [1] For these purposes, assumes the shortest filing deadline of the School District s previous Continuing Disclosure Agreements [2] Submission ID is the EMMA Submission ID for each filing. To access a filing, insert the Submission ID to the end of the web address below: [3] Included in various EMMA submissions. Debt statement included in Audited Financial Statements filed on 4/30/2015 (EMMA Submission ID ER696422); tax & millage rates, tax collection results, assessed & market values, and pupil enrollment filed on 9/1/2015 (EMMA Submission ID ES595463); top 10 taxpayers filed on 5/17/2016 (EMMA Submission ID ER761153) [4] Included in various EMMA submissions. Debt statement included in Audited Financial Statements filed on 4/30/2015 (EMMA Submission ID ER696425); tax & millage rates, tax collection results, assessed & market values, and pupil enrollment filed on 9/1/2015 (EMMA Submission ID ES595463); top 10 taxpayers filed on 5/17/2016 (EMMA Submission ID ER761153) [5] Included in various EMMA submissions. Debt statement included in Audited Financial Statements filed on 4/30/2015 (EMMA Submission ID ER696428); tax & millage rates, tax collection results, assessed & market values, and pupil enrollment filed on 9/1/2015 (EMMA Submission ID ES595463); top 10 taxpayers filed on 5/17/2016 (EMMA Submission ID ER761153) [6] Included in various EMMA submissions. Debt statement included in Audited Financial Statements filed on 4/30/2015 (EMMA Submission ID ER696433); tax & millage rates, tax collection results, assessed & market values, pupil enrollment, and top ten taxpayers filed on 9/1/2015 (EMMA Submission ID ES595463). [7] Interim filing of PDE-2057 Annual Financial Report. Audited Financial Statements filed on 2/8/2016 (EMMA Submission ID ER744930) [8] Included in various EMMA submissions. Pupil enrollment and debt statement filed on 9/1/2015 (EMMA Submission ID ES595463); tax & millage rates and assessed & market values provided in PDE-2028 Budget filed on 9/2/2015 (EMMA Submission ID EP691507); top ten taxpayers filed on 6/14/2016 (EMMA Submission ID ES358715); and tax collection results filed on 6/14/2016 (EMMA Submission ID ES358715). Based on the information above, the School District s annual financial and operating filing history over the past five (5) years can be summarized as follows: For fiscal year ending June 30, 2011, the School District filed the audit report and budget report on April 30, The operating data was included in various filings on April 30, 2015, September 1, 2015 and on May 17, For fiscal year ending June 30, 2012, the School District the School District filed the audit report and budget report on April 30, The operating data was included in various filings on April 30, 2015, September 1, 2015 and on May 17, For fiscal year ending June 30, 2013, the School District the School District filed the audit report and budget report on April 30, The operating data was included in various filings on April 30, 2015, September 1, 2015 and on May 17, For fiscal year ending June 30, 2014, the School District the School District filed the audit report and budget report on April 30, The operating data was included in various filings on April 30, 2015 and September 1, For fiscal year ending June 30, 2015, the School District filed an interim filing of the PDE-2057 Annual Financial Report on December 29, 2015 and the audit report was filed on February 8, The budget report was filed on September 2, 2015 and the operating data was included in various filings on September 5, 2015 and on June 14, Failure to Provide Annual Financial Information As outlined in the table above, the School District failed to provide certain annual financial information in a timely manner during the past (5) five years. The School District filed a Failure to Provide Annual Financial Information notice to EMMA on August 10, 2015 and June 15, I-12

157 Bond Insurance Rating Downgrades and Upgrades by S&P and/or Moody s Some of the School District s bond issues that have been outstanding during the past five (5) years have been insured by various bond insurance companies that have received rating downgrades and upgrades by both S&P and Moody s. This information was publicly available from widely accepted information sources at the time of their respective downgrades or upgrades. For informational purposes, the School District has recently filed a summary of rating upgrades and downgrades relating to certain bond insurance companies. [THIS PAGE INTENTIONALLY LEFT BLANK] I-13

