MATURITY SCHEDULE. Base CUSIP:

Transcription

1 NEW ISSUE Book-Entry Only RATING: S&P: AA See RATING herein. In the opinion of Gilmore & Bell, P.C., Bond Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended, the interest on the Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal and Missouri income tax purposes, except as described in this Official Statement, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The Bonds have not been designated as qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See TAX MATTERS in this Official Statement. $77,315,000 REORGANIZED SCHOOL DISTRICT NO. 4 OF JACKSON COUNTY, MISSOURI (BLUE SPRINGS, MISSOURI) GENERAL OBLIGATION REFUNDING AND IMPROVEMENT BONDS SERIES 2009A Dated: April 1, 2009 Due: March 1, as shown below The Bonds are issuable only as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Bonds. The Bonds will be available for purchase in denominations of $5,000 or any integral multiple thereof, under the bookentry system maintained by DTC. DTC will receive all payments with respect to the Bonds from UMB Bank n.a., Kansas City, Missouri, as Paying Agent for the Bonds. DTC is required to remit such payments to DTC Participants for subsequent disbursement to the beneficial owners of the Bonds. Semiannual interest will be payable on March 1 and September 1, beginning on September 1, The Bonds maturing on and after March 1, 2020, are subject to redemption prior to maturity beginning on March 1, 2019, as described herein. The principal of and interest on the Bonds will constitute general obligations of the District, payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the District. Maturity March 1 Principal Amount Interest Rate Yield CUSIP MATURITY SCHEDULE Base CUSIP: Maturity March 1 Principal Amount Interest Rate Yield CUSIP 2012 $2,400, % 1.90% PY $1,050, % 3.65% QE ,050, % 1.90% QH ,050, % 3.65% QV ,810, % 2.33% PZ ,160, % 3.85% QF ,230, % 2.33% QJ ,640, % 3.85% QW ,725, % 2.75% QA ,200, % 4.15% QG ,000, % 2.75% QK ,425, % 3.00% QB ,100, % 4.65% QL , % 3.00% QS ,700, % 4.80% QM ,700, % 3.25% QC ,400, % 4.90% QN ,000, % 3.25% QT ,100, % 4.95% QP ,350, % 3.56% QD ,700, % 5.00% QQ ,750, % 3.56% QU ,500, % 5.05% QR0 (Plus accrued interest, if any) The Bonds are offered when, as and if issued by the District, subject to the approval of legality by Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel. It is expected that the Bonds will be available for delivery in book-entry form through DTC, New York, New York, on or about April 2, The date of this Official Statement is March 19, 2009.

2 REORGANIZED SCHOOL DISTRICT NO. 4 OF JACKSON COUNTY, MISSOURI (BLUE SPRINGS, MISSOURI) 1801 NW Vesper Blue Springs, Missouri BOARD OF EDUCATION Dale Walkup, President & Member James Coen, Vice President & Member David Wright, Treasurer & Member Joyce Spears, Member Kent Bradford, Member Rhonda Gilstrap, Member Dale Falck, Member Carol Richardson, Secretary of the Board ADMINISTRATION Dr. Paul Kinder, Superintendent Dr. Annette Seago, Deputy Superintendent Curriculum/Instruction Dr. Nancy Stonner, Assistant Superintendent Human Resources Dr. James Finley, Assistant Superintendent Administration/Safety Dr. William Cowling, Assistant Superintendent Management Services Ms. Kim Brightwell, Chief Financial Officer Mr. Scott Young, Assistant to the Superintendent, Community & Student Services UNDERWRITER George K. Baum & Company Kansas City, Missouri BOND COUNSEL Gilmore & Bell, P.C. Kansas City, Missouri CERTIFIED PUBLIC ACCOUNTANTS Novak Birks P.C. Kansas City, Missouri

3 REGARDING USE OF THIS OFFICIAL STATEMENT No dealer, broker, salesman or other person has been authorized by the District or the Underwriters to give any information or to make any representations with respect to the Bonds 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 any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall 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 herein has been furnished by the District and other sources which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness, and is not to be construed as a representation, by the Underwriters. 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 hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District since the date hereof. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER ALLOTT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. THE BONDS ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION. -ii-

4 TABLE OF CONTENTS Page INTRODUCTION... 1 Purpose of the Official Statement... 1 The District... 1 Purpose of the Bonds... 1 Security and Source of Payment... 1 Other Outstanding Obligations Payable... 2 Financial Statements... 2 Continuing Disclosure Information... 2 Bond Rating... 2 PLAN OF FINANCING... 2 Authorization and Purpose of Bonds... 2 The Improvements... 2 Refunding of Refunded Bonds... 3 Sources and Uses of Funds... 3 THE BONDS... 3 Description of the Bonds... 3 Security and Sources of Payment for the Bonds... 4 Redemption Provisions... 4 Book-Entry Only System... 4 Transfer Outside Book-Entry System... 7 CUSIP Numbers... 7 GENERAL AND ECONOMIC INFORMATION CONCERNING THE DISTRICT... 7 Location and Size... 7 Government and Organization... 7 Educational Facilities... 8 History of Enrollment... 8 Other District Statistics... 9 School Rating and Accreditation... 9 Employment... 9 General and Demographic Information Healthcare Municipal Services and Utilities Transportation and Communication Facilities Recreational Facilities DEBT STRUCTURE OF THE DISTRICT Overview Current Long-Term General Obligation Indebtedness History of General Obligation Indebtedness Debt Service Requirements Overlapping or Underlying Indebtedness Authority to Incur Debt Legal Debt Capacity Other Obligations of the District FINANCIAL INFORMATION CONCERNING THE DISTRICT Accounting, Budgeting and Auditing Procedures 16 Sources of Revenue Local Revenue County Revenue State Revenue Federal Revenue Missouri School Finance Laws Page Tax Limitation Provisions Fund Placement and Expenditure Restrictions Fund Balances Summary Risk Management Employee Retirement and Pension Plans Employee Relations PROPERTY TAX INFORMATION CONCERNING THE DISTRICT Property Valuations Property Tax Levies and Collections Tax Rates Tax Collection Record Major Property Taxpayers LEGAL MATTERS Legal Proceedings Approval of Legality TAX MATTERS Tax Opinion of Bond Counsel Other Tax Consequences RATING MISCELLANEOUS Underwriting Continuing Disclosure Certification and Other Matters Regarding Official Statement Additional Information APPENDIX A: Independent Auditor's Report and Financial Statements for the Year Ended June 30, 2008 APPENDIX B: Summary of Continuing Disclosure Agreement APPENDIX C: Form of Opinion of Bond Counsel -iii-

5 BOND ISSUE SUMMARY This Bond Issue Summary is expressly qualified by the entire Official Statement, which is provided for the convenience of potential investors and which should be reviewed in their entirety by potential investors. District: Issue: Dated Date: April 1, 2009 Reorganized School District No. 4 of Jackson County, Missouri (Blue Springs) $77,315,000 General Obligation Refunding and Improvement Bonds, Series 2009A Interest Date: March 1 and September 1, commencing September 1, 2009 Principal Due: Optional Redemption: Authorization: Security: Credit Rating: Purpose: Tax Exemption: Bank Qualification: Paying Agent: Book-Entry Form: Serially on March 1, commencing March 1, 2012, as detailed on the front page of this Official Statement The Bonds or portions thereof maturing on March 1, 2020, and thereafter may be called for redemption and payment prior to maturity on March 1, 2019, and thereafter, in whole or in part at any time at a redemption price of 100% of the principal amount thereof, plus accrued interest thereon to the redemption date. The Bonds are authorized by a resolution of the Board of Education of the District pursuant to and in full compliance with the Constitution and statutes of the State of Missouri, including particularly Article VI, Sections 26(b) and 28 of the Missouri Constitution and Chapters 108 and 164 of the Revised Statutes of Missouri, as amended. The Bonds will be general obligations of the District and will be payable from ad valorem taxes which may be levied without limitations as to rate or amount upon all taxable property, real and personal, within the territorial limits of the District. S&P has given the Bonds the rating shown on the cover page hereof reflecting the investment quality of the Bonds. See BOND RATING herein. The Bonds are being issued for the purposes of (i) acquiring land, school buildings and facilities, building school buildings and facilities, building additions to, remodeling, repairing and renovating existing school buildings and facilities and furnishing and equipping the same and (ii) current refunding $6,000,000 General Obligation Refunding Bonds (Missouri Direct Deposit Program), Series 2004A. See the caption THE BONDS herein. The Bonds are being issued pursuant to a resolution adopted by the Board of Education, the governing body of the District. See THE BONDS. Gilmore & Bell, P.C., Bond Counsel, will provide an opinion as to the tax exemption of the Bonds as discussed under TAX MATTERS in this Official Statement. The Bonds have not been designated as qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. UMB Bank, n.a., Kansas City, Missouri The Bonds will be registered in the name of Cede & Co. as nominee for The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository of the Bonds.

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7 OFFICIAL STATEMENT $77,315,000 REORGANIZED SCHOOL DISTRICT NO. 4 OF JACKSON COUNTY, MISSOURI (BLUE SPRINGS, MISSOURI) GENERAL OBLIGATION REFUNDING AND IMPROVEMENT BONDS SERIES 2009A INTRODUCTION This introduction is only a brief description and summary of certain information contained in this Official Statement and is qualified in its entirety by reference to more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. Purpose of the Official Statement The purpose of this Official Statement is to furnish information relating to (1) the Reorganized School District No. 4 of Jackson County, Missouri (the District ), and (2) the General Obligation Refunding and Improvement Bonds, Series 2009A (the Bonds ), of the District, dated April 1, 2009, to be issued in the principal amount of $77,315,000. The District The District is a seven-director school district organized and existing under the laws of the State of Missouri. See the captions GENERAL AND ECONOMIC INFORMATION CONCERNING THE DISTRICT, DEBT STRUCTURE OF THE DISTRICT, FINANCIAL INFORMATION CONCERNING THE DISTRICT and PROPERTY TAX INFORMATION CONCERNING THE DISTRICT herein. Purpose of the Bonds $71,500,000 of the Bonds represent a portion of $86,500,000 of general obligation bonds approved by the required majority of the qualified voters of the District for the purpose of acquiring land, school buildings and facilities, building school buildings and facilities, building additions to, remodeling, repairing and renovating existing school buildings and facilities and furnishing and equipping the same at an election held in the District on February 3, $5,815,000 of the Bonds are being issued to current refund all of the outstanding $6,000,000 General Obligation Refunding Bonds (Missouri Direct Deposit Program), Series 2004A, dated April 15, 2004, scheduled to mature on March 1 in the years 2010 to 2012, inclusive (the Refunded Bonds ). The Bonds are being issued pursuant to a resolution adopted by the Board of Education, the governing body of the District. See the captions PLAN OF FINANCING and THE BONDS herein. Security and Source of Payment The Bonds will be general obligations of the District and will be payable from ad valorem taxes which may be levied without limitations as to rate or amount upon all taxable property, real and personal, within the territorial limits of the District. See also the caption THE BONDS Security and Sources of Payment For The Bonds herein.

