Due: December 1, as shown on the inside cover page

Transcription

1 NEW ISSUE BOOK-ENTRY ONLY Rating: MOODY S Aaa See BOND RATING herein Subject to compliance by the District with certain covenants, in the opinion of Chapman and Cutler LLP, Chicago, Illinois ( Bond Counsel ), under present law, interest on the Bonds is excludable from gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but such interest is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Interest on the Bonds is not exempt from present State of Illinois income taxes. See TAX EXEMPTION herein for a more complete discussion. Community College District No. 512 Counties of Cook, Kane, Lake and McHenry and State of Illinois (William Rainey Harper College) $20,110,000 General Obligation Refunding Bonds, Series 2015B Dated: October 22, 2015 Due: December 1, as shown on the inside cover page The General Obligation Refunding Bonds, Series 2015B (the Bonds ), of Community College District No. 512, Counties of Cook, Kane, Lake and McHenry and State of Illinois (the District ), will be issued in fully registered form and will be registered initially only in the name of Cede & Co., as registered owner and nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Bonds. Purchasers of the Bonds will not receive certificates representing their interests in the Bonds purchased. Ownership by the beneficial owners of the Bonds will be evidenced by book-entry only. Payments of principal of and interest on the Bonds will be made by Amalgamated Bank of Chicago, Chicago, Illinois, as bond registrar and paying agent, to DTC, which in turn will remit such payments to its participants for subsequent disbursement to the beneficial owners of the Bonds. As long as Cede & Co. is the registered owner as nominee of DTC, payments of principal of and interest on the Bonds will be made to such registered owner, and disbursement of such payments will be the responsibility of DTC and its participants. Individual purchases of the Bonds will be made in the principal amount of $5,000 or any integral multiple thereof. The Bonds will bear interest from their dated date at the rates per annum as shown on the inside cover page. Interest on the Bonds (computed on the basis of a 360-day year consisting of twelve 30-day months) will be payable semi-annually on each June 1 and December 1, commencing December 1, Proceeds of the Bonds will be used to (i) refund certain of the District s outstanding bonds and (ii) pay costs associated with the issuance of the Bonds. The Bonds are not subject to redemption prior to maturity. In the opinion of Bond Counsel, the Bonds are valid and legally binding upon the District and are payable from any funds of the District legally available for such purpose, and all taxable property in the District is subject to the levy of taxes to pay the same without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. See THE BONDS Security herein. The date of this Official Statement is September 30, The Bonds were offered at public sale on September 30, 2015, and are being issued subject to the approval of legality by Chapman and Cutler LLP, Chicago, Illinois, Bond Counsel, and certain other conditions. Chapman and Cutler LLP, Chicago, Illinois, will also act as Disclosure Counsel to the District. It is expected that beneficial interests in the Bonds will be available for delivery through the facilities of DTC on or about October 22, Established 1954 Speer Financial, Inc. INDEPENDENT PUBLIC FINANCE CONSULTANTS ONE NORTH LASALLE STREET, SUITE 4100 CHICAGO, ILLINOIS Telephone: (312) ; Facsimile: (312)

2 Community College District No. 512 Counties of Cook, Kane, Lake and McHenry and State of Illinois (William Rainey Harper College) $20,110,000 GENERAL OBLIGATION REFUNDING BONDS, SERIES 2015B MATURITIES, AMOUNTS, INTEREST RATES, YIELDS AND CUSIP NUMBERS MATURITY (DECEMBER 1) AMOUNT INTEREST RATE YIELD CUSIP NUMBER (216181) 2015 $3,000, % 0.33% FM ,625, % 0.41% FN ,095, % 0.74% FP ,450, % 0.98% FQ ,690, % 1.20% FR ,250, % 1.44% FS1 CUSIP data herein is provided by the CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Capital IQ, a part of McGraw-Hill Companies Financial. No representations are made as to the correctness of the CUSIP numbers. These CUSIP numbers may also be subject to change after the issuance of the Bonds.

3 No dealer, broker, salesman or other person has been authorized by the District or PNC Capital Markets LLC, Philadelphia, Pennsylvania (the Underwriter ), to give any information or to make any representations other than those contained in this Official Statement in connection with the offering described herein and if given or made, such other information or representations must not be relied upon as statements having been authorized by the District, the Underwriter or any other entity. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy any securities other than the Bonds, nor shall there be any offer to sell or solicitation of an offer to buy the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. This Official Statement is submitted in connection with the sale of the securities described in it and may not be reproduced or used, in whole or in part, for any other purposes. Unless otherwise indicated, the District is the source of all tables and statistical and financial information contained in this Official Statement. The information contained in this Official Statement concerning DTC has been obtained from DTC. The other information set forth herein has been furnished by the District or from other sources believed to be reliable. The information and opinions expressed herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District since the date of this Official Statement. This Official Statement should be considered in its entirety and no one factor considered more or less important than any other by reason of its position in this Official Statement. Where statutes, reports or other documents are referred to herein, reference should be made to such statutes, reports or other documents for more complete information regarding the rights and obligations of parties thereto, facts and opinions contained therein and the subject matter thereof. Any statements made in this Official Statement, including the Exhibits and Appendices, involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of such estimates will be realized. This Official Statement contains certain forward-looking statements and information that are based on the District s beliefs as well as assumptions made by and information currently available to the District. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. The Underwriter has reviewed the information in this Official Statement in accordance with, and as 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. IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

4 TABLE OF CONTENTS PAGE INTRODUCTION...1 THE BONDS...1 Authority and Purpose...1 General Description...1 Registration and Transfer...2 Redemption...2 Security...2 THE REFUNDING...3 SOURCES AND USES...4 RISK FACTORS...4 Finances of the State of Illinois...4 Declining Equalized Assessed Valuation...4 Local Economy...5 Loss or Change of Bond Rating...5 Secondary Market for the Bonds...5 Continuing Disclosure...5 Suitability of Investment...6 Future Changes in Laws...6 Factors Relating to Tax Exemption...6 Bankruptcy...7 THE DISTRICT...7 District Map...7 Description...8 Campus Master Plan...8 Governance...9 Administrative Officers...9 Academic Programs...14 Faculty and Employees...14 Students and Enrollment...15 Admissions Policy...15 Tuition and Financial Aid...15 General Fund Revenues...16 Tax-Capped Funds Reserves...17 WORKING CASH FUND...17 Working Cash Fund Summary...18 POPULATION DATA...18 FINANCIAL INFORMATION AND ECONOMIC CHARACTERISTICS OF THE DISTRICT...19 Direct General Obligation Bonded Debt (Principal Only)...19 Overlapping General Obligation Bonded Debt...20 Selected Financial Information...21 Composition of Equalized Assessed Valuation...21 Trend of Equalized Assessed Valuation i-

5 Taxes Extended and Collected...22 District Tax Rates by Purpose Representative Total Tax Rates...23 Ten Largest Taxpayers...23 Retailers Occupation, Service Occupation and Use Tax...24 Specified Owner-Occupied Units...25 Largest Employers...26 New Property...27 Unemployment Rates...27 Employment by Industry...28 Employment by Occupation...30 Household Incomes...31 Per Capita Income...32 SHORT-TERM BORROWING...32 FUTURE DEBT...32 DEFAULT RECORD...32 REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION...32 Summary of Property Assessment, Tax Levy and Collection Procedures...32 Real Property Assessment...33 Equalization...35 Exemptions...36 Tax Levy...38 Property Tax Extension Limitation Law...38 Extensions...39 Collections...39 Truth in Taxation Law...41 BOND RATING...41 TAX EXEMPTION...41 STATE AID...44 General...44 Direct Operating Support...45 Indirect Operating Support...45 Institutional Grant Programs...45 Student Financial Aid...46 RETIREMENT PLANS...46 CONTINUING DISCLOSURE...47 THE UNDERTAKING...48 Annual Financial Information Disclosure...48 Reportable Events Disclosure...49 Consequences of Failure of the District to Provide Information...50 Amendment; Waiver...50 Termination of Undertaking...51 Additional Information...51 Dissemination of Information; Dissemination Agent...51 AUDITED FINANCIAL STATEMENTS...51 BOOK-ENTRY ONLY SYSTEM ii-

6 CERTAIN LEGAL MATTERS...54 MUNICIPAL ADVISOR...55 NO LITIGATION...55 UNDERWRITING...55 AUTHORIZATION...56 EXHIBITS Exhibit A Combined Statement of Revenues, Expenditures and Changes in Fund Balance, Exhibit B Budget, Fiscal Year Ending June 30, 2016 APPENDICES Appendix A Audited Financial Statements of the District for the Fiscal Year Ended June 30, 2015 Appendix B Proposed Form of Opinion of Bond Counsel -iii-

7 COMMUNITY COLLEGE DISTRICT NO. 512 COUNTIES OF COOK, KANE, LAKE AND MCHENRY AND STATE OF ILLINOIS (WILLIAM RAINEY HARPER COLLEGE) GREGORY DOWELL Chairman WALT MUNDT Vice Chairman JIM GALLO WILLIAM KELLEY JOSEPH HAYNES Student Trustee NANCY ROBB Secretary DIANE HILL PAT STACK DR. KENNETH L. ENDER President DR. RONALD N. ALLY Executive Vice President of Finance and Administrative Services DR. MARIA COONS Senior Executive to the President, Board Liaison and Vice President of Workforce and Strategic Alliances DR. SHEILA QUIRK-BAILEY Chief of Staff and Vice President of Planning and Institutional Effectiveness LAURA BROWN Vice President and Chief Advancement Officer DR. JUDITH MARWICK Provost MICHELÉ ROBINSON Special Assistant to the President for Diversity and Inclusion/Assistant Provost DISTRICT COUNSEL Robbins, Schwartz, Nicholas, Lifton & Taylor, Ltd. Chicago, Illinois DISTRICT AUDITORS Crowe Horwath LLP Oak Brook, Illinois BOND AND DISCLOSURE COUNSEL Chapman and Cutler LLP Chicago, Illinois MUNICIPAL ADVISOR Speer Financial, Inc. Chicago, Illinois UNDERWRITER PNC Capital Markets LLC Philadelphia, Pennsylvania

8 OFFICIAL STATEMENT Community College District No. 512 Counties of Cook, Kane, Lake and McHenry and State of Illinois (William Rainey Harper College) $20,110,000 General Obligation Refunding Bonds, Series 2015B INTRODUCTION The purpose of this Official Statement is to set forth certain information concerning Community College District No. 512, Counties of Cook, Kane, Lake and McHenry and State of Illinois (the District or the Issuer ), in connection with the offering and sale of its General Obligation Refunding Bonds, Series 2015B (the Bonds ). THE BONDS AUTHORITY AND PURPOSE The Bonds are being issued pursuant to the Public Community College Act of the State of Illinois (the Community College Act ), the Local Government Debt Reform Act of the State of Illinois (the Debt Reform Act ), and all laws amendatory thereof and supplementary thereto, and a bond resolution (the Bond Resolution ) adopted by the Board of Trustees of the District (the Board ) on the 30th day of September, 2015, as supplemented by a notification of sale. Proceeds of the Bonds will be used to (i) currently refund all of the District s outstanding General Obligation Refunding Bonds, Series 2005A, dated December 15, 2005 (the Series 2005A Bonds ), and all of the District s outstanding General Obligation Refunding Bonds, Series 2006, dated December 1, 2005 (the Series 2006 Bonds and together with the Series 2005 Bonds, the Refunded Bonds ), and (ii) pay costs associated with the issuance of the Bonds. See THE REFUNDING herein. GENERAL DESCRIPTION The Bonds will be dated the date of issuance thereof, will be in fully registered form, without coupons, and will be in denominations of $5,000 or any integral multiple thereof under a book-entry only system operated by The Depository Trust Company, New York, New York ( DTC ). Principal of and interest on the Bonds will be payable by Amalgamated Bank of Chicago, Chicago, Illinois (the Registrar ). The Bonds will mature as shown on the inside cover page hereof. Interest on the Bonds will be payable each June 1 and December 1, beginning December 1, The Bonds will bear interest from their dated date, or from the most recent interest payment date to which interest has been paid or provided for, computed on the basis of a 360-day year consisting of twelve 30-day months. The principal of the Bonds will be payable in lawful

9 money of the United States of America upon presentation and surrender thereof at the principal corporate trust office of the Registrar. Interest on each Bond will be paid by check or draft of the Registrar payable upon presentation in lawful money of the United States of America to the person in whose name such Bond is registered at the close of business on the 15th day of the month next preceding the interest payment date. REGISTRATION AND TRANSFER The Registrar will maintain books for the registration of ownership and transfer of the Bonds. Subject to the provisions of the Bonds as they relate to book-entry form, any Bond may be transferred upon the surrender thereof at the principal corporate trust office of the Registrar, together with an assignment duly executed by the registered owner or his or her attorney in such form as will be satisfactory to the Registrar. No service charge shall be made for any transfer or exchange of Bonds, but the District or the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds. The Registrar shall not be required to transfer or exchange any Bond during the period beginning at the close of business on the 15th day of the month next preceding any interest payment date on such Bond and ending at the opening of business on such interest payment date. REDEMPTION The Bonds are not subject to redemption prior to maturity. SECURITY The Bonds, in the opinion of Chapman and Cutler LLP, Chicago, Illinois, Bond Counsel ( Bond Counsel ), are valid and legally binding upon the District and are payable from any funds of the District legally available for such purpose, and all taxable property in the District is subject to the levy of taxes to pay the same without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. The Bond Resolution provides for the levy of ad valorem taxes, unlimited as to rate or amount, upon all taxable property within the District in amounts sufficient to pay, as and when due, all principal of and interest on the Bonds. The Bond Resolution will be filed with the County Clerks of Cook, Kane, Lake and McHenry Counties, Illinois (the County Clerks ), and will serve as authorization to the County Clerks to extend and collect the property taxes as set forth in the Bond Resolution to pay the Bonds. Reference is made to Appendix B for the proposed form of opinion of Bond Counsel. -2-

10 THE REFUNDING A portion of the proceeds of the Bonds will be used to refund the Refunded Bonds, further described as follows: SERIES 2005A BONDS MATURITY (DECEMBER 1) ORIGINAL AMOUNT ISSUED AMOUNT REFUNDED BY THE BONDS CALL PRICE CALL DATE 2019 $3,200,000 $3,200, % 12/01/ ,630,000 4,630, % 12/01/2015 TOTAL $7,830,000 $7,830,000 SERIES 2006 BONDS MATURITY (DECEMBER 1) ORIGINAL AMOUNT ISSUED AMOUNT REFUNDED BY THE BONDS CALL PRICE CALL DATE 2015 $ 2,795,000 $ 2,795,000 N/A N/A ,945,000 2,945, % 12/01/ ,460,000 3,460, % 12/01/ ,830,000 3,830, % 12/01/ , , % 12/01/2015 TOTAL $13,920,000 $13,920,000 Certain proceeds received from the sale of the Bonds and lawfully available funds of the District in the amount of $188, (the Available Funds ), will be deposited in an Escrow Account (the Escrow Account ) to be held by Amalgamated Bank of Chicago, Chicago, Illinois (the Escrow Agent ), under the terms of an Escrow Letter Agreement, dated as of the date of issuance of the Bonds, between the District and the Escrow Agent. The moneys so deposited in the Escrow Account will be held in cash and will be sufficient to pay when due the principal of and interest on the Refunded Bonds up to and including the maturity and prior redemption dates thereof. -3-

11 SOURCES AND USES The sources and uses of funds resulting from the Bonds and the Available Funds are shown below: SOURCES: Principal Amount $20,110, Original Issue Premium 2,117, Available Funds 188, Total Sources $22,416, USES: Deposit to Escrow Account to Pay Refunded Bonds $22,246, Costs of Issuance* 169, Total Uses $22,416, * Includes underwriter s discount and other issuance costs. RISK FACTORS The purchase of the Bonds involves certain investment risks. Accordingly, each prospective purchaser of the Bonds should make an independent evaluation of the entirety of the information presented in this Official Statement and its appendices and exhibits in order to make an informed investment decision. Certain of the investment risks are described below. The following statements, however, should not be considered a complete description of all risks to be considered in the decision to purchase the Bonds, nor should the order of the presentation of such risks be construed to reflect the relative importance of the various risks. There can be no assurance that other risk factors are not material or will not become material in the future. FINANCES OF THE STATE OF ILLINOIS The State of Illinois (the State ) has experienced adverse economic conditions resulting in significant shortfalls between the State s general fund revenues and spending demands. In addition, the underfunding of the State s pension systems has contributed to the State s poor financial health. Budget problems of the State may result in decreased or delayed State appropriations to the District, including appropriations of the hereinafter defined State Aid (6.44% of the District s General Fund Revenue Sources for the fiscal year ended June 30, 2014). DECLINING EQUALIZED ASSESSED VALUATION The amount of property taxes extended for the District is determined by applying the various operating tax rates and the bond and interest tax rate levied by the District to the EAV. The District s EAV could decrease for a number of reasons including, but not limited to, a decline in property values or large taxpayers moving out of the District. As detailed herein under -4-

