$26,285,000* PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 OF MARICOPA COUNTY, ARIZONA REFUNDING BONDS, SERIES 2017

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1 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. NEW ISSUE BOOK-ENTRY-ONLY PRELIMINARY OFFICIAL STATEMENT DATED MAY 8, 2017 RATINGS: See RATINGS herein. In the opinion of Gust Rosenfeld P.L.C., Phoenix, Arizona, Bond Counsel, under existing laws, regulations, rulings and judicial decisions, and assuming continuing compliance with certain restrictions, conditions and requirements by the District, as mentioned under TAX EXEMPTION herein, interest income on the Bonds is excluded from gross income for federal income tax purposes. Interest income on the Bonds is not an item of tax preference to be included in computing the alternative minimum tax of individuals or corporations; however, such interest income must be taken into account for federal income tax purposes as an adjustment to alternative minimum taxable income for certain corporations, which income is subject to the federal alternative minimum tax. In the opinion of Bond Counsel, interest income on the Bonds is exempt from Arizona income taxes. See TAX EXEMPTION, ORIGINAL ISSUE DISCOUNT and BOND PREMIUM herein. 26,285,000* PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 OF MARICOPA COUNTY, ARIZONA REFUNDING BONDS, SERIES 2017 Dated: Date of Initial Authentication and Delivery Due: July 1, as shown on the inside front cover page The Refunding Bonds, Series 2017 (the Bonds ) of Phoenix Union High School District No. 210 of Maricopa County, Arizona (the District ), will be issued in the form of fully-registered bonds, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). Ownership interests in the Bonds may be purchased in amounts of 5,000 of principal due on a specific maturity date or integral multiples thereof. The Bonds will mature on the dates and in the principal amounts and will bear interest from their initial date of delivery to their maturity as set forth on the inside front cover page. Interest on the Bonds will accrue from the date of initial authentication and delivery and will be payable semiannually on July 1 and January 1 of each year commencing January 1, 2018*, until maturity. SEE MATURITY SCHEDULE ON INSIDE FRONT COVER PAGE The District will initially utilize DTC s book-entry-only system, although the District and DTC each reserve the right to discontinue the book-entry-only system at any time. Utilization of the book-entry-only system will affect the method and timing of payment of principal of and interest on the Bonds and the method of transfer of the Bonds. So long as the bookentry-only system is in effect, a single fully-registered Bond, for each maturity of the Bonds, will be registered in the name of Cede & Co., as nominee of DTC, on the registration books maintained by The Bank of New York Mellon Trust Company, N.A., the initial bond registrar and paying agent for the Bonds. DTC will be responsible for distributing the principal, premium, if any, and interest payments to its direct and indirect participants who will, in turn, be responsible for distribution to the beneficial owners of the Bonds (the Beneficial Owners ). So long as the book-entry-only system is in effect and Cede & Co. is the registered owner of the Bonds, all references herein (except under the heading TAX MATTERS ) to owners of the Bonds will refer to Cede & Co. and not the Beneficial Owners. See APPENDIX H - BOOK-ENTRY-ONLY SYSTEM herein. The Bonds will not be subject to redemption prior to their stated maturity dates. Principal of and interest on the Bonds will be payable from a continuing, direct, annual, ad valorem tax levied against all of the taxable property located within the boundaries of the District, as more fully described herein. The Bonds will be payable from such tax without limit as to rate, but limited in amount so that the total aggregate amount of taxes levied to pay principal of and interest on the Bonds in the aggregate shall not exceed the total aggregate of principal of and interest on the Bonds Being Refunded (as defined herein) from the date of issuance of the Bonds to the final date of maturity of the Bonds Being Refunded. The application of such taxes to the payment of the Bonds will be subject to the rights vested in the owners of the Bonds Being Refunded to the payment of the Bonds Being Refunded from the same source in the event of a deficiency in the securities to be purchased with the proceeds of the Bonds and held in trust to pay principal of and interest on the Bonds Being Refunded. The owners of the Bonds must rely on the sufficiency of the monies for payment of the Bonds Being Refunded. See PLAN OF REFUNDING and SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS herein. The Bonds will be offered when, as and if issued by the District and received by the underwriter identified below (the Underwriter ), subject to the legal opinion of Gust Rosenfeld P.L.C., Phoenix, Arizona, Bond Counsel, as to validity and tax exemption. In addition, certain legal matters will be passed upon for the Underwriter by Greenberg Traurig, LLP. It is expected that the Bonds will be available for delivery through the facilities of DTC on or about June 7, 2017*. This cover page and inside front cover page contain certain information with respect to the Bonds for convenience of reference only. It is not a summary of the issue of which the Bonds are a part. Investors must read this entire Official Statement to obtain information essential to the making of an informed investment decision with respect to the Bonds. * Subject to change.

2 26,285,000* PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 OF MARICOPA COUNTY, ARIZONA REFUNDING BONDS, SERIES 2017 MATURITY SCHEDULE* Base CUSIP (1) No Maturity Date Principal Interest Price or CUSIP (1) (July 1) Amount Rate Yield No ,010,000 %% %% ,695, ,020, ,095, ,465,000 * Subject to change. (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services ( CGS ) is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright 2017 CUSIP Global Services. All rights reserved. CUSIP data herein is provided by CGS. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP numbers are provided for convenience of reference only. None of the District, Bond Counsel, the Underwriter or their agents or counsel assumes responsibility for the accuracy of such numbers.

3 PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 OF MARICOPA COUNTY, ARIZONA DISTRICT GOVERNING BOARD Ian Danley, President Stanford Prescott, Clerk Linda Abril, Member Lela Alston, Member Stephanie Parra, Member Laura Pastor, Member Randy D. Schiller, Member DISTRICT ADMINISTRATION Dr. Chad E. Gestson, Superintendent Dr. Althe Allen, Chief Academic Officer Sherry Celaya, Chief Financial Officer Michelle Gayles, Chief Strategy Officer FINANCIAL ADVISOR Stifel, Nicolaus & Company, Incorporated Phoenix, Arizona BOND COUNSEL Gust Rosenfeld P.L.C. Phoenix, Arizona DEPOSITORY TRUSTEE / BOND REGISTRAR AND PAYING AGENT The Bank of New York Mellon Trust Company, N.A. Dallas, Texas (i)

4 REGARDING THIS OFFICIAL STATEMENT No dealer, broker, salesperson or other person has been authorized by Phoenix Union High School District No. 210 of Maricopa County, Arizona (the District ), Stifel, Nicolaus & Company, Incorporated (the Financial Advisor ) or Piper Jaffray & Co. (the Underwriter ) to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth in this Official Statement, which includes the cover page, inside front cover page and appendices hereto, has been obtained from the District, the Arizona Department of Revenue, the Assessor, Finance Department and Treasurer of Maricopa County, Arizona and other sources that are considered to be accurate and reliable and customarily relied upon in the preparation of similar official statements, but such information has neither been independently confirmed nor verified by the District, the Financial Advisor or the Underwriter and is not guaranteed as to accuracy or completeness and is not to be construed as the promise or guarantee of the District, the Financial Advisor or the Underwriter. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement pursuant to its responsibilities to investors under the federal securities laws, but the Underwriter does not guarantee the accuracy or completeness of such information. None of the District, the Underwriter, the Financial Advisor, counsel to the Underwriter or Bond Counsel (as defined herein) are actuaries. None of them have performed any actuarial or other analysis of the District s share of the unfunded liabilities of the Arizona State Retirement System. The presentation of information, including tables of receipts from taxes and other sources, shows recent historical information and is not intended to indicate future or continuing trends in the financial position or other affairs of the District. All information, estimates and assumptions contained herein are based on past experience and on the latest information available and are believed to be reliable, but no representations are made that such information, estimates and assumptions are correct, will continue, will be realized or will be repeated in the future. To the extent that any statements made in this Official Statement involve matters of opinion or estimates, whether or not expressly stated to be such, they are made as such and not as representations of fact or certainty, and no representation is made that any of these statements have been or will be realized. All forecasts, projections, opinions, assumptions or estimates are forward looking statements that must be read with an abundance of caution and that may not be realized or may not occur in the future. Information other than that obtained from official records of the District has been identified by source and has neither been independently confirmed nor verified by the District, the Financial Advisor or the Underwriter and its accuracy cannot be guaranteed. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made pursuant hereto will, under any circumstances, create any implication that there has been no change in the affairs of the District or any of the other parties or matters described herein since the date hereof. The Bonds will not be registered under the Securities Act of 1933, as amended, or any state securities law, and will not be listed on any stock or other securities exchange. Neither the Securities and Exchange Commission or any other federal, state or other governmental entity or agency will have passed upon the accuracy or adequacy of this Official Statement or approved the Bonds for sale. References to web site addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader s convenience. Unless specified otherwise, such web sites and neither the information nor links contained therein are incorporated into, and are not part of, this Official Statement for purposes of Rule 15c2-12 of the Securities and Exchange Commission. The District will undertake to provide continuing disclosure as described in this Official Statement under the heading CONTINUING DISCLOSURE and in APPENDIX G FORM OF CONTINUING DISCLOSURE CERTIFICATE, all pursuant to Rule 15c2-12 of the Securities and Exchange Commission. (ii)

5 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY ALLOW CONCESSIONS OR DISCOUNTS FROM THE INITIAL PUBLIC OFFERING PRICES TO DEALERS AND OTHERS, AND THE UNDERWRITER MAY OVERALLOT OR ENGAGE IN TRANSACTIONS INTENDED TO STABILIZE THE PRICES OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET IN ORDER TO FACILITATE THEIR DISTRIBUTION. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. A wide variety of information, including financial information, concerning the District is available from publications and websites of the District and others. Any such information that is inconsistent with the information set forth in this Official Statement should be disregarded. No such information is a part of, or incorporated into, this Official Statement, except as expressly noted herein. (iii)

6 TABLE OF CONTENTS INTRODUCTORY STATEMENT...1 THE BONDS...1 Authorization and Purpose...1 Terms of the Bonds Generally...1 Bond Registrar and Paying Agent...2 No Prior Redemption...2 Registration and Transfer When Book-Entry-Only System Has Been Discontinued...2 PLAN OF REFUNDING...2 Schedule of Bonds Being Refunded...2 SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS...3 General...3 Recent Legislation Affecting Application of Ad Valorem Taxes to Pay Debt Service...3 Investment of Debt Service Funds...3 SOURCES AND USES OF FUNDS...4 ESTIMATED DEBT SERVICE REQUIREMENTS...5 LITIGATION...6 RATINGS...6 LEGAL MATTERS...6 DEPOSITORY TRUST AGREEMENT NOTICE OF CANCELLATION OF CONTRACTS...7 TAX EXEMPTION...7 ORIGINAL ISSUE DISCOUNT...8 BOND PREMIUM...9 UNDERWRITING...9 RELATIONSHIP AMONG PARTIES...9 CONTINUING DISCLOSURE...10 FINANCIAL ADVISOR...10 GENERAL PURPOSE FINANCIAL STATEMENTS...10 CONCLUDING STATEMENT...11 Page APPENDIX A: APPENDIX B: APPENDIX C: APPENDIX D: APPENDIX E: APPENDIX F: APPENDIX G: APPENDIX H: THE DISTRICT DISTRICT INFORMATION THE DISTRICT FINANCIAL INFORMATION THE DISTRICT AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 CITY OF PHOENIX, ARIZONA MARICOPA COUNTY, ARIZONA FORM OF APPROVING LEGAL OPINION FORM OF CONTINUING DISCLOSURE CERTIFICATE BOOK-ENTRY-ONLY SYSTEM (iv)

7 OFFICIAL STATEMENT 26,285,000* PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 OF MARICOPA COUNTY, ARIZONA REFUNDING BONDS, SERIES 2017 INTRODUCTORY STATEMENT This Official Statement, which includes the cover page, inside front cover page and appendices hereto, has been prepared at the direction of Phoenix Union High School District No. 210 of Maricopa County, Arizona (the District ), in connection with the issuance of 26,285,000* aggregate principal amount of bonds designated Refunding Bonds, Series 2017 (the Bonds ). Certain information concerning the authorization, purpose, terms, conditions of sale and sources of payment of and security for the Bonds is stated in this Official Statement. Reference to provisions of State of Arizona (the State or Arizona ) law, whether codified in the Arizona Revised Statutes, or uncodified, or of the State Constitution, are references to the current provisions. These provisions may be amended, repealed or supplemented. Neither this Official Statement nor any statement that may have been made orally or in writing in connection herewith is to be considered as, or as part of, a contract with the original purchasers or subsequent owners or beneficial owners of the Bonds. Authorization and Purpose THE BONDS The Bonds will be issued, executed and delivered pursuant to the Constitution and the laws of the State, including particularly Title 35, Chapter 3, Article 4, Arizona Revised Statutes (the Act ), and a resolution adopted by the Governing Board of the District on May 4, 2017 (the Bond Resolution ). Proceeds from the sale of the Bonds and any amounts contributed by the District will be used to establish an irrevocable depository trust (the Trust ) containing monies and certain obligations that will, together with certain reinvestment income thereon, be sufficient to pay when due the principal and interest on 29,970,000* aggregate principal amount of the District s outstanding bonds as described herein under PLAN OF REFUNDING (the Bonds Being Refunded ) and to pay all legal, financial, and other necessary costs incurred in connection with the issuance of the Bonds and confirming the sufficiency of the depository Trust. Terms of the Bonds Generally The Bonds will be dated the date of delivery and will be registered only in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ), under the book-entry-only system described herein (the Book-Entry-Only System ). See APPENDIX H BOOK-ENTRY-ONLY SYSTEM. The Bonds will mature on the dates and in the principal amounts and will bear interest from their date at the rates set forth on the inside front cover page of this Official Statement. Beneficial ownership interests in the Bonds may be purchased in amounts of 5,000 of principal due on a specific maturity date or integral multiples thereof. Interest on the Bonds will be payable semiannually on each January 1 and July 1, commencing January 1, 2018* (each an Interest Payment Date ), until maturity. See TAX EXEMPTION, ORIGINAL ISSUE DISCOUNT and BOND PREMIUM herein for a discussion of the treatment of interest on the Bonds for federal and State income tax purposes. * Subject to change. 1