8 Other Outstanding Obligations Payable In addition to the Bonds, the District is obligated to meet from ad valorem taxes the principal and interest requirements on the District's other general obligation bonds as set forth in this Official Statement under the caption DEBT STRUCTURE OF THE DISTRICT Current Long-Term Indebtedness. Financial Statements Audited financial statements of the District, as of and for the year ended June 30, 2008, are included in Appendix A to this Official Statement. These financial statements have been audited by Novak Birks P.C., independent certified public accountants, to the extent and for the period indicated in the Independent Auditor's Report which is also included in Appendix A hereto. Continuing Disclosure Information The District has agreed to provide to certain repositories the audited financial statements and certain operating data of the District. The District will also provide notices of certain material in compliance with Rule 15c2-12 promulgated by the Securities and Exchange Commission. See MISCELLANEOUS Continuing Disclosure. Bond Rating The District has received the rating set forth on the cover page on this issue. See the caption RATING herein. Authorization and Purpose of Bonds PLAN OF FINANCING The Bonds are authorized pursuant to and in full compliance with the Constitution and statutes of the State of Missouri, including particularly Article VI, Sections 26(b) and 28 of the Missouri Constitution and Chapters 108 and 164 of the Revised Statutes of Missouri, as amended. The $71,500,000 of Bonds being issued for improvements were approved at an election duly held in the District on February 3, 2009, at which more than two-thirds of the qualified votes of the District voting on the question voted in favor of bonds of the District. The Improvements The improvements to be financed from the proceeds of the Bonds include the following: Blue Springs High School: expansion and renovation of classrooms and activity spaces. Blue Springs South High School: expansion and renovation of classrooms and activity spaces. Elementary School at Cordill-Mason Site: expansion and renovation of classrooms and activity spaces. Elementary Schools: renovations and additions at several locations. Various Improvements: miscellaneous, including streets and sidewalks and elevator additions. -2-

9 Construction is expected to begin immediately and be completed in August, Refunding of Refunded Bonds Proceeds of the Bonds in the amount of $6,016, will be transferred to UMB Bank, n.a., as paying agent for the Refunded Bonds, with irrevocable instructions to apply such amount to the payment of the redemption price of the Refunded Bonds on April 5, 2009, the date the Refunded Bonds are being called for redemption. Dated Date Set forth below is a description of the Refunded Bonds: Maturity Date Principal Amount Interest Rate CUSIP Number Redemption Date Redemption Price 4/15/04 3/1/10 $2,000, % NZ5 4/5/09 100% 4/15/04 3/1/11 2,000, % PA8 4/5/09 100% 4/15/04 3/1/12 2,000, % PB6 4/5/09 100% Sources and Uses of Funds The following table summarizes the estimated sources of funds, including the proceeds from the sale of the Bonds, and the expected uses of such funds, in connection with the plan of financing: Sources of Funds: Bond Proceeds... $77,315, Net Original Issue Premium , Accrued Interest... 9, Uses of Funds: Total... $78,215, Deposit to Project Fund... $71,772, Deposit with Paying Agent for Refunded Bonds... 6,016, Deposit to Debt Service Fund... 9, Costs of Issuance, including Underwriter's Discount , Total... $78,215, THE BONDS The following is a summary of certain terms and provisions of the Bonds. Reference is hereby made to the Bonds and the provisions with respect thereto in the Bond Resolution for the detailed terms and provisions thereof. Description of the Bonds The Bonds will be issued in the principal amount stated on the cover page of this Official Statement, will be dated April 1, 2009, and will consist of fully registered bonds without coupons in the denomination of $5,000 or any integral multiple thereof. The Bonds will mature, subject to redemption as described below, on March 1 in the years and in the principal amounts set forth on the cover page of this Official Statement. Interest on the Bonds will be payable semiannually on March 1 and September 1 in each year, beginning on -3-

10 September 1, Principal will be payable upon presentation and surrender of the Bonds by the Registered Owners thereof at UMB Bank, n.a., Kansas City, Missouri, Paying Agent, or at such other location designated by the Paying Agent. Interest shall be paid to the Registered Owners of the Bonds as shown on the Bond Register at the close of business on the Record Date for such interest (a) by check or draft mailed by the Paying Agent to the address of such Registered Owners shown on the Bond Register or at such other address as is furnished to the Paying Agent in writing by any Registered Owner or (b) in the case of an interest payment to the Securities Depository or any Registered Owner of $500,000 or more in aggregate principal amount of Bonds, by wire transfer to such Registered Owner upon written notice given to the Paying Agent by such Registered Owner, not less than 15 days prior to the Record Date for such interest, containing the wire transfer address (which shall be in the continental United States) including the bank ABA routing number and account number to which such Registered Owner wishes to have such wire directed. Security and Sources of Payment for the Bonds The Bonds will constitute general obligations of the District and will be payable as to both principal and interest from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the District. Redemption Provisions Optional Redemption. At the option of the District, the Bonds or portions thereof maturing on March 1, 2020, and thereafter may be called for redemption and payment prior to maturity on March 1, 2019, and thereafter, in whole or in part at any time. When less than all Bonds are to be redeemed, such Bonds shall be redeemed from maturities selected by the District, and Bonds of less than a full maturity shall be selected by the Paying Agent in multiples of $5,000 principal amount at the redemption price of 100% of the principal amount thereof, plus accrued interest thereon to the redemption date. Notice and Effect of Call for Redemption. In the event of any redemption, the Paying Agent will give written notice of the District's intention to redeem and pay said Bonds by first-class mail to the State Auditor of Missouri, to the original purchaser of the Bonds, and to the Registered Owner of each Bond, said notice to be mailed not less than 30 days prior to the redemption date. Notice of redemption having been given as aforesaid, the Bonds or portions of Bonds to be redeemed shall become due and payable on the redemption date, at the redemption price therein specified, and from and after the redemption date (unless the District defaults in the payment of the redemption price) such Bonds or portion of Bonds shall cease to bear interest. The Paying Agent, as long as a book-entry system is used for the Bonds, will send notices of redemption only to the Securities Depository, as the registered owner of the Bonds. It is expected that the Securities Depository will notify the DTC Participants and request the DTC Participants to notify the Beneficial Owners of the Bonds of such redemption. Any failure of the Securities Depository to advise any of the DTC Participants, or of any DTC Participant or any nominee to notify any Beneficial Owner of the Bonds, of any such notice and its content or effect will not affect the validity or sufficiency of the proceedings relating to the redemption of the Bonds called for redemption. Book-Entry Only System The following information concerning DTC and DTC s Book-Entry Only System has been obtained from sources that the District believes to be reliable, but is not guaranteed as to accuracy or completeness by and is not to be construed as a representation by the District, the Paying Agent or the Underwriter. The District, the Paying Agent and the Underwriter make no assurances that DTC, Direct Participants, Indirect Participants or other nominees of the Beneficial Owners will act in accordance with the procedures described above or in a timely manner. General. Ownership interests in the Bonds will be available to purchasers only through a book-entry only system (the Book-Entry Only System ) maintained by The Depository Trust Company ( DTC ), New -4-

11 York, New York. DTC will act as securities depository for the Bonds. Initially, the Bonds will be issued as fully-registered securities, registered in the name of Cede & Co. (DTC S partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. The following discussion will not apply to any Bonds issued in certificate form due to the discontinuance of the DTC Book-Entry Only System, as described below. DTC and its Participants. DTC 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 2.2 million issues of U.S. and non-u.s. equity, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, 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 and Purchase of Ownership Interests. Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond (the 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 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. Transfers. To facilitate subsequent transfers, all Bonds 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 the Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds. DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Notices. 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 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond Resolution. For example, Beneficial Owners of Bonds may -5-

12 wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Paying Agent and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Voting. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer of bonds as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of Principal and Interest. Payments of principal of or redemption price and interest on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the District or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, its nominee, the Paying Agent or the District, subject to any statutory and regulatory requirements as may be in effect from time to time. Payment of principal of or redemption price and interest on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Paying Agent. Disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. Discontinuation of Book-Entry Only System. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the District or the Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered as described in the Bond Resolution. The District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed, 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), and delivered to DTC (or a successor securities depository), to be held by it as securities depository for Direct Participants. If, however, the system of book-entry-only transfers has been discontinued and a Direct Participant has elected to withdraw its Bonds from DTC (or such successor securities depository), Bond certificates may be delivered to Beneficial Owners in the manner described herein under the caption Registration, Transfer and Exchange of Bonds Upon Discontinuance of Book-Entry Only System. None of the Underwriter, the Paying Agent nor the District will have any responsibility or obligations to any Direct Participants or Indirect Participants or the persons for whom they act with respect to (i) the accuracy of any records maintained by DTC or any such Direct Participant or Indirect Participant; (ii) the payment by any Participant of any amount due to any Beneficial Owner in respect of the principal or redemption price or interest on the Bonds; (iii) the delivery by any such Direct Participant or Indirect Participant of any notice to any Beneficial Owner that is required or permitted under the terms of the Bond Resolution to be given to owners of the Bonds; (iv) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the Bonds; or (v) any consent given or other action taken by DTC as Bondholder. -6-

