$1,260,000 JOLIET SCHOOL DISTRICT NUMBER 86 WILL COUNTY, ILLINOIS Debt Certificates, Series 2007

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1 NEW ISSUE RATINGS: Non-Rated Subject to compliance by the District with certain covenants, in the opinion of Bond Counsel, under present law, interest on the Certificates is excludable from gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but such interest is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. See Tax Exemption herein for a more complete discussion. Interest on the Certificates is not exempt from Illinois income tax. $1,260,000 JOLIET SCHOOL DISTRICT NUMBER 86 WILL COUNTY, ILLINOIS Debt Certificates, Series 2007 Dated: December 15, 2007 Due: March 1 of the years and in the amounts as shown below. The Certificates are issuable as fully registered Certificates and when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"), to which principal and interest payments on the Certificates will be made. Individual purchases will be made in book-entry form only, in the principal amount of $5,000 or any whole multiple thereof. Purchasers of the Certificates will not receive physical delivery of certificates. So long as Cede & Co. is the registered owner of the Certificates, reference herein to the holders of the Certificates or registered owners of the Certificates shall mean Cede & Co. and shall not mean the beneficial owners of the Certificates. So long as Cede & Co. is the registered owner of the Certificates, the principal and interest on the Certificates (first payable on September 1, 2008 and semiannually thereafter on each March 1 and September 1) are payable to Cede & Co., which will in turn remit such principal and interest to the DTC Participants (as defined herein) for subsequent disbursement to the beneficial owners of the Certificates. The record date for the Bonds is the fifteenth day of the calendar month next preceding an interest payment date. Wells Fargo Bank, National Association, Chicago, Illinois, will serve as paying agent and registrar. The Certificates are a valid and binding obligation upon the District payable from the general funds of the District and such other sources of payment as are otherwise lawfully available, except that the rights of the owners of the Certificates and the enforceability of the Certificates may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. There is no statutory authority for the levy of a special tax unlimited as to rate or amount to pay the Certificates. The District agrees to budget funds annually and in a timely manner so as to provide for the making of all payments when due under the terms of the Certificates. THE DISTRICT INTENDS TO DESIGNATE THE CERTIFICATES AS "QUALIFIED TAX-EXEMPT OBLIGATIONS." SEE QUALIFIED TAX-EXEMPT OBLIGATIONS INCLUDED HEREIN. Maturity Interest Amount March 1 Rate Yield $185, % 3.400% 205, , , , , (Accrued interest to be added) THE CERTIFICATES ARE NOT SUBJECT TO REDEMPTION PRIOR TO MATURITY. The Certificates are offered when, as and if issued and received by the Underwriter, subject to prior sale, withdrawal or modification of the offer without notice, and subject to the approval of legality of the Certificates by Chapman and Cutler LLP, Chicago, Illinois, Bond Counsel. It is expected that the Certificates in definitive form will be available for delivery through DTC for the account of the Underwriter, on or about December 27, Robert W. Baird & Co. Underwriter The Date of this Official Statement is December 12, 2007.

2 No person has been authorized by Joliet School District Number 86, Will County, Illinois or the Underwriter to give any information or make any representations other than those contained in this Official Statement and, if given or made, such information or representations with respect to the District or the Certificates must not be relied upon as having been authorized by the District or the Underwriter. This Official Statement does not constitute an offer to sell, or solicitation of an offer to buy, any securities other than the securities offered hereby or an offer or solicitation of such offer of the securities offered hereby to any person in any jurisdiction where such offer or solicitation of such offer would be unlawful. This Official Statement should be considered in its entirety and no one factor should be considered more or less important than any other by reason of its position in this Official Statement. Where statutes, reports, or other documents are referred to herein, reference should be made to such statutes, reports, or other documents for more complete information regarding the rights and obligations or parties thereto, facts and opinions contained therein and the subject matter thereof. The information and expressions of opinion in this Official Statement are subject to change without notice and neither the delivery of this Official Statement nor any sale made under it shall, under any circumstances, create any implication that there has been no change in the affairs of Joliet School District Number 86, Will County, Illinois, since the date as of which information is given in this Official Statement.