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159 APPENDIX J BOND COUNSEL OPINION SCHOOL REVENUE BONDS, SERIES OF 2016

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161 OPINION OF BOND COUNSEL The form of the approving legal opinion of Dinsmore & Shohl LLP, Bond Counsel, is set forth below. The actual opinion will be delivered on the date of delivery of the Bonds and may vary from the form set forth to reflect circumstances both factual and legal at the time of such delivery. Bond Counsel has no duty, and has assumed no obligation, to revise, update or supplement its opinion to address or reflect a change or changes in such circumstances subsequent to the date of delivery of the Bonds, whether or not it has notice or obtains knowledge of the same, and whether or not this Official Statement shall be recirculated. The approving legal opinion of Bond Counsel represents its considered professional judgment, following a comparison of relevant factual certifications to applicable law. Such opinion is not a guarantee of a particular result, nor is such opinion binding on any administrative or judicial tribunal. We have served as Bond Counsel to Washington County Industrial Development Authority (the "Authority") and do hereby undertake to advise you in connection with the issuance, sale and delivery of its $14,765,000, aggregate principal amount, School Revenue Bonds (A. W. Beattie Career Center Project), Series of 2016 (the "Bonds"), issued in fully registered form, denominated in $5, or any integral multiple thereof, dated and bearing interest from July 28, 2016, maturing or subject to mandatory redemption on October 15 of various years during the term of the Bonds, with final maturity October 15, 2028, subject to redemption at the option of the Authority or the Member School Districts beginning October 15, In that capacity, we have examined the Constitution of the Commonwealth of Pennsylvania; the Economic Development Financing Law, as amended (the " Act"); the Articles of Incorporation of the Authority; the Local Government Unit Debt Act, Act of December 19, 1996, P.L. 1158, No. 177, as amended (the "Debt Act"); the Trust Indenture dated as of July 28, 2016 from the Authority to ZB, National Association, as Trustee, setting forth terms and conditions of, and providing for the security of, the Bonds (the "Indenture"); the formal action of the Board of the Authority authorizing the Bonds (the "Bond Resolution"); the formal actions of the Governing Bodies of each of the: Avonworth School District, Deer Lakes School District, Fox Chapel Area School District, Hampton Township School District, North Allegheny School District, North Hills School District, Northgate School District, Pine- Richland School District and Shaler Area School District (the "Member School District(s)") authorizing the incurrence of nonelectoral debt (the "Debt Ordinance(s)") to be evidenced by their respective general obligation notes (the Note(s) ) delivered under the Loan Agreement dated as of July 28, 2016 between the Member School Districts and the Joint Operating Committee (the "Joint Operating Committee") of the A. W. Beattie Career Center (the "School"), as borrower, and the Authority, as lender (the "Loan Agreement"); the corresponding Certificates of Approval of the Department of Community and Economic Development; the Internal Revenue Code of 1986, as amended (the "Tax Code"); the Federal Income Tax Certificate of an authorized officer of the Authority (the Tax Certificate ); the Bond Purchase Agreement (as defined in each of the Debt Ordinances) relating to the Bonds (the Purchase Agreement ) among the Authority and Janney Montgomery Scott LLC (the Underwriter ), (the Bonds, the Indenture, the Loan Agreement, the Purchase Agreement and the Tax Certificate are collectively referred to as the Authority Documents and the Loan Agreement and the Notes are collectively referred to as the School District Documents ); and such other certificates, proceedings and law as we deemed necessary in order to render this opinion. Unless separately noted, we have not independently verified factual certifications either contained in the official statement, prospectus or other similar document used in connection with the sale of the Bonds or made to us by either the Authority or the School Districts, nor their officers and agents, during the course of our engagement. Both principal of and interest on the Bonds are payable at the designated corporate trust office of ZB, National Association, Pittsburgh, Pennsylvania, as Trustee under the Indenture. AWBeattie - BC Opinion (printer version) 2016_FINAL.docx