13 Transfer Outside Book-Entry System If the Book-Entry Only System is discontinued the following provisions would apply: Each Bond when issued shall be registered by the Paying Agent in the name of the owner thereof on the Bond Register. Bonds are transferable only upon the Bond Register upon presentation and surrender of the Bonds, together with instructions for transfer. Bonds may be exchanged for Bonds in the same aggregate principal amount and maturity upon presentation to the Paying Agent, subject to the terms, conditions and limitations set forth in the Bond Resolution and upon payment of any tax, fee or other governmental charge required to be paid with respect to any such registration, transfer or exchange. CUSIP Numbers It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bonds, nor any error in the printing of such numbers shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and payment for any Bonds. Location and Size GENERAL AND ECONOMIC INFORMATION CONCERNING THE DISTRICT The District encompasses approximately 58 square miles and is located entirely in central Jackson County, Missouri, approximately 17 miles east of downtown Kansas City, Missouri. The District's 2007 population was estimated at 78,167, based on data from the U.S. Census Bureau. The District includes the cities of Blue Springs and Lake Tapawingo and includes a small portion of the cities of Lee's Summit and Independence, Missouri. Government and Organization The District was formed as a reorganized school district in 1949 pursuant to Missouri law. The District is governed by a seven-member Board of Education. The members of the Board are elected by the voters of the District for three-year staggered terms with two or three members being elected each year. All Board members are elected at-large and serve without compensation. The Board is responsible for all policy decisions. The President of the Board is elected by the Board from among its members for a term of one year and has no regular administrative duties. The Secretary and Treasurer are appointed by the Board and may or may not be members of the Board. The Board of Education appoints the Superintendent of Schools who is the chief administrative officer of the District responsible for carrying out the policies set by the Board. Additional members of the administrative staff are appointed by the Board of Education upon recommendation by the Superintendent. The District has a total of 2,145 employees, including 69 administrative personnel, 1,042 certified employees and 1,036 non-certified employees. The current members and officers of the Board of Education are: -7-

14 Name Office First Elected Term Began Term Expires Dale Walkup President & Member James Coen Vice President & Member David Wright Treasurer & Member Joyce Spears Member Kent Bradford Member Rhonda Gilstrap Member Dale Falck Member 2007* * Appointed August, The Board has appointed Carol Richardson to serve as Secretary. Dr. Paul Kinder has served as Superintendent of the District since July, 2000 and has a total of 21 years experience in the District. Dr. Kinder received his bachelor, masters, specialist and doctorate degrees from the University of Missouri-Columbia. Educational Facilities The following table contains descriptive information on the various schools and sites owned by the District. The value of the physical facilities of the District as most recently determined for insurance purposes is $339,353,010. Name of School Grades Served Name of School Grades Served Valley View High 9-12 James Lewis Elem. K-5 Blue Springs High William Yates Elem. K-5 Blue Springs South High Lucy Franklin Elem. K-5 Freshman Ctr. 9 Cordill-Mason Elem. K-5 Brittany Hill Middle 6-8 James Walker Elem. K-5 Moreland Ridge Middle 6-8 John Nowlin Elem. K-5 Delta Woods Middle 6-8 Daniel Young Elem. K-5 Sunny Vale Middle 6-8 William Bryant Elem. K-5 Liggett Trail Education Ctr. PK-12 Chapel Lakes Elem. K-5 Thomas J. Ultican Elem. K-5 Sunny Pointe Elem. K-5 Franklin Smith Elem. K-5 Voy Spears, Jr. Elem. K-5 History of Enrollment The following table shows student enrollment in the District as of the last Wednesday in September, for each of the last four school years and the current school year. Grades Elementary 5,947 6,043 6,409 6,513 6,563 Middle 3,096 3,083 3,072 3,112 3,216 High 4,194 4,213 4,214 4,302 4,245 TOTAL 13,237 13,339 13,695 13,927 14,024 Source: Missouri Department of Elementary and Secondary Education Fall Enrollment for FY 2005 and 2006; District for FY

15 Other District Statistics The following table shows additional information about the District compiled by the Missouri Department of Elementary and Secondary Education ( DESE ) for the last five completed fiscal years Average Daily Attendance (ADA) 12,544 12,680 12,764 12,972 13,179 Rate of Attendance Current Expenditures per ADA $6, $7, $7, $8, $8, Students per Teacher Students per Classroom Teacher Source: Missouri Department of Elementary and Secondary Education. School Rating and Accreditation The Missouri Department of Elementary and Secondary Education (DESE) administers the Missouri School Improvement Program, whereby school districts are evaluated in all areas of operation, including curriculum, facilities, teaching staff and administrative staff. The evaluation culminates with the placing of each district in one of three categories: accredited, provisionally accredited or unaccredited. The District has received an accredited status, the highest possible under the Program. The classification is not a bond or debt rating, but solely an evaluation made by DESE. Employment Because of the District s proximity to downtown Kansas City, Missouri, employment opportunities for residents of the District are available both within the District and throughout the Kansas City Metropolitan Area. Listed below are the top ten major employers located in the Kansas City Metropolitan Area: Employer Type of Business Number of Employees Federal Government Government 38,906 Sprint Nextel Corp. Telecommunications 13,200 HCA-Midwest Division Health care 7,000 McDonalds USA LLC Restaurant chain 6,400 State of Missouri Government 6,030 Saint Luke's Health System Health care 5,454 City of Kansas City, MO Government 4,824 Cerner Corp. Health care information technology 4,700 Ford Motor Co. SUV and truck manufacturing 4,400 Source: Kansas City Business Journal, April Listed below are major employers located in or near the city of Blue Springs, Missouri (the City ), and the number employed by each: -9-

16 Employer Type of Business Number of Employees Blue Springs R-IV School District Education 2,145 St. Mary s Hospital Health care 615 Kohl s Distribution Center Warehouse distribution 450 Price Chopper Retail grocery 402 Wal-Mart Discount department store 400 Fike Corporation Manufacturer of fire protection products 380 Hy-Vee Retail grocery 340 City of Blue Springs Local government 256 Haldex Brake manufacturer 233 Gemaco, Inc. Manufacturer of playing cards 190 Source: Blue Springs, Missouri Economic Development Corporation and Eastern Jackson County by the Numbers, published by the Eastern Jackson County Development Alliance. The following table sets forth employment figures for Jackson County and the State of Missouri for the last five years: Jackson County Total Labor Force 349, , , , ,405 Employed 325, , , , ,222 Unemployed 23,814 21,262 18,891 19,427 23,183 Unemployment Rate 6.8% 6.4% 5.7% 5.7% 6.9% State of Missouri Total Labor Force 3,031,105 3,024,478 3,032,434 3,031,187 3,019,553 Employed 2,858,897 2,862,153 2,885,857 2,878,399 2,834,338 Unemployed 172, , , , ,216 Unemployment Rate 5.7% 5.4% 4.8% 5.0% 6.1% Source: MERIC (Missouri Economic Research and Information Center). General and Demographic Information Population The following tables set forth certain area population information City of Blue Springs 6,779 25,936 40,153 48,080 55,031 Jackson County 654, , , , ,890 State of Missouri 4,677,623 4,916,776 5,117,073 5,595,211 5,878,415 Source: U.S. Census Bureau, 2007 American Community Survey. Income Statistics Listed below are area income figures for the District as compared to the City of Blue Springs, Jackson County and the State of Missouri: -10-

17 Per Capita Income Median Family Income Blue Springs R-IV $31,981 $82,989 City of Blue Springs (1) 28,688 75,089 Jackson County 24,432 56,667 State of Missouri 23,915 55,947 Source: U.S. Census Bureau, 2007 American Community Survey. (1) Missouri Census Data Center, America Community Survey Profile Reports 3 year estimates Housing Listed below are certain housing statistics for the District as compared to the City of Blue Springs, Jackson County and the State of Missouri: Owner-Occupied Housing Units Median Value of Owner-Occupied Units Blue Springs R-IV 22,767 $162,500 City of Blue Springs (1) 14, ,100 Jackson County 176, ,300 State of Missouri 1,632, ,600 Source: U.S. Census Bureau, 2007 American Community Survey. (1) Missouri Census Data Center, America Community Survey Profile Reports 3 year estimates Healthcare St. Mary's Hospital of Blue Springs is a 143-bed acute care hospital, served by a medical staff of approximately 300, representing more than 30 medical specialties. Located adjacent to the hospital campus is St. Mary's Manor, a 132-bed long-term care and 57-bed residential care facility. Centerpoint Medical Center of Independence is a newly-opened facility, licensed for 257 beds, that is located in Independence, Missouri, and serves surrounding communities, including the District. In addition, residents of the District have easy access to hospitals and medical facilities in Kansas City and surrounding areas. Municipal Services and Utilities Utility service in the District is provided by both public and private facilities. Aquila and Kansas City Power & Light Company provide electrical service to residents of the District. Both residential and commercial properties receive water service from the City who purchases its water from Kansas City, Missouri, and Independence, Missouri. Sewer services are provided by the Sni-A-Bar Wastewater Treatment Facility, owned and operated by the City and Little Blue Valley Sewer District. Missouri Gas Energy provides natural gas service. Fire protection is provided by Central Jackson County Fire Protection District. Transportation and Communication Facilities Three major highways intersect the District including Interstate 70, Missouri 7 and U.S. 40. Because of its location, the District's residents have a short commute into the Kansas City Metropolitan Area. Great Western Railway, the primary railway line of the District, as well as the Atchison, Topeka and Santa Fe, Union Pacific and Chicago North Western Transportation serve the District and the Kansas City Metropolitan Area. Charles B. Wheeler Downtown Airport, approximately 23 miles away and Kansas City International Airport, approximately 35 miles away, provide both commercial and charter flights. Grain Valley Aviation, Inc., 4 miles away, offers a private airport. -11-