3 JOLIET SCHOOL DISTRICT NUMBER 86 WILL COUNTY, ILLINOIS 420 N. Raynor Avenue Joliet, Illinois Phone: (815) Fax: (815) Dr. Phyllis M. Wilson, Superintendent Troy J. Whalen, Asst. Superintendent for Business/Financial Services Charyll M. Colstock, Secretary * * * * * * * * * * * * * * * * * * * Board of School Inspectors Deborah Ziech, President Herbert Brooks, Jr., Vice President Sandra Archambeau David Evans Tonya Myers Diane Parker Jeffrey Pritz * * * * * * * * * * * * * * * * * * * Paying Agent/Registrar Wells Fargo Bank, National Association Robert Selangowski, Vice President 230 West Monroe, Suite 2900 Chicago, Illinois Phone: (312) Fax: (312) Bond Counsel Chapman and Cutler LLP 111 W. Monroe Chicago, Illinois Phone: (312) Fax: (312) Underwriter Robert W. Baird & Co. Incorporated William Hepworth, Director 2325 Dean Street, Suite 550 St. Charles, Illinois Phone: (630) Fax: (630)

4 TABLE OF CONTENTS Principal Amounts, Maturity Dates, Interest Rates and Yields to Call Cover Page Introduction 1 Purpose and Authority 1 Security 1 Book-Entry Only System for the Certificates 1 Registration 3 District Profile 3 Enrollment Trend 4 Selected Economic Information Population, Housing, and Income Data 4 Unemployment Rates 5 Major Area Employers 5 Major District Taxpayers 5 Trend of Equalized Assessed Valuation 6 Composition of 2006 Equalized Assessed Valuation 6 Tax Levy and Collection Procedures 6 Property Tax Extension Limitation Law 7 Tax Rate Trend 7 Total 2006 Representative Tax Rate 8 Tax Extensions and Collections 8 Debt Limit 8 Debt Statement 9 Summary of Outstanding Debt 9 Debt Repayment Schedule 10 Future Financing 10 Short Term Debt 10 Debt Payment History 10 Selected Financial Information General 10 Working Cash Fund 10 General Fund Revenue Sources 11 General Fund Summary 12 Working Cash Fund Summary 12 Retirement Fund Commitments 12 Litigation 12 Continuing Disclosure 13 The Undertaking 13 Tax Exemption 15 Qualified Tax-Exempt Obligations 17 Certain Legal Matters 17 Underwriting 17 Authorization 17 Audited Financial Statements For Year Ended June 30, 2007 Appendix A

5 OFFICIAL STATEMENT $1,260,000 JOLIET SCHOOL DISTRICT NUMBER 86 WILL COUNTY, ILLINOIS Debt Certificates, Series 2007 INTRODUCTION The purpose of this Preliminary Official Statement is to set forth information with respect to Joliet School District Number 86, Will County, Illinois (the "District"), and its $1,260,000 Debt Certificates, Series 2007, dated December 15, 2007 (the Certificates ). This Official Statement includes the cover page and the Appendix. PURPOSE AND AUTHORITY The Certificates are being issued under the provisions of the School Code of the State of Illinois (the School Code ), and all laws amendatory thereof and supplementary thereto, and as particularly supplemented by the Local Government Debt Reform Act of the State of Illinois, as amended (the Debt Reform Act ), authorizing the District to enter into an Installment Purchase Agreement and issue certificates in evidence of the indebtedness incurred for the purpose of improvements and renovations to existing district facilities and paying certain costs of issuance, and further authorized by a resolution adopted by the Board of School Inspectors of the District authorizing the sale of the Certificates (the Certificate Resolution ). SECURITY The Certificates are valid and legally binding direct obligations of the District payable from the general funds of the District and such other sources of payment as are otherwise lawfully available, except that the rights of the owners of the Certificates and the enforceability of the Certificates may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. The District agrees to budget funds annually and in a timely manner so as to provide for the making of all payments when due under the terms of the Certificates. BOOK ENTRY ONLY SYSTEM FOR THE CERTIFICATES The information in this section concerning DTC and DTC's book-entry only system has been obtained from sources the District believes to be reliable, but the District takes no responsibility for the accuracy or completeness thereof. The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Certificates. The Certificates will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Certificates, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 2 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct

6 Participants accounts. This eliminates the need for physical movement of certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Certificates on DTC s records. The ownership interest of each actual purchaser of each Certificate ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Certificates are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Certificates, except in the event that use of the book-entry system for the Certificates is discontinued. To facilitate subsequent transfers, all Certificates deposited by Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Certificates with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC s records reflect only the identity of the Direct Participants to whose accounts such Certificates are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Certificates may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Certificates, such as redemptions, tenders, defaults and proposed amendments to the Certificate documents. For example, Beneficial Owners of Certificates may wish to ascertain that the nominee holding the Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. If applicable, redemption notices shall be sent to Cede & Co. If less than all of the Certificates within a maturity are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Certificates unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy). 2