8 Bond Registrar and Paying Agent The Bank of New York Mellon Trust Company, N.A., will serve as the initial bond registrar, transfer agent and paying agent (the Bond Registrar and Paying Agent ) for the Bonds. The District may change the Bond Registrar and Paying Agent without notice to or consent of the owners of the Bonds. No Prior Redemption* The Bonds will not be subject to redemption prior to their stated maturity dates. Registration and Transfer When Book-Entry-Only System Has Been Discontinued If the Book-Entry-Only System is discontinued, the Bonds will be transferred only upon the bond register maintained by the Bond Registrar and Paying Agent and one or more new Bonds, registered in the name of the transferee, of the same principal amount, maturity and rate of interest as the surrendered Bond or Bonds will be authenticated, upon surrender to the Bond Registrar and Paying Agent of the Bond or Bonds to be transferred, together with an appropriate instrument of transfer executed by the transferor if the Bond Registrar and Paying Agent s requirements for transfer are met. The District has chosen the fifteenth day of the month preceding an Interest Payment Date as the Record Date for the Bonds. The Bond Registrar and Paying Agent may, but is not required to, transfer or exchange any Bonds during the period from the Record Date to and including the respective Interest Payment Date. The transferor will be responsible for all transfer fees, taxes, fees and any other costs relating to the transfer of ownership of individual Bonds. PLAN OF REFUNDING* The proceeds of the sale of the Bonds remaining after payment of certain costs of issuance will be placed in the Trust with The Bank of New York Mellon Trust Company, N.A., the depository trustee (the Depository Trustee ), pursuant to a depository trust agreement among the District, the Treasurer of the Maricopa County, Arizona (the County ) and the Depository Trustee, dated as of June 1, 2017* (the Depository Trust Agreement ), to be applied to the payment of the Bonds Being Refunded identified below. Such funds will be used to acquire securities issued by or guaranteed by the United States of America (the Government Obligations ), the maturing principal of and interest income with respect to which are calculated to be sufficient, along with certain cash held pursuant to the Depository Trust Agreement or contributed by the District, to pay debt service on the Bonds Being Refunded until their redemption on the dates specified below, and to redeem the Bonds Being Refunded on such redemption dates, without premium. See VERIFICATION OF MATHEMATICAL COMPUTATIONS herein. Schedule of Bonds Being Refunded* Redemption Premium Maturity Principal Bonds Redemption (as a Issue Date Amount Being Date Percentage CUSIP (1) Series (July 1) Coupon Outstanding Refunded (July 1) of Principal) No C % 7,155,000 7,155, % KG ,675,000 3,675, KM ,430,000 3,430, KN ,825,000 8,825, KP ,885,000 6,885, KQ4 29,970,000 29,970,000 * Subject to change. (1) See footnote (1) on the inside front cover page. 2

9 To the extent the money and Government Obligations held in the Trust are not sufficient to pay the principal of and interest on the Bonds Being Refunded, the District will remain liable for payment of the Bonds Being Refunded. The ad valorem tax to be levied for the payment of the Bonds will be unlimited as to rate, except that the total aggregate of taxes levied to pay principal and interest on the Bonds in the aggregate will not exceed the total aggregate of principal and interest due on the Bonds Being Refunded from the date of issuance of the Bonds to the final date of maturity of the Bonds Being Refunded. The Act provides that the issuance of the Bonds will in no way infringe upon the rights of holders of the Bonds Being Refunded to rely upon a tax levy for the payment of principal of and interest on the Bonds Being Refunded if the monies and Government Obligations in the Trust prove insufficient. The Act further provides that owners of the Bonds must rely upon the sufficiency of such monies and the Government Obligations held in the Trust for the payment of the Bonds Being Refunded. See SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS. General SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS For the purpose of paying the principal of and interest on the Bonds and costs of registration and payment of the Bonds, the District will cause to be levied on all the taxable property in the District a continuing, direct, annual, ad valorem property tax sufficient to pay all such principal, premium, interest, and costs of the administration of the Bonds as the same become due, provided, however, that the total of taxes levied to pay principal of and interest on the Bonds will not exceed the total aggregate of principal and interest that would become due on the Bonds Being Refunded from the date of issuance of the Bonds to the final date of maturity of the Bonds Being Refunded. (The District has other bonds payable from such source outstanding and may issue additional bonds payable from such source in the future with or without such limit. See APPENDIX B THE DISTRICT FINANCIAL INFORMATION DIRECT AND OVERLAPPING BONDED INDEBTEDNESS. ) Subject to such limitation, such taxes are to be levied, assessed and collected at the same time and in the same manner as other taxes are levied, assessed and collected. The proceeds of the taxes will be kept in a special fund of the District (the Debt Service Fund ) and will be used only for the payment of principal, interest, and administration costs as above-stated. For the ad valorem property tax levy and collection procedures, see APPENDIX B THE DISTRICT FINANCIAL INFORMATION PROPERTY TAXES. As described above, under PLAN OF REFUNDING, the net proceeds of the sale of the Bonds will be invested in the Government Obligations and held in the Trust for the payment of the Bonds Being Refunded and interest to come due thereon to and including their redemption prior to their stated maturity dates. The owners of the Bonds must rely upon the sufficiency of the monies and Government Obligations held in the Trust for the payment of the Bonds Being Refunded. The issuance of the Bonds will in no way infringe upon the rights of the holders of the Bonds Being Refunded to rely upon a tax levy for the payment of principal of and interest on the Bonds Being Refunded if the monies and Government Obligations held in the Trust prove insufficient. Recent Legislation Affecting Application of Ad Valorem Taxes to Pay Debt Service Subsequent Refunding of the Bonds. On May 11, 2016, the Governor of Arizona signed House Bill 2301 ( HB 2301 ) into law. HB 2301 provides that with respect to general obligation bonds issued from and after August 31, 2016, such as the Bonds, if the District were to issue refunding bonds to refund the Bonds in advance of maturity, the owners of the Bonds must rely on the sufficiency of the funds or securities held in trust for the payment of such refunded Bonds. In contrast, as described above under PLAN OF REFUNDING, because the Bonds Being Refunded were issued on or before August 30, 2016, the District would still be required to levy ad valorem property taxes for payment of the Bonds Being Refunded to the extent the monies and Government Obligations held in the Trust Account are not sufficient to pay the principal of and interest on the Bonds Being Refunded. Investment of Debt Service Funds Following collection and deposit of the proceeds of the taxes into the Debt Service Fund, the District will instruct the Treasurer of the County, as ex officio Treasurer of the District, to invest the monies credited to the Debt Service Fund in accordance with Title 15, Chapter 9, Article 7 of the Arizona Revised Statutes. The District is statutorily permitted to invest monies in the Debt Service Fund only in the investments set forth in Arizona Revised Statutes Section , which include, with certain restrictions, bonds issued or guaranteed by the United States of 3

10 America (the United States ) or any of its agencies or instrumentalities when such obligations are guaranteed as to principal and interest by the United States or by any agency or instrumentality thereof, bonds of the State or any Arizona county, city, town, or school district, certain bonds of any Arizona county, municipality or municipal district utility, certain bonds of any Arizona municipal improvement district, federally insured savings accounts or certificates of deposit, and bonds issued by federal land banks, federal intermediate credit banks, or banks for cooperatives. All earnings derived from such investments are credited to the Debt Service Fund. The statutes governing investment of monies in the Debt Service Fund are subject to change. The District does not monitor the manner in which the Treasurer of the County invests monies in the Debt Service Fund. Except to the extent any bond proceeds are deposited to the Debt Service Fund and except as otherwise described above, neither the proceeds of the sale of the Bonds nor any school property of the District are security for, or a source of payment of, principal of or interest, on the Bonds. SOURCES AND USES OF FUNDS Sources Principal Amount 26,285,000.00* Net Original Issue Premium (a) Deposit to the Trust Refunding Bonds Escrow Deposit Payments of Costs of Issuance (b) Deposit to Debt Service Fund Total Sources of Funds Uses Total Uses of Funds * Subject to change. (a) (b) Net original issue premium consists of original issue premium on the Bonds, less original issue discount on the Bonds. Will include compensation and costs of the Underwriter (as defined herein) with respect to the Bonds. 4

11 ESTIMATED DEBT SERVICE REQUIREMENTS The following table illustrates the (i) annual debt service on the outstanding bonds of the District, net of the Bonds Being Refunded, (ii) estimated annual debt service on the Bonds and (iii) total estimated annual debt service on all bonds of the District outstanding after issuance of the Bonds. TABLE 1 Schedule of Estimated Annual Debt Service Requirements (a) Phoenix Union High School District No. 210 Total Estimated Bonds Outstanding (b) The Bonds Annual Fiscal Estimated Debt Service Year Principal Interest Principal* Interest (c) Requirements* 2016/17 25,545,000 3,999,694 29,544, /18 27,265,000 9,742,966 1,283,494 (d) 38,291, /19 28,585,000 8,120,863 1,200,150 37,906, /20 29,110,000 7,016,500 1,200,150 37,326, /21 26,480,000 5,833,450 3,010,000 1,200,150 36,523, /22 27,805,000 4,904,900 2,695,000 1,109,850 36,514, /23 17,170,000 3,717,225 8,020,000 1,029,000 29,936, /24 16,525,000 3,162,425 6,095, ,000 26,410, /25 17,040,000 2,562,475 6,465, ,250 26,390, /26 11,740,000 1,872,125 13,612, /27 12,195,000 1,430,500 13,625, /28 10,085, ,175 11,061, /29 2,190, ,050 2,758, /30 2,260, ,250 2,751, /31 1,155, ,750 1,547, /32 1,210, ,000 1,545, /33 1,275, ,500 1,549, /34 1,335, ,750 1,545, /35 1,405, ,000 1,549, /36 1,475,000 73,750 1,548, ,850,000 26,285,000 * Subject to change. (a) (b) Prepared by Stifel, Nicolaus & Company, Incorporated (the Financial Advisor ). Net of the Bonds Being Refunded. (c) Interest is estimated at 4.75%. (d) The first interest payment on the Bonds will be due on January 1, 2018*. Thereafter, interest payments will be made semiannually on July 1 and January 1 until maturity. 5

