DEBT SERVICE FUNDS. Debt Management Policy and Guidelines

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1 DEBT SERVICE FUNDS Debt service funds are used to account for all financial resources that are restricted, committed, or assigned to expend for principal and interest, and related fees. For FY , the total Debt Service budget is $350.1 million, representing 8% of the District s total budget. While adhering to its debt management policy and guidelines described in the section below, and with the goal of providing cash relief to the capital outlay program to allow for maintaining the District s assets during a period of declining property values, the District successfully restructured its Certificates of Participation (COPs) debt in FY and achieved a three year phased savings of $137.4 million ($27.6 million in FY , $50 million in FY , and $59.8 million in FY ). Debt Management Policy and Guidelines The District s debt management policy, formally adopted in School Board Rule 6Gx13-3A , provides guidelines for issuing debt and managing the debt portfolio in order to ensure the longterm financial strength of the Board. Debt is issued to fund the District s Capital Program including the construction of new school buildings, renovations, equipment, buses, and information technology systems. Debt may also be issued to fund working capital reserves for operations, as needed, and for large scale investments or funding needs of the Board, as appropriate. The guiding principles and objectives of the Board s debt policies are the following: Provide the lowest cost of funds. Maximize proceeds to fund capital projects by integrating the capital planning and debt financing functions. Reduce risks by establishing and monitoring risk management strategies such as liability matching and use of derivative products to hedge interest rate exposure. Maintain the confidence of the rating agencies, bond insurers, and investor markets. Comply with all State and Federal requirements regarding the sale of debt and the investment and expenditure of proceeds. Maintain the integrity and transparency of the underwriter selection process and all other outside providers in the debt management process. Monitor the development and market acceptance of new municipal market products to evaluate suitability to the Board s needs. The District s debt policies and portfolio are periodically reviewed by the Treasury Advisory Committee, a panel of financial professionals who act in an independent and advisory role and provide the Board with expert advice on prudent investment management, debt management, risk management, and optimum treasury management techniques and systems. 5-1

2 SUMMARY OF DEBT SERVICE FUNDS FY TENTATIVE BUDGET ARRA MASTER SBE COP COP EQUIPMENT FUND FUND FUND LEASE Revenues State $ 13,794,280 $ - $ - $ - Local - Property Taxes Other - Interest ,000 Total Revenues $ 13,794,280 $ - $ - $ 1,000 Transfers From Capital Funds - 2,038, ,315,474 33,671,635 Fund Balance - Prior Year 2,129,607-3,955, ,952 TOTAL REVENUES & OTHER SOURCES $ 15,923,887 $ 2,038,060 $ 157,271,186 $ 33,887,587 Appropriations Principal $ 10,300,000 $ - $ 59,726,370 $ 30,402,419 Interest 3,494,280 2,038,060 93,589,104 3,269,216 Total Appropriations $ 13,794,280 $ 2,038,060 $ 153,315,474 $ 33,671,635 Fund Balance - End of Year Restricted 2,129,607-3,955, ,952 TOTAL APPROPRIATIONS & RESERVES $ 15,923,887 $ 2,038,060 $ 157,271,186 $ 33,887,587 Debt Service Projected Revenue FY Tentative Budget FY Tentative REVENUE Budget Fund Balance $ 96,167,824 State Revenue 13,794,280 Local Property Taxes 46,023,386 Local Interest 1,632,978 Transfers in from Capital 192,518,146 TOTAL $ 350,136,614 Transfers in from Capital 55.0% Revenue FY Local Interest 0.5% Fund Balance 27.5% State Revenue 3.9% Local Property Taxes 13.1% 5-2