7 Redemption proceeds, distributions, and dividend payments on the Certificates will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the District or Paying Agent, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with Certificates held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Certificates at any time by giving reasonable notice to the District or Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the accuracy thereof. REGISTRATION The Certificates shall be issued as fully-registered Certificates without coupons and, when issued, will be registered only in the name of Cede & Co., as nominee for DTC. The Certificates will be issued to DTC and immobilized in its custody. Individual purchases may be made in book-entry form only pursuant to the rules and procedures established between DTC and its Participants, in the principal amount of $5,000 and integral multiples thereof. Individual purchasers will not receive certificates evidencing their ownership of the Certificates purchased. The District will make payments of principal and interest on the Certificates to DTC or its nominee as registered Owner of the Certificates. Transfer of those payments to Participants of DTC will be the responsibility of DTC; transfer of the payments to the Beneficial Owners by DTC Participants will be the responsibility of such Participants and other nominees of Beneficial Owners all as required by DTC rules and procedures. DTC or the applicable Participants may charge a fee sufficient to reimburse it or them for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer. No assurance can be given by the District or the Paying Agent/ Registrar that DTC, its Participants, and other nominees of Beneficial Owners, will make prompt transfer of the payments as required by DTC rules and procedures. The District assumes no liability for failures of DTC, its Participants or other nominees to promptly transfer payments to Beneficial Owners of the Certificates. DISTRICT PROFILE The District is located in northeastern Illinois, approximately 44 miles southwest of Chicago. Encompassing an area of 26.4 square miles, the District serves the City of Joliet and smaller portions of the City of Crest Hill, Village of New Lenox, Village of Rockdale, and surrounding unincorporated areas. Approximately 94% of the District's valuation lies in Joliet Township, with only 5% in Troy Township, and less than 1% in Lockport Township. The area's transportation network includes Interstates 55 and 80, both of which traverse the District. In addition, the District is served by Illinois Routes 59 and 126, along with U.S. Routes 30 and 52. Commuter service to Chicago's "Loop" is available in Joliet. Rail freight service is provided by Illinois Central Gulf, and long distance passenger rail service is available (via Amtrak) in Joliet. 3

8 The District's tax base is comprised primarily of residential properties, complemented by commercial and industrial properties. Since 2002, valuation has increased 33.42% and continued growth is expected. The District presently operates 21 facilities, providing for the educational needs of 10,185 students in grades K through 8. The District is governed by a seven-member Board of School Inspectors, elected atlarge for overlapping terms. Day-to-day operations are administered by the Superintendent, Assistant Superintendent for Business and Financial Services, Secretary and staff. Enrollments for the past five years are shown below. Source: District Administration ENROLLMENT TREND School Year Enrollment 2003/ , / , / , / , / ,185 SELECTED ECONOMIC INFORMATION POPULATION, HOUSING, AND INCOME DATA Median Median Household Population Population Home Value Income City of Joliet 67, ,221 $119,900 $47,761 City of New Lenox 9,627 17, ,000 67,967 City of Crest Hill 10,643 13,329 64,300 30,794 City of Rockdale 1,709 1,888 94,300 39,954 Will County 357, , ,300 62,238 State of Illinois 11,430,602 12,419, ,800 46,590 Source: U.S. Bureau of the Census 4

