$1,799, MCFARLAND UNIFIED SCHOOL DISTRICT (KERN COUNTY, CALIFORNIA) General Obligation Bonds Election of 2004, Series 2006 B

Transcription

1 NEW ISSUE -- FULL BOOK-ENTRY BANK QUALIFIED RATING: Standard & Poor s: AAA See Rating herein In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes, such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings, and the Bonds are "qualified tax-exempt obligations" within the meaning of section 265(b)(3) of the Internal Revenue Code of In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See "TAX MATTERS" herein. $1,799, MCFARLAND UNIFIED SCHOOL DISTRICT (KERN COUNTY, CALIFORNIA) General Obligation Bonds Election of 2004, Series 2006 B Dated: Date of Delivery Due: November 1, as shown on inside cover Issuance. The McFarland Unified School District General Obligation Bonds, Election of 2004, Series 2006 B (the "2006 Bonds ) are being issued by the County of Kern (the County ) on behalf of the McFarland Unified School District (the "District") pursuant to a resolution of the Board of Supervisors of the County adopted December 5, The 2006 Bonds were authorized at an election of the registered voters of the District held on March 2, 2004, which authorized the issuance of $8,300,000 principal amount of general obligation bonds for the purpose of financing the addition and modernization of school facilities. The 2006 Bonds are the second series of bonds to be issued under this authorization. Security. The 2006 Bonds represent a general obligation of the District payable solely from ad valorem property taxes. The Board of Supervisors of the County has the power and is obligated to annually levy ad valorem taxes upon all property subject to taxation by the District without limitation of rate or amount (except certain personal property which is taxable at limited rates) for the payment of principal of and interest on the 2006 Bonds. The 2006 Bonds are not the debt of the County, the State of California or any political subdivision of the State of California. Book-Entry Only. The 2006 Bonds will be issued in book-entry form only and will be initially issued and registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository of the 2006 Bonds. Individual purchases of the 2006 Bonds will be made in book-entry form only. Purchasers will not receive physical delivery of the 2006 Bonds purchased by them. Payments of the principal and accreted value (collectively, Principal ) of and interest on the 2006 Bonds will be made by Wells Fargo Bank, National Association, as the designated paying agent, registrar and transfer agent (the Paying Agent ), to DTC for subsequent disbursement through DTC Participants (defined herein) to the beneficial owners of the 2006 Bonds. See THE 2006 BONDS Book-Entry-Only System herein. Payments. The 2006 Bonds are comprised of Current Interest Bonds and Capital Appreciation Bonds. Interest on the Current Interest Bonds accrues from the dated date and is payable semiannually on May 1 and November 1 of each year, commencing May 1, The Current Interest Bonds will be issued in denominations of $5,000 or any integral multiple thereof. The Capital Appreciation Bonds are dated the date of delivery of the 2006 Bonds and accrete interest from such date, compounded semiannually on May 1 and November 1 of each year, commencing May 1, The Capital Appreciation Bonds will be issued in denominations of $5,000 Maturity Value or any integral multiple thereof. Redemption. The Current Interest Bonds are subject to redemption prior to maturity as described herein. The Capital Appreciation Bonds are not subject to redemption prior to maturity. (See THE 2006 BONDS Redemption ). Bond Insurance. The scheduled payment of principal of and interest on the 2006 Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the 2006 Bonds by FINANCIAL SECURITY ASSURANCE INC. This cover page contains certain information for reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. The 2006 Bonds are offered when, as and if issued, subject to the approval as to their legality by Jones Hall, a Professional Law Corporation, San Francisco, California, Bond Counsel. Jones Hall, A Profession Law Corporation, is also acting as Disclosure Counsel. It is anticipated that the 2006 Bonds in book-entry form will be available for delivery through the facilities of DTC in New York, New York, on or about December 21, The date of this Official Statement is December 13, 2006.