3 SUMMARY OF DEBT SERVICE FUNDS FY TENTATIVE BUDGET QUALIFIED ZONE GENERAL TOTAL ACADEMY OBLIGATION DEBT BONDS BONDS SERVICE Revenues State $ - $ - $ 13,794,280 Local - Property Taxes - 46,023,386 46,023,386 Other - Interest 1,560,978 71,000 1,632,978 $ 1,560,978 $ 46,094,386 $ 61,450,644 Transfers From Capital Funds 3,492, ,518,146 Fund Balance - Prior Year 32,450,429 57,417,124 96,167,824 TOTAL REVENUES & OTHER SOURCES $ 37,504,384 $ 103,511,510 $ 350,136,614 Appropriations Principal $ - $ 54,145,000 $ 154,573,789 Interest - 9,989, ,380,357 Total Appropriations $ - $ 64,134,697 $ 266,954,146 Fund Balance - End of Year Restricted 37,504,384 39,376,813 83,182,468 TOTAL APPROPRIATIONS & RESERVES $ 37,504,384 $ 103,511,510 $ 350,136,614 Debt Service Appropriations FY Tentative Budget Appropriations FY SBE Bonds 3.9% ARRA 0.6% FY Tentative APPROPRIATIONS Budget SBE Bonds $ 13,794,280 ARRA 2,038,060 COPs 153,315,474 MEL 33,671,635 GOBs 64,134,697 Fund Balance 83,182,468 TOTAL $ 350,136,614 Fund Balance 23.8% GOBs 18.3% MEL 9.6% COPs 43.8% Abbreviations SBE State Board of Education MEL Master Equipment/Technology Lease ARRA American Recovery and Reinvestment Act COP Certificates of Participation QSCBs/BABs Qualified School Construction Bonds/Build America Bonds GOBs General Obligation Bonds 5-3

4 REVENUE SUMMARY OF DEBT SERVICE FUNDS FY TENTATIVE BUDGET FIVE YEAR HISTORY FY Actual FY Actual FY Actual FY Projected FY Estimated Revenue Increase/ (Decrease) State Sources CO&DS Withheld for SBE Bonds $ 12,577,633 $ 13,324,985 $ 13,463,482 $ 13,490,872 $ 13,794,280 $ 303,408 SBE/COBI Bond Interest 109,395 3,972 7, Total State $ 12,687,028 $ 13,328,957 $ 13,471,331 $ 13,490,872 $ 13,794,280 $ 303,408 Local Sources District School Tax $ 87,316,175 $ 60,555,243 $ 64,200,564 $ 75,568,645 $ 46,023,386 $ (29,545,259) Interest Revenue 2,574,018 5,183,927 1,615,599 1,632,978 1,632,978 - Net Increase/Decrease in Fair Value of Investments 29,584 2,146 2, Total Local 89,919,777 65,741,316 65,818,724 77,201,623 47,656,364 (29,545,259) Other Financing Sources Proceeds of Refunding Bonds/COPs $ 511,815,000 $ 57,770,000 $ 1,710,000 $ 276,715,000 $ - $ (276,715,000) Premium on Refunding Bonds/COPs 14,150, ,363 8,249,265 - (8,249,265) Payments to Refunded Bond Escrow Agent (245,279,112) (57,440,000) (1,861,836) (282,618,959) - 282,618,959 Transfers from Capital 157,804, ,959, ,249, ,658, ,518,146 (25,140,165) Total Other Financing Sources 438,491, ,289, ,264, ,003, ,518,146 (27,485,471) Beginning Fund Balance 82,537,719 92,157,333 76,467,737 81,329,813 96,167,824 14,838,011 TOTAL REVENUE, TRANSFERS, & FUND BALANCE $ 623,636,153 $ 486,517,030 $ 377,022,757 $ 392,025,925 $ 350,136,614 $ (41,889,311) EXPENDITURES FY Actual FY Actual FY Actual FY Projected FY Tentative Appropriations Increase/ (Decrease) (Function 9200) Redemption of Principal $ 407,819,690 $ 271,447,592 $ 143,948,927 $ 151,723,236 $ 154,573,789 $ 2,850,553 Interest 120,757, ,261, ,718, ,857, ,380,357 (28,476,841) Dues, Fees, & Other 2,901, ,274 25,044 3,277,667 - (3,277,667) Total Expenditures 531,478, ,049, ,692, ,858, ,954,146 (28,903,955) Ending Fund Balance 92,157,333 76,467,737 81,329,813 96,167,824 83,182,468 (12,985,356) TOTAL EXPENDITURES, TRANSFERS & FUND BALANCE $ 623,636,153 $ 486,517,030 $ 377,022,757 $ 392,025,925 $ 350,136,614 $ (41,889,311) 5-4