12 FINANCIAL INFORMATION Trend of Equalized Assessed Valuation, the District s EAV has significantly declined over the past five years. Declining EAVs and increasing rates (certain of which may reach their rate ceilings) could reduce the amount of taxes the District is able to receive. However, the levy of property taxes to pay debt service on the Bonds is unlimited as to rate and amount. LOCAL ECONOMY The financial health of the District is in part dependent on the strength of the local economy. Many factors affect the local economy, including rates of employment and economic growth and the level of residential and commercial development. It is not possible to predict to what extent any changes in economic conditions, demographic characteristics, population or commercial and industrial activity will occur and what impact such changes would have on the finances of the District. LOSS OR CHANGE OF BOND RATING The Bonds have received a credit rating from Moody s Investors Service, New York, New York ( Moody s ). The rating can be changed or withdrawn at any time for reasons both under and outside the District s control. Any change, withdrawal or combination thereof could adversely affect the ability of investors to sell the Bonds or may affect the price at which they can be sold. SECONDARY MARKET FOR THE BONDS No assurance can be given that a secondary market will develop for the purchase and sale of the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. The Underwriter is not obligated to engage in secondary market trading or to repurchase any of the Bonds at the request of the owners thereof. Prices of the Bonds as traded in the secondary market are subject to adjustment upward and downward in response to changes in the credit markets and other prevailing circumstances. No guarantee exists as to the future market value of the Bonds. Such market value could be substantially different from the original purchase price. CONTINUING DISCLOSURE A failure by the District to comply with the Undertaking for continuing disclosure (see CONTINUING DISCLOSURE herein) will not constitute an event of default on the Bonds. Any such failure must be reported in accordance with Rule 15c2-12 (the Rule ) adopted by the Securities and Exchange Commission (the Commission ) under the Securities Exchange Act of 1934, as amended (the Exchange Act ), and may adversely affect the transferability and liquidity of the Bonds and their market price. -5-

13 SUITABILITY OF INVESTMENT The interest rate borne by the Bonds is intended to compensate the investor for assuming the risk of investing in the Bonds. Furthermore, the tax-exempt feature of the Bonds is currently more valuable to high tax bracket investors than to investors that are in low tax brackets. As such, the value of the interest compensation to any particular investor will vary with individual tax rates and circumstances. Each prospective investor should carefully examine the Official Statement and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Bonds are an appropriate investment for such investor. FUTURE CHANGES IN LAWS Various state and federal laws, regulations and constitutional provisions apply to the District and to the Bonds. The District can give no assurance that there will not be a change in, interpretation of, or addition to such applicable laws, provisions and regulations which would have a material effect, either directly or indirectly, on the District, or the taxing authority of the District. For example, many elements of local government finance, including the issuance of debt and the levy of property taxes, are controlled by state government. Future actions of the State may affect the overall financial conditions of the District, the taxable value of property within the District, and the ability of the District to levy property taxes or collect revenues for its ongoing operations. FACTORS RELATING TO TAX EXEMPTION As discussed under TAX EXEMPTION herein, interest on the Bonds could become includible in gross income for purposes of federal income taxation, retroactive to the date the Bonds were issued, as a result of future acts or omissions of the District in violation of its covenants in the Bond Resolution. Should such an event of taxability occur, the Bonds are not subject to any special redemption. There are or may be pending in the Congress of the United States legislative proposals relating to the federal tax treatment of interest on the Bonds, including some that carry retroactive effective dates, that, if enacted, could affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to Bonds issued prior to enactment. Finally, reduction or elimination of the tax-exempt status of obligations such as the Bonds could have an adverse effect on the District s ability to access the capital markets to finance future capital or operational needs by reducing market demand for such obligations or materially increasing borrowing costs of the District. The tax-exempt bond office of the Internal Revenue Service (the Service ) is conducting audits of tax-exempt bonds, both compliance checks and full audits, with increasing frequency to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for Federal income tax purposes. It cannot be predicted whether the Service will commence any such audit. If an audit is commenced, under current procedures the Service may treat the District as a taxpayer and the -6-

14 Bondholders may have no right to participate in such proceeding. The commencement of an audit with respect to any tax-exempt obligations of the District could adversely affect the market value and liquidity of the Bonds, regardless of the ultimate outcome. BANKRUPTCY The rights and remedies of the Bondholders may be limited by and are subject to the provisions of federal bankruptcy laws, to other laws or equitable principles that may affect the enforcement of creditors rights, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against local governments. The various opinions of counsel to be delivered with respect to the Bonds and the Bond Resolution will be similarly qualified. THE DISTRICT DISTRICT MAP -7-

15 DESCRIPTION The District is a public community college which first enrolled students in September, Established by referendum on March 27, 1965, the District provides its residents with a comprehensive post-secondary education which includes career and continuing education programs. Currently, approximately 35% of area college bound high school graduates choose to enroll at the District within one year of graduation. The District encompasses an area of approximately 200 square miles and much of the northwest suburban region of Chicago. The majority of acreage in the District is located in the northwestern quadrant of Cook County. The remainder of land within the District is located in the adjacent counties of Kane, Lake, and McHenry. Approximately 92% of the 2014 Equalized Assessed Valuation of the District is located in Cook County, with approximately 7% in Lake County, 0.8% in McHenry County and 0.2% in Kane County. Substantial residential, commercial and retail growth over the last three decades has resulted from O Hare International Airport located immediately to the southeast of the District and the Northwest Tollway (Interstate Highway 90) which bisects the District. The District s estimated total population within its boundaries is 534,984. Communities located mostly or entirely within the District include Arlington Heights, Barrington, Barrington Hills, Elk Grove Village, Hoffman Estates, Inverness, Lake Barrington, Mount Prospect, Palatine, Prospect Heights, Rolling Meadows, Schaumburg, South Barrington, Tower Lakes and Wheeling. The District also includes sections of Buffalo Grove, Carpentersville, Deer Park, DesPlaines, Fox River Grove, Fox River Valley Gardens, Hanover Park, North Barrington, Northbrook and Roselle. The main campus of the District has 20 buildings and is located on a 200 acre site within the Village of Palatine. The District also operates a second, one-building facility in the City of Prospect Heights and a third one-building facility in the Village of Schaumburg. The District operates in many extension centers in addition to the three main locations. CAMPUS MASTER PLAN In fall 2008, the District passed a $153 million capital bond referendum. Several building projects proposed to the State of Illinois through the RAMP process could make additional funding available for capital projects. In order to properly leverage this funding, the District updated in 2010 its campus master plan (the Master Plan ), previously adopted in 2008, to provide a comprehensive vision for the District s campus through Working closely with the Board, the President and a broadly-based campus steering committee, and with input from faculty, students, staff and the community, the design team conducted extensive analyses of District s academic programs and facilities to create the updated Master Plan. -8-

16 The Master Plan was designed to achieve the following four goals: (i) a more effective and welcoming campus; (ii) space for academic programs to meet current and future needs; (iii) space for student services to meet current and future needs; and (iv) a strategic, cost-effective approach to the entire campus. In January 2011, the Board adopted the 2010 Master Plan document and a prioritization of projects. GOVERNANCE The District is governed by a seven member Board of Trustees elected by residents of the District for overlapping six year terms plus a non-voting student board member elected annually by the students of the District. The following table presents a list of the members of the Board of Trustees of the District and their business or professional affiliation as of June 1, 2015: NAME FIRST ELECTED TERM EXPIRES BUSINESS OR PROFESSIONAL AFFILIATION Gregory Dowell Chairman Walt Mundt Vice Chairman Nancy Robb Secretary 2011 April 2017 Managing Partner at Bass, Solomon & Dowell, LLP 2011 April 2017 Enterprise Account Executive at Apttus 2015 April 2019 Retired Superintendent for Township High School District 211 Jim Gallo 2011 April 2017 CEO of Specialty Finishing Group Diane Hill 2009 April 2017 Retired Northwestern University Instructor William Kelley 2003 April 2019 Attorney at Law, Kelley, Kelley & Kelley Pat Stack 2015 April 2019 Retired Vice President of Performance Improvement at Northwest Community Hospital Joseph Haynes (1) April 2016 Student, William Rainey Harper College (1) Non-voting student member. ADMINISTRATIVE OFFICERS The District is governed on a day-to-day basis by an executive staff. Set forth below are brief descriptions of the background of the District s chief administrative officers: the President, the Provost, the Executive Vice President of Finance and Administrative Services, the Chief of Staff and Vice President of Planning and Institutional Effectiveness, the Vice President and Chief Advancement Officer, the Senior Executive to the President, Board Liaison and Vice President of Workforce and Strategic Alliances, and the Special Assistant to the President for Diversity and Inclusion/Assistant Provost. -9-

17 Dr. Kenneth L. Ender, President Dr. Kenneth L. Ender became Harper College s fifth president on July 1, 2009 after serving as President and Chief Executive Officer of Cumberland County College in Vineland, New Jersey for eleven years. Through partnerships and alliances, Dr. Ender is positioning Harper to become a leading 21st century community college by increasing graduation, transfer and certificate completion rates, aligning Harper s curriculum with high schools, training students for new economy jobs and implementing new accountability and transparency standards. Previously, Dr. Ender held a variety of positions in higher education, including Vice President for Academic Affairs at Richland Community College, Interim District Dean at Cuyahoga Community College, Associate Vice President for Administrative Services at Cleveland State University, Director of Student Activities at Virginia Commonwealth University and Director of Student Advising at University of Georgia. He also has teaching experience and has written numerous publications. In addition to his Ph.D. in Urban Services Leadership from Virginia Commonwealth University, Dr. Ender holds a Master s in Education from the University of Georgia and a bachelor s degree in Business Management, also from Virginia Commonwealth University. Dr. Ronald N. Ally, Executive Vice President, Finance and Administrative Services Dr. Ally assumed his current position on July 1, 2010, following a nationwide search. Dr. Ally previously served as the Chief Financial and Operations Officer for School District U-46 in Elgin, IL, the second largest school district in Illinois. Prior to School District U-46, Dr. Ally served as the Vice President for Administrative Services/Treasurer for nine years at McHenry County College in Crystal Lake, Illinois, as well as the Director of Financial Affairs and Controller at College of DuPage in Glen Ellyn, IL and Controller at Moraine Valley Community College in Palos Hills, IL. Dr. Ally holds an Educational Doctorate degree with a major in Educational Administration, an Educational Specialist degree with a major in Educational Administration, and a Master s of Science degree in Education with a major in School Business Management from Northern Illinois University. Dr. Ally earned his Bachelor of Science degree with a major in Accounting from Elmhurst College. He is a Certified Public Accountant licensed to practice in the State of Illinois. Dr. Ally is actively involved in many professional organizations, including service as an AQIP Reviewer and Consultant-Evaluator for the Higher Learning Commission, American Institute of Certified Public Accountants (AICPA), Illinois CPA Society, National Association of College and University Business Officials (NACUBO), Central Association of College and University Business Officials (CACUBO), Illinois Association of School Business Officials (IASBO), and Government Finance Officers Association (GFOA). Dr. Ally has previously served as a member of the Accreditation Review Council (ARC) for the Higher Learning Commission, ICCB Effective Practice Reviewer for Policy Area Three Affordability and -10-

18 Policy Area Six Accountability and Productivity for the Illinois Community College Board, and the CACUBO 2005 and 2013 Annual Meeting Host Committees. Laura J. Brown, Vice President and Chief Advancement Officer Laura Brown was appointed in August 2014 by the Harper College Board of Trustees to serve as the Chief Advancement Officer and Executive Director of the Harper College Educational Foundation. In her new role, Ms. Brown oversees all aspects of the College s public and private sector fundraising and alumni programs and oversees the areas of marketing services and communications. In addition, she co-leads a philanthropic management company that assists nonprofit organizations with strategic planning, charitable positioning and marketing strategies. Prior to joining the Educational Foundation, Ms. Brown served as the Vice President for Institutional Advancement for McHenry County College (MCC) in Crystal Lake, Illinois. While at MCC Ms. Brown served on the executive cabinet and was responsible for college-wide strategic planning, and leadership for institutional advancement areas, including enrollment management, college-wide planning, financial development and private fundraising, grants, governmental relations, marketing and communications, institutional research, institutional accreditation and external relations. She provided leadership to many institutional initiatives including the HLC re-accreditation, ICCB 5 year commitment, and five year strategic plan. Ms. Brown holds a bachelor s degree in therapeutic recreation from the University of St. Francis in Joliet, Illinois. She is currently pursuing a masters in Management and Business Administration from University of St. Francis. Prior to pursuing a career in education, Ms. Brown served in senior-level executive for more than 25 years within 3 regional nonprofit organizations, and 2 county/regional government agencies. Dr. Maria Coons, Senior Executive to the President, Board Liaison and Vice President of Workforce and Strategic Alliances Dr. Coons is currently the Senior Executive to the President, Board Liaison and Vice President of Workforce and Strategic Alliances. In these roles, Dr. Coons oversees Board relations, workforce development, community education, adult learning, and business outreach processes at the College. These functions contribute to the College s strategic directions by building pathways to better employment opportunities and ensuring incumbent workers have the skills necessary to succeed. In 2008, Business Outreach activities were expanded to smaller businesses with the opening of an Illinois Small Business Development Center at Harper College. This unit contributes to District economic activity by helping small businesses get started and expand. The Job Placement Resource Center was created in 2014 to match Harper students and alumni to local job opportunities. Joining Harper College in 1987, Dr. Coons has served as a full-time faculty member and department chair where she taught a full complement of management, marketing and finance courses. She was also instrumental in implementing the College s Adult Fast Track Program. Dr. Coons served as co-chair of the College s Master Plan Steering Committee. This team -11-

19 assisted in crafting a 10-year campus master plan that addressed space needs for academic and support functions. She also served as the co-chair of Harper s successful re-accreditation with the Higher Learning Commission. As a result, Dr. Coons was given the President s Leadership Award in Before pursuing a career in education, Dr. Coons was Assistant Vice President of Check Operations at the Federal Reserve Bank of Chicago. Her division was responsible for clearing 4 million checks daily. Dr. Coons also served as Employment Manager for the Bank where she developed bank examiner recruiting and professional internship programs. During her 8-year career with the Federal Reserve Bank of Chicago, Dr. Coons received two President s Awards for Excellence for her accomplishments and dedication to the core values of the institution. Dr. Coons holds a doctorate in Higher Education from National-Louis University, a Master s in Business Administration from Loyola University in Chicago and a Bachelor of Science degree in Marketing from Indiana University. Dr. Judith Marwick, Provost Dr. Marwick assumed the role of Provost on July 1, 2010, following a national search. In the 20 years prior to Harper she has worked in the Illinois community college system as a Mathematics faculty member and Department Chair at Prairie State College in Chicago Heights; Dean of Arts and Sciences at Morton College in Cicero; Assistant Vice President for Academic Programs at Moraine Valley Community College in Palos Hills; and as Executive Vice President for Instruction and Student Services at Kankakee Community College. Dr. Marwick holds a doctorate in community college executive leadership from the University of Illinois and a master s of science degree in mathematics from Purdue University. She has been active in state and national organizations and currently serves as a member of the Illinois Board of Higher Education s Academic Leadership Council and was appointed to the Developmental Advisory Committee to Illinois Community College Board. Dr. Marwick has provided leadership for a number of community college initiatives including collaborating with high schools to improve college readiness, assessing student learning, developing new curriculum, evaluating and revising institutional placement policies and providing smoother transitions for community college students to universities. Dr. Sheila Quirk-Bailey, Chief of Staff and Vice President of Institutional Effectiveness As Chief of Staff and Vice President of Planning and Institutional Effectiveness, Dr. Quirk-Bailey helps coordinate the daily operations of the College and oversees the following functions: Institutional Research; Outcomes Assessment; Institutional Effectiveness; and Strategic Planning and Strategic Alliances. Joining Harper College in 1992, Dr. Quirk-Bailey has held seven positions which included responsibility for the following functions: Strategic Planning and Alliances; Grants; Customized Training for Businesses; Workforce and Professional Development; Credit Career Programs; Technology, Math and Physical Science Division; Business Continuing Education; Economic Development; and Workforce Partnerships. -12-