18 Recreational Facilities Ample wetlands and woodlands provide plenty of outdoor recreation. Blue Springs Federal Reservoir, two miles outside the City, features thirteen miles of shoreline for such water activities as swimming, fishing, boating, sailing, and water skiing. Lake Tapawingo, Lake Jacomo and Longview Lake are located minutes away and provide additional water sports activities. Burr Oak Woods Conservation Area offers five walking trails and 1,071 acres of woods and wildlife for nature lovers. In or within ten miles of the City, residents can take advantage of 20 public parks, 23 public tennis courts, 12 soccer fields, 3 public swimming pools and 2 country clubs. The YMCA/YWCA brings multiple programs and activities to the community. Overview DEBT STRUCTURE OF THE DISTRICT The following table summarizes certain financial information concerning the District. This information should be reviewed in conjunction with the information contained in this section and the financial statements of the District in Appendix A hereto Assessed Valuation (1)... $1,303,136, Estimated Actual Valuation (2)... $5,831,244,940 Outstanding General Obligation Bonds ( Direct Debt ) (3)... $140,815,000 Estimated Population (2007)... 78,167 Per Capita Direct Debt... $1, Ratio of Direct Debt to Assessed Valuation % Ratio of Direct Debt to Estimated Actual Valuation % Overlapping and Underlying General Obligation Debt ( Indirect Debt ) (4)... $17,436,398 Total Direct Debt and Indirect Debt... $158,251,398 Per Capita Direct Debt and Indirect Debt... $2, Ratio of Direct Debt and Indirect Debt to Assessed Valuation % Ratio of Direct Debt and Indirect Debt to Estimated Actual Valuation % (1) (2) (3) (4) Includes 2008 real and personal property assessment as provided by the County Clerk of Jackson County. Does not include state assessed railroad and utility property. For further details see PROPERTY TAX INFORMATION CONCERNING THE DISTRICT. Estimated actual valuation is calculated by dividing different classes of property by the corresponding assessment ratio. For a detail of these different classes and ratios see PROPERTY TAX INFORMATION CONCERNING THE DISTRICT. Including the Bonds and excluding the Refunded Bonds. For further details see DEBT STRUCTURE OF THE DISTRICT-Overlapping and Underlying Indebtedness. Current Long-Term General Obligation Indebtedness The following table sets forth all of the outstanding general obligation indebtedness of the District following issuance of the Bonds. The principal amount of bonds to be paid pursuant to escrow trust agreements is not shown. -12-

19 Category of Indebtedness Date of Indebtedness Amount Outstanding General Obligation Bonds, Series 2001 March 15, 2001 $ 15,500,000 General Obligation School Building Bonds, Series 2005 March 1, ,000,000 General Obligation School Refunding Bonds, Series 2006 February 15, ,000,000 General Obligation Refunding and Improvement Bonds, Series 2009A April 1, ,315,000 TOTAL $140,815,000 History of General Obligation Indebtedness The following table sets forth the total outstanding bonded indebtedness of the District as of the end of each of the last five fiscal years: Fiscal Year Total Debt as % of Ending June 30 Outstanding Debt (1) Assessed Valuation 2008 $ 79,500, % ,375, % ,675, % ,675, % ,925, % (1) Excludes principal of refunded bonds to be paid from securities and money on deposit with escrow agents under escrow trust agreements. The District has never defaulted in the payment of interest on or principal of its general obligation indebtedness. Anticipated Issuance of Additional Indebtedness On February 3, 2009, the voters of the District authorized $86,500,000 of general obligation bonds of the District. The District is currently issuing $71,500,000 of the bonds so authorized and expects to issue the remaining $15,000,000 of those bonds in the fall of

20 Debt Service Requirements The following schedule shows the annual principal and interest requirements for all outstanding general obligation indebtedness of the District, excluding the Refunded Bonds. Fiscal Year Ending Outstanding Bonds Bonds Being Offered June 30 Total Debt Service Principal Interest Total 2010 $10,437, $3,154, $13,592, ,544, ,441, ,985, ,124, $3,450, ,441, ,015, ,018, ,040, ,339, ,397, ,909, ,725, ,212, ,847, ,761, ,700, ,087, ,548, ,542, ,700, ,997, ,239, ,242, ,100, ,895, ,237, ,942, ,100, ,757, ,799, ,592, ,800, ,626, ,018, ,266, ,200, ,457, ,923, ,289, ,289, ,289, ,289, ,289, ,289, ,100, ,289, ,389, ,700, ,984, ,684, ,400, ,666, ,066, ,100, ,315, ,415, ,700, , ,610, ,500, , ,975, TOTAL $81,379, $77,315, $48,922, $207,617, Overlapping or Underlying Indebtedness The following table sets forth overlapping and underlying general obligation and lease indebtedness of political subdivisions with boundaries overlapping the District as of March 1, 2009, and the percent attributable (on the basis of assessed valuation figures for calendar year 2008, excluding state assessed railroad and utility property) to the District. The table was compiled from information furnished by the Jackson County Assessment Department, and the District has not independently verified the accuracy or completeness of such information. Furthermore, political subdivisions may have ongoing programs requiring the issuance of substantial additional bonds, the amounts of which cannot be determined at this time. Taxing Jurisdiction Outstanding General Obligation Bonds Percent Applicable to the School District Amount Applicable to the School District City of Blue Springs $ 5,615, % $5,440,935 City of Lee's Summit 28,805, % 4,666,410 Central Jackson County Fire Protection Dist. 8,700, % 6,707,700 City of Lake Tapawingo 467, % 467,000 City of Independence 801, % 154,353 TOTAL $17,436,398 Source: Missouri State Auditor, Bond Registration Reports; Jackson County, Missouri Assessment Department -14-

21 Authority to Incur Debt Under Article VI, Section 26(b) of the Constitution of Missouri, the District may incur indebtedness not to exceed 15% of the valuation of taxable tangible property in the District according to the last completed assessment (including state-assessed railroad and utility valuations) upon the approval of the constitutionally required percentage of the qualified voters in the District. The purpose for which school bonds may be issued is governed by Section of the Revised Statutes of Missouri, and includes purchasing sites for school buildings, erecting school buildings, building additions to, remodeling and reconstructing existing school buildings, furnishing school buildings and purchasing school buses and other transportation equipment. The District's legal debt limit and debt margin would be higher if the valuation of state assessed railroad and utility property that is physically located within the bounds of the District was taken into account, but because the amount of state assessed railroad and utility property within the District is not easily obtainable such amount was not included in the calculations of debt limit or debt margin. Legal Debt Capacity Under Article VI, Section 26(b) of the Constitution of Missouri, the District may incur indebtedness for authorized school district purposes not to exceed 15% of the valuation of taxable tangible property in the District according to the last completed assessment upon the approval of four-sevenths of the qualified voters in the District voting on the proposition at any municipal, primary or general election or two-thirds voter approval on any other election date Assessed Valuation: $1,303,136,214 Constitutional Debt Limit under Article VI, Section 26(b) (15% of 2008 assessed valuation) $195,470,432 General Obligation Bond Indebtedness, including the Bonds 140,815,000 Legal Debt Margin $ 54,655,432 Other Obligations of the District DNR Energy Loan. The District has entered into a loan from the Missouri Department of Natural Resources to finance an energy conservation project. The original principal amount of the loan was $226,685 and it bears interest at 3.55% per annum. Payments under the loan total $21,116 annually, with the final payment scheduled in the fiscal year ending June 30, Lease Obligations. The District has obtained $13,220,000 lease purchase financing to obtain new HVAC equipment. Semi-annual lease purchase payments of $597,709 at 4.18% will be funded with anticipated energy cost savings, with the final payment scheduled in the fiscal year ending June 30, The District obtained $787,800 lease purchase financing through Missouri Department of Natural Resources for energy conservation methods. Semi-annual lease purchase payments of $33,592 at 4% will be funded with anticipated energy cost savings, with the final payment scheduled in the fiscal year ending June 30, In addition, the District has entered into a renewable operating lease for use of a municipal swimming pool. Annual lease payments plus one-half of annual operating costs is approximately $40,

22 FINANCIAL INFORMATION CONCERNING THE DISTRICT Accounting, Budgeting and Auditing Procedures The financial statements of the District are prepared on the modified cash basis of accounting, which is a comprehensive basis of accounting other than generally accepted accounting principles. Therefore, revenues and expenditures are recognized when collected or paid; and receivables and accrued liabilities, except for accrued salaries, as explained below and self insured health claims payable, are not reflected in the financial statements. Also, fixed assets and long-term debt are not reflected on the statement of net assets, but are reflected in the statement of activities when paid. Accounts of the District are organized on the basis of funds, each of which is considered a separate accounting entity. District resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprises its assets and liabilities arising from modified cash transactions, fund balance, revenues collected, and expenditures paid. The following fund types and account groups are used by the District: General (Incidental) Fund: Accounts for general activities of the District, including student activities, food service and the textbook fund which are not required to be accounted for in another fund. Special Revenue (Teachers') Fund: Accounts for expenditures for certified employees involved in administration and instruction. It includes revenues restricted by the State of Missouri and the local levy for the payment of teacher salaries and certain employee benefits. Capital Projects Fund: Accounts for the proceeds of long-term debt, taxes and other revenues designated for acquisition or construction of major capital assets. Debt Service Fund: Accounts for the accumulation of resources for, and the payment of, principal, interest and fiscal charges on general long-term debt. The Treasurer of the District is responsible for handling all moneys of the District and administering the above funds. All moneys received by the District from whatever source are credited to the appropriate fund. Moneys may be disbursed from such funds by the Treasurer only for the purpose for which they are levied, collected or received and all checks must be signed by the President and the Treasurer. An annual budget of estimated revenues and expenditures for the coming fiscal year is prepared by the Superintendent and is presented to the Board of Education for approval, after a public hearing, prior to August 15. The District's fiscal year is July 1 through June 30. The budget lists estimated revenues by funds and sources and estimated expenditures by funds and purposes and includes a statement of the rate of levy per hundred dollars of assessed valuation required to raise each amount shown on the budget as coming from District taxes. The financial records of the District are audited annually by a firm of independent certified public accountants in accordance with generally accepted accounting standards. The audit for the 2008 fiscal year was performed by Novak Birks P.C., Kansas City, Missouri, a copy of which is included in this Official Statement at Appendix A. A summary of significant accounting policies of the District is contained in the Notes accompanying the financial statements in Appendix A. Sources of Revenue The District finances its operations through the local property tax levy, state sales tax, State Aid, federal grant programs and miscellaneous sources. Debt service on general obligation bonds is paid from amounts in the District s Debt Service Fund. The primary source of money in the Debt Service Fund is local -16-