12 LITIGATION No litigation or administrative action or proceeding is pending to restrain or enjoin, or seeking to restrain or enjoin, the issuance and delivery of the Bonds, the levy and collection of taxes to pay the debt service on the Bonds, to contest or question the proceedings and authority under which the Bonds have been authorized and are to be issued, sold, executed or delivered, or the validity of the Bonds. Representatives of the District will deliver a certificate to the same effect at the time of the initial delivery of the Bonds. RATINGS Standard & Poor s Financial Services LLC ( S&P ) and Moody s Investors Service, Inc. ( Moody s ) have assigned ratings of AA and Aa2, respectively, to the Bonds. Such ratings reflect only the views of S&P and Moody s. An explanation of the significance of a rating assigned by S&P may be obtained at One California Street, 31 st Floor, San Francisco, California An explanation of the significance of a rating assigned by Moody s may be obtained at One Front Street, Suite 1900, San Francisco, California Such ratings may be revised downward or withdrawn entirely at any time by S&P or Moody s if, in their judgment, circumstances so warrant. Any downward revision or withdrawal of such ratings may have an adverse effect on the market price or marketability of the Bonds. The District has covenanted in its continuing disclosure certificate that it will file notice of any formal change in any rating relating to the Bonds. See CONTINUING DISCLOSURE and APPENDIX G FORM OF CONTINUING DISCLOSURE CERTIFICATE herein. LEGAL MATTERS The Bonds are sold with the understanding that the District will furnish the Underwriter with the approving opinion of Gust Rosenfeld P.L.C., Phoenix, Arizona, Bond Counsel, addressing legal matters relating to the validity of the Bonds under Arizona law, and with regard to the tax-exempt status of the interest thereon (see TAX EXEMPTION ). The signed legal opinion of Bond Counsel is dated and premised on the law in effect only as of the date of original delivery of the Bonds and will be delivered to the District and the Underwriter at the time of original issuance. The fees of Bond Counsel, the Financial Advisor and counsel to the Underwriter are expected to be paid from the proceeds of the sale of the Bonds and are contingent upon delivery of the Bonds. The proposed text of the legal opinion is set forth as APPENDIX F FORM OF APPROVING LEGAL OPINION. The legal opinion to be delivered may vary from the text of APPENDIX F FORM OF APPROVING LEGAL OPINION if necessary to reflect the facts and law on the date of delivery. The opinion will speak only as of its date, and subsequent distribution, by recirculation of this Official Statement or otherwise, should not be construed as a representation that Bond Counsel has reviewed or expressed any opinion concerning any matters relating to the Bonds subsequent to the original delivery of the Bonds. Bond Counsel has reviewed the information in the tax caption on the cover page as well as the information under the headings THE BONDS, PLAN OF REFUNDING, SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS, TAX EXEMPTION, ORIGINAL ISSUE DISCOUNT, BOND PREMIUM, RELATIONSHIP AMONG PARTIES (but only as it applies to Bond Counsel) and CONTINUING DISCLOSURE (except as it relates to compliance with prior continuing disclosure undertakings) and in APPENDICES F FORM OF APPROVING LEGAL OPINION and G FORM OF CONTINUING DISCLOSURE CERTIFICATE but otherwise has not participated in the preparation of this Official Statement and will not pass upon its accuracy, completeness or sufficiency. Bond Counsel has neither examined nor attempted to examine nor verify any of the financial or statistical statements or data contained in this Official Statement and will express no opinion with respect thereto. Certain legal matters will be passed upon for the Underwriter by Greenberg Traurig, LLP, counsel to the Underwriter. 6

13 Currently and from time to time, there are legislative proposals (and interpretations of such proposals by courts of law and other entities and individuals) which, if enacted, could alter or amend the property tax system of the State and numerous matters, both financial and non-financial, impacting the operations of school districts which could have a material impact on the District and could adversely affect the secondary 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 obligations (such as the Bonds) issued prior to enactment. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction. The rendering of an opinion also does not guarantee the outcome of any legal dispute that may arise out of the transaction. DEPOSITORY TRUST AGREEMENT NOTICE OF CANCELLATION OF CONTRACTS The Depository Trust Agreement provides that the Trust created is irrevocable and the Depository Trust Agreement shall not be revoked or amended in any manner which may adversely affect the Trust and the rights of the owners of the Bonds Being Refunded. Notwithstanding the irrevocable nature of the Trust pursuant to the Depository Trust Agreement, the provisions of Arizona Revised Statutes Section , as amended, provide that all contracts entered into by the District must give notice of the provisions of Arizona Revised Statutes Section Arizona Revised Statutes Section provides that within three years of its execution, the District may cancel any contract, including the Depository Trust Agreement, without penalty or further obligation, if any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the District is, at any time while the contract or any extension thereof is in effect, an employee of any other party to the contract in any capacity or a consultant to any other party of the contract with respect to the subject matter of the contract. The District is not aware of any fact or circumstance that would give rise to cancellation of the Depository Trust Agreement. TAX EXEMPTION In the opinion of Bond Counsel, under existing laws, regulations, rulings and judicial decisions, and assuming continuing compliance with certain restrictions, conditions and requirements by the District as described below, interest income on the Bonds is excluded from gross income for federal income tax purposes. In the opinion of Bond Counsel, interest income on the Bonds is exempt from State income taxes. The opinion of Bond Counsel will be dated as of the date of initial delivery of the Bonds. The form of such opinion is included as APPENDIX F FORM OF APPROVING LEGAL OPINION attached hereto. The Internal Revenue Code of 1986, as amended, (the Code ) imposes various restrictions, conditions and requirements relating to the continued exclusion of interest income on the Bonds from gross income for federal income tax purposes, including a requirement that the District rebate to the federal government certain of its investment earnings with respect to the Bonds. The District has covenanted to comply with the provisions of the Code relating to such matters. Failure to comply with such restrictions, conditions and requirements could result in the interest income on the Bonds being included as gross income for federal income tax purposes, under certain circumstances, from the date of initial issuance. The Bonds do not provide for an adjustment in the interest rate or yield in the event of taxability and an event of taxability does not cause an acceleration of the principal on the Bonds. The opinion of Bond Counsel assumes continuing compliance with such covenants. The Code also imposes an alternative minimum tax upon certain corporations and individuals. A taxpayer s alternative minimum taxable income ( AMTI ) is its taxable income with certain adjustments. Interest income on the Bonds is not an item of tax preference to be included in the AMTI of individuals or corporations. 7

14 Notwithstanding the preceding sentence, 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 (if any) of the corporation s adjusted current earnings over the corporation s AMTI for the taxable year (determined without regard to such adjustment for excess book income and the alternative tax net operating loss deduction). A corporation s adjusted current earnings includes all tax-exempt interest, including the interest on the Bonds. Although Bond Counsel will render an opinion that, as of the delivery date of the Bonds, interest income on the Bonds is excluded from gross income for federal income tax purposes, the accrual or receipt of interest on the Bonds may otherwise affect a Beneficial Owner s (as defined in APPENDIX H BOOK-ENTRY-ONLY SYSTEM ) federal tax liability. Certain taxpayers may experience other tax consequences. Taxpayers who become Beneficial Owners of the Bonds, including without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain subchapter S corporations, individuals who receive Social Security or Railroad Retirement benefits and taxpayers who have or are deemed to have incurred indebtedness to purchase or carry tax-exempt obligations, should consult their tax advisors as to the applicability of such tax consequences to the respective Beneficial Owner. The nature and extent of these other tax consequences will depend upon the Beneficial Owner s particular tax status and the Beneficial Owner s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. The Bonds are not private activity bonds within the meaning of Section 141 of the Code. Currently and from time to time, there are legislative proposals in Congress, which, if enacted or made effective, could alter or amend the federal tax matters referred to above or adversely affect the market value of the Bonds. Any such change that occurs before initial delivery of the Bonds could cause Bond Counsel to deliver an opinion substantially different from the opinion shown in APPENDIX F FORM OF APPROVING LEGAL OPINION. The extent of change in Bond Counsel s opinion cannot be determined at this time. It cannot be predicted whether, when or in what form any such proposal or proposals might be enacted or whether, if enacted, such proposal or proposals would apply to obligations (such as the Bonds) issued prior to the enactment or effective date. Prospective purchasers should consult with their own tax advisors regarding any other pending or proposed federal income tax legislation. ORIGINAL ISSUE DISCOUNT The initial public offering prices of the Bonds maturing on July 1, 20 through and including July 1, 20 (collectively, the Discount Bonds ) are less than the respective amounts payable on such Discount Bonds at maturity. As a result, the Discount Bonds will be considered to be issued with original issue discount. The difference between the initial public offering price (the Issue Price ) of the Discount Bonds, and the amount payable at maturity, of the Discount Bonds will be treated as original issue discount. With respect to a Beneficial Owner who purchases a Discount Bond in the initial public offering at the Issue Price and who holds the Discount Bond to maturity, the full amount of original issue discount will constitute interest income which is not includible in the gross income of the Beneficial Owner of the Discount Bond for federal income tax purposes and Arizona income tax purposes and that Beneficial Owner will not, under present federal income tax law and present Arizona income tax law, realize a taxable capital gain upon payment of the Discount Bond at maturity. The original issue discount on each Discount Bond is treated for federal income tax purposes and Arizona income tax purposes as accreting daily over the term of such Discount Bond on the basis of a constant interest rate compounded at the end of each six-month period (or shorter period from the date of original issue) ending on January 1 and July 1 (with straight-line interpolation between compounding dates). The amount of original issue discount accreting each period will be added to the Beneficial Owner s tax basis for the Discount Bond. The adjusted tax basis will be used to determine taxable gain or loss upon disposition of the Discount Bond. An initial Beneficial Owner of a Discount Bond who disposes of the Discount Bond prior to maturity should consult his or her tax advisor as to the amount of the original issue discount accrued over the period held and the amount of taxable gain or loss upon the sale or disposition of the Discount Bond prior to maturity. 8

15 The Code contains certain provisions relating to the accretion of original issue discount in the case of subsequent Beneficial Owners of the Discount Bonds. Beneficial Owners who do not purchase the Discount Bonds in the initial offering at the Issue Price should consult their own tax advisors with respect to the tax consequences of the ownership of Discount Bonds. A portion of the original issue discount that accretes in each year to a Beneficial Owner of a Discount Bond may result in certain collateral federal income tax consequences as described in TAX EXEMPTION herein. Beneficial Owners of Discount Bonds in states other than Arizona should consult their own tax advisors with respect to the state and local tax consequences. BOND PREMIUM The initial public offering prices of the Bonds maturing on July 1, 20 through and including July 1, 20 (collectively, the Premium Bonds ) are greater than the respective amounts payable on such Premium Bonds at maturity. An amount equal to the difference between the Issue Price of a Premium Bond (assuming that a substantial amount of the Premium Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes premium to the initial Beneficial Owner of such Premium Bonds. The basis for federal income tax purposes of a Premium Bond in the hands of such initial Beneficial Owner must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Bond. The amount of premium which is amortizable each year by an initial Beneficial Owner is determined by using such Beneficial Owner s yield to maturity. Beneficial Owners of the Premium Bonds should consult with their own tax advisors with respect to the determination of amortizable bond premium with respect to the Premium Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning Premium Bonds. UNDERWRITING The Bonds will be purchased by Piper Jaffray & Co. (the Underwriter ) at an aggregate purchase price of, pursuant to a bond purchase agreement (the Bond Purchase Agreement ) entered into by and between the District and the Underwriter. If the Bonds are sold to produce the yields shown on the inside front cover page hereof, the Underwriter s compensation will be. The Bond Purchase Agreement provides that the Underwriter will purchase all of the Bonds so offered if any are purchased. The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into unit investment trusts) and others at prices higher or yields lower than the public offering prices or yields stated on the inside front cover page hereof. The initial offering yields set forth on the inside front cover page may be changed, from time to time, by the Underwriter. The Underwriter has entered into a distribution agreement ( Distribution Agreement ) with Charles Schwab & Co, Inc. ( CS&Co ) for the retail distribution of certain securities offerings, including the Bonds, at the original issue prices. Pursuant to the Distribution Agreement, CS&Co will purchase the Bonds from the Underwriter at the original issue price less a negotiated portion of the selling concession applicable to any Bonds that CS&Co sells. RELATIONSHIP AMONG PARTIES Bond Counsel has previously represented, and is currently representing, the Underwriter and the Financial Advisor with respect to other financings and has acted or is acting as bond counsel with respect to other bonds underwritten by the Underwriter and the Financial Advisor and may do so in the future. Bond Counsel also serves and has served as bond counsel for one or more of the political subdivisions that the District territorially overlaps. Counsel to the Underwriter has previously acted as bond counsel with respect to other bonds underwritten by the Underwriter and the Financial Advisor and may continue to do so in the future if requested. 9

16 CONTINUING DISCLOSURE The District will covenant for the benefit of certain owners of the Bonds to provide certain financial information and operating data relating to the District by not later than February 1 in each year commencing February 1, 2018 (the Annual Reports ), and to provide notices of the occurrence of certain enumerated events (the Notices of Listed Events ). The Annual Reports, the Notices of Listed Events and any other document or information required to be filed by the District as such will be filed with the Municipal Securities Rulemaking Board (the MSRB ) through the MSRB s Electronic Municipal Market Access system, each as described in APPENDIX G FORM OF CONTINUING DISCLOSURE CERTIFICATE. The specific nature of the information to be contained in the Annual Reports and the Notices of Listed Events is also set forth in APPENDIX G FORM OF CONTINUING DISCLOSURE CERTIFICATE. These covenants will be made in order to assist the Underwriter in complying with the Securities and Exchange Commission s Rule 15c2-12(b)(5) (the Rule ). A failure by the District to comply with these covenants must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer 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. Pursuant to Arizona Law, the ability of the District to comply with such covenants will be subject to annual appropriation of funds sufficient to provide for the costs of compliance with such covenants. Should the District not comply with such covenants due to a failure to appropriate for such purpose, the District has covenanted to provide notice of such fact to the MSRB. Absence of continuing disclosure, due to non-appropriation or otherwise, could adversely affect the Bonds, specifically their market price and transferability. The District previously entered into continuing disclosure undertakings (the Prior Undertakings ) with respect to certain previously issued school improvement bonds and refunding bonds, which require the filing of, among other things, notices of the occurrence of certain events by the District. During the prior five years, the District was late in filing notices of certain bond insurance rating changes as required by the Prior Undertakings. The District has since filed all such notices. The District reviewed its filing requirements and has implemented procedures to facilitate compliance with all existing and future undertakings in all material respects. FINANCIAL ADVISOR The Financial Advisor s fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. The Financial Advisor has not verified, and does not assume any responsibility for, the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. The Financial Advisor has provided the following sentence for inclusion in this Official Statement: The Financial Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the District and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information. GENERAL PURPOSE FINANCIAL STATEMENTS The comprehensive annual financial report of the District for the fiscal year ended June 30, 2016, a copy of which is included in APPENDIX C THE DISTRICT AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 of this Official Statement, includes the District s financial statements for the fiscal year ended June 30, 2016 that were audited by Heinfeld, Meech & Co., P.C., a certified public accounting firm, to the extent indicated in its report thereon. The District has not requested the consent of Heinfeld, Meech & Co., P.C. to include its report and Heinfeld, Meech & Co., P.C. has performed no procedures subsequent to rendering its report on the financial statements. 10