2 MATURITY SCHEDULE Base CUSIP ( ) : Maturity (November 1) $1,735,000 Current Interest Bonds Principal Amount Interest Rate Yield CUSIP 2011 $ 5, % 3.48% EA , EB , EC , ED , EE , EF 0 $155, % Term Bonds due November 1, 2021; Yield: 4.050%; CUSIP : EL 7 $215, % Term Bonds due November 1, 2025; Yield: 4.100%; CUSIP : EQ 6 $1,285, % Term Bonds due November 1, 2031; Yield: 4.200%; CUSIP : EW 3 Maturity (November 1) Denominational Amount $64, Capital Appreciation Bonds Accretion Rate Yield to Maturity Accreted Amount at Maturity CUSIP 2029 $45, % 4.57% $655,000 DY , ,000 DZ 7 CUSIP Copyright 2006, American Bankers Association. CUSIP data herein is provided by Standard & Poor's CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc.

3 GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the sale of the 2006 Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract between any bond owner and the District or the Underwriter. No Offering Except by This Official Statement. No dealer, broker, salesperson or other person has been authorized by the District or the Underwriter to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representation must not be relied upon as having been authorized by the District or the Underwriter. No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sale of the 2006 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Information in Official Statement. The information set forth in this Official Statement has been furnished by the District and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness. Involvement of Underwriter. The Underwriter has provided the following statement for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the Federal Securities Laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. Document Summaries. All summaries of the Bond Resolution or other documents referred to in this Official Statement are made subject to the provisions of such documents and qualified in their entirety to reference to such documents, and do not purport to be complete statements of any or all of such provisions. No Securities Laws Registration. The 2006 Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon exceptions therein for the issuance and sale of municipal securities. The 2006 Bonds have not been registered or qualified under the securities laws of any state. Insurer s Disclaimer. Other than with respect to information concerning Financial Security Assurance Inc. ( Financial Security ) contained under the caption BOND INSURANCE and APPENDIX F Specimen Municipal Bond Insurance Policy herein, none of the information in this Official Statement has been supplied or verified by Financial Security and Financial Security makes no representation or warranty, express or implied, as to (i) the accuracy or completeness of such information; (ii) the validity of the 2006 Bonds; or (iii) the tax exempt status of the interest on the 2006 Bonds. Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the 2006 Bonds will, under any circumstances, give rise to any implication that there has been no change in the affairs of the District, the County, the other parties described in this Official Statement, or the condition of the property within the District since the date of this Official Statement. THE 2006 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE 2006 BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

4 MCFARLAND UNIFIED SCHOOL DISTRICT COUNTY OF KERN STATE OF CALIFORNIA DISTRICT BOARD OF TRUSTEES Jim Kasiner, President Ramon Melendez, Vice President Rey Deleon, Clerk Don Chandler, Member Arturo Munoz, Member DISTRICT ADMINISTRATION William Brand, Interim Superintendent Wayne Jones, Assistant Superintendent, Business Services William C. Young, Business Manager BOND COUNSEL AND DISCLOSURE COUNSEL Jones Hall, A Professional Law Corporation San Francisco, California FINANCIAL ADVISOR Caldwell Flores Winters, Inc. Emeryville, California PAYING AGENT, TRANSFER AGENT, AND BOND REGISTRAR Wells Fargo Bank, National Association Los Angeles, California