23 property taxes derived from a debt service levy. However, the Debt Service Fund may also contain money derived from transfers from the Incidental Fund described under the caption Missouri School Finance Laws Transfers from Incidental Fund to Debt Service Fund and/or Capital Projects Fund, from State Aid in the Classroom Trust Fund (discussed below), and from certain other taxes or payments-in-lieu-of-taxes which may be placed in the Debt Service Fund at the discretion of the Board of Education. For the fiscal year, the District s budgeted sources of revenue are as follows: Budgeted Source Amount Percent Local Revenue: Property Taxes $ 70,200, % Proposition C Sales Tax 11,300, % Other 14,390, % County Revenue: Railroad & Utility Property Taxes 1,550, % Fines, Forfeitures & Other 125, % State Revenue 49,758, % Federal Revenue 6,433, % Other Revenue 1,195, % Total Revenue $154,952, % Source: District s Budget for FY Local Revenue The primary sources of local revenue are (1) taxes upon real and personal property within a district, excluding railroad and utility property taxes, which are more fully described below under the caption PROPERTY TAX INFORMATION CONCERNING THE DISTRICT, and (2) receipts from a 1% state sales tax (commonly referred to as Proposition C revenues ) approved by the voters in Proposition C sales tax proceeds are deemed to be local revenues for school district accounting purposes. Proposition C revenues are distributed to each school district on a per-pupil basis utilizing the district s weighted average daily attendance (see Weighted ADA under Missouri School Finance Laws below). Historically, each school district has received from $750 to $800 per pupil per year from Proposition C revenues. County Revenue For school taxation purposes, all state assessed railroad and utility property within a county is taxed uniformly at a rate determined by averaging the tax rates of all school districts in the county. No determination is made of the assessed value of the railroad and utility property that is physically located within the boundaries of each school district. Such tax collections for each county are distributed to the school districts within that county according to a formula based in part on total student enrollments in each district within the County and in part on the taxes levied by each district within the County. County revenue also includes certain fines and forfeitures collected with respect to violations within the boundaries of the school district. State Revenue The primary source of state revenue or State Aid is provided under a formula enacted under Chapter 163 of the Revised Statutes of Missouri, as amended. In its 2005 regular session, the Missouri General Assembly approved significant changes to the formula by adoption of Senate Bill 287 ( SB 287 ), which -17-

24 became effective July 1, The changes to State Aid distribution laws are more fully described below under Missouri School Finance Laws. Federal Revenue School districts receive certain grants and other revenue from the federal government, which are usually required to be used for the specified purposes of the grant or funding program. Missouri School Finance Laws State Aid. The amount of State Aid for school districts in Missouri has typically been calculated using a complex formula. The impact of SB 287 is to transition the State away from a local-tax-rate-based formula to a formula that is primarily student-needs based. The new formula is being phased in over a seven-year period which began in the fiscal year. During the phase-in period, State Aid for each school district will be based on a percentage of both the old local tax rate based formula (determined as a percentage of the State Aid Payments), and the new student-needs based formula. State aid will be calculated using the following percentages of the old and new formulas: Percentage of State Aid Payment Percentage of SB 287 Formula Phase-In Year % 15% Property Tax Levy Requirements. The sum of a district s local property tax levies in its Incidental and Teachers Funds must be at least $2.75 per $100 assessed valuation in order for the district to receive increases in State Aid above the level of State Aid it received in the fiscal year. Levy reductions required as a result of a Hancock rollback (See PROPERTY TAX INFORMATION CONCERNING THE DISTRICT Tax Rates Tax Limitations Provisions below) will not affect a district s eligibility for State Aid increases. The Formula. A district s State Aid is determined by first multiplying the district s weighted average daily attendance ( ADA ) by the state adequacy target (discussed below). This figure may be adjusted upward by a dollar value modifier, which is an index of the relative purchasing power of a dollar, calculated as one plus 15% of the difference of the regional wage ratio minus one. The product of the weighted ADA multiplied by the state adequacy target is then reduced by a district s local effort (discussed below) to calculate a district s final State Aid amount. Weighted ADA. Weighted ADA is based upon regular term ADA plus summer school ADA, with additional weight assigned in certain circumstances for students who qualify for free and reduced lunch, receive special education services, or possess limited English language proficiency. Students receive additional weighted treatment if, categorically, they exceed certain thresholds (based on the percentage of students in each of the categories in Performance Districts, as defined below). Currently, additional weight is assigned to students above the following thresholds: above 26.6% for students who qualify for free or reduced lunch, above 14.9% for students receiving special education services, and above 1.1% for students possessing limited English language proficiency. The District s State Aid revenues would be adversely affected by decreases in its weighted ADA resulting from decreased enrollment generally and, specifically, decreased enrollment of students eligible for free and reduced lunch, special education students, or students with limited English language proficiency. -18-

25 State Adequacy Target. The new State Aid formula requires DESE to calculate a state adequacy target, which is intended to be the minimum amount of funds a school district needs in order to educate each student. DESE s calculation of the state adequacy target will be based upon amounts spent, excluding federal and state transportation revenues, by certain high performing districts (known as Performance Districts ). Every two years, using the most current list of Performance Districts, DESE will recalculate the state adequacy target. The recalculation can never result in a decrease from the previous state adequacy target amount. DESE has established the state adequacy target for the current fiscal year at $6,117. Local Effort. For the fiscal year, the local effort figure utilized in a district s State Aid calculation was the amount of locally generated revenue that the district would have received in the fiscal year if its operating levy was set at $3.43. The $3.43 amount is called the performance levy. Since the fiscal year, a district s local effort amount has been frozen at the amount, except for adjustments due to increased locally collected fines or decreased assessed valuation in the district. Growth in assessed valuation and operating levy increases will result in additional local revenue to the district, without affecting State Aid payments. Categorical-Source Add-Ons. In addition to State Aid distributed pursuant to the formula as described above, the formula provides for the distribution of certain categorical sources of State Aid to school districts. These include (1) 75% of allowable transportation costs, (2) the career ladder entitlement, (3) the vocational education entitlement, and (4) educational and screening program entitlements. Classroom Trust Fund (Gambling Revenue) Distribution. A portion of the state aid received under the formula will be in the form of a distribution from the Classroom Trust Fund in the state treasury containing a portion of the State s gambling revenues. This money is distributed to school districts on the basis of average daily attendance (versus weighted ADA, which applies to the basic formula distribution). The funds deposited into the Classroom Trust Fund are not earmarked for a particular fund or expense and may be spent at the discretion of the local school district. Historically, each school district has received approximately $350 per ADA from the Classroom Trust Fund. Mandatory Deposit and Expenditures of Certain Amounts in the Teachers Fund. The following state and local revenues must be deposited in the Teachers Fund: (1) 75% of basic formula State Aid, excluding State Aid distributed from the Classroom Trust Fund (gambling revenues); (2) 75% of one-half of the district s local share of Proposition C revenues; (3) 100% of the career ladder state matching payments; and (4) 100% of local revenue from fines and escheats based on violations or abandoned property within the district s boundaries. In addition to these mandatory deposits, school districts are also required to spend for certificated staff compensation and tuition expenditures each year the amounts described in clauses (1) and (2) of the preceding paragraph. Beginning in the fiscal year, school districts were further required to spend for certificated staff compensation and tuition expenditures each year, per the second preceding year s weighted ADA, as much as was spent in the previous year from local and county tax revenues deposited in the Teachers Fund, plus the amount of any transfers from the Incidental Fund to the Teachers Fund that are calculated to be local and county tax sources. This amount is to be determined by dividing local and county tax sources in the Incidental Fund by total revenue in the Incidental Fund. Failure to satisfy the deposit and expenditure requirements applicable to the Teachers Fund will result in a deduction of the amount of the expenditure shortfall from a district s basic formula State Aid for the following year, unless the district receives an exemption from the State Board of Education. The Formula also provides that certificated staff compensation now includes the costs of public school retirement and Medicare for those staff members. Commencing with the fiscal year, such costs are paid from the Teachers Fund rather than the Incidental Fund. -19-

26 A school board may transfer any portion of the unrestricted balance remaining in the Incidental Fund to the Teachers Fund. Any district that uses a transfer from the Incidental Fund to pay for more than 25% of the annual certificated compensation obligation of the district, and has an Incidental Fund balance on June 30 in any year in excess of 50% of the combined Incidental and Teachers Fund expenditures for the fiscal year just ended, will be required to transfer the excess from the Incidental Fund to the Teachers Fund. Limited Sources of Funds for Capital Expenditures. School districts may only pay for capital outlays from the Capital Projects Fund. Sources of revenues in the Capital Projects Fund are limited to: (i) proceeds of general obligation bonds (which are repaid from a Debt Service Fund levy), (ii) revenue from the school district s local property tax levy for the Capital Projects Fund; (iii) certain permitted transfers from the Incidental Fund, and (iv) funds distributed to school districts from the Classroom Trust Fund. Capital Projects Fund Levy. Prior to setting tax rates for the Teachers and Incidental Funds, each school district must annually set the tax rate for the Capital Projects Fund as necessary to meet the expenditures of the Capital Projects Fund for capital outlays, except that the tax rate set for the Capital Projects Fund may not be in an amount that would result in the reduction of the equalized combined tax rates for the Teachers and Incidental Funds to an amount below $2.75. Transfers from Incidental Fund to Capital Projects Fund. In addition to money generated from the Capital Projects Fund levy, each school district may transfer money from the Incidental Fund to the Capital Projects Fund under the following limited circumstances: (1) The amount to be expended for transportation equipment that is considered an allowable cost under the state board of education rules for transportation reimbursements during the current year; (2) Current year obligations for lease-purchase obligations entered into prior to January 1, 1997; (3) The amount necessary to repay costs of one or more guaranteed energy savings performance contracts to renovate buildings in the school district, provided that the contract specified that no payment or total of payments shall be required from the school district until at least an equal total amount of energy and energy-related operating savings and payments from the vendor pursuant to the contract have been realized; and (4) To satisfy current year capital project expenditures, an amount not to exceed the greater of: a. $162,326; or b. The product of: (i) Seven percent (7%) of the state adequacy target (presently $6,117), which equals approximately $428, times (ii) the district s weighted ADA. Transfers from Incidental Fund to Debt Service Fund and/or Capital Projects Fund. If a school district is not using the seven percent (7%) or the $162,326 transfer (as discussed above) and is not making payments on lease purchases pursuant to Section , Revised Statutes of Missouri, then the school district may transfer from the Incidental Fund to the Debt Service and/or the Capital Projects Fund the greater of: (1) The State Aid received in the school year as a result of no more than eighteen (18) cents of the sum of the debt service and capital projects levy used in the foundation formula and placed in the Capital Projects or Debt Service fund; or -20-