9 UNEMPLOYMENT RATES Will State Of County Illinois 2003 Average 6.9% 6.7% 2004 Average Average Average Average through September Source: Illinois Bureau of Employment Security MAJOR DISTRICT AND AREA EMPLOYERS Approx. Number of Employer Service or Product Employees JOLIET Caterpillar, Inc. Bulldozers, truck bodies 3,000 Provena St. Joseph Medical Center Regional medical center 2,430 Empress Joliet Casino, hotel, resort and riverboat 2,000 Silver Cross Hospital General hospital 1,800 Elgin Joliet & Eastern Railway Co. Railroad services 650 Ecolab, Inc. Cleaning compounds 450 Flint Hills Resources Chemical intermediates 400 T. J. Lambrecht Construction, Inc. Highway construction contractor 300 Midwest Generation, Joliet Station Coal processing 270 First Midwest Bank Full banking services 250 Source: 2007 Illinois Manufacturers and 2007 Illinois Services Directories. MAJOR DISTRICT TAXPAYERS 2006 E.A.V. Taxpayer Product or Service (Approximate) Des Plaines Development Casino $8,376,221 Larkin Village LP Apartment complex 4,618,092 Bay Investment Corporation Investment properties 4,067,994 Simon Property Group Shopping malls 4,035,691 Burnham Management Commercial property management 3,518,563 Harris Bank Real property holdings 3,480,463 First Midwest Bank Real property holdings 3,465,719 WHII 2700 McDonough Road LLC Logistics Company 3,134,397 Joliet Properties Investment properties 3,009,130 Ingalls Avenue Investments LLC Investment properties 2,591,600 Sam s Real Estate Bus TR Commercial real estate 2,393,857 Wal-Mart Realty Co. Commercial real estate 2,196,965 Ineos Silicas Silica product manufacturing 2,099,966 Raceway Central Joliet N LLC Race track 2,063,753 Source: County Assessor s Office -- Valuations are obtained from the valuation books which provide details as to owner, valuation, tax bill amount, etc. for each parcel in the County. These books are searched, noting larger assessed valuations within the District. Since a taxpayer may own numerous parcels in the District, a piece of property with a small assessed valuation may be overlooked. Thus, the valuations presented herewith have been noted as approximations. 5

10 Source: County Clerk s Office TREND OF EQUALIZED ASSESSED VALUATION (33-1/3% of full valuation) Tax Will Year County 2002 $ 811,883, ,579, ,674, ,928, ,083,240,249 Source: County Clerk's Office COMPOSITION OF 2006 EQUALIZED ASSESSED VALUATION (33-1/3 of full valuation) Will County Percent of E.A.V. Residential $ 841,325, % Commercial 216,568, Railroad 2,384, Industrial 21,938, Farm 1,022, TOTAL $1,083,240, % TAX LEVY AND COLLECTION PROCEDURES - WILL COUNTY The County Assessor supervises the assessment of all real property and railroad property not used for transportation purposes. These valuations are subject to appeal by the taxpayer to the County Board of Appeals and then to equalization by the Illinois Department of Revenue. Real estate sales ratio studies conducted annually by the Illinois Department of Revenue provide the foundation of intercounty equalization by means of multipliers assigned to each County. The multiplier (also known as the "equalization factor") is applied to all assessments in each County to adjust such assessments by a given percentage in order to bring each County s level toward the statutory standard of 33-1/3% of fair market value. Railroad real properties used for transportation purposes, private car lines, pollution control equipment and capital stock are assessed by the Illinois Department of Revenue which certifies these valuations to the responsible County Clerks. These assessments are not subject to revision by the equalization factor. The equalized assessed valuation is subject to the local tax rates. Each County Clerk computes all tax rates and ensures that the rate for any taxing body does not exceed that authorized by law. Abatements are factored into the final determination of tax rates. After receipt of the tax levies of each taxing body in each County, the responsible County Clerk extends the taxes for each parcel of taxable property which amount constitutes property taxes payable for each such parcel. All taxable property in the County is reassessed every four years. Between these quadrennial assessments, the Assessor has the authority to revalue those properties whose condition has been altered significantly since the last assessment and any other properties which may be incorrectly assessed. 6

11 Taxes not paid when due are subject to a penalty rate of 1-1/2% per month until paid. Unpaid property taxes constitute a valid lien against the property on which the tax is levied. Property taxes are collected by the County Collector who then distributes to the District its share of the collections. Taxes levied for expenditures of any year become due and payable in the following year. For example, taxes levied by the District for the year 2007 become due and payable in Real estate taxes are by statute payable in two installments during the year (June 1 and September 1). PROPERTY TAX EXTENSION LIMITATION LAW The Property Tax Extension Limitation Law of the State of Illinois, as amended (the "Tax Limitation Law") was enacted by the State of Illinois in July of 1991 and became effective on October 1, In general, the Tax Limitation Law limits the annual growth in the amount to be extended by the District beginning in 1992 to the "Extension Limitation". The Extension Limitation under the Tax Limitation Law is (i) the lesser of 5% or the percentage increase in the Consumer Price Index during the calendar year preceding the levy year, or (ii) the rate of increase approved by the voters at a referendum election held pursuant to the Tax Limitation Law. The effect of the Tax Limitation Law is to limit the amount of property taxes that can be extended for the District and the ability of the District to issue non-referendum general obligation bonds. Among other specific exceptions, levies for debt service on general obligation bonds issued prior to October 1, 1991 or issued pursuant to a referendum, are excluded from the limitations set forth in the Tax Limitation Law. Additionally, no limit is currently placed on extensions for alternate bonds and certain refunding bonds. Public Act , effective August 18, 1995, permits local governments, including the District to issue limited tax bonds in lieu of general obligation bonds that have otherwise been authorized by applicable law. Limited tax bonds issued by the District are secured by the non-referendum bond debt service extension base ($1,834,575). The base amount for the District will become available as its existing general obligation bonds are paid or retired. The District could also further increase its debt service extension base by referendum. TAX RATE TREND Fund Educational $ $ $ $ $ Operations and Maintenance Bond and Interest Transportation IMRF Special Education Social Security Tort Immunity Life Safety TOTALS $ $ $ $ $ Source: Will County Clerk's Office 7