20 She has provided leadership to many institutional initiatives, including the 2007 HLC re-accreditation and Harper s successful $88.8 million referendum in She has created strategic partnerships with five regional hospitals, 3COM, Motorola, Ameritech, Siemens and other Fortune 500 companies. She has also represented the College on statewide task forces on transfer and workforce development issues. Dr. Quirk-Bailey is very active in the business community and has served on many Chambers and Economic Development Boards. She is the past chair and currently serves on the Board of Directors of the Schaumburg Business Association, one of the largest business organizations in Illinois. She is also the Chair of the Northwest Educational Council for Student Success (NECSS), which is comprised of the superintendents of Harper s three feeder high school districts. Prior to joining Harper College, Dr. Quirk-Bailey was an Education Manager at Andersen Consulting Center for Professional Education. Dr. Quirk-Bailey holds a Doctorate in Management and Community College Policy and Administration from the University of Maryland University College, a Master s degree in Communications from Northern Illinois University and a Bachelor of Science degree in Speech Communication with a Business minor from Bradley University. She also has Instructional Design and Management Certifications from Andersen Consulting. Michelé Robinson, Special Assistant to the President for Diversity & Inclusion/Assistant Provost Michelé Robinson has worked for William Rainey Harper College since 2002 and is currently serving as Special Assistant to the President for Diversity & Inclusion/Assistant Provost. Prior to serving in this capacity, she served as Dean of Business & Social Science, coordinator of the campus Child Learning Center, and faculty in the Early Childhood Education department. In her current role, Ms. Robinson is responsible for the leadership of the college s Diversity & Inclusion initiatives including serving as ombudsman for Bias Incident Reporting, developing support for campus affinity employee groups, providing leadership for the Faculty Fellows program aimed at improving employee diversity in the faculty ranks, and collaborating with Human Resources on the implementation of 360 degree feedback surveys and exit interviews. She also has oversight for college wide curriculum, the Multicultural Faculty Fellowship program, and the Harper Promise Program. Ms. Robinson earned a bachelor s degree in Psychology from Northwestern University, a master s degree in Early Childhood Education Leadership and Advocacy from National Louis University and she is currently pursuing a doctorate in Educational Psychology from Northern Illinois University. Ms. Robinson is an active member of several campus committees and is co-leader of the Adelante Academy program at Harper College focused on providing college readiness experiences for Hispanic and Latino students. -13-

21 ACADEMIC PROGRAMS The District describes itself as a community college in the truest sense of the term. The District strives to provide the opportunity for developing a career, for completing the first two years of credit required for most bachelor s degrees, for learning new skills, for retooling for career advancement or change, for enriching the quality of one s life or simply enjoying the discovery of new knowledge. In addition to providing these primary missions, the District also offers specialized programs and services in cooperation with local school districts, area business and industry and other community colleges. Graduates of the District s programs frequently transfer to schools throughout Illinois and across the United States. The District offers career programs in a number of fields including Accounting and Business Programs, Computer Information Systems, Dental Hygiene, Diagnostic Medical Services, Early Childhood Education, Electronics Engineering Technology, Emergency Management Services, Fashion, Graphics Arts Technology, Heating-Ventilation-Air Conditioning, Health Information Technology, Human Services, Interior Design, Law Enforcement and Justice Administration, Manufacturing, Welding, Medical Office Administration, Nanoscience Technology, and Nursing. The programs offered in continuing education are an integral part of the comprehensive educational effort of the District. The wide range of offerings covers management training, technical training, psychological and health education needs, as well as fine arts, industrial arts, home economics and a variety of academic courses. FACULTY AND EMPLOYEES As of June 30, 2015, the budgeted full-time faculty of the District numbered 238, while there were also approximately 1,277 part-time adjunct faculty members, including continuing education instructors. The full-time faculty of the District is represented by the American Federation of Teachers. Adjunct faculty, which includes Librarians and Counselors, are represented by the Illinois Educational Association. As of June 30, 2015, the District had approximately 716 full-time and part time budgeted employee positions, excluding faculty. Building Service Employees are represented by the Illinois Educational Association, the Professional Technical employees are represented by the American Federation of Teachers and the Police are represented by the Illinois Council of Police. All non-faculty Union represented employees have contracts in place through at least A two year extension to 2017 was approved in 2014 for the full-time faculty union contract. -14-

22 STUDENTS AND ENROLLMENT The students of the District traditionally are residents of the District or employees of businesses located in the District. However, the District also accepts students from outside the District, with such students paying higher tuition charges. The following table sets forth the credit enrollment based upon Fall term registration for the current and past five academic years: Full-Time Equivalent (1) 10,547 10,170 9,545 9,444 9,089 Headcount (2) 17,678 17,337 16,470 16,260 15,830 (1) Full Time Equivalent ( FTE ) is the total number of credit hours for which students are enrolled divided by 15 semester credit hours. (2) Headcount represents total students enrolled on part-time or full-time basis. Source: The District. The District projects enrollment for financial forecast purposes. The following table sets forth enrollment projections of the District for the next three academic years: Full-Time Equivalent (1) 9,162 9,171 9,208 (1) FTE is the total number of credit hours for which students are enrolled divided by 15 semester credit hours. Source: The District. ADMISSIONS POLICY All high school graduates or the equivalent (e.g., GED) are eligible for admission to the District. A non-graduate 16 or 17 years of age who has been educated within the high school system, as certified in writing by the chief executive officer of the high school district in which the student has legal residence, or a non-graduate 18 years of age or older, may be admitted if he or she demonstrates the capacity to benefit from programs and courses offered by the District. High school students may be admitted to selected courses upon the written approval of their high school principal and the Director of Admissions of the District. To be placed in some programs in the District, the applicant may have to meet additional requirements as specified by that program and/or the Community College Act. TUITION AND FINANCIAL AID The District has a Board policy to limit the annual tuition and per credit hour fee increases to a maximum of the change in the annual December Consumer Price Index (CPI-U) rate plus 2%, but not to exceed either 5% of total tuition and fees or the Illinois statutory limitation. State statute limits in-district tuition to 1/3 of the district s per capita cost. -15-

23 In Fiscal Year 2015, tuition was $ and fees were $16.00 per credit hour. Tuition and fees represented 42.62% of General Fund revenues in Fiscal Year See also THE DISTRICT General Fund Revenues : YEAR TUITION (PER CREDIT HOUR) STATE APPORTIONMENT (PER CREDIT HOUR) LOCAL & OTHER REVENUE (PER CREDIT HOUR) PER CAPITA COST TUITION AS PERCENT OF PER CAPITA COST $ $25.51 $ $ % % % % % % In addition to tuition, the District charges a $9.00 per credit hour Construction and Renovation fee and a $7.00 per credit hour Technology fee. Of the Construction and Renovation fee, $7.00 is credited to the Operations and Maintenance Fund and $2.00 is credited to the Operations and Maintenance (Restricted) Fund for capital needs. Technology fees are credited to the Restricted Purposes Fund and are used to maintain and upgrade the District s computer technology. The District participates in a number of financial aid programs. The programs are funded by federal, state, and institutional sources. Federal programs include: Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work Study Program, William D. Ford Federal Direct Loan Program and Veteran s Educational Benefits. State programs available: Illinois Monetary Award program, Illinois Veterans Grant and other Illinois State Scholarship Programs. Other available sources of financial assistance that are institutionally funded include: Trustee Scholarship, Distinguished Scholarship, Senior Citizens Free Entitlement Program, Harper Community College Student Service Awards and Educational Foundation Endowed Scholarships. Additionally, scholarships funded by local organizations, corporations and private donors have been provided in all areas of study. For the academic year, 12,965 students applied for governmental financial aid assistance as of January 12, 2015, compared to 14,143 for the entire academic year and 14,705 for the academic year. Approximately, 30% of the student population was awarded Federal and State financial aid in GENERAL FUND REVENUES Over 92% of the District s operating revenues come from local sources: property taxes and tuition and fees. In Fiscal Year 2014, Local Tax Revenues (property taxes) represented 49.57% of General Fund revenues. Tuition and Fees comprised 42.62% of General Fund revenues that year. The District s General Fund consists of the Education Fund and the Operations and Maintenance Fund. -16-

24 GENERAL FUND REVENUE SOURCES FOR FISCAL YEARS ENDING JUNE 30, YEAR ENDED JUNE 30, 2010 YEAR ENDED JUNE 30, 2011 YEAR ENDED JUNE 30, 2012 YEAR ENDED JUNE 30, 2013 YEAR ENDED JUNE 30, 2014 Local Sources-Property Taxes 47.07% 45.89% 47.45% 49.34% 49.57% Local Sources-Other 0.26% 1.21% 0.86% 0.00% 1.04% State Sources-ICCB Grants 7.14% 6.50% 6.46% 6.41% 6.44% State Sources-Other 0.00% 0.00% 0.00% 0.00% 0.00% Federal Sources 0.26% 0.03% 0.03% 0.03% 0.02% Tuition & Fees 44.80% 46.16% 44.26% 43.55% 42.62% Other 0.47% 0.25% 0.94% 0.67% 0.31% TOTAL % % % % % Source: The audited financial statements of the District for the years ending June 30, June 30, Such financial statements were prepared using the accrual basis of accounting. TAX-CAPPED FUNDS RESERVES The District has a Board policy of maintaining a fund balance in the combined Tax-Capped Funds (consisting of the Education Fund, the Operations and Maintenance Fund, the Audit Fund and the Liability, Protection and Settlement Fund) between 40% and 60% of the budgeted annual expenditures. For Fiscal Year 2014, the ending fund balance of the Tax-Capped Funds was $54,161,579, or 49.1% of budgeted expenditures. The District s fund balance has exceeded 48% of budgeted expenditures in each of the last five years. TAX-CAPPED FUNDS (EDUCATION FUND, OPERATIONS AND MAINTENANCE FUND, AUDIT FUND AND LIABILITY, PROTECTION AND SETTLEMENT FUND) FISCAL YEAR ENDING FUND BALANCE REVENUES ENDING FUND BALANCE AS % OF REVENUES 2010 $49,533,942 $100,603, % ,526, ,627, % ,945, ,951, % ,999, ,863, % ,161, ,231, % WORKING CASH FUND Working Cash Fund Bonds are issued, subject to the provisions of the Limitation Law, for the purpose of creating or increasing a working cash fund. The District s Working Cash Fund is established by Section of the Public Community College Act. The fund is established for the purpose of enabling the District to have on hand at all times sufficient money to meet the demands for ordinary and necessary expenditures for all community college purposes. By making temporary transfers, the Working Cash Fund is used as a source of -17-

25 working capital by other funds. Such temporary transfers assist funds in meeting the demands for ordinary and necessary expenditures during periods of temporary low cash balances. Moneys in the working cash fund shall not be regarded as current assets available for community college purposes and shall not be used by the community college board in any manner other than to provide moneys with which to meet ordinary and necessary disbursements for salaries and other community college purposes. The moneys shall be loaned to the educational or operations and maintenance funds in order to avoid the issuance of tax anticipation warrants and notes. WORKING CASH FUND SUMMARY FISCAL YEAR END OF YEAR FUND BALANCE 2010 $15,549, ,624, ,661, ,678, ,705,626 Source: Compiled from the District s Audited Financial Statements for Fiscal Years ending June 30, POPULATION DATA The District s estimated population is 534,984. NAME OF ENTITY % CHANGE 2000/2010 Village of Arlington Heights 75,460 76,031 75, % Village of Barrington 9,504 10,168 10, % Village of Barrington Hills 4,202 3,915 4, % Village of Buffalo Grove 36,427 42,963 41, % Village of Carpentersville 23,049 30,586 37, % Village of Deer Park 2,887 3,102 3, % City of Des Plaines 53,223 58,720 58, % Village of Elk Grove Village 33,429 34,727 33, % Village of Fox River Grove 3,551 4,862 4, % Village of Hanover Park 32,895 38,278 37, % Village of Hoffman Estates 46,561 49,495 51, % Village of Inverness 6,503 6,749 7, % Village of Lake Barrington 3,855 4,757 4, % Village of Mount Prospect 53,170 56,265 54, % Village of North Barrington 1,787 2,918 3, % Village of Palatine 39,253 65,479 68, % City of Prospect Heights 15,239 17,081 16, % City of Rolling Meadows 22,591 24,604 24, % Village of Roselle 20,819 23,115 22, % Village of Schaumburg 68,586 75,386 74, % Village of South Barrington 2,937 3,760 4, % Village of Tower Lakes 1,333 1,310 1, % Village of Wheeling 29,911 34,496 35, % Cook County 5,105,067 5,376,741 5,194, % Kane County 317, , , % Lake County 516, , , % McHenry County 183, , , % State of Illinois 11,430,602 12,419,293 12,830, % Source: U.S. Census Bureau -18-

26 FINANCIAL INFORMATION AND ECONOMIC CHARACTERISTICS OF THE DISTRICT DIRECT GENERAL OBLIGATION BONDED DEBT (PRINCIPAL ONLY) CALENDAR YEAR SERIES 2005A BONDS (1) (DECEMBER 1) SERIES 2006 BONDS (2) (DECEMBER 1) SERIES 2009A BONDS (3) (DECEMBER 1) SERIES 2013 BONDS (4) (DECEMBER 1) SERIES 2015 BONDS (5) (DECEMBER 1) PLUS: THE BONDS (DECEMBER 1) LESS: THE REFUNDED BONDS (DECEMBER 1) TOTAL OUTSTANDING BONDS 2015 $ 2,795,000 $ 5,265,000 $1,510,000 $ 710,000 $ 3,000,000 $ 2,795,000 $ 10,485, ,945,000 5,425,000 2,245,000 2,625,000 2,945,000 10,295, ,460,000 6,730,000 1,935,000 3,095,000 3,460,000 11,760, ,830,000 7,530,000 3,450,000 3,830,000 10,980, $3,200, ,000 7,760,000 3,690,000 4,090,000 11,450, ,630,000 9,365,000 4,250,000 4,630,000 13,615, ,240,000 8,240, ,650,000 8,650, ,615,000 10,615, ,975,000 11,975, ,575,000 12,575, ,890,000 14,890, ,495,000 16,495, ,270,000 17,270,000 Total $7,830,000 $13,920,000 $142,785,000 $1,510,000 $4,890,000 $20,110,000 $21,750,000 $169,295,000 (1) The Series 2005A Bonds. (2) The Series 2006 Bonds. (3) General Obligation Bonds, Series 2009A, dated February 5, (4) General Obligation Limited Bonds, Series 2013, dated March 7, (5) General Obligation Limited Bonds, Series 2015, dated March 12,

27 OVERLAPPING GENERAL OBLIGATION BONDED DEBT (As of August 3, 2015) TAXING BODY OUTSTANDING DEBT (1) PERCENT AMOUNT Cook County $3,491,226, % $ 422,486,657 Cook County Forest Preserve District 118,610, % 14,353,448 Metropolitan Water Reclamation District 2,492,374, % 307,547,089 Kane County % 0 Kane County Forest Preserve District 162,325, % 533,470 Lake County % 0 Lake Count Forest Preserve District 274,450, % 13,667,610 McHenry County Conservation District 111,220, % 2,157,668 Village of Arlington Heights 42,540, % 42,540,000 Village of Barrington 2,635, % 2,579,138 Village of Barrington Hills 1,160, % 1,090,168 Village of Buffalo Grove 10,550, % 2,098,395 Village of Carpentersville 22,155, % 1,497,678 City of Des Plaines 40,611, % 6,786,125 Village of Elk Grove 79,370, % 74,631,611 Village of Fox River Grove 465, % 303,180 Village of Hanover Park 19,615, % 10,056,611 Village of Hoffman Estates 105,955, % 97,086,567 Village of Inverness 6,455, % 6,455,000 Village of Lake Barrington 4,755, % 4,195,812 Village of Mt. Prospect 48,075, % 48,075,000 Village of Northbrook 85,475, % 863,298 Village of Palatine 87,630, % 87,630,000 City of Prospect Heights 13,365, % 12,716,798 City of Rolling Meadows 20,010, % 19,923,957 Village of Roselle % 0 Village of Schaumburg 282,040, % 274,058,268 Village of South Barrington 4,600, % 4,351,600 Village of Wheeling 44,635, % 44,367,190 Dundee Township 5,230, % 192,464 Arlington Heights Park District 15,190, % 15,190,000 Barrington Park District 20,225, % 19,786,118 Buffalo Grove Park District 7,995, % 1,840,449 Des Plaines Park District 4,980, % 83,166 Dundee Township Park District 1,845, % 52,029 Elk Grove Park District 10,650, % 10,645,740 Hanover Park Park District 475, % 172,283 Hoffman Estates Park District 10,130, % 9,331,756 Mt. Prospect Park District 4,297, % 4,297,000 Northbrook Park District 8,265, % 8,017,050 Palatine Park District 10,255, % 10,255,000 Prospect Heights Park District % 0 River Trails Park District % 0 Rolling Meadows Park District 2,115, % 2,115,000 Salt Creek Rural Park District 659, % 659,000 Schaumburg Park District 17,705, % 16,938,374 Wheeling Park District 900, % 832,140 Fox River Grove Public Library District 265, % 94,446 Gail Borden Public Library District 16,550, % 220,115 Poplar Creek Public Library District 18,615, % 794,861 Lake Barrington Special Service Area 3 2,425, % 643,110 North Barrington Special Service Area 17 5,390, % 1,495,864 South Barrington Special Service Area 1 230, % 230,000 South Barrington Special Service Area 3 6,210, % 6,210,000 School District Number 3 2,505, % 1,013,523 School District Number 23 9,940, % 9,760,086 School District Number 25 9,050, % 9,050,000 School District Number 26 10,610, % 9,294,360 School District Number 57 7,045, % 7,045,000 High School District Number ,610, % 326,311 Community Consolidated School District 15 20,635, % 20,635,633 Community Consolidated School District 21 40,805, % 39,866,485 Community Consolidated School District 59 20,685, % 20,674,658 Community Unit School District Number ,000, % 60,768,200 Township High School District Number ,380, % 11,233,198 Township High School District Number ,800, % 42,675,880 Total Overlapping Bonded Debt $1,844,491,632 Source: Cook, Kane, Lake and McHenry County Clerks Office (1) Does not include Alternate Revenue Bonds. -20-