5 STATE BOARD OF EDUCATION (SBE) FUND Capital Outlay Bonds are issued by the State Board of Education on behalf of the District and are referred to as SBE or Capital Outlay Bond Issue (COBI) Bonds. Pursuant to the Florida Constitution, bonds have a twenty year maturity and are secured by a pledge of the District s portion of state revenues from the sale of automobile license plates (referred to as motor vehicle license (MVL) taxes or tag revenue). Net proceeds from the bond sale are distributed to the District and deposited into capital outlay funds for eligible capital projects. Principal and interest payments, investment of Debt Service Fund resources, and compliance with reserve requirements are administered by the State Board of Education and the State Board of Administration. Since 1995, the state has sold over $176 million of SBE bonds on behalf of M-DCPS, and $71.5 million of the bonds remain outstanding. A sale in the amount of $390 thousand is anticipated for fiscal year Information for budget and accounting transactions are provided by the state. REVENUES ACTUAL PROJECTED TENTATIVE RESULTS RESULTS BUDGET State Sources CO & DS Withheld for SBE Bonds $ 13,463,482 $ 13,490,872 $ 13,794,280 SBE/COBI Bond Interest 7, Sub-Total $ 13,471,331 $ 13,490,872 $ 13,794,280 Non Revenue Source Proceeds of Refunding Bonds $ 1,710,000 $ - $ - Premium on Refunding Bonds 167, Payments to Refunded Bond Escrow Agent (1,861,836) - - Sub-Total $ 15,527 $ - $ - FUND BALANCE FROM PRIOR YEAR 2,542,588 2,355,076 2,129,607 TOTAL REVENUES & OTHER SOURCES $ 16,029,446 $ 15,845,948 $ 15,923,887 APPROPRIATIONS Bond Principal $ 9,300,000 $ 9,785,000 $ 10,300,000 Interest 4,349,326 3,931,341 3,494,280 Other Debt Service 25, Sub-Total $ 13,674,370 $ 13,716,341 $ 13,794,280 FUND BALANCE - END OF YEAR Restricted 2,355,076 2,129,607 2,129,607 TOTAL APPROPRIATIONS & RESERVES $ 16,029,446 $ 15,845,948 $ 15,923,

6 AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA) ECONOMIC STIMULUS FUNDS On February 17, 2009, the American Recovery and Reinvestment Act of 2009 was enacted to provide a stimulus to the economy. This federal stimulus provided much needed cash relief to the Capital Program with an infusion of $226 million in Qualified School Construction Bonds (QSCBs) and Build America Bonds (BABs) with near interest-free payments and the ability to defer payments for five years. Debt service payments are estimated at ~$2 million annually for the first five years, $11.5 million in FY 2016 and $20.3 million annually from FY 2017 through FY QSCBs mature in BABs debt service payments continue from FY 2028 through 2032 at $6.4 million annually. FY FY FY ACTUAL PROJECTED TENTATIVE RESULTS RESULTS BUDGET REVENUES Local Sources-Interest $ - $ - $ - Net Increase(Decrease) in Fair Value of Investments TRANSFERS From Capital Outlay Funds - 1,987,109 2,038,060 Sub-Total $ - $ 1,987,109 $ 2,038,060 FUND BALANCE FROM PRIOR YEAR TOTAL REVENUES & OTHER SOURCES $ - $ 1,987,109 $ 2,038,060 APPROPRIATIONS Bond Principal $ - $ - $ - Interest - 1,987,109 2,038,060 Other Debt Service Sub-Total $ - $ 1,987,109 $ 2,038,060 FUND BALANCE - END OF YEAR Restricted TOTAL APPROPRIATIONS & RESERVES $ - $ 1,987,109 $ 2,038,