12 TOTAL 2006 REPRESENTATIVE TAX RATE The following is a 2006 representative tax rate for a District property owner situated in the City of Joliet. Taxing Body Amount Will County (includes Public Building Commission) $.5154 Will County Forest Preserve District.1369 Joliet Township Town Funds.1689 Joliet Township Road Funds.0983 City of Joliet.8044 City of Joliet Park District.3184 City of Joliet Public Library.1624 City of Joliet Fire District.0922 Joliet School District Number Joliet High School District # Community College District Number TOTAL $ Source: Will County Clerk's Office TAX EXTENSIONS AND COLLECTIONS Tax Levy/ Net Tax Total Percent Collection Year Extension Collections (1) Collected 2002/2003 $24,387,371 $24,280, % 2003/ ,330,915 25,229, / ,008,799 25,959, / ,677 27,053, / ,539,049 27,883, (1) Reflects collections as of November 21, Source: County Treasurer s Office DEBT LIMIT The District's statutory debt limit is 6.9% of the Equalized Assessed Valuation of all taxable property located within the boundaries of the District. Shown below is a calculation of the District's debt limit and remaining debt margin after the close of this issue. Amount Percent 2006 Equalized Assessed Value: $1,083,240,249 Debt 6.9%: $ 74,743, % Outstanding Debt: 70,788, Debt Margin: $ 3,955, % 8

13 DEBT STATEMENT (as of closing of this issue) General Obligation Bonds Outstanding: $69,528,520 This Issue: 1,260,000 Net Direct Debt: $70,788,520 Less Self Supporting/Other Debt: 1,260,000 $69,528,520 Overlapping Bonded Debt: Outstanding Estimated Portion Debt as of Applicable to District Taxing Body 11/15/2007 Percent Amount Will County $ 4,075, % $ 240,425 Will County Forest Preserve District 160,697, ,481,141 City of Joliet 17,180, ,234,622 Joliet Park District ,857,190 Lockport Township Park District 5,974, ,792 Joliet Township High School District #204 60,830, ,160,595 Lockport Township High School Dist. #205 40,495, ,099 Overlapping Debt: $ 46,983,864 Direct and Overlapping Debt: $116,512, Estimated Full Valuation: $3,249,720, Equalized Assessed Valuation: $1,083,240,249 Net Estimated Full Value Per Capita: $39,153 Net Estimated Current Population: 83,000 Debt Ratios: Percent % Full Per E.A.V. Value Capita Net Direct Debt: $ 69,528, % 2.14% $ Net Direct and Overlapping Debt: $116,512, % 3.59% $1, SUMMARY OF OUTSTANDING DEBT Shown below is the summary of the District s outstanding general obligation debt, including the Debt Certificates, as of the closing of this issue. Original Current Dated Amount Amount Maturity Issue Date of Issue Outstanding Dates CABs, Series /29/2002 $19,318,155 $12,333,520 11/01/ Series 2006B 09/01/ ,240,000 35,240,000 03/01/ Series 2006C 09/01/ ,445,000 16,445,000 03/01/ (1) Series 2006D 09/01/2006 5,510,000 5,510,000 03/01/ This Issue Series /15/2007 1,260,000 1,260,000 03/01/ TOTAL $70,788,520 (1) There is an additional maturity September 1,