5 TABLE OF CONTENTS Page INTRODUCTION... 1 THE 2006 BONDS... 1 Authority for Issuance... 1 Description of the 2006 Bonds... 1 Accreted Values... 2 Paying Agent... 2 Purpose of Issue... 3 Book-Entry-Only System... 3 Redemption... 6 Selection of 2006 Bonds for Redemption... 7 Notice of Redemption... 7 Partial Redemption of 2006 Bonds... 7 Registration, Transfer and Exchange of 2006 Bonds... 7 Satisfaction and Discharge of 2006 Bonds... 8 Sources and Uses of Funds... 8 Debt Service Schedule... 9 Combined Debt Service Schedule SECURITY FOR THE 2006 BONDS...11 Ad Valorem Property Taxes Debt Service Fund Investment of District Funds and Bond Proceeds CONTINUING DISCLOSURE...12 BOND INSURANCE...13 Bond Insurance Policy...13 Financial Security Assurance Inc TAX BASE FOR REPAYMENT OF 2006 BONDS...14 Ad Valorem Property Taxation Assessed Valuations Taxation of State-Assessed Utility Property Alternative Method of Tax Apportionment - "Teeter Plan" Largest Property Owners General Obligation Bonds Debt Obligations Page THE DISTRICT General Information...21 Administration...21 Recent Enrollment Trends...21 Employee Relations...22 District Retirement Systems...22 DISTRICT FINANCIAL INFORMATION Accounting Practices...23 Financial Statements...23 Budget Process...25 State Funding of Education and Revenue Limitations...26 Revenue Sources...27 General Long-Term Debt...28 KERN COUNTY INVESTMENT POOL State Funding of Education...31 CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS Article XIIIA of the California Constitution...34 Unitary Property...35 Constitutional Appropriations Limitation...35 Article XIIIC and Article XIIID of the California Constitution...36 Proposition Proposition Proposition Proposition 1A...39 Future Initiatives...39 TAX MATTERS BANK QUALIFIED CERTAIN LEGAL MATTERS Absence of Material Litigation...41 RATING UNDERWRITING ADDITIONAL INFORMATION APPENDIX A - Audited Financial Statements of the District for Fiscal Year Ended June 30, A-1 APPENDIX B - General Information About Kern County...B-1 APPENDIX C - Form of Opinion of Bond Counsel...C-1 APPENDIX D - Form of Continuing Disclosure Certificate...D-1 APPENDIX E - Accreted Value Tables...E-1 APPENDIX F - Specimen Municipal Bond Insurance Policy... F-1

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7 $1,799, MCFARLAND UNIFIED SCHOOL DISTRICT (Kern County, California) General Obligation Bonds Election of 2004, Series 2006 B INTRODUCTION This Official Statement (which includes the cover page, the Table of Contents and the Appendices attached hereto) is furnished by the McFarland Unified School District (the District ), County of Kern (the County ), California to provide information concerning the $1,799, aggregate principal amount of the McFarland Unified School District (Kern County, California) General Obligation Bonds, Election of 2004, Series 2006 B (the 2006 Bonds ). This Official Statement makes reference to resolutions and to other documents and laws. Such references do not purport to be complete, comprehensive or definitive and are qualified in their entirety by reference to each such document and provision. All terms used herein and not otherwise defined shall have the meanings given such terms in the Bond Resolution (as defined below). Authority for Issuance THE 2006 BONDS The 2006 Bonds are being issued pursuant to the provisions of Chapter 1 and Chapter 1.5 of Part 10 of Division 1 of Title 1 of the California Education Code (the Act ) and pursuant to a resolution adopted by the Board of Education of the District on November 14, 2006 and a resolution adopted by the Board of Supervisors of the County on December 5, 2006 (together, the Bond Resolution ). The District received authorization at an election held on March 2, 2004, by an affirmative vote of 77.9% or more of the qualified electors to issue general obligation bonds in a principal amount not to exceed $8,300,000 (the 2004 Authorization ). The election was conducted pursuant to a California State Proposition 39 of November 2000 (and applicable statutes), which amended Article XIIIA of the California Constitution to permit the approval of general obligation bonds of a school district by 55% or more of the votes cast on the measure, subject to certain accountability features (see CONSTITUTIONAL AND STATUATORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS Article XIIIA of the California Constitution herein. The 2006 Bonds represent the second series of bonds within the 2004 Authorization. In May 2004 the District issued $5,285, General Obligation Bonds, Election of 2004, Series 2004A (the 2004 Bonds ) under the 2004 Authorization. After the issuance of the 2006 Bonds, $1,214, of the 2004 Authorization will remain. Description of the 2006 Bonds The 2006 Bonds will be issued in book-entry form only and will be initially issued and registered in the name of Cede & Co. as nominee for The Depository Trust Company, New York, New York (collectively referred to herein as DTC ). Purchasers of beneficial ownership -1-