27 (2) Five percent (5%) of the state adequacy target (presently $6,117) times the district s weighted ADA. Constitutional Challenge. In 2004, the Committee for Educational Equality ( CEE ), a nonprofit corporation whose members include many Missouri school districts, challenged the constitutionality of the State s public school funding system in the Circuit Court of Cole County. While the lawsuit was pending, the Missouri General Assembly enacted Senate Bill 287 in 2005, which significantly changed the State Aid formula calculation, and included the phasing in of an estimated $800 million of new funding over seven years. CEE continued its lawsuit, claiming that (1) the State was not spending enough money on schools, (2) the new funding formula still did not distribute money fairly among school districts, and (3) the State was not spending at least 25 percent of its revenues on education, as required by the Missouri Constitution. In October 2007, the Circuit Court rejected all three arguments and entered a judgment in favor of the State. In December 2007, CEE appealed the decision to the Missouri Supreme Court. Tax Limitation Provisions The operating levy of a school district (consisting of all ad valorem taxes levied except the debt service levy) cannot exceed the tax rate ceiling for the current year without voter approval. The tax rate ceiling, determined annually, is the rate of levy which, when charged against the district s assessed valuation for the current year, excluding new construction and improvements, will produce an amount of tax revenues equal to tax revenues for the previous year increased by 5% or the Consumer Price Index, whichever is lower. Without the required percentage of voter approval, the tax rate ceiling cannot at any time exceed the greater of the tax rate in effect in 1980 or the most recent voter-approved tax rate (as adjusted pursuant to the provisions of the Hancock Amendment, more fully explained below). Under Article X, Section 11(b) of the Missouri Constitution, a school district may increase its operating levy up to $2.75 per $100 assessed valuation without voter approval. Any increase above $2.75, however, must be approved by a majority of the voters voting on the proposition. Further, pursuant to Article X, Section 11(c) of the Missouri Constitution, any increase above $6.00 must be approved by twothirds of the voters voting on the proposition. The tax levy for debt service on a school district s general obligation bonds is exempt from these limitations upon the tax rate ceiling. Article X, Section 22(a) of the Missouri Constitution (popularly known as the Hancock Amendment ), approved in 1980, places limitations on total state revenues and the levying or increasing of taxes without voter approval. The Missouri Supreme Court has interpreted the definition of total state revenues to exclude voter-approved tax increases. The Hancock Amendment also includes provisions for rolling back tax rates. If the assessed valuation of property, excluding the value of new construction and improvements, increases by a larger percentage than the increase in the Consumer Price Index from the previous year (or 5%, if greater), the maximum authorized current levy must be reduced to yield the same gross revenue from existing property, adjusted for changes in the Consumer Price Index, as could have been collected at the existing authorized levy on the prior assessed value. This reduction is often referred to as a Hancock rollback. The limitation on local governmental units does not apply to taxes levied in the Debt Service Fund for the payment of principal and interest on general obligation bonds. Fund Placement and Expenditure Restrictions General. With few exceptions, revenues of school districts are required to be deposited, at the board of education s discretion, in the Incidental or Teachers Funds. Money received from other districts for transportation is required to be deposited in the Incidental Fund. The proceeds of property tax levies must be placed in the fund for which the levy was intended. Money donated to the school districts is to be deposited in the fund where it can be expended to meet the purpose for which it was donated and accepted. Money received from any other source whatsoever must be placed to the credit of the fund or funds designated by the board. -21-

28 Mandatory Deposit and Expenditures of Certain Amounts in the Teachers Fund. Under SB 287, commencing with the fiscal year, the following state and local revenues must be deposited in the Teachers Fund and spent for certificated staff compensation and tuition expenditures each year: (1) 75% of basic formula state aid, excluding state aid distributed from the Classroom Trust Fund (gaming revenues); (2) 75% of the district s local share of Proposition C revenues, (3) 100% of the career ladder state matching payments, and (4) 100% of local revenue from fines and escheats based on violations or abandoned property within the district s boundaries. SB 287 provides that certificated staff compensation includes the costs of public school retirement and Medicare for those staff members. Commencing with the fiscal year, those costs will, therefore, be paid from the Teachers Fund, rather than the Incidental Fund. Failure to satisfy the deposit and expenditure requirements applicable to the Teachers Fund will result in a deduction of the amount of the expenditure shortfall from a district s basic formula state aid for the following year, unless the district receives an exemption from the State Board of Education. A school board may transfer any portion of the unrestricted balance remaining in the Incidental Fund to the Teachers Fund. Under SB 287, beginning with the fiscal year, any district that uses a transfer from the Incidental Fund transfer to pay for more than 25% of the annual certificated compensation obligation of the district and has an Incidental Fund balance on June 30 in any year in excess of 50% of the combined Incidental and Teachers Fund expenditures for the fiscal year just ended will be required to transfer the excess from the Incidental Fund to the Teachers Fund. Limited Sources of Funds for Capital Expenditures. School districts may only pay for capital outlays through either (1) the issuance of general obligation bonds (which are paid from a Debt Service Fund levy) or (2) amounts on deposit in the Capital Projects Fund. Sources of revenues in the Capital Projects Fund are generally limited to the school district s local property tax levy for the Capital Projects Fund, transfers from the Incidental Fund, which are very limited, and donations or payments in lieu of taxes, which are properly allocated to such fund. Commencing on July 1, 2006, pursuant to SB 287, a school district may also deposit in its Capital Projects Fund that portion of its state aid that represents the disbursement of the Classroom Trust Fund (gaming revenues). Prior to setting tax rates for the Teachers and Incidental Funds, each school district must annually set the tax rate for the Capital Projects Fund as necessary to meet the expenditures of the Capital Projects Fund for capital outlays, after all allowable transfers to the Capital Projects Fund. The tax rate set for the Capital Projects Fund may not, however, be set in an amount that would result in the reduction of the equalized combined tax rates for the Teachers and Incidental Funds to an amount below $2.75. Permitted transfers from the Teachers and Incidental Funds to the Capital Projects are limited in amount and, with few exceptions, are not permitted to be used for paying lease purchase obligations. Fund Balances Summary The following Summary Statement of Revenues, Expenditures and Changes in Fund Balances All Governmental Funds was prepared from audited financial statements of the District. The statement set forth below should be read in conjunction with the other financial statements and notes appertaining hereto set forth in Appendix A of this Official Statement and the financial statements on file at the District s office. -22-

29 SUMMARY STATEMENT OF CASH RECEIPTS, DISBURSEMENTS AND CHANGES IN FUND BALANCES Year Ended June General (Incidental) Fund Balance-Beginning of Year $ 9,988,439 $17,381,314 $25,479,475 $33,379,314 $30,513,798 Cash Receipts 105,910, ,506, ,033,269 73,711,906 92,939,790 Cash Disbursements 44,466,679 48,651,444 55,361,024 48,804,618 51,338,252 Transfers In (Out) (54,051,138) (51,756,976) (54,772,406) (27,772,804) (46,263,687) Balance-End of Year $ 17,381,314 $25,479,475 $33,379,314 $30,513,798 $25,851,649 Special Revenue (Teacher's) Fund Balance-Beginning of Year $ 0 $ 0 $ 0 $ 0 $ 0 Cash Receipts 4,084,420 3,951,167 4,302,693 49,874,330 37,405,603 Cash Disbursements 52,671,238 55,019,533 58,353,196 71,400,626 75,861,168 Transfers In (Out) 48,586,818 51,068,366 54,050,503 21,526,296 38,455,565 Balance-End of Year $ 0 $ 0 $ 0 $ 0 $ 0 Debt Service Fund Balance-Beginning of Year $ 6,608,641 $20,850,356 $23,672,477 $31,839,572 $30,808,256 Cash Receipts 26,585,081 12,636,031 11,539,630 14,575,839 14,481,081 Cash Disbursements 12,343,366 9,813,910 12,372,535 15,607,155 29,322,702 Transfers In (Out) ,000, Balance-End of Year $20,850,356 $23,672,477 $31,839,572 $30,808,256 $15,966,635 Capital Projects Fund Balance-Beginning of Year $ 2,672,554 $ 6,757,059 $47,646,673 $14,555,121 $10,944,377 Cash Receipts 1,115,332 50,973,362 2,486,848 4,800,751 8,444,602 Cash Disbursements 2,495,147 10,772,358 36,300,303 14,658,003 13,279,325 Transfers In (Out) 5,464, , ,903 6,246,508 7,808,122 Balance-End of Year $ 6,757,059 $47,646,673 $14,555,121 $10,944,377 $13,917,776 Total Funds Balance-Beginning of Year $ 19,269,634 $ 44,988,729 $ 96,798,625 $ 79,774,007 $ 72,266,431 Cash Receipts 137,695, ,067, ,362, ,962, ,271,076 Cash Disbursements 111,976, ,257, ,387, ,470, ,801,447 Balance-End of Year $ 44,988,729 $ 96,798,624 $ 79,774,007 (2) $ 72,266,431 $ 55,736,060 Ending Operating Fund Balances as Percentage of Operating Fund Disbursements (1) 17.89% 24.58% 29.35% 25.38% 20.32% Source: District s Audited Financial Statements for the fiscal years ended June 30, ; District s Budget. (1) The operating funds are defined to be the General Fund and Special Revenue Fund only. (2) Includes $9,000,000 principal amount of bonds dated February 15,