17 CONCLUDING STATEMENT To the extent that any statements made in this Official Statement involve matters of opinion or estimates, whether or not expressly stated to be such, they are made as such and not as representations of fact or certainty, and no representation is made that any of these statements have been or will be realized. All financial and other information in this Official Statement has been derived by the District from official records and other sources and is believed by the District to be accurate and reliable. Information other than that obtained from official records of the District has been identified by source and has not been independently confirmed or verified by the District and its accuracy is not guaranteed. The presentation of information, including tables of receipts from taxes and other sources, is intended to show recent historic information and is not intended to indicate future or continuing trends in the financial position or other affairs of the District. No representation is made that past experience, as is shown by that financial and other information, will necessarily continue or be repeated in the future. PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 OF MARICOPA COUNTY, ARIZONA By: President of the Governing Board 11

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19 APPENDIX A THE DISTRICT DISTRICT INFORMATION General Information The District provides a program of public education to high school students from the 9 th through 12 th grades. Elementary education is provided by the overlapping districts as shown in TABLE 16 of APPENDIX B THE DISTRICT FINANCIAL INFORMATION. The District was organized on April 8, 1895 and comprises an area of approximately 220 square miles, over 79% of which lies within the city limits of the City of Phoenix, Arizona ( the City ), the State capital and largest city. See APPENDIX D CITY OF PHOENIX, ARIZONA for certain information about the City and APPENDIX E MARICOPA COUNTY, ARIZONA for certain information about the County. The District is one of 55 public school districts currently operating in the metropolitan area. The estimated population for the District is 712,540. Enrollment The following chart illustrates the current and historical average daily membership ( A.D.M. ) of the District s student population. TABLE 2 AVERAGE DAILY MEMBERSHIP Phoenix Union High School District No. 210 Fiscal Year A.D.M. 2016/17 26, /16 26, /15 26,602 (a) 2013/14 26,323 (a) 2012/13 25,448 (a) (a) Amounts provided by the Arizona Department of Education ( ADE ). ADE has indicated at various times in the past issues with the software used to track A.D.M. for school districts and charter schools throughout the State. Such issues may result in incorrect levels of funding for State aid. ADE has not yet determined the full extent of the most recently announced issues. The District is affected by the issues; as such, information for fiscal years 2012/13, 2013/14 and 2014/15 in the preceding table were provided by the District as it was believed they are more accurate. ADE, with information provided by the District, is taking steps to correct the issues and determine whether adjustments will be necessary to correct past payments of State aid. Representatives of the District have indicated that they do not believe such adjustments will materially adversely affect the financial affairs of the District. Source: The Arizona Department of Education and the District. A-1

20 The District operates the following schools: TABLE 3 SCHOOL FACILITIES Phoenix Union High School District No. 210 Grade Facility Type Range Alhambra High School Comprehensive high school 9 12 Betty H. Fairfax High School Comprehensive high school 9 12 Bioscience High School Specialty school 9 12 Bostrom High School Alternative education school 9 12 Camelback High School Comprehensive high school 9 12 Carl Hayden Community High School Comprehensive high school 9 12 Central High School Comprehensive high school 9 12 Cesar Chavez High School Comprehensive high school 9 12 Desiderata Program Special education school 9 12 Franklin Police and Fire High School Career & technical education school 9 12 Linda Abril Educational Academy (formerly Suns- Alternative education school Diamondbacks Education Academy) Maryvale High School Comprehensive high school 9 12 Metro Tech High School Comprehensive high school with 9 12 career & technical education programs North High School Comprehensive high school 9 12 Phoenix Coding Academy Alternative education school 9 12 South Mountain High School Comprehensive high school 9 12 Trevor G. Browne High School Comprehensive high school 9 12 Administration and Governance The District has 90 principals and administrators, 1,700 certified teachers and 1,500 classified support personnel. This provides the District with a student-teacher ratio of approximately 19:1. The District is governed by a seven-member Governing Board and administered by one Superintendent. The members of the Governing Board of the District are elected at large from the District for four-year terms. The present members of the Governing Board of the District are: TABLE 4 GOVERNING BOARD Phoenix Union High School District No. 210 Ian Danley, President Stanford Prescott, Clerk Linda Abril, Member Lela Alston, Member Stephanie Parra, Member Laura Pastor, Member Randy D. Schiller, Member Dr. Chad E. Gestson was named Superintendent in February 2016 by the Governing Board of the District. Dr. Gestson had been serving as the District's Interim Superintendent since August Prior to being named Interim Superintendent, Dr. Gestson served as the Director of School Leadership. In that role, Dr. Gestson supervised and A-2

21 supported principals and developed future principals and assistant principals through an Aspiring Leaders program that he developed in He had previously spent five years as the principal of Camelback High School, where he established the first Montessori high school in Arizona, a comprehensive Advisory system, a Virtual Academy, and an engineering program. Dr. Gestson served the Isaac School District for five years as an administrator before joining the District in 2009, first as an elementary school assistant principal, and later as a middle school principal. A product of Teach For America, he began his teaching career in the Roosevelt School District in Prior to his public education career, Dr. Gestson was a commercial construction superintendent in Seattle, Washington. Dr. Gestson holds a Bachelor of Arts in English from the University of Washington, a Master of Education in Curriculum and Instruction from Arizona State University, and a Master of Education in Educational Leadership from Northern Arizona University. In 2009, he completed his Doctor of Education in Educational Leadership from Northern Arizona University where he was named the Outstanding Doctoral Student of the Year by the Arizona Association of School Administrators. Dr. Gestson is also proficient in Spanish. Dr. Gestson, the 2013 PUHSD District Administrator of the Year, was a Rodel Exemplary Principal, one of only seven in the state that year and the first ever high school principal in the County. In that role, he mentored aspiring leaders, particularly those who aspire to lead schools of low-income students. In 2011, Dr. Gestson won the Lead and Inspire Award, Urban High School Division, presented by Arizona State University s Office of Education Partnerships. He also won the award as a middle school principal at Carl T. Smith Middle School in Dr. Gestson serves on numerous local boards and councils, including Expect More Arizona, ABEC (Arizona Business and Education Coalition), and Support My Club. He is the Co-Chair of Thriving Together, a collective impact organization in partnership with the United Way, Helios Foundation, and other educational and business partners. He also serves as the president of his church s board of directors. He and his wife, Megan, currently a principal in the Roosevelt School District, founded and run Sponsors For Scholars (@SFStoCollege), a non-profit organization that supports under-resourced and under-represented high school and college students. They have two children, Olivia and Andrew, ages 11 and 8, respectively, and reside in the City. Sherry Celaya became the Assistant Superintendent for Business and Finance in July, 2015 and Chief Financial Officer in July, She oversees budgeting, payroll, purchasing, food services, real estate and legislative matters, elections, and sale of District bonds. Ms. Celaya brings over 30 years of school finance experience to the District, coming from the Cartwright Elementary School District where she was the director of business services for three years. She was also the chief financial officer for the Scottsdale Unified School District and the Roosevelt Elementary School District, and business manager at Casa Grande Union High School District and Picacho Elementary School District. Ms. Celaya holds a Bachelor of Science degree in Business Administration, specializing in Accounting. She holds certification from the Association of School Business Officials International as a Certified Administrator of School Finance and Operations. A member of Arizona Association of School Business Officials (AASBO) she has completed its courses in advanced purchasing, budget and finance, business management and accounting. Ms. Celaya resides in Phoenix. Desegregation Order and Funding In August of 1995, the United States Federal Court in the District of Arizona (the U.S. District Court ), requested a review of the District s original Desegregation Federal Court Order (the Order ). Subsequently, the District built two new high schools in compliance with the Order and took other remedial actions. In May 2005, the U.S. District Court ordered that the District had complied with its obligation, declared the District unitary and ended its oversight of the District upon completion of the second high school in August State statutes authorize the District to continue to budget for and receive desegregation funds from local property taxes for programs and activities undertaken before the May 2005 ruling that the District is unitary. The U.S. District Court will retain jurisdiction to grant relief to the parties if the Arizona legislature takes any action at any time that would have the effect of decreasing, terminating or otherwise interfering with funding for existing and ongoing desegregation programs and activities pursuant to Arizona Revised Statutes Section (G), as currently written or as it may be amended or renumbered in the future. A-3

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23 APPENDIX B THE DISTRICT FINANCIAL INFORMATION PROPERTY TAXES As described under the heading SECURITY FOR AND SOURCES OF PAYMENT OF THE BONDS, for the purpose of paying the principal of and interest on the Bonds and costs of administration of the Bonds, the District will be required by law to cause to be levied on all the taxable property in the District a continuing, direct, annual, ad valorem property tax sufficient to pay all principal, interest, and costs of administration for the Bonds as the same become due, limited as described under such heading. Taxes levied for the maintenance and operation of counties, cities, towns, school districts, community college districts and the State are primary taxes. Taxes levied for payment of bonds like the Bonds, voter-approved budget overrides and the maintenance and operation of special service districts such as sanitary, fire, road improvement and joint technological education districts are secondary taxes. See Primary Taxes and Secondary Taxes below. The State s ad valorem property tax levy and collection procedures are summarized under this heading PROPERTY TAXES. Taxable Property Real property and improvements and personal property are either valued by the Assessor of the County or the Arizona Department of Revenue (the Department of Revenue ). Property valued by the Assessor of the County is referred to as locally assessed property and generally encompasses residential, agricultural and traditional commercial and industrial property. Property valued by the Department of Revenue is referred to as centrally valued property and generally includes large mine and utility entities. Locally assessed property is assigned two values: Full Cash Value and Limited Property Value (both as defined herein). Centrally valued property is assigned one value: Full Cash Value which is used for both Jurisdictional Full Cash Value and Jurisdictional Limited Property Value (both as defined herein). Full Cash Value In the context of a specific property parcel, full cash value ( Full Cash Value ) is statutorily defined to mean that value determined as prescribed by statute or if no statutory method is prescribed it is synonymous with market value which means that estimate of value that is derived annually by using standard appraisal methods and techniques, which generally include the market approach, the cost approach and the income approach. In valuing locally assessed property, the Assessor of the County generally uses a cost approach to value commercial/industrial property and a market approach to value residential property. In valuing centrally valued property, the Department of Revenue begins generally with information provided by taxpayers and then applies procedures provided by State law. State law allows taxpayers to appeal such Full Cash Values by providing evidence of a lower value, which may be based upon another valuation approach. Full Cash Value is used as the ceiling for determining Limited Property Value. Unlike Limited Property Value, increases in Full Cash Value are not limited. Limited Property Value In the context of a specific property parcel, limited property value ( Limited Property Value ) is a property value determined pursuant to the Arizona Constitution and the Arizona Revised Statutes. For locally assessed property in existence in the prior year that did not undergo modification through construction, destruction, split or change in use, including that for mobile homes, Limited Property Value is limited to the lesser of Full Cash Value or an amount 5% greater than Limited Property Value determined for the prior year for such specific property parcel. Prior to 2015, Limited Property Value for a specific property parcel in existence in the prior year that did not B-1

24 undergo modification through construction, destruction, split or change in use, including that for mobile homes, increased by the greater of either 10% of the prior year s Limited Property Value or 25% of the difference between the prior year s Limited Property Value and the current year s Full Cash Value. A separate Limited Property Value was not and is not provided for centrally valued property. Full Cash Value and Limited Property Value for Taxing Jurisdictions The Full Cash Value in the context of a taxing jurisdiction is the sum of the Full Cash Value associated with each parcel of property in the jurisdiction. Full Cash Value of the jurisdiction is the basis for determining constitutional and statutory debt limits for certain political subdivisions in Arizona, including the District. The Limited Property Value in the context of a taxing jurisdiction is the sum of the Limited Property Value associated with each parcel of locally assessed property within the jurisdiction plus the sum of the Full Cash Value associated with each parcel of centrally valued property within the jurisdiction. Limited Property Value of the jurisdiction is used as the basis for levying both primary and secondary taxes. Prior to tax year 2015, Jurisdictional Limited Property Value was used as the basis for levying primary property taxes while Jurisdictional Full Cash Value was used as the basis for levying secondary property taxes. Property Classification and Assessment Ratios All property, both real and personal, is assigned a classification (defined by property use) and related assessment ratio that is multiplied by the Limited Property Value or Full Cash Value of the property, as applicable, to obtain the Limited Assessed Property Value and the Full Cash Assessed Value, respectively. The assessment ratios for each property classification are set forth by tax year in the following table. Property Tax Assessment Ratios (Tax Year) TABLE 5 Property Classification (a) Mining, utilities, commercial and industrial 19.5% 19% 18.5% 18% 18% Agricultural and vacant land Owner occupied residential Leased or rented residential Railroad, private car company and airline flight property (b) (a) (b) Additional classes of property exist, but seldom amount to a significant portion of a municipal body s total valuation. This percentage is determined annually pursuant to Section , Arizona Revised Statutes. Source: State and County Abstract of the Assessment Roll, Arizona Department of Revenue. Primary Taxes Primary taxes are levied against Net Limited Assessed Property Value (as defined herein). Net Limited Assessed Property Value is determined by excluding the value of property exempt from taxation from Limited Assessed Property Value of locally assessed property and from Full Cash Assessed Value of centrally valued property and combining the resulting two amounts. B-2