8 interests in the 2006 Bonds from participants in the DTC system will not receive certificates representing their interest in the 2006 Bonds. The 2006 Bonds will be issued as current interest bonds (the Current Interest Bonds ) and capital appreciation bonds (the Capital Appreciation Bonds ). Interest on the Current Interest Bonds accrues from the dated date, and is payable semiannually on May 1 and November 1 of each year (each an Interest Payment Date ), commencing May 1, 2007, at the annual interest rates shown on the inside cover page. The Current Interest Bonds will be issued in denominations of $5,000 or any integral multiple thereof. Interest will accrue on the Current Interest Bonds on the basis of a 360-day year comprised of twelve 30-day months. The Capital Appreciation Bonds are dated the date of delivery of the Bonds and accrete interest from such date, compounded semiannually on May 1 and November 1 of each year, commencing May 1, 2007, payable only upon maturity or prior redemption thereof. Interest on the Current Interest Bonds, including the final interest payment upon maturity, is payable by check of the Paying Agent mailed on the Interest Payment Date via firstclass mail to the Owner thereof at such Owner s address as it appears on the bond register maintained by the Paying Agent at the close of business on the fifteenth day of the month preceding the Interest Payment Date (the Record Date ), or at such other address as the Owner may have filed with the Paying Agent for that purpose, or upon written request filed with the Paying Agent as of the Record Date by an Owner of at least $1,000,000 in aggregate principal amount of Current Interest Bonds, by wire transfer. See the Maturity Schedule on the inside cover page and THE 2006 BONDS Debt Service Schedule. Accreted Values Appendix E contains a table of the principal component plus interest accrued thereon (the Accreted Value ) on each May 1 and November 1 for each maturity of Capital Appreciation Bonds. Any Accreted Value, however, determined by the District and Paying Agent by computing interest in accordance with the provisions of the Resolution, shall control over any different Accreted Value determined by reference to Appendix E. Paying Agent Wells Fargo Bank, National Association, Los Angeles, California, will act as the registrar, transfer agent, and paying agent for the Bonds (the Paying Agent ). As long as DTC is the registered owner of the Bonds and DTC's book-entry method is used for the Bonds, the Paying Agent will send any notice of prepayment or other notices to owners only to DTC. Any failure of DTC to advise any DTC Participant, or of any DTC Participant to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity or sufficiency of the proceedings relating to the prepayment of the Bonds called for prepayment or of any other action covered by such notice. The Paying Agent, the District, the County and the Underwriter of the Bonds have no responsibility or liability for any aspects of the records relating to or payments made on account of beneficial ownership, or for maintaining, supervising or reviewing any records relating to beneficial ownership, of interests in the Bonds. -2-

9 Purpose of Issue The District intends to complete some or all of the following projects using a combination of funding sources. Other anticipated sources other than Bond proceeds, include state aid matching funds and other available funds. Construct new K-6 school to relieve overcrowding; Modernize and upgrade classroom interiors and facilities; Make health and safety improvements to meet current standards; Construct new central kitchen to reduce District operating costs; Improve access to student technology and modernize and provide student support facilities; Furnish and equip schools to the extent permitted by law. Book-Entry-Only System The information contained herein concerning The Depository Trust Company ("DTC"), New York, New York, and DTC s book-entry system has been obtained from DTC and the District takes no responsibility for the completeness or accuracy thereof. The District cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the 2006 Bonds, (b) certificates representing ownership interest in or other confirmation of ownership interest in the 2006 Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the 2006 Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the 2006 Bonds. The 2006 Bonds 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 each maturity of the 2006 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest 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 2 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments from over 85 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 -3-

10 companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (respectively, "NSCC", "GSCC", "MBSCC", and "EMCC", also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. 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 Standard & Poor s highest rating: AAA. 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 the 2006 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2006 Bonds 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 2006 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the 2006 Bonds, except in the event that use of the book-entry system for the 2006 Bonds is discontinued. To facilitate subsequent transfers, all 2006 Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the 2006 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2006 Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such 2006 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the 2006 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2006 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of the 2006 Bonds may wish to ascertain that the nominee holding the 2006 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the 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 2006 Bonds 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. -4-