14 DEBT REPAYMENT SCHEDULE Shown below is the maturity schedule for the District s outstanding general obligation bonded debt, as of the closing of this issue. Principal Cumulative Due Prior Cumulative Percent Year Issues Total Retired 2008 $ 100,000 $ 100,000.14% ,740,000 1,840, ,484,927 5,324, ,053,054 7,377, ,625,015 10,002, ,797,298 12,800, ,969,273 15,769, ,177,164 18,946, ,393,932 22,340, ,613,282 25,953, ,882,816 29,836, ,135,064 33,971, ,431,377 38,403, ,075,318 43,478, ,360,000 45,838, ,930,000 55,768, ,215,000 65,983, ,450,000 67,433, ,095,000 69,528, TOTALS $69,528,520 FUTURE FINANCING At the present time, the District has no plans to issue additional debt. SHORT TERM DEBT The District has no tax anticipation warrants or notes outstanding. DEBT PAYMENT HISTORY The District has no record of default and has met its debt repayment obligations promptly. SELECTED FINANCIAL INFORMATION General The District accounts for its financial resources through the use of separately balanced fund groups utilizing the cash basis of accounting. The General Fund is the primary operating fund of the District and includes the Educational and Operations and Maintenance Funds. Working Cash Fund The District is authorized to issue general obligation bonds to create or increase a Working Cash Fund. Such fund can also be created or increased by the levy of an annual tax not to exceed $.05 per hundred dollars of equalized assessed valuation. The purpose of the fund is to enable the District to have suf- 10

15 ficient money to meet demands for ordinary and necessary expenditures for school operating purposes. In order to achieve this purpose, the money in the Working Cash Fund may be loaned, in whole or in part, as authorized and directed by the Board of School Inspectors of the District, to any fund of the District in anticipation of ad valorem property taxes levied by the District for such fund. The Working Cash Fund is reimbursed when the anticipated taxes or money are received by the District. Included as Appendix A to this Official Statement are the audited financial statements and notes thereto of the District for the fiscal year ended June 30, Potential purchasers should read Appendix A in its entirety for more complete information concerning the District's financial position. Set forth below and on the following page is a summary of the operating results and fund balances for the General Fund and Working Cash Fund for the years 2005 through 2007, as derived from the District's Audited Financial Statements. GENERAL FUND REVENUE SOURCES Years ended June 30 (Modified Accrual Basis) Percent Local Sources Property Taxes 26.56% 26.42% 25.04% Other State Sources Federal Sources TOTAL % % % Source: Compiled from the District's Audited Financial Statements for years ended June 30, 2005 through June 30,

16 GENERAL FUND SUMMARY Years Ended June 30 (Modified Accrual Basis) REVENUES Local Sources Property Taxes $20,628,524 $20,856,510 $21,128,512 Other 4,736,153 4,717,316 5,093,087 State Sources 39,244,867 40,675,506 44,720,378 Federal Sources 13,049,713 12,692,460 13,442,386 TOTAL $77,659,257 $78,941,792 $84,384,363 EXPENDITURES Instructional $46,414,407 $44,755,774 $47,563,971 Supporting Services 31,030,150 31,571,759 33,790,852 Non-Programmed Charges 89,967 43,359 38,700 Capital Outlay 1,579,690 1,836,865 1,074,201 Other 746, , ,665 TOTAL $79,861,051 $78,919,791 $83,173,389 Excess of Revenues (Expenditures) ($ 2,201,794) $ 22,001 $ 1,210,974 Bond Proceeds/Transfers $ 926,528 Beginning Fund Balance $ 6,965,216 $ 4,763,422 $ 4,785,423 Ending Fund Balance $ 4,763,422 $ 4,785,423 $ 6,922,925 Source: Compiled from the District's Audited Financial Statements for years ended June 30, 2005 through June 30, WORKING CASH FUND SUMMARY Years Ended June 30 (Modified Accrual Basis) REVENUES Property Taxes $ -0- $ -0- $ -0- Interest 32,321 1,963 2,640 TOTAL $ 32,321 $ 1,963 $ 2,640 Beginning Fund Balance $7,927,039 $7,959,360 $7,961,323 Ending Fund Balance $7,959,360 $7,961,323 $7,963,963 Source: Compiled from the District's Audited Financial Statements for years ended June 30, 2005 through June 30, RETIREMENT COMMITMENTS Details regarding retirement fund commitments are summarized in Note 5 to the District's June 30, 2007 audited financial statements. LITIGATION There is no controversy or litigation of any nature now pending or threatened, restraining or enjoining the issuance, sale, execution or delivery of the Certificates or in any way contesting or affecting the validity of the Certificates or any proceedings of the District taken with respect to the issuance or sale thereof. 12