25 The primary taxes levied by each county, city, town and community college district are constitutionally limited to a maximum increase of 2% over the maximum allowable prior year s levy limit plus any taxes on property not subject to taxation in the preceding year (e.g., new construction and property brought into the jurisdiction because of annexation). The 2% limitation does not apply to primary taxes levied on behalf of school districts. Primary taxes on residential property only are constitutionally limited to 1% of the Limited Property Value of such property. This constitutional limitation on residential primary tax levies is implemented by reducing the school district s taxes. To offset the effects of reduced school district property taxes, the State compensates the school district by providing additional State aid. Secondary Taxes Like primary taxes, secondary taxes are also levied against Net Limited Assessed Property Value. (Prior to tax year 2015, secondary taxes were levied against Net Full Cash Assessed Value which is determined by excluding the value of property exempt from taxation from Full Cash Assessed Value of both locally assessed and centrally valued property and combining the resulting two amounts.) There is no constitutional or statutory limitation on annual levies for voter-approved bond indebtedness and overrides and certain special district assessments. As Net Full Cash Assessed Value was used as the basis for levying taxes for payment of bonds like the Bonds in fiscal years prior to fiscal year 2015/16, this Official Statement compares Net Limited Assessed Property Value with Net Full Cash Assessed Value in applicable years under the heading ASSESSED VALUATIONS AND TAX RATES herein. Tax Procedures The State tax year has been defined as the calendar year, notwithstanding the fact that tax procedures begin prior to January 1 of the tax year and continue through May of the succeeding calendar year. On or before the third Monday in August each year the Board of Supervisors of the County prepares the tax roll setting forth certain valuations by taxing district of all property in the County subject to taxation. The Assessor of the County is required to complete the assessment roll by December 15th of the year prior to the levy. This tax roll also shows the valuation and classification of each parcel of land located within the County for the tax year. The tax roll is then forwarded to the Treasurer of the County. With the various budgetary procedures having been completed by the governmental entities, the appropriate tax rate for each jurisdiction is then applied to the parcel of property in order to determine the total tax owed by each property owner. Any subsequent decrease in the value of the tax roll as it existed on the date of the tax levy due to appeals or other reasons would reduce the amount of taxes received by each jurisdiction. The property tax lien on real property attaches on January 1 of the year the tax is levied. Such lien is prior and superior to all other liens and encumbrances on the property subject to such tax except liens or encumbrances held by the State or liens for taxes accruing in any other years. Set forth below is a record of property taxes levied and collected in the District for a portion of the current fiscal year and all of the previous five fiscal years. B-3

26 TABLE 6 Real and Secured Property Taxes Levied and Collected (a) Phoenix Union High School District No. 210 Combined Collected to June 30th Cumulative Collections Primary and of Initial Fiscal Year to March 03, 2017 Fiscal Secondary District % of % of Year Tax Rate Tax Levy Amount Levy Amount Levy 2016/ ,825,939 (b) (b) 129,390, % 2015/ ,925, ,225, % 207,949, / ,557, ,697, ,614, / ,403, ,502, ,212, / ,874, ,158, ,233, / ,099, ,001, ,450, (a) Taxes are collected by the Treasurer of the County. Taxes in support of debt service are levied by the Board of Supervisors of the County as required by Arizona Revised Statutes. Delinquent taxes are subject to an interest and penalty charge of 16% per annum, which is prorated at a monthly rate of 1.33%. Interest and penalty collections for delinquent taxes are not included in the collection figures above, but are deposited in the County s General Fund. Interest and penalties with respect to the first half tax collections (delinquent November 1) are waived if the full year s taxes are paid by December 31. In November 2013, voters in the District authorized the District to continue to exceed its statutorily prescribed maintenance and operations budget limit by an amount not to exceed 15% of the prescribed limit. The authorization, which began in fiscal year 2014/15, extends for seven years, although in the sixth (fiscal year 2019/20) and seventh (fiscal year 2020/21) years, the amount by which the prescribed budget limit may be exceeded is limited to 10% and 5%, respectively. Tax rates for corresponding years include amounts available for this override. If voters do not authorize the District to continue to exceed its prescribed budget by fiscal year 2018/19, the District will have to decrease its budgeted expenditures in fiscal years that follow. The Governing Board of the District has called an election in and for the District to be held on November 7, 2017, to authorize the District to continue to exceed its statutorily prescribed maintenance and operations budget limit by an amount not to exceed 15% of the prescribed limit. In November 2015, voters in the District authorized the District to exceed its statutorily prescribed capital outlay budget limit by an amount not to exceed 15,300,600 per year. The authorization extends for seven years, took effect in fiscal year 2016/17 and expires in fiscal year 2022/23. If voters do not authorize the District to continue to exceed its statutorily prescribed capital outlay budget limit by fiscal year 2022/23, the District will have to decrease its budgeted capital outlay expenditures in fiscal years following 2022/23. (b) 2016/17 taxes in course of collection: First installment due , delinquent ; Second installment due , delinquent Source: Office of the Treasurer of the County. SPECIAL NOTE: The Full Cash Assessed Value of property owned by the Salt River Project Agricultural Improvement and Power District ( SRP ) is not included in the assessed value of the District or in any valuation information set forth in this Official Statement. Because of SRP s quasi-governmental nature, property owned by SRP is exempt from property taxation. However, SRP may elect each year to make voluntary contributions in lieu of property taxes with respect to certain of its electrical facilities (the SRP Electric Plant ). If SRP elects to make the in lieu contribution for the year, the B-4

27 Full Cash Assessed Value of the portion of the SRP Electric Plant located within the District and the in lieu contribution amount is determined in the same manner as the Full Cash Assessed Value and property taxes owed is determined for similar non-governmental public utility property, with certain special deductions. SRP in-lieu is taken into account when setting the District s tax rate. If SRP elected not to make such contributions, the District would be required to contribute funds from other sources or levy an increased tax rate on all other taxable property to provide sufficient amounts to pay debt service on the Bonds. If after electing to make the in lieu contribution, SRP then failed to make the in lieu contribution when due, the Treasurer of the County and the District have no recourse against the property of SRP and there may be a delay in the payment of that portion of the debt service on the Bonds that would have been paid by SRP s in lieu contribution. Since 1964, when the in lieu contribution was originally authorized by the Arizona Revised Statutes, SRP has always elected to make the in lieu contribution. The fiscal year 2016/17 Net Limited Assessed Property Value equivalent of SRP within the District is 56,975,173 which represents approximately 1.30% of the fiscal year 2016/17 Net Limited Assessed Property Value in the District. The fiscal year 2017/18 estimated Net Limited Assessed Property Value equivalent of SRP within the District is 58,973,748 which represents approximately 1.25% of the fiscal year 2017/18 estimated Net Limited Assessed Property Value of the District. Delinquent Tax Procedures The property taxes due the District are billed, along with State and other taxes, each September and are due and payable in two installments on October 1 and March 1 and become delinquent on November 1 and May 1, respectively. Delinquent taxes are subject to an interest penalty of 16% per annum prorated monthly as of the first day of the month. (Delinquent interest is waived if a taxpayer, delinquent as to the November 1 payment, pays the entire year s tax bill by December 31.) After the close of the tax collection period, the Treasurer of the County prepares a delinquent property tax list and the property so listed is subject to a tax lien sale in February of the succeeding year. In the event that there is no purchaser for the tax lien at the sale, the tax lien is assigned to the State, and the property is reoffered for sale from time to time until such time as it is sold, subject to redemption, for an amount sufficient to cover all delinquent taxes. After three years from the sale of the tax lien, the tax lien certificate holder may bring an action in a court of competent jurisdiction to foreclose the right of redemption and, if the delinquent taxes plus accrued interest are not paid by the owner of record or any entity having a right to redeem, a judgment is entered ordering the Treasurer of the County to deliver a treasurer s deed to the certificate holder as prescribed by law. In the event of bankruptcy of a taxpayer pursuant to the United States Bankruptcy Code (the Bankruptcy Code ), the law is currently unsettled as to whether a lien can attach against the taxpayer s property for property taxes levied during the pendency of bankruptcy. Such taxes might constitute an unsecured and possibly non-interest bearing administrative expense payable only to the extent that the secured creditors of a taxpayer are oversecured, and then possibly only on the prorated basis with other allowed administrative claims. It cannot be determined, therefore, what adverse impact bankruptcy might have on the ability to collect ad valorem taxes on property of a taxpayer within the District. Proceeds to pay such taxes come only from the taxpayer or from a sale of the tax lien on delinquent property. When a debtor files or is forced into bankruptcy, any act to obtain possession of the debtor s estate, any act to create or perfect any lien against the property of the debtor or any act to collect, assess or recover a claim against the debtor that arose before the commencement of the bankruptcy is stayed pursuant to the Bankruptcy Code. While the automatic stay of a bankruptcy court may not prevent the sale of tax liens against the real property of a bankrupt taxpayer, the judicial or administrative foreclosure of a tax lien against the real property of a debtor would be subject to the stay of bankruptcy court. It is reasonable to conclude that tax sale investors may be reluctant to purchase tax liens under such circumstances, and, therefore, the timeliness of the payment of post-bankruptcy petition tax collections becomes uncertain. B-5

28 It cannot be determined what impact any deterioration of the financial conditions of any taxpayer, whether or not protection under the Bankruptcy Code is sought, may have on payment of or the secondary market for the Bonds. None of the District, the Underwriter or their respective agents or consultants has undertaken any independent investigation of the operations and financial condition of any taxpayer, nor have they assumed responsibility for the same. In the event the County is expressly enjoined or prohibited by law from collecting taxes due from any taxpayer, such as may result from the bankruptcy of a taxpayer, any resulting deficiency could be collected in subsequent tax years by adjusting the District s tax rate charged to non-bankrupt taxpayers during such subsequent tax years. B-6

29 ASSESSED VALUATIONS AND TAX RATES TABLE 7 Direct and Overlapping Net Limited Assessed Property Values and Tax Rates (a) Per 100 Assessed Valuation Overlapping Jurisdiction 2016/17 Net Limited Assessed Property Value 2016/17 Combined Primary and Secondary Tax Rates Per 100 Net Limited Assessed Property Value State of Arizona 56,589,592,481 None Maricopa County 36,135,494, (b) Maricopa County Community College District 36,135,494, Maricopa County Fire District Assistance Tax 36,135,494, Maricopa County Special Health Care District (MIHS) 36,135,494, Maricopa County Library District 36,135,494, Maricopa County Flood Control District (c) 32,624,765, Central Arizona Water Conservation District (d) 36,135,494, Estrella Dells County Improvement District N/A Phoenix Downtown Enhancement District N/A Rancho Solano County Improvement District 4,797, Buckeye Valley Volunteer Fire District 120,686, Laveen Fire District 39,559, City of Glendale 1,173,091, City of Phoenix 10,982,150, City of Scottsdale 5,398,913, Town of Paradise Valley 792,243, Phoenix Elementary School District No ,496, Riverside Elementary School District No ,179, Isaac Elementary School District No ,947, Wilson Elementary School District No. 7 91,129, Osborn Elementary School District No ,609, Creighton Elementary School District No ,744, Murphy Elementary School District No ,321, Balsz Elementary School District No ,080, Madison Elementary School District No ,131, Laveen Elementary School District No ,002, Roosevelt Elementary School District No ,228, Alhambra Elementary School District No ,006, Cartwright Elementary School District No ,690, Western Maricopa Education Center (West-MEC) 13,286,755, Phoenix Union High School District No ,328,567, B-7