11 Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the 2006 Bonds unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the 2006 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of principal of, premium, if any, and interest evidenced by the 2006 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the District or the Paying 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 (nor its nominee), the Paying Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal of premium, if any, and interest evidenced by the 2006 Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Paying 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. DTC may discontinue providing its services as depository with respect to the 2006 Bonds at any time by giving reasonable notice to the County or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. In the event that the book-entry system is discontinued as described above, the requirements of the Bond Resolution will apply. The foregoing information concerning DTC and DTC s book-entry system has been provided by DTC, and neither the District nor the Paying Agent take any responsibility for the accuracy thereof. Neither the District nor the Underwriter can and do not give any assurances that DTC, the Participants or others will distribute payments of principal, interest or premium, if any, evidenced by the 2006 Bonds paid to DTC or its nominee as the registered owner, or will distribute any redemption notices or other notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the manner described in this Official Statement. Neither the District nor the Underwriter is responsible or liable for the failure of DTC or any Participant to make any payment or give any notice to a Beneficial Owner with respect to the 2006 Bonds or an error or delay relating thereto. -5-

12 Redemption Optional Redemption. The Current Interest Bonds maturing on or before November 1, 2016 are not subject to redemption prior to their maturity dates. The Current Interest Bonds maturing on or after November 1, 2017, are subject to redemption prior to their respective stated maturity dates, at the option of the District, from any source of available funds, in whole or in part, on any date on or after November 1, 2016, at a redemption price equal to the principal amount to be redeemed, plus accrued interest to the date fixed for redemption, without premium. The Capital Appreciation 2006 Bonds are not subject to redemption prior to maturity. Mandatory Sinking Fund Redemption. The Current Interest Bonds maturing on November 1, 2021, November 1, 2025 and November 1, 2031 (together, the Term Bonds ), are subject to mandatory sinking fund redemption in part by lot, on November 1 of each year in accordance with the schedules set forth below. The Current Interest Bonds so called for mandatory sinking fund redemption shall be redeemed at the principal amount of such Current Interest Bonds to be redeemed, plus accrued but unpaid interest, without premium. $155,000 Term Bonds Maturing November 1, 2021 Redemption Date (November 1) Principal Amount 2017 $25, , , , (maturity) 40,000 $215,000 Term Bonds Maturing November 1, 2025 Redemption Date (November 1) Principal Amount 2022 $45, , , (maturity) 60,000 $1,285,000 Term Bonds Maturing November 1, 2031 Redemption Date (November 1) Principal Amount 2026 $70, , , , (maturity) 695,000-6-

13 Selection of 2006 Bonds for Redemption Whenever provision is made for the redemption of 2006 Bonds and less than all Outstanding Bonds are to be redeemed, the Paying Agent, upon written instruction from the District received at least 30 days prior to the specified redemption date (unless a shorter notice is consented to by the Paying Agent and the Insurer), shall select 2006 Bonds for redemption in inverse order of maturity. Within a maturity, the Paying Agent shall select 2006 Bonds for redemption by lot. Redemption by lot shall be in such a manner as the Paying Agent shall determine; provided, however, that the portion of any Current Interest Bond to be redeemed in part shall be in the Principal Amount of $5,000 or any integral multiple thereof. Notice of Redemption The Paying Agent is required to give notice of the redemption of the 2006 Bonds, at the expense of the District. Notice of any redemption of 2006 Bonds shall specify: (a) the 2006 Bonds or designated portions thereof (in the case of redemption of the Bonds in part but not in whole) which are to be redeemed, (b) the date of redemption, (c) the place or places where the redemption will be made, including the name and address of the Paying Agent, (d) the redemption price, (e) the CUSIP numbers (if any) assigned to the 2006 Bonds to be redeemed, (f) the Bond numbers of the 2006 Bonds to be redeemed in whole or in part and, in the case of any 2006 Bond to be redeemed in part only, the Principal Amount of such 2006 Bond to be redeemed, and (g) the original issue date, interest rate and stated maturity date of each 2006 Bond to be redeemed in whole or in part. Such notice shall further state that on the specified date there shall become due and payable upon each 2006 Bond or portion thereof being redeemed the redemption price thereof, together with the interest accrued to the redemption date in the case of the Capital Appreciation Bonds, and that from and after such date, interest with respect thereto shall cease to accrete in value. Neither failure to receive or failure to send any notice of redemption nor any defect in any such redemption notice so given shall affect the sufficiency of the proceedings for the redemption of the affected 2006 Bonds. Partial Redemption of 2006 Bonds Upon the surrender of any 2006 Bond redeemed in part only, the Paying Agent shall execute and deliver to the Owner thereof a new 2006 Bond or 2006 Bonds of like tenor and maturity and of authorized denominations equal in transfer amounts to the unredeemed portion of the 2006 Bond surrendered. Such partial redemption shall be valid upon payment of the amount required to be paid to such Owner, and the District shall be released and discharged thereupon from all liability to the extent of such payment. Registration, Transfer and Exchange of 2006 Bonds If the book entry system is discontinued, the District shall cause the Paying Agent to maintain and keep at its principal corporate trust office all books and records necessary for the registration, exchange and transfer of the 2006 Bonds. If the book entry system is discontinued, the person in whose name a Bond is registered on the Bond Register shall be regarded as the absolute owner of that Bond. Payment of the principal of and interest on any Bond shall be made only to or upon the order of that person; neither the District, the County nor the Paying Agent shall be affected by any notice to the contrary, but the registration may be changed as provided in the Resolution. -7-