28 SELECTED FINANCIAL INFORMATION 2014 Estimated Full Value of Taxable Property: $50,473,272, Equalized Assessed Valuation of Taxable Property: $16,824,424,132 Direct General Obligation Bonded Debt (including the Bonds): $ 169,295,000 Other Direct General Obligation Debt: $ 0 Total Direct General Obligation Debt: $ 169,295,000 Percentage to Full Value of Taxable Property: 0.34% Percentage to Equalized Assessed Valuation: 1.01% Debt Limit (2.875% of EAV): $ 483,702,194 Percentage of Debt Limit: 35.00% Per Capita: $ Overlapping General Obligation Bonded Debt: $ 1,844,491,632 Direct General Obligation Bonded Debt and Overlapping General Obligation Bonded Debt: $ 2,013,786,632 Percentage to Full Value of Taxable Property: 3.99% Percentage to Equalized Assessed Valuation: 11.97% Per Capita: $ 3, Population Estimate: 534,984 COMPOSITION OF EQUALIZED ASSESSED VALUATION By Property Residential $15,571,763,813 $ 1,355,119,894 $12,364,960,291 $10,502,768,904 $10,948,281,141 Farm 13,737,075 12,274,712 14,018,569 13,872,389 3,975,820,592 Commercial 4,931,135, ,349,276 3,973,184,635 3,761,260,562 1,875,218,573 Industrial 3,278,538,748 27,014,939 2,651,199,190 2,353,484,759 13,766,486 Railroad 8,316,829 8,479,222 8,387,824 10,662,369 11,337,340 Total EAV $22,803,492,049 $20,628,324,840 $19,011,750,509 $16,642,048,983 $16,824,424, By County Cook $21,165,879,977 $19,108,356,373 $17,600,259,080 $15,313,884,665 $15,524,741,153 Kane 65,462,081 47,867,863 41,971,259 39,276,186 37,853,315 Lake 1,380,492,594 1,298,352,948 1,213,605,246 1,148,120,681 1,127,445,458 McHenry 191,657, ,747, ,914, ,767, ,384,206 Total EAV $22,803,492,049 $20,628,324,840 $19,011,750,509 $16,642,048,983 $16,824,424,132 Source: Cook, Kane, Lake and McHenry County Clerks Office -21-

29 TREND OF EQUALIZED ASSESSED VALUATION LEVY YEAR EQUALIZED ASSESSED VALUATION % CHANGE IN EAV FROM PREVIOUS YEAR 2010 $22,803,492, % (1) ,628,324, % ,011,750, % ,642,048, % ,824,424, % Source: Cook, Kane, Lake and McHenry County Clerks Office (1) Based on the District s $24,973,396, EAV TAXES EXTENDED AND COLLECTED TAX LEVY YEAR/ TAXES TAXES COLLECTED PERCENT COLLECTION YEAR EXTENDED AND DISTRIBUTED COLLECTED 2009/10 $65,363,111 $65,615, % 2010/11 67,500,721 67,579, % 2011/12 68,943,721 68,921, % 2012/13 71,675,247 71,898, % 2013/14 73,578,187 73,413, % 2014/15* 75,996,861 49,428, % Source: Cook, Kane, Lake and McHenry County Treasurers and County Clerks Offices *In Process of Collection, as of July 31, DISTRICT TAX RATES BY PURPOSE (Per $100 Equalized Assessed Valuation) PURPOSE MAX RATE Education $ $ $ $ $ $ Operations & Maintenance Operations & Maintenance Restricted None Bond & Interest Fund None Audit Fund Limited Bonds None Liability, Protection and Settlement Fund None TOTAL $ $ $ $ $ Source: Cook County Clerk s Office -22-

30 REPRESENTATIVE TOTAL TAX RATES * (Per $100 Equalized Assessed Valuation) TAXING AUTHORITY The District $0.295 $0.334 $0.373 $ $ Cook County Cook County Forest Preserve District Metropolitan Water Reclamation District Consolidated Elections Schaumburg Township Schaumburg Township General Assistance Schaumburg Township Road and Bridge Northwest Mosquito Abatement District Village of Schaumburg Schaumburg Park District Schaumburg Township Library District Community Consolidated School District Township High School District TOTAL* $7.712 $8.481 $9.414 $ $ Source: Cook County Clerk s Office *The total of such rates is the property tax rate paid by a typical resident living in the Village of Schaumberg, Cook County, in the District. TEN LARGEST TAXPAYERS TAXPAYER NAME 2014 EQUALIZED ASSESSED VALUE PERCENT OF DISTRICT S TOTAL EAV Simon Property Group $222,239, % AT & T 100,210, % Crane & Norcross 52,491, % Wal-Mart 54,882, % Motorola, Inc. 45,756, % Streets of Woodfield 54,827, % Manulife Financial 54,245, % KBS Woodfield Preserve 41,567, % ZNA Real Estate Dept. 41,828, % Bre DDR Woodfield Village 38,344, % Source: Cook County Clerk s Office $706,393, % The above taxpayers represent 4.19% of the District s $16,842,424, EAV. Every effort has been made to seek out and report the largest taxpayers. However, many of the taxpayers listed may own multiple parcels and it is possible that some parcels and their valuations may not be included. -23-

31 RETAILERS OCCUPATION, SERVICE OCCUPATION AND USE TAX The following table shows the distribution of the municipal portion of the Retailers Occupation, Service Occupation and Use Tax collected by the Illinois Department of Revenue from retailers within the Village of Arlington Heights, the Village of Elk Grove Village, the Village of Palatine and the Village of Schaumburg. The table indicates the level of retail activity in said Villages. VILLAGE OF ARLINGTON HEIGHTS VILLAGE OF ELK GROVE VILLAGE VILLAGE OF PALATINE VILLAGE OF SCHAUMBURG YEAR (1) STATE SALES TAX DISTRIBUTION (2) STATE SALES TAX DISTRIBUTION (2) STATE SALES TAX DISTRIBUTION (2) STATE SALES TAX DISTRIBUTION (2) 2010 $10,114,433 $6,899,176 $7,104,459 $26,752, ,449,561 7,364,252 8,117,138 28,306, ,357,930 7,863,957 7,919,350 30,060, ,170,872 8,836,545 8,127,875 30,386, ,934,596 9,450,381 8,761,623 30,862, (3) 2,637,856 2,295,540 1,886,736 7,054,254 Source: Illinois Department of Revenue. (1) Calendar year reports ending December 31. (2) Tax distributions are based on records of the Illinois Department of Revenue relating to the 1% municipal portion of the Retailers Occupation, Service Occupation and Use Tax, collected on behalf of the Villages and the City, less a State administration fee. The municipal 1% sales tax includes tax receipts from the sale of food and drugs, which are not taxed by the State. (3) As of First Quarter,

32 SPECIFIED OWNER-OCCUPIED UNITS VILLAGE OF ARLINGTON HEIGHTS VILLAGE OF ELK GROVE VILLAGE VILLAGE OF PALATINE VALUE NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Under $50, % % % $50,000 to $99,999 1, % % % $100,000 to $149,999 1, % % 1, % $150,000 to $199,999 1, % 1, % 1, % $200,000 to $299,999 5, % 4, % 4, % $300,000 to $499,999 9, % 3, % 5, % $500,000 to $999,999 3, % % 1, % $1,000,000 or more % % % Total 22, % 9, % 17, % Median Value $325,200 $266,900 $277,700 VILLAGE OF SCHAUMBURG COUNTY OF COOK COUNTY OF KANE VALUE NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Under $50, % 42, % 3, % $50,000 to $99, % 88, % 8, % $100,000 to $149,999 2, % 141, % 16, % $150,000 to $199,999 4, % 191, % 25, % $200,000 to $299,999 6, % 289, % 37, % $300,000 to $499,999 5, % 243, % 28, % $500,000 to $999, % 103, % 7, % $1,000,000 or more % 26, % % Total 20, % 1,127, % 128, % Median Value $243,500 $231,200 $223,100 COUNTY OF LAKE COUNTY OF MCHENRY STATE OF ILLINOIS VALUE NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Under $50,000 6, % 2, % 235, % $50,000 to $99,999 10, % 4, % 493, % $100,000 to $149,999 22, % 11, % 504, % $150,000 to $199,999 29, % 19, % 538, % $200,000 to $299,999 39, % 29, % 692, % $300,000 to $499,999 40, % 18, % 513, % $500,000 to $999,999 28, % 3, % 196, % $1,000,000 or more 6, % % 46, % Total 183, % 89, % 3,220, % Median Value $254,800 $220,500 $182,300 Source: U.S. Census Bureau ( American Community Survey) -25-

33 LARGEST EMPLOYERS Below is a listing of the largest employers within or near the District area: EMPLOYER PRODUCT OR SERVICE APPROXIMATE NUMBER OF EMPLOYEES Sears Holdings Corp. Corporate headquarters; retail department store chain 6,200 Northwest Community Hospital Company headquarters & community hospital 4,000 Alexian Bros. Medical Center Regional medical center 3,100 AT & T Services, Inc. Group purchasing, warehousing, marketing, consulting & 2,500 accounting services Zurich North America Company headquarters & commercial property & casualty 2,500 insurance St. Alexius Medical Center Full-service hospital 2,045 Automatic Data Processing, Inc., Employer Data processing & payroll services 1,500 Services Clearbrook Charitable organization 1,000 Motorola Solutions, Inc. Radio sales & administration 970 CVS Caremark Mail order pharmaceutical products 850 William Rainey Harper College Community college 840 Catamaran Corp. Corporate headquarters & pharmacy software & automation 800 services Symons By Dayton Superior Concrete forming equipment 770 Nation Pizza Products L. P. Dough related items, including pizzas, sandwiches, 700 appetizers, snacks & desserts Verizon Wireless, Inc. Mobile phone sales, service & marketing office 670 Nielsen Co., The Marketing research & analytics provider 650 Executive Building Maintenance, Inc. Janitorial facilities management & disaster & restoration 632 services CDK Global Dealership management systems for the automotive, truck, 600 motorcycle, marine, RV & heavy equipment retail segments Experian Information Solutions, Inc. Direct marketing computer & information services 600 Motorola Solutions, Inc. Corporate headquarters; wireless & broadband 600 communications & broadband, VOIP & IP software development Robert Bosch Tool Corp. Corporate headquarters & wholesaler of portable electric 600 tools, saws, sanders & drills Paddock Publications, Inc. Corporate headquarters & daily printed & online newspaper publishing 550 Siemens Healthcare, Molecular Imaging Nuclear medical imaging cameras 550 Gonnella Baking Co. Company headquarters & frozen dough, hearth-baked & pan breads & rolls, bread crumbs & contract specialty breads for in-store bakeries, foodservice operations & consumer packaged products 520 Source: 2015 Illinois Manufacturers Directory, 2015 Illinois Services Directory and Illinois Department of Commerce and Economic Opportunity, except for District employee information which was provided by the District. -26-

34 NEW PROPERTY The following chart indicates the EAV of new property (as defined in the Limitation Law) within the District for each of the last five levy years. LEVY YEAR NEW PROPERTY 2010 $101,443, ,810, ,673, ,184, ,071,512 Source: Cook, Kane, Lake and McHenry County Clerks Office UNEMPLOYMENT RATES Unemployment statistics are not compiled specifically for the District. The following table shows the trend in annual average unemployment rates for the Village of Arlington Heights, the Village of Elk Grove Village, the Village of Palatine, the Village of Schaumburg, the County of Cook, the County of Kane, the County of Lake, the County of McHenry and the State of Illinois. VILLAGE OF ARLINGTON HEIGHTS VILLAGE OF ELK GROVE VILLAGE VILLAGE OF PALATINE VILLAGE OF SCHAUMBURG COUNTY OF COOK 2010 Average 8.0% 9.4% 9.3% 8.7% 10.9% 2011 Average 7.6% 8.3% 8.6% 8.3% 10.4% 2012 Average 7.2% 8.1% 7.8% 7.6% 9.6% 2013 Average 7.0% 8.1% 7.7% 7.6% 9.6% 2014 Average 5.4% 5.8% 5.8% 5.7% 7.4% 2015 June 4.7% 5.3% 5.4% 4.9% 6.6% COUNTY OF KANE COUNTY OF LAKE COUNTY OF MCHENRY STATE OF ILLINOIS 2010 Average 11.0% 9.8% 10.5% 10.0% 2011 Average 9.8% 8.9% 9.8% 9.7% 2012 Average 8.9% 8.1% 8.9% 9.0% 2013 Average 8.7% 8.1% 8.5% 9.1% 2014 Average 7.0% 6.5% 6.4% 7.1% 2015 June 5.7% 5.3% 5.9% 6.1% Source: State of Illinois Department of Employment Security -27-

35 EMPLOYMENT BY INDUSTRY The following table shows employment by industry for the Village of Arlington Heights, the Village of Elk Grove Village, the Village of Palatine, the Village of Schaumburg, the County of Cook, the County of Kane, the County of Lake, the County of McHenry and the State of Illinois as reported by the Census. VILLAGE OF ARLINGTON HEIGHTS VILLAGE OF ELK GROVE VILLAGE VILLAGE OF PALATINE CLASSIFICATION NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Agriculture, forestry, fishing, hunting and mining % % % Construction 1, % 1, % 1, % Manufacturing 4, % 2, % 4, % Wholesale Trade 1, % % 1, % Retail Trade 4, % 1, % 4, % Transportation, warehousing and utilities 2, % 1, % 1, % Information % % % Finance, insurance and real estate 3, % 1, % 3, % Professional, scientific management administrative & waste management 5, % 2, % 4, % Educational, health & social services 8, % 3, % 7, % Arts, entertainment, recreations accommodations & food services 3, % 1, % 3, % Other Services 2, % % 1, % Public Administration % % % Total 38, % 17, % 36, % VILLAGE OF SCHAUMBURG COUNTY OF COOK COUNTY OF KANE CLASSIFICATION NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Agriculture, forestry, fishing, hunting and mining % 4, % 1, % Construction 1, % 110, % 14, % Manufacturing 6, % 257, % 41, % Wholesale Trade 1, % 67, % 10, % Retail Trade 4, % 240, % 29, % Transportation, warehousing and utilities 2, % 150, % 11, % Information 1, % 57, % 5, % Finance, insurance and real estate 3, % 199, % 17, % Professional, scientific management administrative & waste management 5, % 325, % 32, % Educational, health & social services 7, % 549, % 46, % Arts, entertainment, recreations accommodations & food services 2, % 238, % 19, % Other Services 1, % 122, % 9, % Public Administration % 91, % 7, % Total 40, % 2,414, % 247, % -28-

36 COUNTY OF LAKE COUNTY OF MCHENRY STATE OF ILLINOIS CLASSIFICATION NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Agriculture, forestry, fishing, hunting and mining 1, % 1, % 63, % Construction 16, % 10, % 310, % Manufacturing 53, % 25, % 756, % Wholesale Trade 14, % 5, % 184, % Retail Trade 39, % 19, % 655, % Transportation, warehousing and utilities 12, % 7, % 348, % Information 6, % 3, % 126, % Finance, insurance and real estate 26, % 11, % 447, % Professional, scientific management administrative & waste management 43, % 15, % 666, % Educational, health & social services 65, % 29, % 1,379, % Arts, entertainment, recreations accommodations & food services 30, % 12, % 538, % Other Services 14, % 6, % 286, % Public Administration 10, % 4, % 234, % Total 332, % 153, % 5,998, % Source: U.S. Census Bureau ( American Community Survey) -29-

37 EMPLOYMENT BY OCCUPATION The following table shows employment by occupation for the Village of Arlington Heights, the Village of Elk Grove Village, the Village of Palatine, the Village of Schaumburg, the County of Cook, the County of Kane, the County of Lake, the County of McHenry and the State of Illinois as reported by the Census. VILLAGE OF ARLINGTON HEIGHTS VILLAGE OF ELK GROVE VILLAGE VILLAGE OF PALATINE CLASSIFICATION NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Management, professional & related occupations 19, % 6, % 15, % Service occupations 4, % 2, % 5, % Sales and office occupations 10, % 5, % 9, % Natural resources, construction & maintenance occupations 1, % 1, % 1, % Production, transportation & material moving occupation 2, % 2, % 3, % Total 38, % 17, % 36, % VILLAGE OF SCHAUMBURG COUNTY OF COOK COUNTY OF KANE CLASSIFICATION NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Management, professional & related occupations 18, % 912, % 82, % Service occupations 4, % 437, % 39, % Sales and office occupations 11, % 601, % 66, % Natural resources, construction & maintenance occupations 2, % 149, % 19, % Production, transportation & material moving occupation 4, % 313, % 40, % Total 40, % 2,414, % 247, % COUNTY OF LAKE COUNTY OF MCHENRY STATE OF ILLINOIS CLASSIFICATION NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Management, professional & related occupations 138, % 57, % 2,183, % Service occupations 49, % 22, % 1,036, % Sales and office occupations 85, % 42, % 1,509, % Natural resources, construction & maintenance occupations 20, % 11, % 444, % Production, transportation & material moving occupation 37, % 19, % 824, % Total 332, % 153, % 5,998, % Source: U.S. Census Bureau ( American Community Survey) -30-