30 Risk Management The District maintains various policies of insurance providing coverage which includes casualties to the District's facilities and general liability insurance, which policies are subject to certain deductible clauses. Employee Retirement and Pension Plans The District contributes to the state-wide retirement systems created by Chapter 169 of the Revised Missouri Statutes to provide retirement allowances for substantially all of its employees. Teachers are covered by The Public School Retirement System of Missouri, and non-teachers are covered by The Nonteacher School Employee Retirement System of Missouri. The system includes most of the school districts in Missouri, and is administered by a five-member Board of Trustees, consisting of two trustees appointed by the State Board of Education, two trustees elected by the members of the retirement system, and the State Commissioner of Education. Both systems are advance funded plans which are required by statute to remain in actuarial balance. The District's annual contributions are based upon amounts recommended by a consulting actuary not to exceed rates established by statute. The actual contribution rates for the fiscal year ended June 30, 2008, were 12.5% and 6.0% of salaries, respectively, with the total cost to the District for the year being $9,329,725. Contribution rates provide for funding the systems' liability for past service cost. However, the liability for past service cost is not allocable to individual school districts. Non-certified employees of the District also participate in the Social Security retirement plan. There are no unfunded pension plans covering District employees. Employee Relations Teachers in the District belong to the Missouri State Teachers Association, the Missouri NEA or are not affiliated. The Board of Education makes the final decisions on all matters of policy, salaries and working conditions without fact finding, mediation or arbitration. Property Valuations PROPERTY TAX INFORMATION CONCERNING THE DISTRICT Assessment Procedure. All taxable real and personal property within the District is assessed annually by the County Assessor. Missouri law requires that personal property be assessed at 33-1/3% of true value and that real property be assessed at the following percentages of true value: Residential real property... 19% Agricultural and horticultural real property... 12% Utility, industrial, commercial, railroad and all other real property... 32% The assessment ratio for personal property is generally 33-1/3% of true value. However, subclasses of tangible personal property are assessed at the following assessment percentages: grain and other agricultural crops in an unmanufactured condition, 0.5%, livestock, 12%; farm machinery, 12%; historic motor vehicles, 5%; poultry, 12%; and certain tools and equipment used for pollution control, used in retooling for the purpose of introducing new product lines or used for making improvements to existing products by certain types of companies specified by state law, 25%. A general reassessment of real property occurred statewide in In order to maintain equalized assessed valuations following this reassessment, the state legislature adopted a maintenance law in On -24-

31 January 1 in every odd-numbered year, each County Assessor must adjust the assessed valuation of all real property located within the county in accordance with a two-year assessment and equalization maintenance plan approved by the State Tax Commission. The County Assessor is responsible for preparing the tax roll each year and for submitting the tax roll to the Board of Equalization. The County Board of Equalization has the authority to adjust and equalize the values of individual properties appearing on the tax rolls. Current Assessed Valuation. The following table shows the total assessed valuation and the estimated actual valuation, by category, of all taxable tangible property situated in the District, excluding state assessed railroad and utility property, according to the assessment for calendar year 2008 for property owned as of January 1, 2008: Type of Property Total Assessed Valuation Assessment Rate Total Estimated Actual Valuation % of Actual Valuation Real Property: Residential $ 834,285, % $4,390,974, % Agricultural 595, % 4,961, % Commercial 243,797, % 761,867, % Total Real Property 1,078,678,182 $5,157,803, % Personal Property 224,458, % (1) 673,441, % TOTAL PROPERTY $1,303,136,214 $5,831,244, % (1) Assumes all personal property is assessed at 33 1/3%; because certain subclasses of tangible personal property are assessed at less than 33 1/3%, the estimated actual valuation for personal property would likely be greater than that shown above. See Assessment Procedure discussed above. For school taxation purposes, all state assessed railroad and utility property within a county is taxed uniformly at a rate determined by averaging the tax rates of all school districts in the county. Such tax collections for each county are distributed to the school districts within that county according to a formula based in part on total student enrollments in each district and in part on the taxes levied by each district. Under this method of distributing tax collections from state assessed railroad and utility property, it is unnecessary to determine the assessed value of such property that is physically located within the bounds of each school district. The District received $1,768, for the fiscal year ended June 30, 2008, from state assessed railroad and utility property taxes. History of Property Valuations. The total assessed valuation of all taxable tangible property situated in the District (excluding state assessed railroad and utility property) according to the assessments of January 1 in each of the following years, has been as follows: Property Tax Levies and Collections Year Assessed Valuation Percent Change 2008 $1,303,136, % ,278,481, % ,173,144, % ,142,169, % ,046,552,892 NA Property taxes are levied and collected for the District by the County, for which the County receives a collection fee of approximately 1.5% of the gross tax collections made. -25-

32 The District is required by law to prepare an annual budget, which includes an estimate of the amount of revenues to be received from all sources for the budget year, including an estimate of the amount of money required to be raised from property taxes and the tax levy rates required to produce such amounts. The budget must also include proposed expenditures and must state the amount required for the payment of interest, amortization and redemption charges on the District's debt for the ensuing budget year. Such estimates are based on the assessed valuation figures provided by the County Clerk. The District must fix its ad valorem property tax rates and certify them to the County Clerk not later than September first for entry in the tax books. The County Clerk receives the county tax books from the County Assessor, which set forth the assessments of real and personal property. The County Clerk enters the tax rates certified to him by the local taxing bodies in the tax books and assesses such rates against all taxable property in the District as shown in such books. The County Clerk forwards the tax books by October 31 to the County Collector, who is charged with levying and collecting taxes as shown therein. The County Collector extends the taxes on the tax rolls and issues the tax statements in early December. Taxes are due by December 31 and become delinquent if not paid to the County Collector by that time. All tracts of land and city lots on which delinquent taxes are due are charged with a penalty of eighteen percent of each year's delinquency. All lands and lots on which taxes are delinquent and unpaid are subject to sale at public auction in August of each year. The County Collector is required to make disbursements of collected taxes to the District each month. Because of the tax collection procedure described above, the District receives the bulk of its moneys from local property taxes in the months of December, January and February. Tax Rates Debt Service Levy. The District's debt service levy for the fiscal year is $ per $100 of assessed valuation. Once indebtedness has been approved by requisite number of the voters voting therefor and bonds are issued, the District is required under Article VI, Section 26(f) of the Missouri Constitution to levy an annual tax on all taxable tangible property therein sufficient to pay the interest and principal of the indebtedness as they fall due and to retire the same within 20 years from the date of issue. The Board of Education may set the tax rate for debt service, without limitation as to rate or amount, at the level required to make such payments. Operating Levy. The total operating levy (consisting of all ad valorem taxes levied except the debt service levy) cannot exceed the tax rate ceiling for the current year without voter approval. The tax rate ceiling, determined annually, is the rate of levy which, when charged against the newly-received assessed valuation of the District for the current year, excluding new construction and improvements, will produce an amount of tax revenues equal to tax revenues for the previous year increased by 5% or the Consumer Price Index, whichever is lower; however, the District cannot be required to reduce its operating levy for school purposes below the minimum rate required to qualify for the highest level of State Aid (currently $2.75). Without the required percentage of voter approval, the tax rate ceiling cannot at any time exceed the greater of the tax rate in effect in 1984 or the most recent voter-approved tax rate (as adjusted pursuant to the provisions of the Hancock Amendment, more fully explained under the following caption Tax Limitation Provisions ). The tax levy for debt service on the District s general obligation bonds is exempt from the calculations of and limitations upon the tax rate ceiling. Under Article X, Section 11(c) of the Missouri Constitution, any increase in the District s total operating levy ceiling up to $6.00 per $100 of assessed valuation must be approved by a majority of the voters voting on the proposition and any increase above $6.00 must be approved by two-thirds of the voters voting on the proposition. For fiscal year , the District s unadjusted operating levy is $ per $100 of assessed valuation which is equal to the District s tax rate ceiling. The unadjusted operating levy was reduced in 1983 and subsequent years pursuant to the initiative process which approved a state sales tax for school purposes ( Proposition C ). Under Proposition C, after determining its budget and the levy rate needed to produce required revenues to fund said budget, school districts must reduce the operating levy by an amount sufficient to decrease the revenues it would have received therefrom by an amount equal to approximately 50% of the -26-

33 estimated revenues to be received through Proposition C during the year. However, under subsequent legislation, school districts may now submit propositions to voters for approval by a simple majority to forego all or a part of the reduction in the operating levy which would otherwise be required under the terms of Proposition C. The operating levy for the fiscal year was reduced by $ under terms of Proposition C to $ per $100 of assessed valuation. The tax levy for debt service on the District s general obligation bonds is exempt from the calculations of and limitations upon the tax rate ceiling. Tax Limitation Provisions. An amendment to the Missouri Constitution commonly known as the Hancock Amendment approved in 1980 places limitations on total state revenues and the levying or increasing of taxes without voter approval. The Missouri Supreme Court has interpreted the definition of total state revenues to exclude voter-approved tax increases such as the 1% state sales tax for education under Proposition C. The Hancock Amendment also includes provisions for rolling back tax rates. If the assessed valuation of property, excluding the value of new construction and improvements, increases by a larger percentage than 5% or the increase in the general price level from the previous year (whichever is lower), the maximum authorized current levy applied thereto in each political subdivision must be reduced to yield the same gross revenue from existing property, adjusted for such changes, as could have been collected at the existing authorized levy on the prior assessed value. School districts that are required to reduce their operating levies below $2.75 per $100 assessed valuation because of the Hancock Amendment will not suffer a reduction in State aid for failure to maintain a $2.75 operating levy. The limitation on local governmental units does not apply to taxes imposed for the payment of principal and interest on general obligation bonds. History of Tax Levies. The following table shows the District's tax levies per $100 of assessed valuation for each of the following years: Fiscal Year Ended June 30 General (Incidental) Fund Special Revenue (Teachers') Fund Debt Service Fund Capital Projects (Building) Fund Total Levy 2009 $ $ $ $ $ Source: Annual Secretary of the Board Reports. Tax Collection Record The following table sets forth tax collection information for the District for the last five years. -27-