14 2006 Bonds may be exchanged at the principal corporate trust office of the Paying Agent in Los Angeles, California for a like aggregate principal amount of 2006 Bonds of authorized denominations and of the same maturity; provided that Current Interest Bonds may only be exchanged for Current Interest Bonds, and Capital Appreciation Bonds may only be exchanged for Capital Appreciation Bonds. Any 2006 Bond may, in accordance with its terms, but only if (i) the District determines to no longer maintain the book entry only status of the 2006 Bonds, (ii) DTC determines to discontinue providing such services and no successor securities depository is named or (iii) DTC requests the District to deliver Bond certificates to particular DTC Participants, be transferred, upon the books required to be kept pursuant to the provisions of the Resolution, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such 2006 Bond for cancellation at the office of the Paying Agent, accompanied by delivery of a written instrument of transfer in a form approved by the Paying Agent, duly executed. No exchanges of 2006 Bonds shall be required to be made (a) fifteen days prior to an Interest Payment Date or the date established by the Paying Agent for selection of 2006 Bonds for redemption or (b) with respect to a 2006 Bond after such 2006 Bond has been selected for redemption. Satisfaction and Discharge of 2006 Bonds As provided in the Bond Resolution, the obligation of the District under the Bond Resolution and the 2006 Bonds will be fully discharged and satisfied as to any 2006 Bond and such 2006 Bond will no longer be deemed to be outstanding and shall be deemed to have been paid for all purposes (a) by paying or causing to be paid the principal of and interest on 2006 Bonds Outstanding, as and when the same become due and payable, (b) by depositing, in trust, at or before maturity, money or securities in the necessary amount (as provided in the Bond Resolution) to pay 2006 Bonds Outstanding or (c) by delivering to the Paying Agent, for cancellation by it, 2006 Bonds Outstanding. Sources and Uses of Funds The estimated sources and uses of funds in connection with the 2006 Bonds, excluding accrued interest, are as follows: Sources of Funds: Principal Amount of 2006 Bonds $1,799, Net Original Issue Premium 258, Total Sources of Funds $2,058, Uses of Funds: Building Fund $1,799, Debt Service Fund (1) 61, Costs of Issuance (2) 196, Total Uses of Funds $2,058, (1) Net original issue premium on the 2006 Bonds, which amount is dedicated to the debt service payments on the 2006 Bonds. (2) Includes legal fees, Underwriter s discount, printing costs, bond insurance premium, rating agency fee and other miscellaneous expenses to be paid by the Underwriter. -8-