38 HOUSEHOLD INCOMES According to the Census, the Village of Palatine had a median household income of $72,818 and the Village of Schaumburg had a median household income of $70,798. This compares to $54,548 for the County of Cook and $56,797 for the State. The following table represents the distribution of household incomes for the Village of Arlington Heights, the Village of Elk Grove Village, the Village of Palatine, the Village of Schaumburg, the County of Cook, the County of Kane, the County of Lake, the County of McHenry and the State at the time of the Census. VILLAGE OF ARLINGTON HEIGHTS VILLAGE OF ELK GROVE VILLAGE VILLAGE OF PALATINE NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Under $10, % % % $10,000 to $14, % % % $15,000 to $24,999 2, % 1, % 2, % $25,000 to $34,999 2, % 1, % 1, % $35,000 to $49,999 3, % 1, % 3, % $50,000 to $74,999 5, % 2, % 4, % $75,000 to $99,999 4, % 1, % 3, % $100,000 to $149,999 5, % 2, % 4, % $150,000 to $199,999 3, % % 2, % $200,000 or more 2, % % 1, % Total 29, % 13, % 25, % VILLAGE OF SCHAUMBURG COUNTY OF COOK COUNTY OF KANE NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Under $10,000 1, % 164, % 6, % $10,000 to $14, % 94, % 4, % $15,000 to $24,999 2, % 202, % 13, % $25,000 to $34,999 1, % 188, % 14, % $35,000 to $49,999 4, % 246, % 20, % $50,000 to $74,999 6, % 332, % 31, % $75,000 to $99,999 5, % 232, % 23, % $100,000 to $149,999 5, % 253, % 30, % $150,000 to $199,999 2, % 103, % 12, % $200,000 or more 1, % 115, % 11, % Total 30, % 1,933, % 170, % COUNTY OF LAKE COUNTY OF MCHENRY STATE OF ILLINOIS NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Under $10,000 9, % 3, % 337, % $10,000 to $14,999 6, % 2, % 219, % $15,000 to $24,999 16, % 7, % 484, % $25,000 to $34,999 17, % 7, % 462, % $35,000 to $49,999 25, % 11, % 618, % $50,000 to $74,999 39, % 19, % 856, % $75,000 to $99,999 31, % 17, % 615, % $100,000 to $149,999 42, % 22, % 667, % $150,000 to $199,999 21, % 8, % 255, % $200,000 or more 28, % 6, % 254, % Total 241, % 108, % 4,772, % Source: U.S. Census Bureau ( American Community Survey) -31-

39 PER CAPITA INCOME PER CAPITA INCOME Village of Arlington Heights $40,189 Village of Elk Grove Village 33,437 Village of Palatine 35,407 Village of Schaumburg 35,433 County of Cook 30,183 County of Kane 30,082 County of Lake 38,018 County of McHenry 32,341 State of Illinois 29,666 Source: U.S. Census Bureau ( American Community Survey). SHORT-TERM BORROWING The District has not issued tax anticipation warrants or revenue anticipation notes during the last five years to meet its short-term current year cash flow requirements. FUTURE DEBT The District anticipates issuance of $ million of General Obligation Limited Tax Bonds in 2017 and every two years thereafter. DEFAULT RECORD The District has no record of default and has met all of its prior debt repayment obligations on a timely basis. REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION SUMMARY OF PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES A separate tax to pay the principal of and interest on the Bonds will be levied on all taxable real property within the District. The information under this caption describes the current procedures for real property assessments, tax levies and collections in Cook County, Illinois. There can be no assurance that the procedures described herein will not change. The current procedures for such assessment, levies and collections are different in the Counties of Kane, Lake and McHenry. -32-

40 REAL PROPERTY ASSESSMENT The County Assessor (the Assessor ) is responsible for the assessment of all taxable real property within Cook County (the County ), including such property located within the boundaries of the District, except for certain railroad property, pollution control facilities and low sulfur dioxide emission coal-fueled devices, which are assessed directly by the Illinois Department of Revenue (the Department of Revenue ). For triennial reassessment purposes, Cook County is divided into three Districts: west and south suburbs (the South Tri ), north and northwest suburbs (the North Tri ), and the City of Chicago (the City Tri ). The District is located in the North Tri and was reassessed for the 2013 tax levy year. In response to the downturn of the real estate market, the Assessor reduced the 2009 assessed value on suburban residential properties (specifically, those properties located in the South Tri and the North Tri) not originally scheduled for reassessment in For tax year 2009, each suburban township received an adjustment percentage for tax year 2009, lowering the existing assessed values of all residential properties in such township within a range of 4% to 15%, beginning with the second-installment tax bills payable in the fall of Real property in the County is separated into classes for assessment purposes. After the Assessor establishes the fair market value of a parcel of property, that value is multiplied by the appropriate classification percentage to arrive at the assessed valuation (the Assessed Valuation ) for the parcel. Such classification percentages range from 10% for certain residential, commercial and industrial property to 25% for other industrial and commercial property. Property is classified for assessment into six basic categories, each of which is assessed (beginning with the 2009 tax levy year) at various percentages of fair market value as follows: Class 1 - unimproved real estate (10%); Class 2 - residential (10%); Class 3 - rental-residential (16% in tax year 2009, 13% in tax year 2010, and 10% in tax year 2011 and subsequent years); Class 4 - not-for-profit (25%); Class 5a - commercial (25%); and Class 5b - industrial (25%). In addition, property may be temporarily classified into one of eight additional assessment classification categories. Upon expiration of such classification, property so classified will revert to one of the basic six assessment classifications described above. The additional assessment classifications are as follows: -33-

41 CLASS DESCRIPTION OF QUALIFYING PROPERTY ASSESSMENT PERCENTAGE REVERTS TO CLASS 6b C 7a/7b Newly constructed industrial properties or substantially rehabilitated sections of existing industrial properties Industrial property that has undergone environmental testing and remediation Commercial property that has undergone environmental testing and remediation Newly constructed or substantially rehabilitated commercial properties in an area in need of commercial development 8 Industrial properties in enterprise communities or zones in need of substantial revitalization Commercial properties in enterprise communities or zones in need of substantial revitalization 9 New or substantially rehabilitated multi-family residential properties in target areas, empowerment or enterprise zones S L Class 3 properties subject to Section 8 contracts renewed under the Mark up to Market option Substantially rehabilitated Class 3, 4 or 5b properties qualifying as Landmark or Contributing buildings Substantially rehabilitated Class 5a properties qualifying as Landmark or Contributing buildings 10% for first 10 years and any 10 year renewal; if not renewed, 15% in year 11, 20% in year 12 10% for first 10 years, 15% in year 11, 20% in year 12 10% for first 10 years, 15% in year 11, 20% in year 12 10% for first 10 years, 15% in year 11, 20% in year 12 10% for first 10 years and any 10-year renewal; if not renewed, 15% in year 11, 20% in year 12 10% for first 10 years, 15% in year 11, 20% in year 12 10% for first 10 years and any 10 year renewal 10% for term of Section 8 contract renewal and any subsequent renewal 10% for first 10 years and any 10-year renewal; if not renewed, 15% in year 11, 20% in year 12 10% for first 10 years, 15% in year 11, 20% in year 12 5b 5b 5a 5a 5b 5a As Applicable 3 3, 4, or 5b 5a The Assessor has established procedures enabling taxpayers to contest their proposed Assessed Valuations. Once the Assessor certifies its final Assessed Valuations, a taxpayer can seek review of its assessment by appealing to the Cook County Board of Review (the Board of Review ), which consists of three commissioners elected by the voters of the County. The Board of Review has the power to adjust the Assessed Valuations set by the Assessor. Owners of residential property having six or fewer units are able to appeal decisions of the Board of Review to the Illinois Property Tax Appeal Board (the PTAB ), a statewide administrative body. The PTAB has the power to determine the Assessed Valuation of real property based on equity and the weight of the evidence. Taxpayers may appeal the decision of PTAB to either the Circuit Court of Cook County (the Circuit Court ) or the Illinois Appellate Court under the Illinois Administrative Review Law. -34-

42 As an alternative to seeking review of Assessed Valuations by PTAB, taxpayers who have first exhausted their remedies before the Board of Review may file an objection in the Circuit Court. The procedure under this alternative is similar to the judicial review procedure described in the immediately preceding paragraph, however, the standard of proof differs. In addition, in cases where the Assessor agrees that an assessment error has been made after tax bills have been issued, the Assessor can correct any factual error, and thus reduce the amount of taxes due, by issuing a Certificate of Error. Certificates of Error are not issued in cases where the only issue is the opinion of the valuation of the property. EQUALIZATION After the Assessor has established the Assessed Valuation for each parcel for a given year, and following any revisions by the Board of Review or PTAB, the Department of Revenue is required by statute to review the Assessed Valuations. The Department of Revenue establishes an equalization factor (the Equalization Factor ), commonly called the multiplier, for each county to make all valuations uniform among the 102 counties in the State of Illinois (the State ). Under State law, the aggregate of the assessments within each county is equalized at 33-1/3% of the estimated fair cash value of real property located within the county prior to any applicable exemptions. One multiplier is applied to all property in the County, regardless of its assessment category, except for certain farmland property and wind energy assessable property, which are not subject to equalization. The following table sets forth the Equalization Factor for the County for the last ten tax levy years. TAX LEVY YEAR EQUALIZATION FACTOR Once the Equalization Factor is established, the Assessed Valuation, as revised by the Board of Review or PTAB, is multiplied by the Equalization Factor to determine the equalized assessed valuation (the EAV ) of that parcel. The EAV for each parcel is the final property valuation used for determination of tax liability. The aggregate EAV for all parcels in any taxing body s jurisdiction, plus the valuation of property assessed directly by the Department of Revenue, constitute the total real estate tax base for the taxing body, which is used to calculate tax rates (the Assessment Base ). -35-

43 EXEMPTIONS The Illinois Property Tax Code, as amended (the Property Tax Code ), exempts certain property from taxation. Certain property is exempt from taxation on the basis of ownership and/or use, including, but not limited to, public parks, not-for-profit schools, public schools, churches, not-for-profit hospitals and public hospitals. In addition, the Property Tax Code provides a variety of homestead exemptions, which are discussed below. An annual General Homestead Exemption provides that the EAV of certain property owned and used for residential purposes may be reduced by the amount of any increase over the 1977 EAV, up to a maximum reduction of $7,000 for tax year 2012 and thereafter. The Alternative General Homestead Exemption limits EAV increases for homeowners (who also reside on the property as their principal place of residence) to 7% a year, up to a certain maximum dollar amount each year as defined by statute. Any amount of increase that exceeds the maximum exemption as defined is added to the 7% increase and is part of that property s taxable EAV. Homes that do not increase by at least 7% a year are entitled, in the alternative, to the General Homestead Exemption as discussed above. The Alternative General Homestead Exemption is being fully phased out by tax year 2014 pursuant to State law. For properties in the City Tri, the Alternative General Homestead Exemption cannot exceed $20,000 for assessment year 2009, $16,000 for assessment year 2010 and $12,000 for assessment year For properties in the North Tri, the Alternative General Homestead Exemption cannot exceed $20,000 for assessment years 2009 and 2010, $16,000 for assessment year 2011 and $12,000 for assessment year For properties in the South Tri, the Alternative General Homestead Exemption cannot exceed $26,000 for assessment year 2009, $20,000 for assessment year 2010 and 2011, $16,000 for assessment year 2012 and $12,000 for assessment year The Long-Time Occupant Homestead Exemption limits the increase in EAV of a taxpayer s homestead property to 10% per year if such taxpayer has owned the property for at least 10 years as of January 1 of the assessment year (or 5 years if purchased with certain government assistance) and has a household income of $100,000 or less ( Qualified Homestead Property ). If the taxpayer s annual income is $75,000 or less, the EAV of the Qualified Homestead Property may increase by no more than 7% per year. There is no exemption limit for Qualified Homestead Properties. The Homestead Improvement Exemption applies to residential properties that have been improved and to properties that have been rebuilt in the two years following a catastrophic event, as defined in the Property Tax Code. The exemption is limited to $75,000 per year, to the extent the Assessed Valuation is attributable solely to such improvements or rebuilding. Additional exemptions exist for senior citizens. The Senior Citizens Homestead Exemption annually reduces the EAV on residences owned and occupied by senior citizens. At present, the maximum exemption in tax year 2013 and beyond is $5,

44 The Senior Citizens Assessment Freeze Homestead Exemption freezes property tax assessments for homeowners who are 65 and older, reside in their property as their principal place of residence and receive a household income not in excess of $55,000. This exemption grants to qualifying senior citizens an exemption equal to the difference between (a) the current EAV of the residence and (b) the EAV of a senior citizen s residence for the year prior to the year in which he or she first qualifies and applies for the exemption, plus the EAV of improvements since such year. The Natural Disaster Homestead Exemption (the Natural Disaster Exemption ) applies to homestead properties containing a residential structure that has been rebuilt following a natural disaster occurring in taxable year 2012 or any taxable year thereafter. A natural disaster is an occurrence of widespread or severe damage or loss of property resulting from any catastrophic cause including but not limited to fire, flood, earthquake, wind, or storm. The Natural Disaster Exemption is equal to the equalized assessed value of the residence in the first taxable year for which the taxpayer applies for the exemption minus the base amount. To be eligible for the Natural Disaster Exemption, the residential structure must be rebuilt within two years after the date of the natural disaster, and the square footage of the rebuilt residential structure may not be more than 110% of the square footage of the original residential structure as it existed immediately prior to the natural disaster. The Natural Disaster Exemption remains at a constant amount until the taxable year in which the property is sold or transferred. Three exemptions are available to veterans of the United States armed forces. The Disabled Veterans Exemption exempts up to $70,000 of the Assessed Valuation of property owned and used exclusively by veterans, their spouses or unmarried surviving spouses. Qualification for this exemption requires the veteran s disability to be of such a nature that the federal government has authorized payment for purchase of specially adapted housing under the U.S. Code as certified to annually by the Illinois Department of Veterans Affairs. The Disabled Veterans Standard Homestead Exemption provides an annual homestead exemption of (a) $5,000 to those veterans with a service-connected disability of 70% (75% for exemptions granted from 2007 to 2009) and (b) $2,500 to those veterans with a service-connected disability of less than 70% (75% for exemptions granted from 2007 to 2009), but at least 50%. The Returning Veterans Homestead Exemption is available for property owned and occupied as the principal residence of a veteran in the assessment year, or the year following the assessment year, in which the veteran returns from an armed conflict while on active duty in the United States armed forces. This provision grants a one-time homestead exemption of $5,000. Finally, the Disabled Persons Homestead Exemption provides an annual homestead exemption in the amount of $2,000 for property that is owned and occupied by certain disabled persons who meet State-mandated guidelines. -37-

45 TAX LEVY As part of the annual budgetary process of governmental units (the Units ) with power to levy taxes in the County, the designated body for each Unit annually adopts proceedings to levy real estate taxes. The administration and collection of real estate taxes is statutorily assigned to the County Clerk and the County Treasurer. After the Units file their annual tax levies, the County Clerk computes the annual tax rate for each Unit. The County Clerk computes the Unit s maximum allowable levy by multiplying the maximum tax rate for that Unit by the prior year s EAV for all property currently in the District. The prior year s EAV includes the EAV of any new property, the current year value of any annexed property and any recovered tax increment value, minus any disconnected property for the current year under the Limitation Law. The tax rate for a Unit is computed by dividing the lesser of the maximum allowable levy or the actual levy by the current year s EAV. PROPERTY TAX EXTENSION LIMITATION LAW The Limitation Law is applied after the prior year EAV limitation. The Limitation Law limits the annual growth in the amount of property taxes to be extended for certain Illinois non-home rule units, including the District. The effect of the Limitation Law is to limit the amount of property taxes that can be extended for a taxing body. In addition, general obligation bonds, notes and installment contracts payable from ad valorem taxes, unlimited as to rate and amount, cannot be issued by the affected taxing bodies unless they are approved by referendum, are alternate bonds or are for certain refunding purposes (such as the Bonds). The use of prior year EAVs to limit the allowable tax levy may reduce tax rates for funds that are at or near their maximum rates in taxing Districts with rising EAVs. These reduced rates and all other rates for those funds subject to the Limitation Law are added together, which results in the aggregate preliminary rate. The aggregate preliminary rate is then compared to the limiting rate. If the limiting rate is more than the aggregate preliminary rate, there is no further reduction in rates due to the Limitation Law. If the limiting rate is less than the aggregate preliminary rate, the aggregate preliminary rate is further reduced to the limiting rate. In all cases, taxes are extended using current year EAV under Section of the Property Tax Code. The District has the authority to levy taxes for many different purposes. See Financial Information and Economic Characteristics of the District - District Tax Rates by Purpose The ceiling at any particular time on the rate at which these taxes may be extended for the District is either (a) unlimited (as provided by statute), (b) initially set by statute but permitted to be increased by referendum, (c) capped by statute, or (d) limited to the rate approved by referendum. The only ceiling on a particular tax rate is the ceiling set by statute, at which the rate is not permitted to be further increased by referendum or otherwise. Therefore, taxing Districts (such as the District) have flexibility to levy taxes for the purposes for which they most need the money. The total aggregate tax rate for the various purposes subject to the Limitation Law, however, will not be allowed to exceed the District s limiting rate computed in accordance with the provisions of the Limitation Law. -38-