30 (a) The following overlapping jurisdictions are taxed as follows: Overlapping Jurisdiction Cuatro Palmas Irrigation and Water Delivery District #26 East Morningside Irrigation and Water Delivery District #8 Hoffman Terrace Irrigation and Water Delivery District #3 Lamar Irrigation and Water Delivery District #30 Los Olivos Irrigation and Water Delivery District #1 Madison Park Irrigation and Water Delivery District #22 McDowell Homes Irrigation and Water Delivery District #7 Myrtle Park Irrigation and Water Delivery District #10 Olivewood Estates Irrigation and Water Delivery District #29 Rancho Grande/Landerwood Irrigation and Water Delivery District #24 Roosevelt Water Conservation Delivery District Sun View Estates I Irrigation and Water Delivery District #55 Sun View Estates II Irrigation and Water Delivery District #54 Tres Palmas Irrigation and Water Delivery District #6 Turney Tract Irrigation and Water Delivery District #15 Whitcomb s Roundup Ranchos Irrigation and Water Delivery District #42 Windsor Square Irrigation and Water Delivery District #27 Woodlea Irrigation and Water Delivery District #2 Yaple Park Irrigation and Water Delivery District #56 Levy/Tax Rate /acre /acre /acre 6.06/acre /acre /acre /acre /acre 1,108.28/acre /acre /acre /acre /acre /acre /acre 1,382.61/acre /acre /acre /acre (b) (c) (d) Includes the State Equalization Assistance Property Tax which is levied by the County and has been set at per 100 Net Limited Assessed Property Value for fiscal year 2016/17. Such amount is adjusted annually pursuant to Section , Arizona Revised Statutes. The assessed value of the Maricopa County Flood Control District does not include the personal property assessed valuation of the County. Value shown for the Central Arizona Water Conservation District covers only the County portion of such district. (See footnote (b) following TABLE 16.) Source: Property Tax Rates and Assessed Values, Arizona Tax Research Association. Total Tax Rates Per 100 Net Limited Assessed Property Value The total overlapping property tax rate for property owners within the District (exclusive of those described in footnote (a) to TABLE 7) ranges from to per 100 Net Limited Assessed Property Value, depending upon the specific jurisdictions which overlap the property. Source: Property Tax Rates and Assessed Values, Arizona Tax Research Association and Finance Department of the County. B-8

31 TABLE 8A Net Limited Assessed Property Value by Property Classification (a) Phoenix Union High School District No / /16 Commercial, industrial, utilities and mines 2,496,892,220 2,472,519,471 Agricultural and vacant 114,259, ,299,087 Residential (owner occupied) 1,047,676,049 1,001,242,479 Residential (rental) 619,525, ,758,747 Railroad 12,945,652 14,080,493 Historical property 36,807,018 35,270,684 Certain Government property improvements 462, ,930 Totals (b) 4,328,567,331 4,206,507,891 (a) (b) Determined by Net Limited Assessed Property Value. See PROPERTY TAXES Limited Property Value and Secondary Taxes herein for a discussion of the use of Net Limited Assessed Property Value for fiscal years 2015/16 and thereafter. Totals may not add up due to rounding. Source: State and County Abstract of the Assessment Roll, Arizona Department of Revenue. TABLE 8B Net Full Cash Assessed Value by Property Classification (a) Phoenix Union High School District No / / /13 Commercial, industrial, utilities and mines 2,545,646,329 2,522,664,418 2,885,899,598 Agricultural and vacant 128,393, ,926, ,322,827 Residential (owner occupied) 1,053,311, ,997,283 1,093,793,401 Residential (rental) 588,428, ,023, ,510,951 Railroad 15,217,775 13,816,999 15,343,303 Historical property 40,746,275 34,529,521 35,470,307 Certain Government property improvements 318, , ,760 Totals (b) 4,372,062,126 4,088,065,277 4,573,470,147 (a) Determined by Net Full Cash Assessed Value. See PROPERTY TAXES Limited Property Value and Secondary Taxes herein for a discussion of the use of Net Full Cash Assessed Value for fiscal years prior to 2015/16. (b) Totals may not add up due to rounding. Source: State and County Abstract of the Assessment Roll, Arizona Department of Revenue. B-9

32 TABLE /17 Net Limited Assessed Property Value of Major Taxpayers Phoenix Union High School District No. 210 Major Taxpayer (a) 2016/17 Net Limited Assessed Property Value As % of 2016/17 Net Limited Assessed Property Value Arizona Public Service Company 167,242, % Southwest Gas Corporation (T&D) 57,743, CenturyLink (b) 36,301, Grand Canyon Education Inc 35,479, Esplanade Owner LP 26,770, AT&T Mobility LLC 22,765, Phoenix Plaza PT LLC 21,913, AGP Arizona Center Owner LLC 21,069, Epic Apollo LLC 19,391, ABR Property LLC 16,720, ,398, % (a) (b) Some of such taxpayers or their parent corporations are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith file reports, proxy statements and other information with the Securities and Exchange Commission (the Commission ). Such reports, proxy statements and other information (collectively, the Filings ) may be inspected, copied and obtained at prescribed rates at the Commission s public reference facilities at 100 F Street, N.E., Washington, D.C In addition, the Filings may also be inspected at the offices of the New York Stock Exchange at 20 Broad Street, New York, New York The Filings may also be obtained through the Internet on the Commission s EDGAR data base at No representative of the District, the Financial Advisor, the Underwriter, Bond Counsel or counsel to the Underwriter has examined the information set forth in the Filings for accuracy or completeness, nor does any such representative assume responsibility for the same. Formerly known as Qwest Corporation. Source: The Assessor of the County. B-10

33 TABLE 10A Comparative Net Limited Assessed Property Values (a) Phoenix Union High Fiscal School District City of Maricopa State of Year No. 210 Phoenix County Arizona 2016/17 4,328,567,331 10,982,150,871 36,135,494,474 56,589,592, /16 4,206,507,891 10,577,031,724 34,623,670,323 54,838,548,829 (a) Determined by Net Limited Assessed Property Value. See PROPERTY TAXES Limited Property Value and Secondary Taxes herein for a discussion of the use of Net Limited Assessed Property Value for fiscal years 2015/16 and thereafter. Source: Property Tax Rates Assessed Values, Arizona Tax Research Association. TABLE 10B Comparative Net Full Cash Assessed Values (a) Phoenix Union High Fiscal School District City of Maricopa State of Year No. 210 Phoenix County Arizona 2014/15 4,372,062,126 10,818,634,186 35,079,646,593 55,352,051, /14 4,088,065,277 9,974,713,171 32,229,006,810 52,594,377, /13 4,573,470,147 10,849,743,656 34,400,455,716 56,271,814,583 (a) Determined by Net Full Cash Assessed Value. See PROPERTY TAXES Limited Property Value and Secondary Taxes herein for a discussion of the use of Net Full Cash Assessed Value for fiscal years prior to 2015/16. Source: Property Tax Rates and Assessed Values, Arizona Tax Research Association. B-11

34 TABLE 11 Estimated Net Full Cash Value History Phoenix Union High School District No. 210 Fiscal Year Estimated Net Full Cash Value (a) 2016/17 41,628,583, /16 36,303,450, /15 30,096,255, /14 27,186,196, /13 29,993,473,561 (a) Estimated Net Full Cash Value is the total market value of the property within the District less the estimated Full Cash Value of property exempt from taxation within the District. Source: State and County Abstract of the Assessment Roll, Arizona Department of Revenue. DIRECT AND OVERLAPPING BONDED INDEBTEDNESS Current Year Statistics (For Fiscal Year 2016/17) Phoenix Union High School District No. 210 TABLE 12 Total General Obligation Bonds Outstanding and to be Outstanding 288,135,000 *(a) Net Limited Assessed Property Value 4,328,567,331 Net Full Cash Assessed Value 5,650,995,865 Estimated Net Full Cash Value 41,628,583,145 The District s preliminary fiscal year 2017/18 Net Full Cash Assessed Value is estimated at 6,357,545,024, a change of approximately 12.50% from the fiscal year 2016/17 Net Full Cash Assessed Value. The District s preliminary fiscal year 2017/18 Net Limited Assessed Property Value is estimated at 4,671,186,110, a change of approximately 7.92% from the fiscal year 2016/17 Net Limited Assessed Property Value. The District s preliminary fiscal year 2017/18 Estimated Net Full Cash Value is estimated at 46,993,900,817, a change of approximately 12.89% from the fiscal year 2016/17 Estimated Net Full Cash Value. The values are subject to positive or negative adjustments until approved by the respective Board of Supervisors of the Counties on or before August 21, * Subject to change. (a) Includes the Bonds, net of the Bonds Being Refunded. See footnote (b) to TABLE 14 for a description of the treatment of certain proceeds of the Bonds for State debt limit purposes. Source: State and County Abstract of the Assessment Roll, Arizona Department of Revenue and Property Tax Rates Assessed Values, Arizona Tax Research Association. B-12

35 TABLE 13 Direct General Obligation Bonded Debt Outstanding and to be Outstanding Phoenix Union High School District No. 210 Final Balance Maturity Bonds Outstanding Issue Original Date Balance Being and to be Series Amount Purpose (July 1) Outstanding Refunded* Outstanding* ,800,000 Refunding ,325,000 6,325, C 90,000,000 School improvements ,155,000 (7,155,000) ,105,000 Refunding ,105,000 (22,815,000) 29,290,000 (a) ,085,000 Refunding ,565,000 1,565, A 38,000,000 School improvements ,000,000 38,000,000 (a) 2012B 12,000,000 School improvements ,070,000 5,070,000 (a) 2014C 75,000,000 School improvements ,000,000 69,000,000 (a) ,445,000 Refunding ,175,000 63,175,000 (a) 2015D 10,000,000 School improvements ,000,000 10,000,000 (a) 2017 E 39,425,000 School improvements ,425,000 39,425,000 (a) Total General Obligation Bonded Debt Outstanding 261,850,000 * Plus: The Bonds 26,285,000* (a) Total General Obligation Bonded Debt Outstanding and to be Outstanding 288,135,000 * (b) * Subject to change. (a) (b) Designated as Class B as described in the following paragraph. See footnote (b) to TABLE 14 for a description of the treatment of certain proceeds of the Bonds for State debt limit purposes. Constitutional / Statutory Debt Limit / Unused Borrowing Capacity after Bond Issuance Phoenix Union High School District No. 210 Arizona school district general obligation bonds are subject to two limits: the constitutional debt limit on all general obligation bonds and the statutory debt limit on Class B bonds. Net Full Cash Assessed Value is used as the basis for determining the debt limits of the District. Class B designates, for the purpose of this statutory limit, those bonds authorized at elections held after December 31, The security and source of payment for Class B bonds is the same as Class A bonds (those authorized at elections held prior to December 31, 1998 or bonds issued to refund those bonds). TABLE 14 shows the unused constitutional capacity and TABLE 15 shows the unused Class B statutory capacity after issuance of the Bonds. B-13

36 TABLE /17 Arizona Constitutional Debt Limitation (15% of Net Full Cash Assessed Value) 847,649,379) Less: Class A Bonds Outstanding (7,890,000) Less: Class B Bonds Outstanding and to be Outstanding (a) (280,245,000)* Less: Original Issue Premium (b) (3,685,000)* Unused Constitutional Borrowing Capacity 555,829,379)* * Subject to change. (a) (b) Includes the Bonds, net of the Bonds Being Refunded. This amount reduces in equal amount the District s borrowing capacity pursuant to State statutes and the Arizona Constitution. TABLE /17 Statutory Limitation on Bonds [Greater of 10% of the Net Full Cash Assessed Value (565,099,586) or 1,500 per student (40,489,500)] 565,099,586) Less: Class B Bonds Outstanding and to be Outstanding (a) (280,245,000)* Less: Original Issue Premium (b) (3,685,000)* Unused Statutory Borrowing Capacity 281,169,586)* * Subject to change. (a) (b) Includes the Bonds, net of the Bonds Being Refunded. See footnote (b) to TABLE 14 for a description of the treatment of certain proceeds of the Bonds for debt limit purposes. B-14

37 TABLE 16 Direct and Overlapping General Obligation Bonded Debt Phoenix Union High School District No. 210 General Proportion Applicable Obligation to the District (a) Bonded Approximate Net Debt Overlapping Jurisdiction Debt (b) Percent Amount State of Arizona None 7.65% None Maricopa County None None Maricopa County Community College District 509,430, ,029,714 Maricopa County Special Health Care District 73,000, ,745,400 City of Glendale 135,130, ,715,999 City of Phoenix 1,286,795, ,485,883 City of Scottsdale 568,925, ,763,668 Town of Paradise Valley None 6.83 None Phoenix Elementary School District No. 1 53,430, ,430,000 Riverside Elementary School District No. 2 37,940, ,940,000 Isaac Elementary School District No. 5 None None Wilson Elementary School District No. 7 5,345, ,345,000 Osborn Elementary School District No. 8 23,795, ,795,000 Creighton Elementary School District No ,980, ,980,000 Murphy Elementary School District No. 21 9,550, ,550,000 Balsz Elementary School District No ,870, ,870,000 Madison Elementary School District No ,185, ,185,000 Laveen Elementary School District No ,835, ,835,000 Roosevelt Elementary School District No ,285, ,285,000 Alhambra Elementary School District No. 68 None None Cartwright Elementary School District No ,140, ,140,000 Western Maricopa Education Center (West-MEC) 141,255,000 (c) ,217,704 Phoenix Union High School District No. 210 (d) 288,135,000* ,135,000* Net Direct and Overlapping General Obligation Bonded Debt 1,244,448,367* * Subject to change. (a) (b) Proportion applicable to the District is computed on the ratio of Net Limited Assessed Property Value for 2016/17. Includes total stated principal amount of general obligation bonds outstanding. Does not include outstanding principal amount of certificates of participation, revenue obligations or loan obligations outstanding for the jurisdictions listed above. Does not include outstanding principal amounts of various County and City improvement districts, as the bonds of these districts are presently being paid from special assessments against property within the various improvement districts. B-15