7 CERTIFICATES OF PARTICIPATION (COPs) FUND Certificates of Participation (COPs) represent undivided interests in a dedicated revenue stream (i.e. lease-purchase agreement payments). COPs proceeds are used to construct or purchase facilities or equipment, acquired by the School Board through a lease-purchase agreement with the School Board Foundation, a tax-exempt organization considered part of the reporting entity under generally accepted accounting principles, and created for the specific purpose of selling COPs. Net COPs proceeds are budgeted in a COPs Capital Outlay Fund and debt service payments are budgeted in a COPs Debt Service Fund. Debt payments are funded primarily through a transfer from the Local Optional Millage Levy Capital Outlay Fund. In FY 2011, the District provided cash relief to the capital program and achieved a three year phased savings of $137.4 million from restructuring COPs debt through the sale of $276,715 million in Series 2011A and Series 2011B COPs. COP Series 2003B, and portions of the 2007A, 2007B, and 2009A COPs were refinanced primarily moving principal and interest obligations from FYs 2011, 2012, and 2013 to mature in FYs 2029 through 2032, resulting in a true interest cost of 4.849% for both Series, with a total present value of $9.8 million. The District was able to lower its cost of borrowing by including mandatory puts of 3 years on $77 million of the 2011A COP and 5 years on $70 million of the 2011B COP due 2031 and 2032 respectively. Since 1988, over $3.2 billion in COPs (net of refundings) have been sold to finance the purchase, construction and renovation of facilities, land, appurtenant equipment, motor vehicles, buses, and technology (see pages 5-6 through 5-9). Of the $3.2 billion sold in COPs, over $1.8 billion were sold since 2006 in order to meet the class size constitutional mandate. Approximately $2.5 billion in COPs remain outstanding, with final maturity in 2037 and with total debt service payments of approximately $4.4 billion. FY FY FY ACTUAL PROJECTED TENTATIVE RESULTS RESULTS BUDGET REVENUES Local Sources-Interest $ 173,876 $ - $ - TRANSFERS From Capital Outlay Funds 181,818, ,671, ,315,474 Sub-Total $ 181,992,282 $ 175,671,551 $ 153,315,474 NON-REVENUE SOURCES Proceeds of Refunding COPs $ - $ 276,715,000 $ - Premium from Refunding COPs - 8,249,265 - Payments to Refunded Bond Escrow Agent - (282,618,959) - FUND BALANCE FROM PRIOR YEAR 3,687,342 4,888,073 3,955,712 TOTAL REVENUES & OTHER SOURCES $ 185,679,624 $ 182,904,930 $ 157,271,186 APPROPRIATIONS Bond Principal $ 55,011,090 $ 58,890,139 $ 59,726,370 Interest 125,780, ,781,412 93,589,104 Other Debt Service - 3,277,667 - Sub-Total $ 180,791,551 $ 178,949,218 $ 153,315,474 FUND BALANCE - END OF YEAR Restricted $ 4,888,073 $ 3,955,712 $ 3,955,712 TOTAL APPROPRIATIONS & RESERVES $ 185,679,624 $ 182,904,930 $ 157,271,

8 MASTER EQUIPMENT/TECHNOLOGY/ERP LEASE AGREEMENT In FY , a Master Equipment/Technology Lease Program was implemented as an alternative form of financing to lower the cost of borrowing for significant equipment acquisitions, instructional technology updates, and the District s Enterprise Resource Planning (ERP) Project which began successful implementation in FY The Master Equipment Lease program also provided relief to the collateral requirements of the COPs Program. Final lease payments are scheduled to pay out in FY FY FY FY ACTUAL PROJECTED TENTATIVE RESULTS RESULTS BUDGET REVENUES Local Interest $ 4,228 $ 1,000 $ 1,000 Net Increase(Decease) in Fair Value (306) - of Investments $ 3,922 $ 1,000 $ 1,000 TRANSFERS From Capital Outlay Funds 36,619,335 37,187,605 33,671,635 Sub-Total $ 36,623,257 $ 37,188,605 $ 33,672,635 FUND BALANCE FROM PRIOR YEAR 783, , ,952 TOTAL REVENUES & OTHER SOURCES $ 37,406,436 $ 37,402,557 $ 33,887,587 APPROPRIATIONS Bond Principal $ 30,712,837 $ 31,693,097 $ 30,402,419 Interest 6,479,647 5,494,508 3,269,216 Sub-Total $ 37,192,484 $ 37,187,605 $ 33,671,635 FUND BALANCE - END OF YEAR Restricted $ 213,952 $ 214,952 $ 215,952 TOTAL APPROPRIATIONS & RESERVES $ 37,406,436 $ 37,402,557 $ 33,887,