46 In general, the annual growth permitted under the Limitation Law is the lesser of 5% or the percentage increase in the Consumer Price Index during the calendar year preceding the levy year. Taxes can also be increased due to new construction, referendum approval of tax rate increases, mergers and consolidations. Local governments, including the District, can issue limited bonds in lieu of general obligation bonds that have otherwise been authorized by applicable law. Illinois legislators have introduced several proposals to modify the Limitation Law, including freezing property taxes and extending tax caps to all taxing bodies in the State (the Property Tax Freeze Proposal ). Specifically, Senate Bill 318 passed the Illinois Senate on August 4, This legislation includes, among other items, a State-wide property tax freeze for levy years 2016 and 2017 for taxing districts located in counties other than Cook County and levy years 2017 and 2018 for taxing districts located in Cook County. If the Property Tax Freeze Proposal or similar legislation were to become law, such reform may have a material impact on the finances of the District and the ability of the District to issue limited tax bonds. The District cannot predict whether, or in what form, any change to the Limitation Law, including the Property Tax Freeze Proposal, may be enacted into law, nor can the District predict the effect of any such change on the District s finances. EXTENSIONS The County Clerk then computes the total tax rate applicable to each parcel of real property by aggregating the tax rates of all of the Units having jurisdiction over the particular parcel. The County Clerk extends the tax by entering the tax (determined by multiplying the total tax rate by the EAV of that parcel for the current assessment year) in the books prepared for the County Collector (the Warrant Books ) along with the tax rates, the Assessed Valuation and the EAV. The Warrant Books are the County Collector s authority for the collection of taxes and are used by the County Collector as the basis for issuing tax bills to all property owners. COLLECTIONS Property taxes are collected by the County Collector, who also serves as the County Treasurer, who remits to each Unit its share of the collections. Taxes levied in one year become payable during the following year in two installments, the first due on March 1 and the second on the later of August 1 or 30 days after the mailing of the tax bills. A payment due is deemed to be paid on time if the payment is postmarked on the due date. Beginning with the first installment payable in 2010, the first installment is equal to 55% of the prior year s tax bill. However, if a Certificate of Error is approved by a court or certified on or before November 30 of the preceding year and before the estimated tax bills are prepared, then the first installment is instead based on the certain percentage of the corrected prior year s tax bill. The second installment covers the balance of the current year s tax bill, and is based on the then current tax year levy, Assessed Valuation and Equalization Factor, and reflects any changes from the prior year in those factors. The first installment penalty date has been the first business day in March for each of the last ten years. However, for 2010, the first installment penalty date was established as -39-

47 April 1 by statute. The following table sets forth the second installment penalty date for the last ten tax levy years in the County. TAX LEVY YEAR SECOND INSTALLMENT PENALTY DATE 2005 September 1, December 3, November 3, December 1, December 13, November 1, August 1, August 1, August 1, August 3, 2015 It is possible that the changes to the assessment appeals process described above will cause delays similar to those experienced in past years in preparation and mailing of the second installment in future years. In the future, the County may provide for tax bills to be payable in four installments instead of two. During the periods of peak collections, tax receipts are forwarded to each Unit on a weekly basis. Upon receipt of taxes from the County Collector, the District promptly credits the taxes received to the funds for which they were levied. Within 90 days following the second installment due date, the County Collector presents the Warrant Books to the Circuit Court and applies for a judgment for all unpaid taxes. The court orders resulting from the application for judgment provides for an Annual Tax Sale (the Annual Tax Sale ) of unpaid taxes shown on that year s Warrant Books. A public sale is held, at which time successful tax buyers pay the unpaid taxes plus penalties. In each such public sale, the collector can use any automated means. Unpaid taxes accrue penalties at the rate of 1.5% per month from their due date until the date of sale. Taxpayers can redeem their property by paying the amount paid at the sale, plus a maximum of 12% for each six-month period after the sale. If no redemption is made within the applicable redemption period (ranging from six months to two and a half years depending on the type and occupancy of the property) and the tax buyer files a petition in the Circuit Court, notifying the necessary parties in accordance with the applicable law, the tax buyer receives a deed to the property. In addition, there are miscellaneous statutory provisions for foreclosure of tax liens. If there is no sale of the tax lien on a parcel of property at the Annual Tax Sale, the taxes are forfeited and the property becomes eligible to be purchased at any time thereafter at an amount equal to all delinquent taxes and interest accrued to the date of purchase. Redemption periods and procedures are the same as applicable to the Annual Tax Sale. -40-

48 The Scavenger Sale (the Scavenger Sale ), like the Annual Tax Sale, is a sale of unpaid taxes. The Scavenger Sale is held every two years on all property on which two or more years taxes are delinquent. The sale price of the unpaid taxes is the amount bid at such sale, which may be less than the amount of delinquent taxes. Redemption periods vary from six months to two and a half years depending upon the type and occupancy of the property. TRUTH IN TAXATION LAW Legislation known as the Truth in Taxation Law (the Law ) limits the aggregate amount of certain taxes which can be levied by, and extended for, a taxing district to 105% of the amount of taxes extended in the preceding year unless specified notice, hearing and certification requirements are met by the taxing body. The express purpose of the Law is to require published disclosure of, and hearing upon, an intention to adopt a levy in excess of the specified levels. The provisions of the Law do not apply to levies made to pay principal of and interest on the Bonds. The District covenanted in the Bond Resolution that it will not take any action which would adversely affect the levy, extension, collection and application of the taxes levied by the District for payment of principal of and interest on the Bonds. The District also covenanted that it will comply with all present and future laws concerning the levy, extension and collection of such taxes levied by the District. BOND RATING Moody s has assigned the Bonds a rating of Aaa. The rating reflects only the view of the rating agency at the time the rating was issued and an explanation of the significance of the rating may be obtained from such rating agency. Certain information concerning the Bonds and the District not included in this Official Statement may have been furnished to Moody s by the District. There is no assurance that the rating will continue for any given period of time or that the rating will not be revised downward or withdrawn entirely by such rating agency if, in its judgment, circumstances so warrant. Any downward revision or withdrawal of the rating can be expected to have an adverse effect on the market price of the Bonds. Except as may be required by the Undertaking described below under the heading CONTINUING DISCLOSURE, neither the District nor the Underwriter undertakes responsibility to bring to the attention of the owners of the Bonds any proposed change in or withdrawal of the rating or to oppose any such revision or withdrawal. TAX EXEMPTION Federal tax law contains a number of requirements and restrictions which apply to the Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and the facilities financed therewith, and certain other matters. The District has covenanted to comply with all requirements that must be satisfied in order for the interest on the Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants -41-

49 could cause interest on the Bonds to become includible in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Subject to the District s compliance with the above-referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Bonds is excludable from the gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but interest on the Bonds is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. In rendering its opinion, Bond Counsel will rely upon certifications of the District with respect to certain material facts within the District s knowledge. Bond Counsel s opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result. The Internal Revenue Code of 1986, as amended (the Code ), includes provisions for an alternative minimum tax ( AMT ) for corporations in addition to the corporate regular tax in certain cases. The AMT, if any, depends upon the corporation s alternative minimum taxable income ( AMTI ), which is the corporation s taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation s adjusted current earnings over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). Adjusted current earnings would include certain tax-exempt interest, including interest on the Bonds. Ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Bonds should consult their tax advisors as to applicability of any such collateral consequences. The issue price (the Issue Price ) for each maturity of the Bonds is the price at which a substantial amount of such maturity of the Bonds is first sold to the public. The Issue Price of a maturity of the Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the inside cover page hereof. If the Issue Price of a maturity of the Bonds is less than the principal amount payable at maturity, the difference between the Issue Price of each such maturity, if any, of the Bonds (the OID Bonds ) and the principal amount payable at maturity is original issue discount. For an investor who purchases an OID Bond in the initial public offering at the Issue Price for such maturity and who holds such OID Bond to its stated maturity, subject to the condition that the District complies with the covenants discussed above, (a) the full amount of original issue discount with respect to such OID Bond constitutes interest which is excludable -42-

50 from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such OID Bond at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in an alternative minimum tax liability for corporations or certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Based upon the stated position of the Illinois Department of Revenue under Illinois income tax law, accreted original issue discount on such OID Bonds is subject to taxation as it accretes, even though there may not be a corresponding cash payment until a later year. Owners of OID Bonds should consult their own tax advisors with respect to the state and local tax consequences of original issue discount on such OID Bonds. Owners of Bonds who dispose of Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase Bonds in the initial public offering, but at a price different from the Issue Price or purchase Bonds subsequent to the initial public offering should consult their own tax advisors. If a Bond is purchased at any time for a price that is less than the Bond s stated redemption price at maturity or, in the case of an OID Bond, its Issue Price plus accreted original issue discount (the Revised Issue Price ), the purchaser will be treated as having purchased a Bond with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a Bond is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser s election, as it accrues. Such treatment would apply to any purchaser who purchases an OID Bond for a price that is less than its Revised Issue Price. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the Bonds. An investor may purchase a Bond at a price in excess of its stated principal amount. Such excess is characterized for federal income tax purposes as bond premium and must be amortized by an investor on a constant yield basis over the remaining term of the Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a tax-exempt bond. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor s basis in the Bond. Investors who purchase a Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the Bond s basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the Bond. There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or affect the market value of the Bonds. It cannot be -43-

51 predicted whether or in what form any such proposal might be enacted or whether, if enacted, it 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. The Service has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Bonds. If an audit is commenced, under current procedures the Service may treat the District 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 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, including the Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Bond owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes. Interest on the Bonds is not exempt from present State income taxes. Ownership of the Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Bonds. Prospective purchasers of the Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. STATE AID GENERAL The State provides aid to local community college districts via grant programs administered by the Illinois Community College Board (the ICCB ). Many community college districts rely on such State Aid for a significant portion of their budgets. As of early 2010, Illinois community colleges received an average of 17% of their operating revenue from the State. For the fiscal year ended June 30, 2014, the District received approximately 6.44% of its general fund revenue from sources at the State, including State Aid. See GENERAL FUND REVENUE SOURCES, FISCAL YEARS ENDED JUNE 30, for additional information. The State subsidizes the costs of higher education by allocating tax dollars between the following four areas: (a) direct operating support, (b) indirect operating support, (c) institutional grant programs and (d) student financial aid programs. -44-

52 In Fiscal Year 2015, the Community College System Operating Budget was funded based upon unrestricted and restricted grants. Unrestricted grants have no grant guidelines or expenditure requirements and can be used for any operating purpose. Such grants include but are not limited to the Base Operating Grant, Equalization Grant, Small College Grant and Technical Education Formula Grant (as more fully discussed below). Restricted grants must be spent according to grant and expenditure guidelines and include the Adult Education Grant and Career and Technical Education Grant (as more fully discussed below). Various proposals for changing the Illinois system of state financial aid have been considered over the years. The nature of future modifications to the process for distributing State Aid cannot be predicted, but such modifications could have an adverse effect on the finances of the District should they be enacted. DIRECT OPERATING SUPPORT Public community colleges are funded primarily through direct operating support. Most of the funds for operating support are used for meeting general costs such as salaries, contracts for services, energy, supplies, travel and scholarships; however, operating support can also be appropriated to specific activities such as workforce preparation programs, adult basic education, career and technical education or legislative initiatives. INDIRECT OPERATING SUPPORT Public community colleges also benefit from indirect operating support through payments or benefits provided by the State to or for faculty and staff. Rather than being paid to community colleges, such funds are spent by other State entities on behalf of community college employees. Examples of indirect operating support include employee health insurance provided by the State employee benefits plan and funding for community college employees pensions paid to SURS (as hereinafter defined). INSTITUTIONAL GRANT PROGRAMS Additionally, grant programs provide funds for specific activities undertaken by educational programs. Funding for such programs as Cooperative Work Study and Nursing Grants is appropriated to the IBHE and then distributed by the IBHE based upon competitive application and program criteria. Private community colleges are also eligible to apply for such grants. As noted previously, the ICCB also administers grant programs and distributes funding to community colleges. The two principal operating grants for community colleges are the Base Operating Grant and the Equalization Grant, both of which are allocated to each local community college district based upon prescribed formulae. Generally, ICCB grants to community colleges amount to the difference between the total funds needed to offer educational programs and the total funds available from local property taxes and tuition and fees. Rate adjustments are required when State appropriations for ICCB grants fall short of equaling the -45-

53 calculated needs of the system. The funds of both the Base Operating Grant and the Equalization Grant are distributed on a monthly basis, though the State has delayed payment of these grants in recent years. In addition to the grants discussed in this section, the State distributes numerous other grants to Illinois community colleges on an annual basis. STUDENT FINANCIAL AID State tax dollars support higher education through direct support to students; such financial aid is distributed through the Illinois Student Assistance Commission. The primary source of direct student assistance is need-based. Need-based programs, such as MAP, cover a portion of the costs of tuition and fees for students at public community colleges. The State also provides several programs that pay some or all of the costs of tuition and fees for students who have served in the military or are preparing for high-demand occupations such as nursing and certain teaching positions. In the event the federal government, the State or any agency pays tuition for any community college student, neither the district of such student s residence nor the student is required to pay that tuition, or any portion thereof, that is otherwise paid. RETIREMENT PLANS State Universities Retirement System of Illinois The District contributes to the State Universities Retirement System of Illinois (SURS), a cost-sharing multiple-employer defined benefit pension plan with a special funding situation whereby the State makes substantially all actuarially determined required contributions on behalf of the participating employers. SURS was established July 21, 1941, to provide retirement annuities and other benefits for staff members and employees of the state universities, certain affiliated organizations, and certain other state educational and scientific agencies and for survivors, dependents, and other beneficiaries of such employees. SURS is considered a component unit of the State s financial reporting entity and is included in the State s financial reports as a pension trust fund. SURS is governed by Section 5/15, Chapter 40, of the Illinois Compiled Statutes. SURS issues a publicly available financial report that includes financial statements and required supplemental information. That report may be obtained by accessing the website at or calling Plan members are required to contribute 8.0% of their annual covered salary and substantially all employer contributions are made by the State on behalf of the individual employers at an actuarially determined rate. The rate for 2014 was 35.80% of annual covered payroll. The contribution requirements of plan members and employers are established and may be amended by the Illinois General Assembly. The employer contributions to SURS for the years ending June 30, 2014, June 30, 2013, and June 30, 2012 were $23,379,200, $22,946,299 and $15,483,931, respectively. The District contributions were in accordance with the actuarially determined requirement for each year. -46-

54 Information regarding the District s retirement health plans is described in Note 7 of the Audit (as hereinafter defined), which is included as Appendix A to this Official Statement. In an attempt to remedy severe under-funding of the State s retirement systems in 2012, then Governor Quinn and several State legislators proposed changes to the manner of funding of such retirement systems, including SURS. One proposed change would require community colleges, including the District, to contribute the full amount of the normal costs of their employees SURS pensions. Normal Cost refers generally to the portion of the present value of retirement benefits allocable to an employee s current year of service. The current proposal would phase in such contributions over the course of several years. Discussions and deliberations on this complex topic remain fluid. The General Assembly did not consider any legislation containing this proposal during 2013 or The District cannot predict whether, or in what form, such legislation may be enacted into law. Furthermore, it is possible that any pension reform legislation that is ultimately passed by the General Assembly and signed into law by the Governor would face court challenges. If a cost shifting proposal were to become law, it may have a material effect on the finances of District. How community colleges, including the District, would pay for such shift of contributions cannot be determined at the current time. Other Post Employment Benefits The District provides for the continuation of health care benefits and life insurance to employees who retire from the District. The District s annual other post employment benefit cost is calculated based on the annual required contribution (ARC). The ARC represents the normal cost each year and an amount to amortize the unfunded actuarial liability over thirty years. As of June 30, 2014, the actuarial accrued liability for benefits was $10,679,564, all of which was unfunded. See Note 11 to the District s Audited Financial Statements for the fiscal year ended June 30, 2015, attached hereto as Appendix A, for a more complete discussion. CONTINUING DISCLOSURE The District will enter into a Continuing Disclosure Undertaking (the Undertaking ) for the benefit of the beneficial owners of the Bonds to send certain information annually and to provide notice of certain events to the Municipal Securities Rulemaking Board (the MSRB ) pursuant to the requirements of Section (b)(5) of Rule 15c2-12 (the Rule ) adopted by the Securities and Exchange Commission (the Commission ) under the 1934 Act. The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and a summary of other terms of the Undertaking, including termination, amendment and remedies, are set forth below under THE UNDERTAKING. The District failed to file its audited financial statements for its fiscal year ending on June 30, 2010, within the time periods specified in prior continuing disclosure undertakings. Such failure was due to an administrative oversight. The audited financial statements for the -47-