162 We have not been engaged nor undertaken to review the adequacy of disclosure in the Official Statement nor in any other securities offering material produced in respect of the Bonds and, except as to matters set forth in this opinion and described as such in said Official Statement, we express no opinion or belief with respect thereto. These proceedings demonstrate that, in the absence of any meritoriously based action in a governmental or judicial forum affecting the validity of the Bonds, the same have been delivered upon full payment. Based on such examination, we are of the opinion that, under the law existing on the date of this opinion: 1. The Authority Documents have been duly authorized, executed and delivered by the Authority and constitute valid, binding and enforceable obligations of the Authority except as the enforceability of the same may be subject to bankruptcy, insolvency, reorganization, moratorium and other laws in effect from time to time affecting creditors' rights, and to the exercise of judicial discretion in accordance with general principles of equity. 2. The School District Documents have been duly authorized, executed and delivered by each of the Member School Districts and each constitutes the valid, binding and enforceable obligation of its respective Member School District, except as the enforceability of the same may be subject to bankruptcy, insolvency, reorganization, moratorium and other laws in effect from time to time affecting creditors' rights, and to the exercise of judicial discretion in accordance with general principles of equity. 3. The Bonds have been duly authorized and executed and all conditions precedent to their sale and delivery have been satisfied. The Bonds constitute special limited obligations of the Authority and the principal of, premium, if any, and interest on Bonds are payable solely from the revenues and other moneys pledged and assigned by the Indenture to secure that payment. 4. All right, title and interest of the Authority in and to the Loan Agreement and to each of the Notes (except for payments with respect to certain fees, expenses and indemnifications) have been validly assigned to the Trustee. Each of the Notes is a valid and binding general obligation of the respective Member School District which issued such Note, secured by its full faith, credit and available taxing power. Each School District has effectively covenanted in its Debt Ordinance to include the amount of debt service due in respect of its Note, for each fiscal year in which such sums are due, in its budget for that year, to appropriate such amounts in respect of said debt service, and to pay or cause to be paid the principal of its Note and the interest thereon on the dates, at the place and in the manner stated in its Note. 5. Presently included among the general revenues of a Member School District available for the payment of its respective Note are ad valorem real estate taxes which may be levied upon all taxable real property situate within the corporate limits of such Member School District, subject to the limitations on the rate of such taxation set forth in Act 1 of Special Session Assuming continuing compliance by the Authority and the Member School Districts and the Joint Operating Committee with certain covenants related to meeting the requirements of Section 103 of the Tax Code, under the laws, regulations, rulings and judicial decisions in effect as of the date hereof, interest on the Bonds is excludible from gross income for Federal income tax purposes. Furthermore, interest on the Bonds will not be treated as an item of tax preference, under Section 57(a)(5) of the Tax Code, in computing AWBeattie - BC Opinion (printer version) 2016_FINAL.docx

163 the alternative minimum tax for individuals and corporations. We express no other opinion as to the federal tax consequences of purchasing, holding or disposing of the Bonds. 7. The Bonds, and the interest income therefrom, are free from taxation for purposes of personal income, corporate net income and personal property taxes within the Commonwealth of Pennsylvania. In rendering this opinion, we have relied upon certifications and representations of facts, estimates and expectations by the Authority, the School Districts and the Joint Operating Committee contained in the Transcript, which we have not independently verified. This opinion is given as of the date hereof. We assume no obligation to update this opinion or to advise you of any changes in facts or laws subsequent to the date hereof. This opinion is limited to the matters set forth herein, and no opinion may be inferred or implied beyond the matters expressly stated in this letter. AWBeattie - BC Opinion (printer version) 2016_FINAL.docx