38 Does not include presently authorized but unissued general obligation bonds of such jurisdictions which may be issued in the future as indicated in the following table. Additional bonds may also be authorized by voters within overlapping jurisdictions pursuant to future elections. Overlapping Jurisdiction General Obligation Bonds Authorized but Unissued Maricopa County Community College District 3,000 Maricopa Special Health Care District 829,000,000 City of Glendale 335,540,054 City of Phoenix 152,355,000 City of Scottsdale 38,080,000 Phoenix Elementary School District No. 1 39,500,000 Riverside Elementary School District No. 2 34,725,000 Wilson Elementary School District No ,060 Creighton Elementary School District No ,000,000 Murphy Elementary School District No. 21 2,015,000 Madison Elementary School District No ,460,623 Laveen Elementary School District No ,520,000 Western Maricopa Education Center 61,000,000 (c) Phoenix Union High School District No ,000,000 (d) Also does not include the obligation of the Central Arizona Water Conservation District ( CAWCD ) to the United States Department of the Interior (the Department of the Interior ), for repayment of certain capital costs for construction of the Central Arizona Project ( CAP ), a major reclamation project that has been substantially completed by the Department of the Interior. The obligation is evidenced by a master contract between CAWCD and the Department of the Interior. In April 2003, the United States and CAWCD agreed to settle litigation over the amount of the construction cost repayment obligation, the amount of the respective obligations for payment of the operation, maintenance and replacement costs and the application of certain revenues and credits against such obligations and costs. Under the agreement, CAWCD s obligation for substantially all of the CAP features that have been constructed so far will be set at billion, which amount assumes (but does not mandate) that the United States will acquire a total of 667,724 acre feet of CAP water for federal purposes. The United States will complete unfinished CAP construction work related to the water supply system and regulatory storage stages of CAP at no additional cost to CAWCD. Of the billion repayment obligation, 73% will be interest bearing and the remaining 27% will be non-interest bearing. These percentages will be fixed for the entire 50-year repayment period, which commenced October 1, CAWCD is a multi-county water conservation district having boundaries coterminous with the exterior boundaries of Arizona s Maricopa, Pima and Pinal Counties. It was formed for the express purpose of paying administrative costs and expenses of the CAP and to assist in the repayment to the United States of the CAP capital costs. Repayment will be made from a combination of power revenues, subcontract revenues (i.e., agreements with municipal, industrial and agricultural water users for delivery of CAP water) and a tax levy against all taxable property within CAWCD s boundaries. At the date of this Official Statement, the tax levy is limited to 14 cents per 100 of Net Limited Assessed Property Value, of which 14 cents is being levied. (See Sections and , Arizona Revised Statutes.) There can be no assurance that such levy limit will not be increased or removed at any time during the life of the contract. (c) (d) Includes the bonds of such District in the principal amount of 70,035,000 which are expected to be issued on May 16, Includes the Bonds, net of the Bonds Being Refunded. The Governing Board of the District has called an election in and for the District to be held on November 7, 2017, to authorize the issuance of 269,000,000 of school improvement bonds. Source: The various entities, Property Tax Rates and Assessed Values, Arizona Tax Research Association, State and County Abstract of the Assessment Roll, Arizona Department of Revenue and the Finance Department of the County. B-16

39 TABLE 17 Direct and Overlapping General Obligation Bonded Debt Ratios Phoenix Union High School District No. 210 As % of As % of Per Capita District s District s Bonded Debt 2016/ /17 Population Net Limited Estimated Estimated Assessed Property Net 712,540 Value Cash Value Net Direct General Obligation Bonded Debt (a)* % 0.69% Net Direct and Overlapping General Obligation Debt (a)* 1, * Subject to change. (a) Includes the Bonds, net of the Bonds Being Refunded. Source: State and County Abstract of the Assessment Roll, Arizona Department of Revenue, Property Tax Rates and Assessed Values, Arizona Tax Research Association, the U.S. Census Bureau Small Area Income and Poverty Estimates, and the District. Other Obligations Phoenix Union High School District No. 210 The District is obligated to pay certain rental payments pursuant to a Taxable QSCB Equipment Lease/Purchase Agreement (the 2014 Energy Equipment Lease/Purchase Agreement ), dated July 16, 2014, by and between the District, as lessee, and JPMorgan Chase Bank N.A., as lessor. In accordance with the 2014 Energy Equipment Lease/Purchase Agreement, the District will lease and acquire certain energy efficiency improvements for various District facilities. The initial acquisition value of the energy efficiency improvements is 8,930,000. The rental payments owed by the District under the 2014 Energy Equipment Lease/Purchase Agreement are subject to annual appropriation by the District from funds budgeted during the District s then current fiscal year. The District s rental payments are scheduled to be paid through June 1, 2024, but may be prepaid according to a prepayment schedule in the 2014 Energy Equipment Lease/Purchase Agreement starting June 1, The District is also obligated to pay certain rental payments pursuant to a Taxable QSCB and Tax-Exempt Equipment Lease/Purchase Agreement (the 2015 Energy Equipment Lease/Purchase Agreement ), dated April 30, 2015, by and between the District, as lessee, and JP Morgan Chase Bank N.A., as lessor. In accordance with the 2015 Energy Equipment Lease/Purchase Agreement, the District will lease and acquire certain energy efficiency improvements for various District facilities. The initial acquisition value of the energy efficiency improvements is 4,100,000. The rental payments owed by the District under the 2015 Energy Equipment Lease/Purchase Agreement are subject to annual appropriation by the District from funds budgeted during the District s then current fiscal year. The District s rental payments are scheduled to be paid through June 1, 2024, but may be prepaid according to a prepayment schedule in the 2015 Energy Equipment Lease/Purchase Agreement starting June 1, B-17

40 DISTRICT EMPLOYEE RETIREMENT SYSTEM Retirement Plan The District s employees are covered by the Arizona State Retirement System (the System ), a cost-sharing, multiple-employer defined benefit plan. The annual contribution rates are determined by the System s actuary, with minimum employer and employee rate requirements of not less than 2.00%. For fiscal year 2017/18, the District s and its employees respective annual contribution is estimated to be 11.50% (11.34% Retirement Pension and Health Insurance Benefit, 0.16% Long Term Disability Income Plan) of payroll amounts. For fiscal year 2016/17, the District s and its employees annual contribution is 11.48% (11.34% Retirement Pension and Health Insurance Benefit, 0.14% Long Term Disability Income Plan) of payroll amounts. See Note 13 in APPENDIX C THE DISTRICT AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 for further discussion of the District and its employees obligations to the System as of June 30, The System s actuarially assumed rate of return is 8%. The most recent actuarial valuations for the System may be accessed at: The Governmental Accounting Standards Board adopted Governmental Accounting Standards Board Statement Number 68, Accounting and Financial Reporting for Pensions ( GASB 68 ), which, beginning with fiscal years starting after June 15, 2014, requires cost-sharing employers to report their proportionate share of the plan s net pension liability in their government-wide financial statements. GASB 68 requires that the cost-sharing employer s pension expense component include its proportionate share of the System s pension expense, the net effect of annual changes in the employer s proportionate share and the annual differences between the employer s actual contributions and its proportionate share. Both the District and each covered employee contribute to the System. As of June 30, 2016, the District reported a liability of 261,258,233 for its proportionate share of the net pension liability under the System. The pension liability was measured as of June 30, See Note 13 in APPENDIX C THE DISTRICT AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 for further discussion of the District and its pension liability as of June 30, Other Post-Employment Benefits Pursuant to Governmental Accounting Standards Board Statement Number 45, Accounting by Employers for Post- Employment Benefits Other than Pensions ( GASB 45 ), the District is required to report the actuarially accrued cost of post-employment benefits, other than pension benefits ( OPEB ), such as health and life insurance for current and future retirees. GASB 45 requires that such benefits be recognized as current costs over the working lifetime of employees and, to the extent such costs are not pre-funded, will require the reporting of such costs as a financial statement liability. The District currently provides OPEBs (health and life) to qualifying retirees and their dependents in accordance with the District s Early Retirement Program (the Program ). The Program is a single-employer defined benefit plan administered by the District and was discontinued for employees hired after July Prior to July 1, 2011, to be eligible, a retiree must have served at least 10 consecutive years before entering the Program and must have reached the age of 50. For each eligible retiree, the District makes yearly contributions until the end of the school year in which the retiree reaches the age of 65. For the fiscal year ended June 30, 2016, the District contributed 2,209,648 to the Program. As of June 30, 2016, the District had the following number of participants: Participants Active employees 1,641 Retired employees 413 Total 2,054 The District currently pays for OPEBs on a pay-as-you-go basis. Additionally, as allowed by Arizona Revised Statutes Section , the District established an OPEB fund and deposited 3,000,000 for the accumulated B-18

41 liability of retiree benefits. The monies in this fund have been designated by the Governing Board of the District and will be used for future benefit payments. As of June 30, 2016, the effective date of the biannual OPEB valuation, the annual required contribution of the District were as follows: Annual required contribution 6,305,169 Interest on net OPEB obligation 913,628 Adjustment to annual required contribution (1,472,883) Annual OPEB cost/(expense) 5,745,914 Contributions made 2,209,648 Increase in net OPEB obligation 3,536,266 Net OPEB obligation beginning of year 20,302,844 Net OPEB obligation end of year 23,839,110 As of July 1, 2011, the Program was amended as follows: employees who retire after June 30, 2011 with less than 15 years or more of District employment at June 30, 2010 will be responsible for 25% of the lowest cost monthly plan of the System. The District will only subsidize 75% of such costs. For the fiscal year ended June 30, 2016, the District contributed 38% to the annual OPEB cost. Source: Comprehensive Annual Financial Report for the fiscal year ended June 30, 2016 of the District. REVENUES AND EXPENDITURES The following information of the District was derived from the annual expenditure budget of the District for fiscal year 2016/17 and the audited financial statements of the District for fiscal years 2011/12 through and including 2015/16. (State law no longer requires school districts to file revenue budgets.) Budgeted figures for fiscal year 2016/17 are on a cash basis and are presented in the format required by State law. Budgeted figures for fiscal year 2016/17 are forward looking statements that may not be realized during the course of the fiscal year as presented herein and thus must be viewed with an abundance of caution. Audited figures for fiscal years 2011/12 through and including 2015/16 are on a modified accrual basis. The presentation which follows has not been independently subject to any audit procedures. Such audited financial statements are the most recent available for the District, are not current and therefore must be considered with an abundance of caution. The District has not requested the consent of Heinfeld, Meech & Co., P.C. to include its report and Heinfeld, Meech & Co., P.C. has performed no procedures subsequent to rendering its report on the financial statements. B-19

42 TABLE 18 General Fund Phoenix Union High School District No. 210 Budgeted (a) Audited 2016/ / / / / /12 FUND BALANCE AT BEGINNING OF YEAR 36,460,514 38,820,384 34,804,772 37,413,549 39,178,309 REVENUES Property taxes 158,560, ,566, ,867, ,373, ,336,481 State aid and grants 63,454,913 57,258,279 53,361,302 45,067,876 38,859,803 Fedral aid, grants and reimbursements 1,224,280 1,193, , , ,925 Other 8,687,437 8,510,823 7,754,659 7,694,561 8,812,298 TOTAL REVENUES 231,926, ,528, ,501, ,684, ,347,507 ADJUSTMENTS Transfers in 2,080,166 2,801,208 1,671,841 1,711,075 1,924,721 Transfers out - (2,000,000) (5,885,901) - - Increase/(decrease) in reserve for inventory (122,532) 70,480 17,891 (10,219) 99,879 Increase/(decrease) in reserve for prepaid items (1,469,357) (1,478,189) 617,620 (2,972,846) 1,284,129 TOTAL FUNDS AVAILABLE FOR EXPENDITURES 268,875, ,742, ,727, ,825, ,834,545 EXPENDITURES Current Instruction 101,897, ,216, ,132, ,461, ,060, ,478,930 Support services: Students and instructional staff 26,414,886 33,062,596 31,330,064 30,114,946 29,814,846 29,087,397 General and school administration 10,857,310 23,901,711 19,900,587 17,465,932 16,753,800 17,364,043 Business and central 5,982, Operation & maintenance of plant services 30,527,541 35,099,462 35,441,408 33,969,687 33,204,407 34,022,211 Student transportation 9,514,320 11,984,383 10,856,414 11,508,781 10,196,090 10,117,353 Operation of noninstructional services 1,406,039 1,794,280 1,554,171 1,349,336 1,199,401 1,261,450 Capital outlay - 604,421 67,117 36, ,094 89,612 School sponsored cocurricular 1,213, School sponsored athletics 2,211, Dropout prevention programs 2,249, Desegregation 54,443, Other 15,269, TOTAL EXPENDITURES 261,986, ,663, ,282, ,907, ,021, ,420,996 FUND BALANCE AT END OF YEAR 39,212,124 36,460,514 38,820,384 34,804,772 37,413,549 (a) Budgeted figures for fiscal year 2016/17 include the maintenance and operation fund as well as the student success, Medicaid reimbursement, auxiliary operations, gifts and donations, and indirect costs funds. B-20