9 QUALIFIED ZONE ACADEMY BONDS (QZABs) In 1997, the Taxpayer Relief Act created the QZAB financial instrument, an interest-free bond that school districts may apply for in order to fund school modernization. Principal on the QZABs is paid by the District, while interest is paid by the U.S. Government in the form of income tax credits to lenders. The terms of the QZABs are thirteen and fifteen years and will be retired through a discounted sinking fund where the annual deposits are invested in a guaranteed investment contract that will yield the additional amount needed to retire the principal at maturity. During the first issue of QZABs in fiscal year 2000, the Florida Department of Education awarded the District the majority of bonding authority allocated to the State of Florida with $24.5 million out of $40 million. Since then, the District has issued an additional $51.8 million in QZABs to fund additional technology, capital and vocational projects. A total of $76.3 million in QZABs remain outstanding and are scheduled to mature in FY The primary sources of funds for required debt service payments are transfers from QZAB interest earnings and the Local Optional Millage Levy Capital Outlay Fund. FY FY FY ACTUAL PROJECTED TENTATIVE RESULTS RESULTS BUDGET REVENUES Local Sources-Interest $ 1,346,587 $ 1,560,978 $ 1,560,978 TRANSFERS From Capital Outlay Funds 2,811,697 2,812,046 3,492,977 Sub-Total $ 4,158,284 $ 4,373,024 $ 5,053,955 FUND BALANCE FROM PRIOR YEAR 23,919,121 28,077,405 32,450,429 TOTAL REVENUES & OTHER SOURCES $ 28,077,405 $ 32,450,429 $ 37,504,384 APPROPRIATIONS FUND BALANCE - END OF YEAR Restricted $ 28,077,405 $ 32,450,429 $ 37,504,384 TOTAL APPROPRIATIONS & RESERVES $ 28,077,405 $ 32,450,429 $ 37,504,

10 GENERAL OBLIGATION BOND (GOB) FUND On March 8, 1988, voters authorized the issuance of $980 million of General Obligation Bonds for the construction of new schools, additions and renovations to existing schools and equipment. The District sold $200,000,000 of General Obligation School District Bonds in both fiscal years and As cash requirements dictated, bonds were issued in the amount of $200 million during , $240 million during , and $140 million during Net proceeds of these General Obligation Bond sales were recorded in the General Obligation Bond Capital Outlay Fund. All bonds have now been issued and $216 million remain outstanding with final maturity in FY The 1989, 1992, 1994A and 1995 Series were partially refunded during 1993, 1996, and 1998 at considerably lower interest rates. Proceeds from refunding issues were recorded in the debt service fund as were the remarketed General Obligation Bonds in , and These proceeds were required by GASB 34 to be reflected as gross proceeds instead of net and generated an additional $28 million to fund capital projects. The General Obligation Bond Debt Service Fund is used to record principal and interest payments. The ad valorem millage is levied annually in an amount to cover the debt service requirements. Fund balance at the end of each year must be sufficient to make debt service payments due during July and August of the next fiscal year, before tax revenues are collected. The recommended millage rate for fiscal year is.240 mills, which is.145 mills lower than FY FY FY FY ACTUAL PROJECTED TENTATIVE RESULTS RESULTS BUDGET REVENUES Local Sources District School Tax $ 64,200,564 $ 75,568,645 $ 46,023,386 Interest Revenue 90,908 71,000 71,000 Net Increase(Decrease) in Fair 2, Value of Investments Total Revenues $ 64,294,339 $ 75,639,645 $ 46,094,386 FUND BALANCE FROM PRIOR YEAR $ 45,535,507 $ 45,795,307 $ 57,417,124 TOTAL REVENUES & BALANCES $ 109,829,846 $ 121,434,952 $ 103,511,510 APPROPRIATIONS Bond Principal $ 48,925,000 $ 51,355,000 $ 54,145,000 Interest 15,109,539 12,662,828 9,989,697 Sub-Total $ 64,034,539 $ 64,017,828 $ 64,134,697 FUND BALANCE - END OF YEAR Restricted $ 45,795,307 $ 57,417,124 $ 39,376,813 TOTAL APPROPRIATIONS & RESERVES $ 109,829,846 $ 121,434,952 $ 103,511,