55 fiscal year ending June 30, 2010, were filed on February 8, The District has since instituted procedures to assure future filings of audited financial statements and certain annual financial information are done on a timely basis, including retaining third party professionals to assist with such future filings. A failure by the District to comply with the Undertaking will not constitute a default under the Bond Resolution and beneficial owners of the Bonds are limited to the remedies described in the Undertaking. The District must report any failure to comply with the Undertaking in accordance with the Rule. Any broker, dealer or municipal securities dealer must consider such report before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. Bond Counsel expresses no opinion as to whether the Undertaking complies with the requirements of Section (b)(5) of the Rule. THE UNDERTAKING The following is a brief summary of certain provisions of the Undertaking of the District and does not purport to be complete. The statements made under this caption are subject to the detailed provisions of the Undertaking, a copy of which is available upon request from the District. ANNUAL FINANCIAL INFORMATION DISCLOSURE The District covenants that it will disseminate its Annual Financial Information and its Audited Financial Statements, if any (as described below) to the MSRB in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information. The District is required to deliver such information within 210 days after the last day of the District s fiscal year (currently June 30), beginning with fiscal year ending June 30, If Audited Financial Statements are not available when the Financial Information is filed, the District will file unaudited financial statements. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. Annual Financial Information means information of the type contained in the following headings, subheadings and exhibits of the Final Official Statement: -48-

56 FINANCIAL INFORMATION AND ECONOMIC CHARACTERISTICS Direct General Obligation Bonded Debt (Principal Only) Selected Financial Information (only as it relates to direct debt) Composition of Equalized Assessed Valuation Trend of Equalized Assessed Valuation Taxes Extended and Collected District Tax Rates by Purpose WORKING CASH FUND Working Cash Fund Summary Exhibit A Combined Statement of Revenues, Expenditures and Changes in Fund Balance Exhibit B Official Budget Audited Financial Statements means the combined financial statements of the District prepared in accordance with accounting principles generally accepted in the United States of America. REPORTABLE EVENTS DISCLOSURE The District covenants that it will disseminate in a timely manner (not in excess of ten business days after the occurrence of the Reportable Event) Reportable Events Disclosure to the MSRB in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission or the State at the time of delivery of such information. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. The Events are: 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, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security Modifications to the rights of security holders, if material Bond calls, if material, and tender offers Defeasances Release, substitution or sale of property securing repayment of the securities, if material Rating changes -49-

57 Bankruptcy, insolvency, receivership or similar event of the District The consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, 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 Appointment of a successor or additional trustee or the change of name of a trustee, if material CONSEQUENCES OF FAILURE OF THE DISTRICT TO PROVIDE INFORMATION The District shall give notice in a timely manner to the MSRB of any failure to provide disclosure of Annual Financial Information and Audited Financial Statements when the same are due under the Undertaking. In the event of a failure of the District to comply with any provision of the Undertaking, the beneficial owner of any Bond may seek mandamus or specific performance by court order to cause the District to comply with its obligations under the Undertaking. A default under the Undertaking shall not be deemed a default under the Bond Resolution, and the sole remedy under the Undertaking in the event of any failure of the District to comply with the Undertaking shall be an action to compel performance. AMENDMENT; WAIVER Notwithstanding any other provision of the Undertaking, the District by resolution authorizing such amendment or waiver, may amend the Undertaking, and any provision of the Undertaking may be waived, if: (a) (i) The amendment or the waiver is made in connection with a change in circumstances that arises from a change in legal requirements, including, without limitation, pursuant to a no-action letter issued by the Commission, a change in law, or a change in the identity, nature, or status of the District, or type of business conducted; or (ii) The Undertaking, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the District in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. -50-

58 (b) The amendment or waiver does not materially impair the interests of the beneficial owners of the Bonds, as determined by parties unaffiliated with the District (such as Bond Counsel). In the event that the Commission or the MSRB or other regulatory authority approves or requires Annual Financial Information or notices of a Reportable Event to be filed with a central post office, governmental agency or similar entity other than the MSRB or in lieu of the MSRB, the District shall, if required, make such dissemination to such central post office, governmental agency or similar entity without the necessity of amending the Undertaking. TERMINATION OF UNDERTAKING The Undertaking shall be terminated if the District shall no longer have any legal liability for any obligation on or relating to repayment of the Bonds under the Bond Resolution. The District shall give notice to the MSRB in a timely manner if this paragraph is applicable. ADDITIONAL INFORMATION Nothing in the Undertaking shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in the Undertaking or any other means of communication, or including any other information in any Annual Financial Information or Audited Financial Statements or notice of occurrence of a Reportable Event, in addition to that which is required by the Undertaking. If the District chooses to include any information from any document or notice of occurrence of a Reportable Event in addition to that which is specifically required by the Undertaking, the District shall have no obligation under the Undertaking to update such information or include it in any future disclosure or notice of occurrence of a Reportable Event. DISSEMINATION OF INFORMATION; DISSEMINATION AGENT When filings are required to be made with the MSRB in accordance with the Undertaking, such filings are required to be made through its Electronic Municipal Market Access (EMMA) system for municipal securities disclosure or through any other electronic format or system prescribed by the MSRB for purposes of the Rule. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Undertaking, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. AUDITED FINANCIAL STATEMENTS The audited financial statements of the District for the fiscal year ended June 30, 2015, contained in Appendix A (the Audit ), including the independent auditor s report accompanying the Audit, have been prepared by Crowe Horwath LLP, Oak Brook, Illinois (the Auditor ), and approved by formal action of the Board. The District has not requested the -51-

59 Auditor to update information contained in the Audit nor has the District requested that the Auditor consent to the use of the Audit in this Official Statement. Other than as expressly set forth in this Official Statement, the financial information contained in the Audit has not been updated since the date of the Audit. The inclusion of the Audit in this Official Statement in and of itself is not intended to demonstrate the fiscal condition of the District since the date of the Audit. If you have a specific question or inquiry relating to the financial information of the District since the date of the Audit, you should contact Dr. Ronald N. Ally, Vice President of Finance and Administrative Services, of the District. BOOK-ENTRY ONLY SYSTEM DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of 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 Commission. More information about DTC can be found at Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( 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 -52-

60 holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices 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 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. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the 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 detailed information from the District or Registrar, 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, the Registrar, or the District, -53-

61 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 the District or the Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District or the Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bond 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 to DTC. The information in this section concerning DTC and DTC s book-entry system has been obtained from DTC, and the District takes no responsibility for the accuracy thereof. The District will have no responsibility or obligation to any Securities Depository, any Participants in the Book-Entry System or the Beneficial Owners with respect to (a) the accuracy of any records maintained by the Securities Depository or any Participant; (b) the payment by the Securities Depository or by any Participant of any amount due to any Beneficial Owner in respect of the principal amount or redemption price of, or interest on, any Bonds; (c) the delivery of any notice by the Securities Depository or any Participant; (d) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the Bonds; or (e) any other action taken by the Securities Depository or any Participant. CERTAIN LEGAL MATTERS Certain legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approving legal opinion of Chapman and Cutler LLP, Chicago, Illinois ( Chapman and Cutler ), Bond Counsel, who has been retained by, and acts as, Bond Counsel to the District. Chapman and Cutler has also been retained by the District to serve as Disclosure Counsel to the District with respect to the Bonds. Although as Disclosure Counsel to the District, Chapman and Cutler has assisted the District with certain disclosure matters, Chapman and Cutler has not undertaken to independently verify the accuracy, completeness or fairness of this Official Statement or other offering material related to the Bonds and does not guarantee the accuracy, completeness or fairness of such information. Chapman and Cutler s engagement as Disclosure Counsel was undertaken solely at the request and for the benefit of the District, to assist it in discharging its responsibility with respect to the Official Statement, and not for the benefit of any other person (including any person purchasing Bonds from the Underwriter), and did not include any obligation to establish or confirm factual matters, forecasts, projections, estimates or any other financial or economic information in connection therewith. Further, Chapman and Cutler makes no representation as to the suitability of the Bonds for investment by any investor. -54-

62 MUNICIPAL ADVISOR Speer Financial, Inc., Chicago, Illinois, has been retained as financial advisor (the Municipal Advisor ) in connection with the issuance of the Bonds. To the Municipal Advisor s knowledge, the information contained in this Official Statement is true and accurate. However, the Municipal Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. The Municipal Advisor s duties, responsibilities, and fees arise solely from the position of financial advisor for the District. NO LITIGATION No litigation is now pending or threatened restraining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds or any proceedings of the District taken with respect to the issuance or sale thereof. A certificate to this effect will be delivered by the District with the other customary closing papers when the Bonds are delivered. UNDERWRITING The Bonds were offered for sale by the District at a public, competitive sale on September 30, The best bid submitted at the sale was submitted by PNC Capital Markets LLC, Philadelphia, Pennsylvania (the Underwriter ). The District awarded the contract for sale of the Bonds to the Underwriter at a price of $22,199, (representing the aggregate principal amount of the Bonds of $20,110,000.00, plus original issue premium of $2,117,627.85, and less an underwriting discount of $28,544.94). The Underwriter has represented to the District that the Bonds have been subsequently re-offered to the public initially at the yields set forth on the inside cover of this Official Statement. -55-

63 AUTHORIZATION This Official Statement has been approved by the District for distribution to prospective purchasers of the Bonds. The Board, acting through authorized officers, will provide to the Underwriter at the time of delivery of the Bonds, a certificate confirming that, to the best of its knowledge and belief, the Official Statement with respect to the Bonds, together with any supplements thereto, at the time of the adoption of the Bond Resolution, and at the time of delivery of the Bonds, was true and correct in all material respects and did not at any time contain an untrue statement of a material fact or omit to state a material fact required to be stated where necessary to make the statements therein in light of the circumstances under which they were made, not misleading. September 30, 2015 /s/ Gregory Dowell Chairman, Board of Trustees Community College District No. 512, Counties of Cook, Kane, Lake and McHenry and State of Illinois -56-

64 EXHIBIT A COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE, EDUCATION FUND OPERATIONS AND MAINTENANCE FUND OPERATIONS AND MAINTENANCE FUND RESTRICTED BOND AND INTEREST FUND AUXILIARY ENTERPRISE FUND RESTRICTED PURPOSES FUND WORKING CASH FUND AUDIT FUND LIABILITY, PROTECTION AND SETTLEMENT FUND TOTAL Fund Balances at July 1, 2010 $33,909,189 $14,194,744 $173,236,435 $ 6,678,288 $ 3,951,028 $10,412,694 $15,549,747 $270,608 $1,159,401 $259,362,134 Total Receipts 87,793,500 18,095,943 6,374,025 15,506,496 13,050,067 24,190,094 74, ,925 1,471, ,660,124 Total Expenditures 76,873,185 15,326,957 5,577,622 14,859,049 13,654,955 24,972, ,100 1,422, ,818,195 Total Other Financing Sources (10,218,153) (1,500,000) 6,000, ,386 3,253, (1,781,217) Fund Balance at June 30, 2011 $34,611,351 $15,463,730 $180,032,838 $ 7,325,735 $ 4,029,526 $12,883,696 $15,624,413 $243,433 $1,208,124 $271,422,846 Fund Balances at July 1, 2011 $34,611,351 $15,463,730 $180,032,838 $ 7,325,735 $ 4,029,526 $12,883,696 $15,624,413 $243,433 $1,208,124 $271,422,846 Total Receipts 88,282,991 18,604,766 3,348,417 16,247,275 12,749,687 20,450,927 37,109 60,579 1,036, ,817,772 Total Expenditures 82,746,673 15,429,085 6,120,823 15,684,333 12,995,392 22,756, , , ,539,862 Total Other Financing Sources (5,116,254) (2,024,219) 0 0 4,323,927 2,258, ,971 0 Fund Balance at June 30, 2012 $35,031,415 $16,615,192 $177,260,432 $ 7,888,677 $ 8,107,748 $12,836,678 $15,661,522 $226,912 $2,072,180 $275,700,756 Fund Balances at July 1, 2012 $35,031,415 $16,615,192 $177,260,432 $ 7,888,677 $ 8,107,748 $12,836,678 $15,661,522 $226,912 $2,072,180 $275,700,756 Total Receipts 89,939,382 18,275,495 5,742,034 16,363,016 12,967,396 17,689,568 17,237 18,581 52, ,065,193 Total Expenditures 82,615,536 15,150,206 10,500,957 15,777,684 13,716,259 20,937, , , ,318,171 Total Other Financing Sources (7,845,496) (2,000,000) 2,000, ,552 7,159, Fund Balance at June 30, 2013 $34,509,765 $17,740,481 $174,501,509 $ 8,474,009 $ 8,044,437 $16,749,142 $15,678,759 $156,193 $1,593,483 $277,447,778 Fund Balances at July 1, 2013 $34,509,765 $17,740,481 $174,501,509 $ 8,474,009 $ 8,044,437 $16,749,142 $15,678,759 $156,193 $1,593,483 $277,447,778 Total Receipts 90,927,690 18,358,382 1,714,813 17,172,672 7,536,953 19,263,385 26,867 18,787 (9,204) 155,010,345 Total Expenditures 84,540,327 16,352,886 31,822,433 15,870,742 7,766,148 28,880, , , ,731,227 Total Other Financing Sources (5,742,765) (2,000,000) ,104 7,075, Fund Balance at June 30, 2014 $35,154,363 $17,745,977 $144,393,889 $ 9,775,939 $ 8,482,346 $14,207,517 $15,705,626 $ 84,780 $1,176,459 $246,726,896 Fund Balances at July 1, 2014 $35,154,363 $17,745,977 $144,393,889 $ 9,775,939 $ 8,482,346 $14,207,517 $15,705,626 $ 84,780 $1,176,459 $246,726,896 Total Receipts 92,077,168 18,100,583 5,866,552 18,049,164 5,952,920 20,045,161 27,717 17, ,136,853 Total Expenditures 88,184,688 16,081,405 31,122,911 17,063,626 6,298,495 23,684, , , ,876,792 Total Other Financing Sources (4,003,198) (1,400,000) 2,800, ,825 2,044, Fund Balance at June 30, 2015 $35,043,645 $18,365,155 $121,937,530 $ 10,761,477 $ 8,695,596 $12,612,767 $15,733,343 $ 7,082 $ 830,362 $223,986,957 Source: The audited financial statements of the District for the years ending June 30, June 30, Such financial statements were prepared using the accrual basis of accounting.

65 EXHIBIT B BUDGET, FISCAL YEAR ENDING JUNE 30, 2016 OPERATIONS AND AUXILIARY RESTRICTED EDUCATION MAINTENANCE ENTERPRISE PURPOSES AUDIT FUND BALANCE 6/30/15 $35,043,643 $18,365,155 $8,695,596 $12,612,767 $ 7,082 ESTIMATED REVENUE 95,135,973 17,878,190 7,026,015 47,562,047 16,435 ESTIMATED EXPENDITURES 92,208,768 17,896,833 7,137,232 58,317,626 23,517 TOTAL OTHER FINANCINGS (2,619,540) 0 564,540 2,055,000 0 ESTIMATED FUND BALANCE 6/30/16 $35,351,308 $18,346,512 $9,148,919 $ 3,912,188 $ 0 LIABILITY BOND & O & M WORKING TOTAL ALL PROTECTION INTEREST RESTRICTED CASH FUNDS FUND BALANCE 6/30/15 $830,362 $10,761,477 $121,937,530 $15,733,343 $223,986,955 ESTIMATED REVENUE 18,060 18,446,961 27,996,800 25, ,105,481 ESTIMATED EXPENDITURES 300,000 17,893,635 85,013, ,791,243 TOTAL OTHER FINANCINGS ESTIMATED FUND BALANCE 6/30/16 $548,422 $11,314,803 $ 64,920,698 $15,758,343 $159,301,193 Source: Official Budget for the District for the year ending June 30, 2016.