43 TABLE 19 Other Governmental Funds Phoenix Union High School District No. 210 Budgeted (a) Audited 2016/ / / / / /12 FUND BALANCE AT BEGINNING OF YEAR 113,479, ,032,885 89,779,700 55,851,685 48,553,342 REVENUES Property taxes 5,832,590 6,234,584 1,723, ,678 8,353,496 Intergovernmental 49,608,343 47,907,922 47,634,033 49,866,163 46,887,961 Other local 4,302,889 3,859,276 3,600,372 3,947,433 3,031,841 TOTAL REVENUES 59,743,822 58,001,782 52,957,451 53,955,274 58,273,298 ADJUSTMENTS Transfers in - 2,000,000 5,885, Transfers out (2,384,618) (3,585,212) (5,061,567) (3,661,893) (1,948,124) Capital lease agreements - 13,030, Issuance of school improvement bonds - 10,000,000 75,000,000 50,000,000 - Premium on sale of bonds - 499,395 3,448,451 1,937,530 - Increase (decrease) in reserve for inventory (69,828) 127,342 (96,135) 40,481 11,423 TOTAL FUNDS AVAILABLE FOR EXPENDITURES 170,768, ,106, ,913, ,123, ,889,939 EXPENDITURES Current Instruction 80,770,118 25,040,699 24,537,486 23,614,745 23,200,166 20,541,543 Support services: Students and instructional staff 500,000 10,380,329 9,336,778 9,387,424 9,079,268 9,128,119 General and school administration 424, , , , , ,865 Operation & maintenance of plant services 1,913, , ,041 1,002, , ,153 Student transportation 114, , , , , ,568 Operation of non-instructional services - 9,949,492 9,458,089 8,891,162 8,894,830 8,591,914 Food service 15,000, Other 31,376, Capital outlay 25,754,177 43,659,430 60,768,764 38,759,602 25,425,982 8,925,092 Debt service: Interest and fiscal charges - 441, , Principal retirement - 925, Bond issuance costs , , ,923 - TOTAL EXPENDITURES 155,854,027 91,513, ,627,124 82,880,916 68,343,377 49,038,254 FUND BALANCE AT END OF YEAR 79,254, ,479, ,032,885 89,779,700 55,851,685 (a) Budgeted figures for fiscal year 2016/17 do not include the student success, Medicaid reimbursement, auxiliary operations, gifts and donations, and indirect costs funds. These funds have been included in the budgeted figures for TABLE 18. B-21

44 TABLE 20 Debt Service Fund Phoenix Union High School District No. 210 Budgeted Audited 2016/ / / / / /12 FUND BALANCE AT BEGINNING OF YEAR 2,322,212 7,151,636 3,485,145 2,238,861 2,492,789 REVENUES Property taxes 35,869,526 32,000,711 34,118,788 35,288,573 33,139,064 Other 14,971 25,636 14,278 34,593 63,899 TOTAL REVENUES 35,884,497 32,026,347 34,133,066 35,323,166 33,202,963 ADJUSTMENTS Transfers in 304, ,004 3,389,726 1,950,818 23,403 Issuance of refunding bonds ,445, Premium on sale of bonds - - 6,233, Payment to refunded bond escrow agent - - (75,823,554) - - EXPENDITURES 38,511,161 39,961,987 41,862,706 39,512,845 35,719,155 EXPENDITURES Debt service: 34,693,707 Principal retirement 26,565,000 26,710,000 25,965,000 25,110,000 22,685,000 Interest, premium and fiscal charges 10,143,578 10,929,775 8,432,813 10,917,700 10,795,294 Bond issuance costs , TOTAL EXPENDITURES 34,693,707 36,708,578 37,639,775 34,711,070 36,027,700 33,480,294 FUND BALANCE AT END OF YEAR 1,802,583 2,322,212 7,151,636 3,485,145 2,238,861 B-22

45 APPENDIX C THE DISTRICT AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 The following audited financial statements are for the fiscal year ended June 30, These are the most recent audited financial statements available to the District. THESE FINANCIAL STATEMENTS ARE NOT CURRENT AND MAY NOT REPRESENT THE CURRENT FINANCIAL CONDITION OF THE DISTRICT. Such audited financial statements are the most recent available for the District, are not current and therefore must be considered with an abundance of caution. The District has not requested the consent of Heinfeld, Meech & Co., P.C. to include its report and Heinfeld, Meech & Co., P.C. has performed no procedures subsequent to rendering its report on the financial statements.

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47 INDEPENDENT AUDITOR S REPORT Governing Board Phoenix Union High School District No. 210 Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Phoenix Union High School District No. 210 (District), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the District s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Phoenix Union High School District No. 210, as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As described in Note 1, the District implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application, for the year ended June 30, 2016, which represents a change in accounting principle. Our opinion is not modified with respect to this matter. Page 13

48 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis, budgetary comparison information, net pension liability information and other postemployment benefit schedule of funding progress, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s basic financial statements. The Introductory Section, Combining and Individual Fund Financial Statements and Schedules, and Statistical Section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Combining and Individual Fund Financial Statements and Schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Combining and Individual Fund Financial Statements and Schedules information is fairly stated in all material respects in relation to the basic financial statements as a whole. The Introductory Section and Statistical Section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 20, 2016, on our consideration of Phoenix Union High School District No. 210 s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Phoenix Union High School District No. 210 s internal control over financial reporting and compliance. Heinfeld, Meech & Co., P.C. Phoenix, Arizona December 20, 2016 Page 14

49 Page 15 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information)

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51 PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2016 As management of the Phoenix Union High School District No. 210 (District), we offer readers of the District s financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended June 30, The management s discussion and analysis is presented as required supplementary information to supplement the basic financial statements. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report. FINANCIAL HIGHLIGHTS The District s total net position of governmental activities increased 2.1 million which represents an increase of three percent from the prior fiscal year primarily as a result of an increase in property tax revenue due to an increase in property tax rates and an increase in state aid due to an increase in enrollment. General revenues accounted for million in revenue, or 86 percent of all current fiscal year revenues. Program specific revenues in the form of charges for services and grants and contributions accounted for 44.2 million or 14 percent of total revenues for the current year. The District had approximately million in expenses related to governmental activities, an increase of three percent from the prior fiscal year. Among major funds, the General Fund had million in current fiscal year revenues, which primarily consisted of state aid and property taxes, and million in expenditures. The General Fund s fund balance increased from 36.5 million at the prior fiscal year end to 39.2 million at the end of the current fiscal year primarily due to an increase in property tax and state aid revenue. Net position for the Internal Service Fund decreased 3.8 million from the previous fiscal year. Operating expenditures of 5.8 million exceeded operating revenues of 2.0 million at the end of the current fiscal year. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the District s basic financial statements. The District s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Page 17

52 PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2016 OVERVIEW OF FINANCIAL STATEMENTS Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the District s finances, in a manner similar to a private-sector business. The accrual basis of accounting is used for the government-wide financial statements. The statement of net position presents information on all of the District s assets, liabilities, and deferred inflows/outflows of resources with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The statement of activities presents information showing how the District s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). The government-wide financial statements outline functions of the District that are principally supported by property taxes and intergovernmental revenues. The governmental activities of the District include instruction, support services, operation and maintenance of plant services, student transportation services, operation of non-instructional services, and interest on long-term debt. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements use the modified accrual basis of accounting and focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the District s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the District s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Page 18

53 PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2016 OVERVIEW OF FINANCIAL STATEMENTS Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General, Debt Service and Bond Building Funds, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules. Proprietary funds. The District maintains one type of proprietary fund. The internal service funds are an accounting device used to accumulate and allocate costs internally among the District s various functions. The District uses its internal service funds to account for its other postemployment benefit program and Employee Benefits Trust. Because these services predominantly benefit governmental functions, they have been included within governmental activities in the government-wide financial statements. The Employee Benefits Trust, although a legal separate component unit, functions for all employees of the district, and therefore has been included as an internal service fund. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the District. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the District s own programs. Due to their custodial nature, fiduciary funds do not have a measurement focus. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the basic financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the District s budget process and pension plan. The District adopts an annual expenditure budget for all governmental funds. A schedule of revenues, expenditures and changes in fund balances - budget and actual has been provided for the General Fund as required supplementary information. Schedules for the pension and other post employment benefit plans have been provided as required supplementary information. Page 19

54 PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2016 GOVERNMENT-WIDE FINANCIAL ANALYSIS Net position may serve over time as a useful indicator of a government s financial position. In the case of the District, assets and deferred outflows exceeded liabilities and deferred inflows by 80.9 million at the end of the current fiscal year. The largest portion of the District s net position reflects its investment in capital assets (e.g., land and improvements, buildings and improvements, vehicles, furniture and equipment and construction in progress), less any related outstanding debt used to acquire those assets. The District uses these capital assets to provide services to its students; consequently, these assets are not available for future spending. Although the District s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. In addition, a portion of the District s net position represents resources that are subject to external restrictions on how they may be used. The following table presents a summary of the District s net position for the fiscal years ended June 30, 2016 and June 30, As of June 30, 2016 As of June 30, 2015 Current and other assets 187,850, ,248,753 Capital assets, net 504,619, ,310,966 Total assets 692,470, ,559,719 Deferred outflows 36,015,802 35,536,225 Current and other liabilities 19,318,782 25,842,074 Long-term liabilities 606,198, ,531,986 Total liabilities 625,517, ,374,060 Deferred inflows 22,062,942 41,964,916 Net position: Net investment in capital assets 232,892, ,421,666 Restricted 58,273,036 60,794,987 Unrestricted (210,259,807) (206,459,685) Total net position 80,906,125 78,756,968 Page 20

55 PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2016 GOVERNMENT-WIDE FINANCIAL ANALYSIS At the end of the current fiscal year the District reported positive balances in two categories of net position, while unrestricted net position reported a deficit of million. The deficit is due to the District s proportionate share of the state pension plan's unfunded liability. The same situation held true for the prior fiscal year. The District s financial position is the product of several financial transactions including the net results of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capital assets. The following are significant current year transactions that had an impact on the Statement of Net Position. The increase of 21.3 million in pension liabilities. The principal retirement of 26.7 million of bonds. An increase of 3.5 million in the obligation related to the District s other postemployment benefits. The addition of 33.0 million in capital assets through various school renovations. Page 21

56 PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2016 GOVERNMENT-WIDE FINANCIAL ANALYSIS Changes in net position. The District s total revenues for the current fiscal year were million. The total cost of all programs and services was million. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2016 and June 30, Fiscal Year Ended June 30, 2016 Fiscal Year Ended June 30, 2015 Revenues: Program revenues: Charges for services 6,154,044 5,858,937 Operating grants and contributions 34,487,155 35,093,038 Capital grants and contributions 3,512,819 2,009,173 General revenues: Property taxes 198,647, ,440,765 Investment income 781, ,490 Unrestricted county aid 5,415,653 5,376,238 Unrestricted state aid 75,858,639 68,459,740 Unrestricted federal aid 1,224,280 1,193,360 Total revenues 326,082, ,220,741 Expenses: Instruction 172,013, ,177,498 Support services students and staff 47,191,094 44,872,107 Support services administration 27,142,275 23,230,897 Operation and maintenance of plant services 40,206,065 39,670,017 Student transportation services 14,379,599 14,287,371 Operation of non-instructional services 12,906,454 12,050,038 Interest on long-term debt 10,094,382 10,711,190 Total expenses 323,933, ,999,118 Changes in net position 2,149,157 (9,778,377) Net position, beginning 78,756,968 88,535,345 Net position, ending 80,906,125 78,756,968 Page 22

57 PHOENIX UNION HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2016 GOVERNMENT-WIDE FINANCIAL ANALYSIS Expenses Millions FY FY The following are significant current year transactions that had an impact on the change in net position. An increase of 12.2 in property tax revenue as a result of an increase in tax rates. Unrestricted state aid increase of 7.4 million due to changes in legislation and an increase in enrollment. An increase of 3.9 million in support services-administration expenditures as a result of a change required by the Arizona Office of the Auditor General to the chart of accounts that now requires salaries of any administrator with key decision making authority, such as Assistant and Associate Superintendents, to be recorded in this function. This required change to the chart of accounts also included that retiree health insurance be recorded in this function. The District also spent approximately 600,000 in election costs for a District Additional Assistance Override. The following table presents the cost of the District s major functional activities. The table also shows each function s net cost (total cost less charges for services generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden that was placed on the State and District s taxpayers by each of these functions. Page 23