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165 APPENDIX K FORM OF CONTINUING DISCLOSURE CERTIFICATE

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167 CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the Disclosure Agreement ) made as of July 28, 2016 by and among Avonworth School District, Deer Lakes School District, Fox Chapel Area School District, Hampton Township School District, North Allegheny School District, North Hills School District, Northgate School District, Pine-Richland School District, and Shaler Area School District (each a School District and, collectively, the School Districts ), the Joint Operating Committee of the A. W. Beattie Career Center (the Joint Operating Committee ), and Washington County Industrial Development Authority (the Authority ); WITNESSETH: WHEREAS, pursuant to the Bond Purchase Contract dated June 23, 2016 (the Purchase Contract ) between the Authority and Janney Montgomery Scott LLC (the Purchaser ), the Authority is selling $14,765,000 aggregate principal amount of its School Revenue Bonds (A. W. Beattie Career Center Project), Series of 2016 (the Bonds ) to the Purchaser; and WHEREAS, the Bonds are being issued pursuant to a Trust Indenture dated as of July 28, 2016 between the Authority and ZB, National Association, as Trustee (the Indenture ). WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (the Rule ), provides that a participating Underwriter (as defined in the Rule) shall not purchase or sell municipal securities in connection with an offering (as defined in the Rule) unless the Underwriter has reasonably determined that an issuer of municipal securities, or an obligated person for whom financial or operating data is presented in the final official statement, has undertaken, either individually or in combination with other issuers of such municipal securities or obligated persons, in a written agreement or contract for the benefit of holders of such securities, to provide, either directly or indirectly through an indenture trustee or a designated agent, certain specified financial information and operating data and notices of certain material events; and WHEREAS, the School Districts and the Joint Operating Committee are the only obligated persons with respect to the Bonds; and WHEREAS, the School Districts and the Joint Operating Committee desire to undertake to provide the information and notices required by the Rule; NOW, THEREFORE, in consideration of the premises, the parties hereto, intending to be legally bound hereby, agree as follows: Section 1. Definitions. All terms capitalized but not otherwise defined herein shall have the meanings assigned to those terms in the Indenture and the Bonds. Notwithstanding the foregoing, the term Disclosure Agent shall mean the School Districts and/or the Joint Operating Committee, each for themselves (unless the context should suggest collectively), but in the event a third-party disclosure agent is appointed or engaged by any one or more by the School Districts and/or the Joint Operating Committee, the term shall mean that thirdparty agent, as applicable; any successor disclosure agent shall automatically succeed to the rights and duties of the Disclosure Agent hereunder, without any amendment hereto. The following capitalized terms shall have the following meanings: v1

168 Annual Financial Information shall mean (i) a copy of the annual audited financial information prepared for the School Districts and/or Joint Operating Committee, as applicable, which shall include, if prepared, a balance sheet, a statement of revenue and expenditure and a statement of changes in fund balances; all such financial information shall be prepared using a modified accrual basis of accounting, provided, however, that the School Districts and Joint Operating Committee may change the accounting principles used for preparation of such financial information so long as the School Districts and Joint Operating Committee include as information provided to the public a statement to the effect that different accounting principles are being used, stating the reason for such change and providing a method by which to compare the financial information provided by the differing financial accounting principles; and (ii) a summary of the budget for the current fiscal year. Any or all of the items listed above may be incorporated by reference from other documents, including offering documents of debt issues of the School Districts or Joint Operating Committee, as applicable, or related public entities, which have been submitted to EMMA. If the document incorporated by reference is a final offering document, it must be available from the MSRB. Such other document so incorporated by reference shall be clearly identified by the party submitting the same. Beneficial Owner shall mean any person which has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, the Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). Bondholder shall mean any holder of the Bonds and any Beneficial Owner thereof. EMMA means the continuing disclosure service of the MSRB s Electronic Municipal Market Access system, as established by SEC Release No , as amended, and approved by SEC Release No "MSRB" shall mean the Municipal Securities Rulemaking Board. Material Event shall mean any of the events listed in items (i) through (xi) below the occurrence of which the School Districts and/or Joint Operating Committee, as applicable, obtain knowledge, and which the School Districts and/or Joint Operating Committee, as applicable, determine would constitute material information for Bondholders. The following events with respect to the Bonds shall constitute Material Events: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) Principal and interest payment delinquencies; Non-payment related defaults, if material; Unscheduled draws on debt service reserves reflecting financial difficulties; Unscheduled draws on credit enhancements reflecting financial difficulties; Substitution of credit or liquidity providers, or their failure to perform; Adverse tax opinions or events affecting the tax-exempt status of the security; Modifications to rights of security holders, if material; Bonds calls, except for mandatory scheduled redemptions not otherwise contingent upon the occurrence of an event; v1