17 CONTINUING DISCLOSURE The District will enter into a Continuing Disclosure Undertaking (the Undertaking ) for the benefit of the beneficial owners of the Certificates to send certain information annually and to provide notice of certain events to certain information repositories pursuant to the requirements of Section (b)(5) of Rule 15c2-12 (the Rule ) adopted by the Securities and Exchange Commission (the Commission ), under the Securities Exchange Act of The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and a summary of other terms of the Undertaking, including termination, amendment and remedies, are set forth below under the caption THE UNDERTAKING. The District has represented that it is in compliance with each and every undertaking previously entered into it pursuant to the Rule. A failure by the District to comply with the Undertaking will not constitute a default under the Certificate Resolution and beneficial owners of the Certificates are limited to the remedies described in the Undertaking. See THE UNDERTAKING - Consequences of Failure of the District to Provide Information. A failure by the District to comply with the Undertaking 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 Certificates in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Certificates and their market price. Bond Counsel expresses no opinion as to whether the Undertaking complies with the requirements of Section (b)(5) of the Rule. THE UNDERTAKING The following is a brief summary of certain provisions of the Undertaking and does not purport to be complete. The statements made under this caption are subject to the detailed provisions of the Undertaking, a copy of which is available upon request from the District. Annual Financial Information Disclosure The District covenants that it will disseminate its Annual Financial Information and its Audited Financial Statements, if any (as described below) to each Nationally Recognized Municipal Securities Information Repository (a NRMSIR ) then recognized by the Commission for the purposes of the Rule or to the repository, if any, designated by the State of Illinois as the state depository (the SID ) and recognized as such by the Commission for purposes of the Rule. The District is required to deliver such information so that such entities receive the information by the dates specified in the Undertaking. Annual Financial Information means information of the type contained under the following headings of this Official Statement: Trend of Equalized Assessed Valuation, Composition of 2004 Equalized Assessed Valuation, Tax Rate Trend, Tax Extensions and Collections, Debt Limit, Debt Statement (only as it relates to direct debt), Summary of Outstanding Debt, Debt Repayment Schedule, Future Financing, Short Term-Debt, Debt Payment History, General Fund Revenue Sources, General Fund Summary, and Working Cash Fund Summary. Audited Financial Statements mean the general purpose financial statements of the District prepared in conformity with generally accepted accounting principles, or prepared on the cash basis, which is a comprehensive basis of accounting other than generally accepted accounting principles. Material Events Disclosure The District covenants that it will disseminate to each NRMSIR or to the Municipal Securities Rulemaking Board (the MSRB ) and to the SID, if any, in a timely manner the disclosure of the occurrence of an Event (as described below) with respect to the Certificates that is material, as materiality is interpreted under the Securities Exchange Act of 1934, as amended. The Events are: 13

18 Principal and interest payment delinquencies Non-payment related defaults Unscheduled draws on debt service reserves reflecting financial difficulties Unscheduled draws on credit enhancements reflecting financial difficulties Substitution of credit or liquidity providers, or their failure to perform Adverse tax opinions or events affecting the tax-exempt status of the security Modifications to the rights of security holders Certificate calls Defeasances Release, substitution or sale of property securing repayment of the securities Rating changes Consequences of Failure of the District to Provide Information The District shall give notice in a timely manner to each NRMSIR or the MSRB and to the SID, if any, of any failure to provide disclosure of Annual Financial Information and Audited Financial Statements when the same are due under the Undertaking. In the event of a failure of the District to comply with any provision of the Undertaking, the beneficial owner of any Certificate may seek mandamus or specific performance by court order, to cause the District to comply with its obligations under the Undertaking. A default under the Undertaking shall not be deemed a default under the Certificate Resolution, and the sole remedy under the Undertaking in the event of any failure of the District to comply with the Undertaking shall be an action to compel performance. Amendments; Waiver Notwithstanding any other provision of the Undertaking, the District by resolution authorizing such amendment or waiver, may amend the Undertaking, and any provision of the Undertaking may be waived, if: (a) The amendment or the waiver is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the District, or type of business conducted; (b) The Undertaking, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver does not materially impair the interests of the beneficial owners of the Certificates, as determined by parties unaffiliated with the District (such as Bond Counsel). Termination of Undertaking The Undertaking shall be terminated if the District shall no longer have liability for any obligation on or relating to repayment of the Certificates under the Certificate Resolution. The District shall give notice to each NRMSIR or to the MSRB and the SID, if any, in a timely manner if this paragraph is applicable. Additional Information Nothing in the Undertaking shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in the Undertaking or any other means of communication, or including any other information in any Annual Financial Information or Audited Financial Statements or notice of occurrence of a material Event, in addition to that which is required by the Undertaking. If the District chooses to include any information from any document or notice of a material Event in addition to that which is specifically required by the Undertaking, the District shall have no obligation under the Undertaking to update such information or include it in any future disclosure or notice of occurrence of a material Event. 14