11 DEBT SERVICE AS A PERCENTAGE OF TOTAL TAXABLE ASSESSED VALUE OF PROPERTY Original FY Total Issue Maturity Interest Original Outstanding Debt Service Remaining Series Date Date Rate(s) Principal Principal Payments * Debt Service State Board of Education (SBE) Bonds: 2002A 04/15/02 01/01/ % $ 1,950,000 $ 85,000 $ 88,485 $ 88, A 06/15/03 01/01/ % 1,285, ,000 89,565 1,166, A 07/15/04 01/01/ % 5,115,000 3,975, ,118 5,372, A 05/01/05 01/01/ % 89,680,000 52,115,000 11,805,750 60,319, B 07/01/05 01/01/ % 2,735,000 2,055, ,750 2,503, A 05/01/08 01/01/ % 8,425,000 7,585, ,050 11,611, A 08/15/09 01/01/ % 1,355,000 1,285,000 95,062 1,887, Ref 10/14/10 01/01/ % 1,710, , , , A 10/14/10 01/01/ % 640,000 1,390,000 47,200 1,704, Ref 10/14/10 01/01/ % 1,440,000 1,440,000 95,100 1,924,050 SBE subtotal $ 114,335,000 $ 71,450,000 $ 13,794,280 $ 87,486,551 Certificates of Participation (COPs) Lease Purchase Agreements: 2001B 06/19/01 05/01/ % $ 54,650,000 $ 46,550,000 $ 3,866,292 $ 75,105, C 09/01/01 10/01/ % 42,235,000 1,925,000 1,965,425 1,965, A 12/13/02 08/01/ % 75,000,000 61,680,000 5,497,899 91,023, B 12/13/02 08/01/ % 75,000,000 61,985,000 5,517,945 91,416, A 03/01/03 08/01/ % 63,633,000 1,433, ,000 1,585, D 06/01/03 08/01/29 2-5% 165,210,000-7,732, ,251, A 08/12/04 10/01/ % 87,210,000 80,510,000 9,135, ,785, A 06/28/05 04/01/ % 56,380,000 24,885,000 3,117,000 31,257, A 03/15/06 11/01/ % 201,080, ,685,000 13,870, ,321, B 04/11/06 11/01/ % 208,150, ,995,000 14,245, ,188, C 05/10/06 10/01/ % 53,665,000 42,730,000 5,020,819 55,230, D 12/21/06 10/01/ % 10,570,000 10,485, ,981 14,981, A 05/10/07 05/01/ % 316,515, ,480, ,650, B 05/24/07 05/01/32 4-5% 101,265,000 91,725, ,354, C 05/24/07 05/01/ % 90,825,000 90,825,000 4,591, ,126, A 06/19/08 08/01/26 5% 233,400, ,620,000 28,034, ,185, B 05/28/08 05/01/ % 538,305, ,305,000 27,382, ,894, C 08/01/08 07/15/ % 57,770,000 57,440,000 2,877,267 93,541, A 02/26/09 02/01/ % 310,055, ,770, ,763, A 03/01/11 05/01/ % 139,055, ,055,000 11,395, ,371, B 03/01/11 05/01/ % 137,660, ,660,000 7,860, ,227,995 COPs subtotal $ 3,017,633,000 $ 2,538,743,982 $ 153,315,474 $ 4,380,226,468 * Includes principal and interest payments only for debt outstanding as of June 30,