169 (ix) (x) (xi) (xii) (xiii) (xiv) Tender offers and defeasances; Release, substitution or sale of property securing repayment of the securities, if material; Rating changes; bankruptcy, insolvency, receivership or similar event, such as determination of distressed status, affecting the Authority; the consummation of a merger, consolidation, or acquisition of any of the School Districts or the Joint Operating Committee or the sale of all or substantially all of the assets of any of the School Districts or the Joint Operating Committee, 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 the appointment of a successor or additional trustee or the change of name of a trustee, if material. The SEC requires the listing of (i) through (xiv) although some of such events may not be applicable to the Bonds. Release shall mean Securities and Exchange Commission Release No SEC shall mean the Securities and Exchange Commission. "State" shall mean Commonwealth of Pennsylvania. Section 2. Covenants of the School Districts and Joint Operating Committee. Information Provided to the Public. Except to the extent this Certificate is modified or otherwise altered in accordance with Section 4 hereof, the School Districts and Joint Operating Committee shall make, or shall cause the Disclosure Agent to publish to EMMA the information set forth in subsections (1), (2) and (3) below: (1) Annual Financial Information. Annual Financial Information at least annually not later than 270 days following the end of each fiscal year of the School Districts and the Joint Operating Committee beginning with fiscal year ending June 30, 2016 and continuing with each fiscal year thereafter. If the Disclosure Agent is a third-party person other than one or more of the School Districts and/or Joint Operating Committee, then the School Districts and/or Joint Operating Committee, as applicable, shall provide the Annual Financial Information to the Disclosure Agent not later than fifteen (15) Business Days prior to the disclosure date referenced above. The Annual Financial Information may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information; provided that the audited financial statements of the School Districts and Joint Operating Committee may be submitted separately from the balance of the Annual Financial Information. (2) Material Events Notices. Notice of the occurrence of a Material Event v1