15 Debt Service Schedule The following table summarizes the annual debt service requirements of the District for the 2006 Bonds: Bond Year Ending (November 1) Current Interest Bonds Annual Principal Payment Annual Interest Payment Capital Appreciation Bonds Original Principal Compounded Interest Total Annual Debt Service $ 61, $ 61, , , , , , , $ 5, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , $45, $609, , , , , , , , , , Total $1,735, $1,525, $64, $900, $4,225,

16 Combined Debt Service Schedule The following schedule shows the combined debt service with respect to the 2004 Bonds and the 2006 Bonds. Bond Year Ending (November 1) 2004 Bonds 2006 Bonds Combined Debt Service 2007 $339, $ 61, $ 400, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Total $9,786, $4,225, $14,012,

17 SECURITY FOR THE 2006 BONDS Ad Valorem Property Taxes The 2006 Bonds are general obligations of the District payable solely from ad valorem property taxes. The Board of Supervisors of the County is empowered and obligated to annually levy ad valorem taxes, without limitation of rate or amount, for the payment of the Principal and interest on the 2006 Bonds as such Principal and interest become due and payable, upon all property subject to taxation by the District (except certain personal property which is taxable at limited rates). Although the County is obligated to levy an ad valorem tax for payment of the 2006 Bonds, the 2006 Bonds are not the debt of the County. See DISTRICT FINANCIAL INFORMATION Ad Valorem Property Taxation and - Assessed Valuation herein. The 2006 Bonds do not constitute a debt of the State of California (the State ) or any political subdivision of the State. The annual tax levy will be based on the assessed value of taxable property in the District. Fluctuations in the assessed value of property in the District may cause the annual tax levy and tax rate to fluctuate. The reduction of assessed values of taxable property in the District caused by economic and other factors beyond the District s control, such as economic recession, deflation of land values, a relocation out of the District or financial difficulty or bankruptcy by one or more major property taxpayers, or the complete or partial destruction of such property caused by, among other eventualities, earthquake, flood or other natural disaster, could cause a reduction in the assessed value within the District and necessitate a corresponding increase in the annual tax levy. Debt Service Fund Pursuant to the Bond Resolution, the County Treasurer will create and maintain, while the 2006 Bonds are outstanding, a fund for the 2006 Bonds designated the Series 2006 B Debt Service Fund (the "Debt Service Fund"), which shall be maintained by the County Treasurer as a separate account, distinct from all other funds of the District, into which shall be paid on receipt thereof, (i) the portion of the 2006 Bond proceeds equal to the accrued interest and any premium received by the District, and (ii) the proceeds of any ad valorem taxes levied upon the property within the District for the payment of the 2006 Bonds and the interest thereon. Disbursements From Debt Service Fund. The moneys in the Debt Service Fund, to the extent necessary to pay the principal of and accreted value of, premium, if any, and interest on, the 2006 Bonds as the same become due and payable, shall be transferred by the County Treasurer to the Paying Agent for subsequent disbursement to the beneficial owners of the 2006 Bonds in accordance with the Bond Resolution. Interest earnings on funds in the Debt Service Fund shall remain therein and be used to pay principal and accreted value of, and interest and premium (if any) when due. Any moneys remaining in the Debt Service Fund after the 2006 Bonds and the interest thereon have been paid, or provision for such payment has been made, shall be transferred to the general fund of the District. Investment of District Funds and Bond Proceeds The proceeds from the sale of the 2006 Bonds not consisting of accrued interest or premium, shall be paid to the County Treasurer to the credit of the fund created and established under the Bond Resolution known as the "McFarland Unified School District Building Fund" (the "Building Fund") of the District, which shall be accounted for separate and distinct from all other District and County funds. The Building Fund shall be administered by the County Office of -11-