34 Fiscal Current & Delinquent Year Ended Total Total Taxes Taxes Collected June 30 Levy Levied (1) Amount Percent 2008 $ $68,901,228 $65,148, % ,224,256 62,061, % ,554,936 59,758, % ,401,875 55,425, % ,029,244 53,259, % (1) Excluding State Assessed Railroad and Utility Taxes. Source: Annual Secretary of the Board Reports. Major Property Taxpayers The following table sets forth the taxpayers owning property with the greatest amount of assessed valuation within the District based on the valuation of property owned as of January 1, 2007, with taxes on such property due by December 31, The District has not independently verified the accuracy or completeness of such information. Owner 2007 Assessed Valuation (1) % of 2007 Total Assessed Valuation Simon Property Group LP $24,255, % Cole EDD Mt Independence 10,755, % WalMart 9,111, % Ward, George & Jeanette 3,370, % Little Blue Holdings LLC 3,135, % Pepperwood Apartments LLC 3,120, % Comcast Cablevision 3,110, % William J. Wade, Trustee 2,830, % HD Development of Maryland Inc. 2,017, % Federated Retail Holdings 1,994, % TOTAL $63,701, % (1) The latest data available. Source: Jackson County Division of Finance Collection Department Legal Proceedings LEGAL MATTERS As of the date hereof, there is no controversy, suit or other proceeding of any kind pending or threatened wherein or whereby any question is raised or may be raised, questioning, disputing or affecting in any way the legal organization of the District or its boundaries, or the right or title of any of its officers to their respective offices, or the legality of any official act in connection with the authorization, issuance and sale of the Bonds, or the constitutionality or validity of the Bonds or any of the proceedings had in relation to the authorization, issuance or sale thereof, or the levy and collection of a tax to pay the principal and interest thereof, or which might affect the District's ability to meet its obligations to pay the Bonds. Approval of Legality All legal matters incident to the authorization and issuance of the Bonds are subject to the approval of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel. The form of opinion of Bond Counsel is attached -28-

35 as Appendix C. Bond Counsel has participated in the preparation of this Official Statement, but the factual and financial information appearing herein has been supplied or reviewed by certain officials of the District and a certified public accountant, as referred to herein, and Bond Counsel expresses no opinion as to the accuracy or sufficiency thereof except for the matters appearing in the sections of this Official Statement captioned THE BONDS (except for the information appearing under the caption Book-Entry Only System ), LEGAL MATTERS Approval Of Legality and TAX MATTERS. Bond Counsel has represented the Underwriter in transactions unrelated to the issuance of the Bonds, but is not representing the Underwriter in connection with the issuance of the Bonds. Tax Opinion of Bond Counsel TAX MATTERS Federal and Missouri Tax Exemption. In the opinion of Gilmore & Bell, P.C., Bond Counsel, under existing law, the interest on the Bonds (including any original issue discount properly allocable to an owner thereof) is excludable from gross income for federal and Missouri income tax purposes. Interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and is not taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinions set forth in this paragraph are subject to the condition that the District comply with all requirements of the Internal Revenue Code of 1986, as amended (the Code ), that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal and Missouri income tax purposes. The District has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal and Missouri income tax purposes retroactive to the date of issuance of the Bonds. Bank Qualification. The Bonds have not been designated as qualified tax-exempt obligations for purposes of Section 265(b) of the Code. Original Issue Discount. In the opinion of Bond Counsel, under existing law, the original issue discount in the selling price of each Bond purchased in the original offering at a price less than the principal amount thereof (hereinafter referred to as the OID Bonds ), to the extent properly allocable to each owner of such Bond, is excludable from gross income for federal income tax purposes with respect to such owner. Original issue discount is the excess of the stated redemption price at maturity of an OID Bond over the initial offering price to the public (excluding underwriters and intermediaries) at which price a substantial amount of the OID Bonds were sold. Under Section 1288 of the Code, original issue discount on tax-exempt bonds accrues on a compound basis. For an owner who acquires an OID Bond in this offering, the amount of original issue discount that accrues during any accrual period generally equals (i) the issue price of such OID Bond plus the amount of original issue discount accrued in all prior accrual periods, multiplied by (ii) the yield to maturity on such OID Bond (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period), less (iii) any interest payable on such OID Bond during such accrual period. The amount of original issue discount so accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excludable from gross income for federal income tax purposes, and will increase the owner's tax basis in such OID Bond. Owners of OID Bonds should consult with their individual tax advisors regarding the determination and treatment of original issue discount for federal income tax purposes and the state and local tax consequences of owning OID Bonds. Original Issue Premium. An amount equal to the excess of the purchase price of a Bond over its stated principal amount at maturity constitutes premium on such Bond. An owner of a Bond must amortize any premium over such Bond s term using constant yield principles, based on the Bond s yield to maturity. As premium is amortized, the owner s basis in such Bond and the amount of tax-exempt interest received will be reduced by the amount of amortizable premium properly allocable to such owner. This will result in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of such Bond prior to its maturity. Even though the owner s basis is reduced, no federal income -29-

36 tax deduction is allowed. Owners of any Bonds purchased at a premium, whether at the time of initial issuance or subsequent thereto, should consult their individual tax advisors with respect to the determination and treatment of premium for federal income tax purposes and with respect to state and local tax consequences of owning such Bonds. No Other Opinions. Bond Counsel expresses no opinion regarding other federal, state or local tax consequences arising with respect to the Bonds. Other Tax Consequences Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with excess net passive income, foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Bonds. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Bonds should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Bonds, including the possible application of state, local, foreign and other tax laws. RATING S&P has given the Bonds the rating set forth on the cover page hereof which reflects its evaluation of the investment quality of the Bonds. Such rating reflects only the view of S&P at the time such rating is given, and the District and the Underwriter make no representation as to the appropriateness of such rating or that such rating will not be changed, suspended or withdrawn. S&P relies on the District and its counsel, accountants and other experts for the accuracy and completeness of the information submitted in connection with the rating. The rating is not a market rating nor a recommendation to buy, hold or sell the Bonds, and such rating may be changed, suspended or withdrawn as a result of changes in, or unavailability of, information. Any downward revision, suspension or withdrawal of any of such rating could have an adverse effect on the market price and marketability of the Bonds. An explanation of the significance of such rating may be obtained only from S&P at the following address: Standard & Poor's Corporation, 25 Broadway, New York, New York Underwriting MISCELLANEOUS The underwriter named on the cover page hereof (the Underwriter ) has agreed, subject to certain conditions, to purchase the Bonds from the District at a price equal to $77,899, (being calculated as the par amount of the Bonds, plus an original issue premium of $891,361.50, less an underwriting discount of $307,351.00) plus accrued interest from the date of the Bonds to the date of payment and delivery. The Underwriter is purchasing the Bonds from the District for resale in the normal course of the Underwriter s business activities. The Underwriter will sell certain of the Bonds at a price greater than such purchase price, as shown on the cover hereof. The Underwriter reserves the right to offer any of the Bonds to one or more purchasers on such terms and conditions and at such price or prices as the Underwriter, in their discretion, shall determine. -30-

37 The Underwriter has read and participated in the preparation of certain portions of this Official Statement and has supervised the compilation and editing thereof. The Underwriter has not, however, independently verified the factual and financial information contained in this Official Statement and, accordingly, expresses no view as to the sufficiency or accuracy thereof. Continuing Disclosure Pursuant to a Continuing Disclosure Agreement with UMB Bank, n.a., Kansas City, Missouri, as Dissemination Agent, the District has agreed to provide to certain repositories the audited financial statements and certain operating data of the District. The District has agreed to have updated financial information and operating data for the District available within 180 days after the end of each fiscal year of the District. The financial statements of the District are audited by the District's independent certified public accountants. The District has also agreed to provide prompt notice to certain repositories of the occurrence of certain material events with respect to the Bonds. See Appendix B for a summary of the Continuing Disclosure Agreement. The District has never failed to comply in all material respects with any previous undertakings by the District to provide annual financial information or notices of material events to such repositories. Certification and Other Matters Regarding Official Statement Information set forth in this Official Statement has been furnished or reviewed by certain officials of the District, a certified public accountant, and other sources, as referred to herein, which are believed to be reliable. Any statements made in this Official Statement involving matters of opinion, estimates or projections, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates or projections will be realized. Simultaneously with the delivery of the Bonds, the President of the Board of Education of the District, acting on behalf of the District, will furnish to the Underwriter a certificate which shall state, among other things, that to the best knowledge and belief of such officer, this Official Statement (and any amendment or supplement hereto) as of the date of sale and as of the date of delivery of the Bonds does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements herein, in light of the circumstances under which they were made, not misleading in any material respect. The form of this Official Statement, and its distribution and use by the Underwriter, has been approved by the District. Neither the District nor any of its officers, directors or employees, in either their official or personal capacities, has made any warranties, representations or guarantees regarding the financial condition of the District or the District's ability to make payments required of it; and further, neither the District nor its officers, directors or employees assumes any duties, responsibilities or obligations in relation to the issuance of the Bonds other than those either expressly or by fair implication imposed on the District by the Resolution. Additional Information Additional information regarding the District or the Bonds may be obtained from the office of the Superintendent, Reorganized School District No. 4, 1801 NW Vesper, Blue Springs, Missouri (816) , or from the Underwriter, George K. Baum & Company, 4801 Main Street, Suite 500, Kansas City, Missouri 64112, Attention Gregory A. Bricker (816) REORGANIZED SCHOOL DISTRICT NO. 4 OF JACKSON COUNTY, MISSOURI By: Dale Walkup, President of the Board of Education -31-

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39 APPENDIX A INDEPENDENT AUDITOR'S REPORT AND FINANCIAL STATEMENTS JUNE 30, 2008

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