170 (3) Failure to Provide Annual Financial Information. Notice of the failure of School Districts and/or Joint Operating Committee to provide the Annual Financial Information by the date required herein. Section 3. Termination of Reporting Obligations. A School District s obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the School District s share of the Bonds, and the Joint Operating Committee s obligation under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all the Bonds. If a School District s obligations under the Loan Agreement (as defined in the Purchase Contract) are assumed in full by some other entity, such other entity shall be responsible for compliance with this Disclosure Agreement in the same manner as if it were the School District and the School District shall have no further responsibility hereunder unless the School District agrees otherwise. In addition, each School District s and the Joint Operating Committee s obligation to provide information and notices as specified in Section 2 hereof may be terminated by the School District or the Joint Operating Committee as set forth in Section 4. Section 4. Amendment. This Disclosure Agreement may be amended by written agreement of the parties hereto. The Authority shall agree to any amendment requested by a School District or the Joint Operating Committee permitted by the Rule and which does not subject the Authority to any additional obligations or liabilities. In addition, each School District and the Joint Operating Committee reserves the right (i) to modify from time to time the specific types of information provided or the format of the presentation of the Annual Financial Information, to the extent necessary or appropriate in the judgment of the School District or the Joint Operating Committee and consistent with the Rule, and (ii) upon prior written notice to each NRMSIR, the MSRB, the Authority, and any Pennsylvania SID, to amend or terminate any or all of its continuing disclosure covenants for any reason if permitted to do so under the Rule. Section 5. Remedies for Default. In the event of a breach or default by a School District or the Joint Operating Committee of its covenants to provide Annual Financial Information and notices as provided in Section 2 hereof, the Authority, or any record owner or beneficial owner of Bonds, shall have the right to bring an action in a court of competent jurisdiction to compel specific performance by the School District or the Joint Operating Committee; provided that the covenant involved has not been terminated by the School District or the Joint Operating Committee. No monetary damages may be recovered under any circumstances for any breach or default by any School District or the Joint Operating Committee of its covenants hereunder. A breach or default under this Disclosure Agreement shall not constitute an event of default under any other agreement. Section 6. Indemnification of Authority. The Authority shall have no responsibility or liability for the School Districts or the Joint Operating Committee s filing obligations under this Disclosure Agreement or for the contents of such filings. The School Districts and the Joint Operating Committee agree to indemnify and save harmless the Authority and its members, officers, employees and agents against and from any claims, loss, expense (including reasonable attorney s fees) or liability arising from or based upon (i) any breach by the School Districts and/or the Joint Operating Committee of this Disclosure Agreement or (ii) any Annual Financial Information or notices provided under this Disclosure Agreement or any omission therefrom v1

171 Section 7. Miscellaneous. (a) Binding Nature of Agreement. This Disclosure Agreement shall be binding upon the School Districts, and the Joint Operating Committee, and shall inure to the benefit of the parties hereto and their respective successors and assigns. in addition, record owners and beneficial owners of the Bonds from time to time shall be third party beneficiaries hereof and shall be entitled to enforce the provisions hereof as if they were parties hereto; but no consent of owners of the Bonds shall be required in connection with any amendment of this Disclosure Agreement. (b) Notices. All notices and other communications required or permitted under this Disclosure Agreement shall be in writing and shall be deemed to have been duly given, made and received only when delivered (personally, by recognized national or regional courier service, or by other messenger, for delivery to the intended addressee) or when deposited in the United States mails, registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below: (i) If to the Authority: (A) If by mail: WASHINGTON COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY 375 Southpointe Boulevard, Suite 240 Canonsburg, PA (ii) If to the School Districts: AVONWORTH SCHOOL DISTRICT Avonworth School District 258 Josephs Lane Pittsburgh, PA Attention: Director of Fiscal Management DEER LAKES SCHOOL DISTRICT Deer Lakes School District East Union Road P.O. Box 10 Russellton, PA Attention: Business Manager FOX CHAPEL AREA SCHOOL DISTRICT Fox Chapel Area School District 611 Field Club Road Pittsburgh, PA Attention: Business Manager HAMPTON TOWNSHIP SCHOOL DISTRICT Hampton Township School District 4591 School Dr. Allison Park, PA Attention: Business Manager v1

172 NORTH ALLEGHENY SCHOOL DISTRICT North Allegheny School District 200 Hillvue Lane Pittsburgh, PA Attention: Business Manager NORTH HILLS SCHOOL DISTRICT North Hills School District th Ave. Pittsburgh, PA Attention: Director of Finance & Operations NORTHGATE SCHOOL DISTRICT Northgate School District 591 Union Ave. Pittsburgh, PA Attention: Director of Finance & Operations PINE-RICHLAND SCHOOL DISTRICT Pine-Richland School District 702 Warrendale Rd. Gibsonia, PA Attention: Business Manager SHALER AREA SCHOOL DISTRICT Shaler Area School District 1800 Mount Royal Blvd. Glenshaw, PA Attention: Director of Business Affairs (iii) If to the Joint Operating Committee: A. W. BEATTIE CAREER CENTER 9600 Babcock Boulevard Allison Park, PA Attention: Director of Finance and Facilities Any party may alter the address to which communications are to be sent by giving notice of such change of address in conformity with the provision of this Section for the giving of notice. (c) Execution in Counterparts. This Disclosure Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Disclosure Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. (d) Controlling Law. This Disclosure Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of the State and the Rule v1