12 DEBT SERVICE AS A PERCENTAGE OF TOTAL TAXABLE ASSESSED VALUE OF PROPERTY (continued) Original FY Total Issue Maturity Interest Original Outstanding Debt Service Remaining Series Date Date Rate(s) Principal Principal Payments * Debt Service Qualified School Construction Bonds (QSCBs) & Build America Bonds (BABs): 2009B 11/30/09 12/15/26 N/A $ 104,000,000 $ 104,000,000 $ - $ 104,000, A 06/15/10 06/15/ % 96,290,000 96,290, , ,849, B 06/15/10 06/15/ % 27,990,000 27,990,000 1,253,119 51,919,623 QSCB/BABs subtotal $ 228,280,000 $ 228,280,000 $ 2,038,060 $ 264,768,671 Master Equipment Lease (MEL) Agreements: ERP 06/01/ % $ 85,400,000 $ 61,353,750 $ 13,952,949 $ 67,817,997 Technology 06/20/ % 50,000,000 21,188,107 11,073,600 22,147,201 Buses 03/03/ % 24,387,033 13,274,313 2,923,693 14,618,463 HVAC 03/03/ % 21,986,770 11,967,911 2,635,982 13,179,912 Buses 03/01/ % 25,278,699 16,356,495 3,085,411 18,512,463 MEL subtotal $ 207,052,502 $ 124,140,576 $ 33,671,635 $ 136,276,036 Qualified Zone Academy Bonds (QZABs): /21/00 12/21/13 N/A $ 24,508,401 $ 24,508,401 $ - $ 24,508, /01/01 06/01/15 N/A 15,000,000 15,000,000-15,000, /18/03 12/18/18 N/A 9,743,635 9,743,635-9,743, /15/06 12/15/22 N/A 2,599,392 2,599,392-2,599, /09/10 11/09/30 N/A 24,480,000 24,480,000-24,480,000 QZABs subtotal $ 76,331,428 $ 76,331,428 $ - $ 76,331,428 General Obligation Bonds (GOBs): /24/94 08/01/ % $ 99,030,000 $ 42,515,000 $ 11,695,375 $ 46,904, /01/96 07/15/ % 79,650,000 17,620,000 18,060,500 18,060, /15/97 02/15/17 5.0% 86,785,000 57,430,000 11,206,500 67,930, /15/98 08/01/ % 154,580,000 98,440,000 23,172, ,809,238 GOBs subtotal $ 420,045,000 $ 216,005,000 $ 64,134,697 $ 244,705,113 Total $ 4,063,676,930 $ 3,254,950,986 $ 266,954,146 $ 5,189,794,267 Debt Service as a Percent of Total Assessed Value 0.134% 2.60% Total Taxable Assessed Value $ 199,754,278,377 * Includes principal and interest payments only for debt outstanding as of June 30,

13 FUTURE DEBT SERVICE REQUIREMENTS For Debt Outstanding as of June 30, 2011 (000's) Note: Debt service obligations differ from those listed in the Executive Summary because of changes in variable interest rates and issuance of additional debt. Year Ended June 30: SBE ARRA- QSCBs/ BABs COPs MEL/MTL QZABs GOB TOTAL 2012 $ 13,794 $ 2,038 $ 153,315 $ 33,672 $ - $ 64,135 $ 266, ,815 2, ,514 33,672-46, , ,828 2, ,520 22,598 24,508 46, , ,841 2, ,519 21,949 15,000 46, , ,852 11, ,831 21,300-30, , FORWARD 18, ,124 3,458,527 3,085 36,823 11,455 3,773,371 Total $ 87,487 $264,769 $4,380,226 $136,276 $76,331 $ 244,705 $5,189,794 Future Debt Service Payments Total All Financial Instruments Total Payments Financing Instrument Total Payments SBE $ 87,487 QSCBs/BABs 264,769 COPs 4,380,226 MEL/MTL 136,276 QZABs 76,331 GOB 244,705 Total $ 5,189,794 QZABs 1% MEL/MTL 3% GOB 5% SBE 2% QSCBs/ BABs 5% COPs 84% 5-13