18 Education for the account of the District. Such proceeds shall be used solely for the purpose for which the 2006 Bonds are being issued. Proceeds of the 2006 Bonds held by the County Treasurer shall be invested pursuant to law and the investment policy of the County, unless otherwise requested in writing by the District. The interest earned on the monies deposited to the Building Fund shall be deposited in said Building Fund and used for the purposes for which the 2006 Bonds have been authorized. Any excess proceeds of the 2006 Bonds not needed for the authorized purposes for which the 2006 Bonds are being issued shall be transferred to the Debt Service Fund. All funds held by the County Treasurer pursuant to the Bond Resolution are required to be invested by the County Treasurer pursuant to law and the investment policy of the County, unless otherwise requested in writing by the District, which request may include the Local Agency Investment Fund and/or investment agreements, including guaranteed investment contracts, provided that such agreements comply with the rating agencies which are then rating the 2006 Bonds. See KERN COUNTY INVESTMENT POOL herein. CONTINUING DISCLOSURE The District has covenanted for the benefit of the holders and beneficial owners of the 2006 Bonds to provide certain financial information and operating data relating to the District by not later than 9 months following the end of the District s fiscal year, commencing no later than March 31, 2007 with the report for the fiscal year (the Annual Report ) to each National Repository and appropriate State Repository (if any) (together, the Repositories ). In addition, the District shall provide notices of the occurrence of certain enumerated events, if material, in a timely manner to the Repositories or to the Municipal Securities Rulemaking Board. In lieu of filing the Annual Report and notices of the occurrence of certain events with the Repositories, the District may file such Annual Report solely with the Central Post Office, the Internet-based filing system currently located at or such other similar filing system approved by the Securities and Exchange Commission. The specific nature of the information to be contained in the Annual Report or the notices of material events is summarized below in APPENDIX D Form of Continuing Disclosure Certificate. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. The District has never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events. The County is not obligated to undertake any continuing disclosure in connection with the 2006 Bonds. -12-

19 Disclaimer Regarding Financial Security. The following information has been furnished by Financial Security Assurance Inc. ( Financial Security ) for use in this Official Statement. No representation is made by the District or the Underwriter as to the accuracy or completeness of such information, or the absence of material adverse changes therein at any time subsequent to the date hereof. Reference is made to APPENDIX F for a specimen of the Financial Security s policy. Bond Insurance Policy BOND INSURANCE Concurrently with the issuance of the 2006 Bonds, Financial Security will issue its Municipal Bond Insurance Policy for the 2006 Bonds (the "Policy"). The Policy guarantees the scheduled payment of principal of and interest on the 2006 Bonds when due as set forth in the form of the Policy included as Appendix F to this Official Statement. The Policy are not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. Financial Security Assurance Inc. Financial Security is a New York domiciled financial guaranty insurance company and a wholly owned subsidiary of Financial Security Assurance Holdings Ltd. ("Holdings"). Holdings is an indirect subsidiary of Dexia, S.A., a publicly held Belgian corporation, and of Dexia Credit Local, a direct wholly-owned subsidiary of Dexia, S.A. Dexia, S.A., through its bank subsidiaries, is primarily engaged in the business of public finance, banking and asset management in France, Belgium and other European countries. No shareholder of Holdings or Financial Security is liable for the obligations of Financial Security. At September 30, 2006, Financial Security's combined policyholders' surplus and contingency reserves were approximately $2,581,107,000 and its total net unearned premium reserve was approximately $1,992,163,000 in accordance with statutory accounting principles. At September 30, 2006, Financial Security's consolidated shareholder s equity was approximately $3,058,987,000 and its total net unearned premium reserve was approximately $1,590,538,000 in accordance with generally accepted accounting principles. The consolidated financial statements of Financial Security included in, or as exhibits to, the annual and quarterly reports filed after December 31, 2005 by Holdings with the Securities and Exchange Commission are hereby incorporated by reference into this Official Statement. All financial statements of Financial Security included in, or as exhibits to, documents filed by Holdings pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this Official Statement and before the termination of the offering of the 2006 bonds shall be deemed incorporated by reference into this Official Statement. Copies of materials incorporated by reference will be provided upon request to Financial Security Assurance Inc.: 31 West 52nd Street, New York, New York 10019, Attention: Communications Department (telephone (212) ) The Policy does not protect investors against changes in market value of the 2006 Bonds, which market value may be impaired as a result of changes in prevailing interest rates, changes in applicable ratings or other causes. Financial Security makes no representation -13-