66 APPENDIX A AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2015

67 William Rainey Harper College Community College District #512 Palatine, Illinois harpercollege.edu building community through student success Comprehensive Annual Financial Report For the Fiscal Years Ended June 30, 2015 and 2014

68 WILLIAM RAINEY HARPER COLLEGE COMMUNITY COLLEGE DISTRICT NO. 512 Palatine, Illinois Comprehensive Annual Financial Report For the Fiscal Years Ended June 30, 2015 and 2014 (With Independent Auditor s Report Thereon) Prepared by: Accounting Services

69 WILLIAM RAINEY HARPER COLLEGE COMMUNITY COLLEGE DISTRICT NO. 512 TABLE OF CONTENTS FISCAL YEARS ENDED JUNE 30, 2015 AND JUNE 30, 2014 INTRODUCTORY SECTION (Unaudited): Transmittal Letter 1 Organization Chart 10 Certificate of Achievement for Excellence in Financial Reporting 11 Principal Officials 12 FINANCIAL SECTION: Independent Auditor s Report 13 Management s Discussion and Analysis (Unaudited) 16 Basic Financial Statements: Statements of Net Position Statement 1 31 Statements of Revenues, Expenses, and Changes in Net Position Statement 2 32 Statements of Cash Flows Statement 3 33 Component Unit Statements of Financial Position Statement 4 35 Component Unit Statements of Activities Statement 5 36 Notes to Financial Statements 37 Required Supplementary Information (Unaudited): Defined Benefit Pension Plan Schedule of College s Proportionate Share of the Net Pension Liability Exhibit 1 58 Schedule of College Contributions Exhibit 2 59 Notes to Required Supplementary Information 60 Other Postemployment Benefits Schedule of Funding Progress Exhibit 3 61 STATISTICAL SECTION (Unaudited): Introduction 62 Net Position by Component Table 1 63 Changes in Net Position Table 2 64 Assessed Value and Actual Value of Taxable Property Table 3 65 Property Tax Rates Table 4 66 Assessed Valuations and Tax Extensions Table 5 67 Principal Property Taxpayers Table 6 68 Property Tax Levies and Collections Table 7 69 Enrollment, Tuition, and Fee Rates, Credit Hours Claimed and Tuition and Fee Revenue Table 8 70 Ratio of Outstanding Debt by Type Table 9 71

70 WILLIAM RAINEY HARPER COLLEGE COMMUNITY COLLEGE DISTRICT NO. 512 TABLE OF CONTENTS FISCAL YEARS ENDED JUNE 30, 2015 AND JUNE 30, 2014 STATISTICAL SECTION (Unaudited) Continued: Ratio of Net General Bonded Debt Outstanding Table Direct and Overlapping Bonded Debt Table Legal Debt Margin Information Table Population and Unemployment Rates Table Principal Employers Table Employee Headcount Table Operating Indicators Table Capital Asset Statistics Table SPECIAL REPORTS SECTION: Uniform Financial Statements (Unaudited): All Funds Summary Schedule 1 81 Summary of Capital Assets and Debt Schedule 2 82 Operating Funds Revenues and Expenditures Schedule 3 83 Restricted Purposes Fund Revenues and Expenditures Schedule 4 85 Current Funds Expenditures by Activity Schedule 5 87 Certificate of Chargeback Reimbursement Schedule 6 89 ICCB State Grants Financial Section: Independent Auditor s Report on State Grant Programs Financial Statements 91 Independent Auditor s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Grant Programs Financial Statements Performed in Accordance with Government Auditing Standards 93 State Adult Education Grant Program: Balance Sheet 95 Statement of Revenues, Expenditures, and Changes in Fund Balance 96 ICCB Compliance Statement 97 Career and Technical Education Program Improvement Grant Program: Balance Sheet 98 Statement of Revenues, Expenditures, and Changes in Fund Balance 99 Notes to State Grant Programs Financial Statements 100 Independent Accountant s Report on the Schedule of Enrollment Data and Other Bases upon Which Claims Are Filed 102 Schedule of Enrollment Data and Other Bases upon Which Claims Are Filed 103 Residency Verification for Enrollment 105

71 WILLIAM RAINEY HARPER COLLEGE COMMUNITY COLLEGE DISTRICT NO. 512 TABLE OF CONTENTS FISCAL YEARS ENDED JUNE 30, 2015 AND JUNE 30, 2014 FEDERAL FINANCIAL COMPLIANCE SECTION: Independent Auditor s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 107 Independent Auditor s Report on Compliance with Requirements Applicable to Each Major Program, on Internal Control over Compliance in Accordance with OMB Circular A-133, and on the Schedule of Expenditures of Federal Awards 109 Schedule of Expenditures of Federal Awards 112 Notes to the Schedule of Expenditures of Federal Awards 113 Schedule of Findings and Questioned Costs 114

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73 A successful referendum was held in September 1975 providing funds for the College to move forward with completion of the present campus, purchase land for a second site, and construct the first phase of buildings on that site when required by enrollment increases. Changes in population trends over the succeeding 10 years indicated that a second campus would not be needed to accommodate projected enrollment, and the decision was made to sell the property, which had been purchased in Arlington Heights. The sale was finalized in In August 1993 the College opened Building S, which housed Publications and Communication Services, now called the Marketing Services. In the spring of 1994, Building L was opened. This building includes the Liberal Arts division office, classrooms, faculty offices, and the College Bookstore. First floor space includes a Black Box theatre for instructional use and 3-D art studios devoted to ceramics, sculpture, stagecraft, and metal work. The two buildings were part of a building phase that also included renovation plans in existing buildings. Building F was completely renovated in to provide space on the third floor for the departments and programs of the Academic Enrichment and Language Studies Division and to give appropriate space to Resources for Learning/Library Services on the first and second floors. Occupancy was taken in the spring and fall of Renovations completed in 1996 included the addition of a large computer lab in Building I and updating of Building V. The Board of Trustees approved the first and the second phase of the Technology Plan in 1995 and The campus computer network was completed in 1996, providing links between offices and classrooms and the Internet with a variety of network resources to position Harper for higher education in the next century. In 1998, the College embarked upon implementing a new shared governance structure and the publication of the College s first comprehensive strategic long-range plan. Groundbreaking for the new Performing Arts Center and Instructional Conference Center was held on May 18, The new buildings were partially funded by the State of Illinois. During the summer of 2000, Harper College held Discovery Sessions with various community members, business leaders, and students and talked about some of the key challenges facing the College to discover what the community really wanted from Harper. The Community Response Team (CRT), which was subsequently formed, presented several recommendations to the Board of Trustees, which identified science, technology, and healthcare as top priorities for the College to address. On November 7, 2000, the Harper College district residents resoundingly voted to pass an $88.8 million referendum to build a new facility to house Harper s growing science, technology, and healthcare programs. Construction of the science, emerging technology, and health career center began in the fall of On August 29, 2001, Harper College opened a new facility in Schaumburg for the TECH (Technical Education and Consulting at Harper) program. Today, the facility now called the Harper Professional Center, is the site for the Fast Track program. It is centrally located to provide easy access for students who work or live in the Schaumburg area. In the fall of 2002, the conference center opened and was named the Wojcik Conference Center in recognition of a $1.1 million member initiative grant given to Harper by Illinois State Representative Kay Wojcik. The Wojcik Conference Center houses one of the largest business amphitheaters in the northwest suburbs and offers an array of resources for companies and organizations to provide professional development and interactive education activities to their employees. 2

74 The Performing Arts Center opened in the spring of In addition to providing new expanded educational opportunities for students, the Performing Arts Center will continue to attract well-known entertainers and celebrities to campus. In the fall of 2004, Harper College opened Avanté, Center for Science, Health Careers, and Emerging Technologies. The state-of-art learning facility encompasses 288,500 square feet of space, an area equal to six and one-half acres. In 2006, Harper College was granted authority by the Higher Learning Commission to grant online degrees and grant degrees from two off-campus locations, Northeast Center (NEC) and Harper Professional Center (HPC). The College also received the only National Science Foundation Undergraduate Research grant awarded to a community college. In 2008, Harper College district voters approved a $153.6 million capital bond referendum allowing the College to repair and renovate existing campus buildings, as well as build new facilities over the next ten years. The College approved a new Campus Master Plan in The plan outlines a comprehensive ten-year program to renovate the campus to meet the needs of 21st century teaching and learning. In 2012, the U.S. Department of Labor awarded Harper $12.9 million to expand the Advanced Manufacturing program to community colleges across Illinois. The program offers industry-endorsed skills certificates and paid internships with local manufacturers. It's also designed to encourage younger students to consider a manufacturing career by offering college credit to high school students. In 2014, the College re-launched the Northeast Center (NEC) in Prospect Heights as the Harper College Learning and Career Center (LCC) with a target market focus on local community needs, credential programs, wrap-around services and workforce emphasis. In January 2015 the College completed a $38 million renovation of Building H, now known as the Career & Technical Education Center. The renovation included classrooms and labs for some of Harper's fastestgrowing training programs in fields like manufacturing, welding and architectural technology. About $20 million of the two year project was funded by a state grant. Profile of the College William Rainey Harper College is one of forty-eight (48) community colleges in the State of Illinois that make up the Illinois Community College System. Harper College s credit full-time equivalent (FTE) enrollment for fiscal year 2015 is 10,229. The College has 759 full-time employees, which includes 238 full-time faculty. Harper is a comprehensive community college that offers transfer curriculum, occupational training, adult enrichment classes, and a variety of other community services. The Harper College for Businesses department provides customized training throughout the district. The College offers certificates and associate degrees in a wide range of program areas. The college district is located in the northwest suburbs of Chicago. The 200-acre campus is located in Palatine, with extension facilities at the Learning and Career Center in Prospect Heights, and the Harper Professional Center in Schaumburg. 3

75 The Illinois Community College Board (ICCB) is the coordinating board of Illinois community colleges. ICCB s mission is To administer the Public Community College Act in a manner that maximizes the ability of the community colleges to serve their communities. To promote cooperation within the system and accommodate those State of Illinois initiatives that are appropriate for community colleges, to be accountable to the students, employers, lawmakers, and taxpayers of Illinois, and to provide high-quality, accessible, cost-effective educational opportunities for the individuals and communities they serve. It is the policy of Harper College not to discriminate on the basis of race, color, religion, sex, age, marital status, national origin, ancestry, or physical or mental handicap or unfavorable discharge from the military in its educational programs, activities, or employment. Accreditation Harper College is a fully accredited institution of higher education and is accredited by the Higher Learning Commission of the North Central Association of Colleges and Secondary Schools (NCA). In addition, many of the programs are accredited by their respective national associations. College Philosophy, Mission, and Vision Philosophy Statement We, at Harper College, believe that our charge is to facilitate active learning and foster the knowledge, critical thinking and life/work skills required for participation in our global society. We work with our community partners to enrich the intellectual, cultural and economic fabric of our district. We believe that excellence in education must occur in an ethical climate of integrity and respect. We hold that the strength of our society is rooted in our diversity and that it is through synergy that we achieve excellence. Mission Statement Harper College enriches its diverse communities by providing quality, affordable, and accessible education. Harper College, in collaboration with its partners, inspires the transformation of individual lives, the workforce, and society. Vision Statement Committed to academic integrity and excellence, Harper College will be a leader in teaching and learning, transforming lives by responding to the needs of the individual and the community. Major Initiatives Harper College has long distinguished itself through its efforts to serve students and place emphasis on teaching and learning. Innovations in curriculum, teaching strategies, and support services for students are hallmarks of the College. The College is committed to reducing student performance gaps and increasing the rate of program completion, transfer, and graduation. To assist in achieving these objectives, the College has applied for and received a $2 million Title III grant through the Department of Education's Strengthening Institutions Program. The goal of this grant is to strengthen and increase the capacity of college technology and personnel to provide improved student engagement, tracking, communications, success, retention and completion. 4

76 The grant objectives are to: 1. To strengthen academic and student support services and experiences for degree seeking students. 2. To strengthen early educational experiences and support services for high-need students. 3. To strengthen and increase the capacity of academic and student support technology infrastructure and communications systems. 4. To conduct a professional development program for faculty, staff and administrators. Capital Project Priorities In the fall of 2008, Harper College passed a $153.6 million capital bond referendum. In order to properly steward these funds, the Campus Master Plan was updated in 2010 to provide a comprehensive vision for the Harper College physical plant through The Master Plan was designed to achieve the following four strategic goals: a more effective and welcoming campus, space for academic programs to meet current and future needs, space for student services to meet current and future needs, and cost effectiveness. Current Master Plan projects provided for in the capital budget are renovations for Phase II of the Building D, Canning Center, the Library, and Building M. The Operations and Maintenance (Restricted) Fund, which includes proceeds from the referendum has begun to address much needed infrastructure projects. The budget for FY 2016 includes planned infrastructure projects of $15.5 million. 5

77 As the table above shows, the FY 2016 capital projects budget requests total $85 million. This includes $66 million in projects that support academic programs. Two of those projects, which are described below, are part of the State s Resource Allocation Management Program (RAMP). These projects, while provided for in the budget, are currently on hold until further notice from the State. Construction of the new Canning Center - Currently in the construction document review phase, the FY 2016 budgeted project cost is $30 million. The total estimated project cost is $61.7 million, which includes a state contribution of $40.7 million. Funds to address the Hospitality program facilities. The FY 2016 budgeted project cost is $0.3 million. The total estimated project cost is $5.3 million, which includes a state contribution of $3.9 million. The College has set aside the required matching funds for these projects. These projects will position the College to better serve our students with excellent facilities and accommodate new programs. In addition to the above two projects, Program Support also includes $22.0 million for Phase 2 of the Building D Renovation and Additions project, which is being fully funded by the College. Financial Information Internal Control Management of the College is responsible for establishing and maintaining internal controls designed to protect the assets of the College, prevent loss from theft or misuse and to provide that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America. The internal controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefit likely to be derived, and the valuation of costs and benefits requires estimates and judgments by management. Each year, including the fiscal year ended June 30, 2015, the College receives various reports from an independent certified public accountant reporting, among other things, whether instances of material weakness in the internal controls or material violation of applicable laws or regulations were noted during the audit. These reports are included in the Federal Financial Compliance section of this comprehensive annual financial report. 6

78 Budgeting Controls The College maintains budgetary controls through an encumbrance accounting system. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the College s Board of Trustees. The level of budgetary control (i.e., the level at which expenditures cannot exceed the appropriated amount) is 110% of the budgeted amounts for all funds. The College also maintains an encumbrance accounting system as a technique of accomplishing budgetary control. Encumbered amounts lapse at year-end. However, encumbrances generally are re-authorized as part of the following year s budget. Prospects for the Future Through our experiences over the last five years, we recognize the importance of intentionally engaging students and bringing our strategic initiatives to scale as part of a concerted effort to increase college completion rates going forward. In an era of changing student profiles, shrinking revenues and greater accountability, meeting this challenge requires singular focus. Harper College must ensure that every effort made, every dollar allocated, every policy set, and every initiative implemented will make success and completion a reality for large numbers of our students. As such, our new plan will continue our focus on student success through the strategic directions of Inclusion, Engagement and Achievement. It is critical that all of our employees are involved in welcoming and giving individual attention to our students through their general experience on campus and the onboarding process. Additionally, each student will need to be engaged in the classroom as well as outside the classroom. Whether it is through a stimulating classroom simulation, student club, supplemental instruction or a pickup basketball game, we need to be intentional about helping all of our students connect with the College, both academically and socially. All of our efforts are grounded in increasing the number of students who complete credentials, or Finish. This simple yet powerful theme is critical to our community s and nation s success. Long-Term Financial Planning The College devotes considerable time and resources to long range strategic and operational planning as described in the planning section of this document. The College is equally committed to long range financial planning. Each fall the Five-Year Financial Plan is updated, forecasting financial trends into the future. The Five-Year Financial Plan is presented in four sections as follows: Section One Executive Summary and Summary of Recommendations Sections Two Historical Information Sections Three Five-Year Projections by Fund and Fund Groupings Section Four Financial Plan Alternatives The purpose of the Five-Year Financial Plan is to create a framework which allows the College and the Board of Trustees to examine the long range financial implications of the many major financial decisions that have been made. The Five-Year Financial Plan is not intended to be a detailed line item budget for five years, but rather, it is intended to provide a broad brush overview of the financial position and the resulting impact of the financial decisions that must be made. The Five-Year Financial Plan is also intended to look prospectively at expenditures, the means of financing those expenditures, and the financial position over a longer period of time than the traditional one-year budget. 7

79 The earliest versions of this model were implemented in 1996, and focused primarily on the Education Fund. A review of the data from this model made it apparent the College would need to collectively begin to work on interventions on both the revenue and expenditure side or the College would rapidly use up current resources. The model helped the College and Board to see the need for a consistent and long term tuition philosophy. The above is just one example of how the financial forecasting model provides insight for key financial decisions. Beginning with the fiscal year 2012 financial planning process, the College switched from a three-year Education Fund model to a five-year all funds forecasting model to better understand the long range impact of these decisions. Debt Administration The statutory debt limit based on the property tax assessed valuation totals $483.7 million. The current indebtedness totals $170.9 million leaving a substantial margin for additional debt, as determined by the assessed valuation and the current property taxes. Current indebtedness is due to five outstanding series of bonds with varying maturity dates, with the last payment due in Financial Guidelines The Board guideline is to maintain a balanced budget in the across the Tax-Capped Funds, consisting of the Education Fund, the Operations and Maintenance Fund, the Audit Fund, and the Liability, Protection and Settlement Fund. The term balanced budget shall apply only to the Tax-Capped Funds. Tuition is set by the Board, whose policy is to limit the annual tuition and per credit hour fee increases to a maximum of the change in the annual December Consumer Price Index (CPI-U) rate plus 2%, but not to exceed either 5% of total tuition and fees or the Illinois statutory limitation. Fees are increased and/or added to make up for shortfalls in other revenue sources including state funding and property tax reductions due to Property Tax Appeal Board (PTAB) appeals. It is the Board s policy to maintain the fund balance in the combined Tax Capped Funds between 40% and 60% of budgeted annual expenditures. Other Information The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Harper College for its comprehensive annual financial report for the fiscal year ended June 30, This was the fifth consecutive year Harper College has achieved this prestigious award. In order to be awarded a certificate of Achievement, a government organization must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to meet the Certificate of Achievement Program s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. 8

80 State Statute requires an annual audit by independent certified public accountants. The accounting firm of Crowe Horwath LLP was selected by the College s Board of Trustees to conduct the fiscal year 2015 audit. The auditor s report on the financial statements and supplemental financial information is included in the financial section of this report. The auditor s opinion is unmodified for this year. 9

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