173 IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first above written. AVONWORTH SCHOOL DISTRICT By: President, Board of School Directors DEER LAKES SCHOOL DISTRICT By: President, Board of School Directors FOX CHAPEL AREA SCHOOL DISTRICT By: President, Board of School Directors HAMPTON TOWNSHIP SCHOOL DISTRICT By: President, Board of School Directors NORTH ALLEGHENY SCHOOL DISTRICT By: President, Board of School Directors NORTH HILLS SCHOOL DISTRICT By: President, Board of School Directors v1

174 NORTHGATE SCHOOL DISTRICT By: President, Board of School Directors PINE-RICHLAND SCHOOL DISTRICT By: President, Board of School Directors SHALER AREA SCHOOL DISTRICT By: President, Board of School Directors JOINT OPERATING COMMITTEE of the A. W. Beattie Career Center By: President, Joint Operating Committee WASHINGTON COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY By: v1

175 APPENDIX L AUDITED FIANCIAL STATEMENTS FOR THE CAREER CENTER

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227 APPENDIX M SPECIMEN MUNICIPAL BOND INSURANCE POLICY

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229 MUNICIPAL BOND INSURANCE POLICY ISSUER: [NAME OF ISSUER] Policy No: MEMBER: [NAME OF MEMBER] BONDS: $ in aggregate principal amount of [NAME OF TRANSACTION] [and maturing on] Effective Date: Risk Premium: $ Member Surplus Contribution: $ Total Insurance Payment: $ BUILD AMERICA MUTUAL ASSURANCE COMPANY ( BAM ), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the Trustee ) or paying agent (the Paying Agent ) for the Bonds named above (as set forth in the documentation providing for the issuance and securing of the Bonds), for the benefit of the Owners or, at the election of BAM, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer. On the later of the day on which such principal and interest becomes Due for Payment or the first Business Day following the Business Day on which BAM shall have received Notice of Nonpayment, BAM will disburse (but without duplication in the case of duplicate claims for the same Nonpayment) to or for the benefit of each Owner of the Bonds, the face amount of principal of and interest on the Bonds that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by BAM, in a form reasonably satisfactory to it, of (a) evidence of the Owner s right to receive payment of such principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner s rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in BAM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by BAM is incomplete, it shall be deemed not to have been received by BAM for purposes of the preceding sentence, and BAM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, any of whom may submit an amended Notice of Nonpayment. Upon disbursement under this Policy in respect of a Bond and to the extent of such payment, BAM shall become the owner of such Bond, any appurtenant coupon to such Bond and right to receipt of payment of principal of or interest on such Bond and shall be fully subrogated to the rights of the Owner, including the Owner s right to receive payments under such Bond. Payment by BAM either to the Trustee or Paying Agent for the benefit of the Owners, or directly to the Owners, on account of any Nonpayment shall discharge the obligation of BAM under this Policy with respect to said Nonpayment. Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. Business Day means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer s Fiscal Agent (as defined herein) are authorized or required by law or executive order to remain closed. Due for Payment means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless BAM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration) and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. Nonpayment means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. Nonpayment shall also include, in respect of a Bond, any payment made to an Owner by or on behalf of the Issuer of principal or interest that is Due for Payment, which payment has been recovered from such Owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction. Notice means delivery to BAM of a notice of claim and certificate, by certified mail, or telecopy as set forth on the attached Schedule or other acceptable electronic delivery, in a form satisfactory to BAM, from and signed by an Owner, the Trustee or the Paying Agent, which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount, (d) payment instructions and (e) the date such claimed amount becomes or became Due for Payment. Owner means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that Owner shall not include the Issuer, the Member or any other person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.