19 Dissemination Agent The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Undertaking, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. TAX EXEMPTION Federal tax law contains a number of requirements and restrictions which apply to the Certificates, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond or certificate proceeds and the facilities financed therewith, and certain other matters. The District has covenanted to comply with all requirements that must be satisfied in order for the interest on the Certificates to be excludible from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Certificates to become includible in gross income for federal income tax purposes retroactively to the date of issuance of the Certificates. Subject to the District s compliance with the above-referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Certificates is excludable in the gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations. Interest on the Certificates is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. The Internal Revenue Code of 1986, as amended (the Code ) includes provisions for an alternative minimum tax ( AMT ) for corporations in addition to the corporate regular tax in certain cases. The AMT, if any, depends upon the corporation s alternative minimum taxable income ( AMTI ), which is the corporation s taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation s adjusted current earnings over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). Adjusted current earnings would include all taxexempt interest, including interest on the Certificates. In rendering its opinion, Bond Counsel will rely upon certifications of the District with respect to certain material facts solely within the District s knowledge. Bond Counsel s opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result. Ownership of the Certificates may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S Corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Certificates should consult their tax advisors as to applicability of any such collateral consequences. The issue price (the Issue Price ) for [each maturity of] the Certificates is the price at which a substantial amount of [such maturity of] the Certificates is first sold to the public. The Issue Price of a maturity of the Certificates may be different from the price set forth, or the price corresponding to the yield set forth, on the cover page hereof. The Certificates do not pay interest until a date that is more than one year after the date of issue. The interest payments on the Certificates are not qualified stated interest for federal income tax purposes and will accordingly be included in the computation of original issue discount as described below. Regardless of whether the Issue Price of any maturity of the Certificates is below the par amount thereof, 15

20 the difference between the Issue Price of each maturity of the Certificates and the sum of all interest payments thereon plus the amount payable at maturity is original issue discount. Because interest is not payable at intervals of one year or less, all of the Certificates are OID Certificates. For an investor who purchases an OID Certificate in the initial public offering at the Issue Price for such maturity and who holds such OID Certificate to its stated maturity, subject to the condition that the Issuer complies with the covenants discussed above, (a) the full amount of original issue discount with respect to such OID Certificate constitutes interest which is excludable from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such OID Certificate at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in an alternative minimum tax liability for corporations or certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Based upon the stated position of the Illinois Department of Revenue under Illinois income tax law, accreted original issue discount on such OID Certificates is subject to taxation as it accretes, even though there may not be a corresponding cash payment until a later year. Owners of OID Certificates should consult their own tax advisors with respect to the state and local tax consequences of original issue discount on such OID Certificates. Owners of Certificates who dispose of Certificates prior to the stated maturity (whether by sale, redemption or otherwise), purchase Certificates in the initial public offering, but at a price different from the Issue Price or purchase Certificates subsequent to the initial public offering should consult their own tax advisors. If a Certificate is purchased at any time for a price that is less than the Certificate s stated redemption price at maturity or, in the case of an OID Certificate, its Issue Price plus accreted original issue discount reduced by payments of interest included in the computation of original issue discount and previously paid (the Revised Issue Price ), the purchaser will be treated as having purchased a Certificate with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a Certificate is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser s election, as it accrues. Such treatment would apply to any purchaser who purchases an OID Certificate for a price that is less than its Revised Issue Price even if the purchase price exceeds par. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such Certificate. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the Certificates. There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or adversely affect the market value of the Certificates. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds or certificates issued prior to enactment. Prospective purchasers of the Certificates should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation. The Internal Revenue Service (the Service ) has an ongoing program of auditing tax-exempt obligations to determine whether or not, in the view of the Service, interest on such tax-exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether the Service will commence an audit of the Certificates. If an audit is commenced, under current procedures the Service will treat the District as the taxpayer and the Certificate holders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Certificates until the audit is concluded, regardless of the ultimate outcome. 16