14 FUTURE DEBT SERVICE REQUIREMENTS For Debt Outstanding as of June 30, 2011 Millions Annual Debt Service by Debt Type Fiscal Year SBE State Board of Education QSCBs/BABs Qualified School Construction Bonds / Build America Bonds COPs Certificates of Participation MEL Master Equipment/Technology Lease QZABs Qualified Zone Academy Bonds GOBs General Obligation Bonds 5-14

15 ESTIMATED LEGAL DEBT MARGIN ON BONDED DEBT AS OF JUNE 30, 2011 ($ Millions) The Florida State Board of Education Administrative Rule 6A (2) establishes a parameter on bonded indebtedness for school districts. Limits are computed as ten percent of the assessed value of taxable property for the most current year. The District can bond approximately $19.7 billion with voter approval. Funds may be used for schools listed in the advertised project list. The District s most recent general obligation bonds were issued in 1987 and will be retired in Limit of bonded indebtedness: 10% of the net assessed value of taxable property in 2011 (approximately $199,754.3) $ 19, Gross bonded debt * $ Less amounts available in Debt Service Funds** (50.56) Total amount applicable to debt limit Legal debt margin on bonded debt $ 19, * Includes outstanding bonds issued by the District and bonds issued by the state on behalf of the District and repaid from the District s share of Florida Motor Vehicle License taxes. ** Includes estimated cash on hand available on June 30,

16 DISTRICT BOND AND NOTE RATINGS The District s significant fiscal improvements over the last two years and its strategic response to financial challenges caused by reduced state funding and property tax growth restrictions has been positively recognized by the rating agencies and is reflected in the rating designations below. Short Term Notes Long Term -General Obligation Bonds Long Term -Certificates of Participation Rating Agency Moody's MIG1 Aa3, Stable Outlook A1, Stable Outlook Standard and Poor's A+, Stable Outlook A, Stable Outlook Moody s Investor Service: Ratings for Long-Term Municipal Debt Aaa Best quality; carry the smallest degree of investment risk. Aa High quality; margins of protection not quite as large as the Aaa bonds. A Upper medium grade; security adequate but could be susceptible to impairment. Baa Medium grade; neither highly protected nor poorly secured -lack outstanding investment characteristics and sensitive to changes in economic circumstances. Ba Speculative; protection is very moderate. B Not desirable investment; sensitive to day-to-day economic circumstances. Caa Poor standing; may be in default but with a workout plan. Ca Highly speculative; may be in default with nominal workout plan. C Hopelessly in default. Ratings further classified by 1, 2, or 3 modifier with 1 being high and 3 being low. Moody s Investor Service: Ratings for Short-Term Municipal Debt MIG 1 This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. MIG 2 This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. MIG 3 This designation denotes favorable quality. All security elements are accounted for but lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established. MIG 4 This designation denotes adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk. 5-16

17 DISTRICT BOND AND NOTE RATINGS (continued) Standard & Poor's: Ratings for Long-Term Municipal Debt AAA Highest rating; extremely strong security. AA Very strong security; differs from AAA in only a small degree. A Strong capacity but more susceptible to adverse economic effects than two above categories. BBB Adequate capacity but adverse economic conditions more likely to weaken capacity. BB Lowest degree of speculation; risk exposure. B Speculative; risk exposure. CCC Speculative; major risk exposure. CC Highest degree of speculation; major risk exposure. C No interest is being paid. D Bonds in default with interest and/or repayment of principal in arrears. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. Standard & Poor's: Ratings for Municipal Notes SP-1 Very strong or strong capacity to pay principle and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2 Satisfactory capacity to pay principal and interest SP-3 Speculative capacity to pay principal and interest. + or - are used with a rating symbol to indicate the relative position of a credit within the rating category. 5-17