ABC Unified School District

Board of Education Meeting

July 15, 2014Bond Resolution

Toan Nguyen, Assistant Superintendent-Business Services/Chief Financial Officer

Mark Farrell, Senior Financial Advisor, Dale Scott & CompanyDon Field, Partner, Orrick, Herrington, Sutcliffe LLP

1

PROCESS AND TIMELINEDate Activities

November - December 2013

Staff conducted an assessment of the schools and departments’ Facilities/Technology needs

January 15, 2014

 Board Special Learning Session on: Schools for 21st Century

Learners and the District Facilities/Technology Needs Assessment. The Board authorized Superintendent/designee to Conduct a Feasibility Study & Complete the Facilities Master Plan

February 4, 2014

 Approved contract with Dale Scott & Company to provide survey research services, pre-election services, and financial advisory/bond issuance services.

March 4, 2014Results of Feasibility Study for the Possible Bond Measure was presented to the Board

March 18, 2014Approved contract with Flewelling & Moody to develop a districtwide Facilities Master Plan

April 1, 2014Approved contract with George K. Baum to provide bond underwriting services

2

PROCESS AND TIMELINEDate Activities

April 1, 2014Approved the contract with Orrick, Herrington & Sutcliffe LLP to provide bond counsel services

March - June, 2014

 Staff and Flewelling & Moody visited every school site and district department to assess and solicit input from administrators, teachers, support staff, parents, and students for the Facilities Master Plan

June 24, 2014Draft Facilities Master Plan was presented to the Board of Education for discussion, review, and feedback

July 8, 2014

The Facilities Master Plan was accepted by the Board. Bond Resolution and Project List were presented to the Board as an information item for discussion

July 15, 2014Bond Resolution and Project List are presented to the Board as an action item for consideration

3

1997 Election - Yes Vote: 68.2% (Approved as a “Two-Thirds” Bond)

1997 Authorization – Bond Issuances & Refinancings

Series Issue Date AmountIssued

Amount Outstanding

Series A Dec 17, 1997 $20,000,000 $0

Series B Apr 1, 2000 $24,999,924 $8,299,924

Series C Jan 10, 2001 $14,000,041 $14,000,041

2003 Refunding

May 1, 2003 $18,740,000 $13,835,000

2010 Refunding

May 12, 2010 $10,670,000 $6,025,000

Total Outstanding $42,159,965

The 1997 Bond

Authorized $59M

Including State Facilities Matching Fund and Other District funding sources, the old modernization project was approximately $135 M

$42M Outstanding, will be paid off by 2034

Approximately $28 per 100,000 Assessed Value Tax Rate

Two refundings, saving the taxpayers more than $2M.

4

The 1997 Bond ModernizationArchitectural and Structural

Replace roofing and repair canopies Abate asbestos and lead Upgrade restrooms, replace toilet partition and restroom

hardware Re-paint & re-carpet

Mechanical Systems Replace heating ventilation and air-conditioning units Provide solid state energy management system

5

Plumbing Systems Replace galvanized piping and exterior hose bibs Evaluate and add hydrants per code Replace drinking fountains and plumbing accessories Correct drainage and replace drains Correct irrigation with replacement of sprinkler heads, re-plumbing, timer and

shut off valves

Electrical Systems and Low Voltage Provide new power distribution Replace technology distribution system and re-cable all classrooms Replace light fixtures with T-8 lamps Install emergency lighting Provide standardize Fire Alarm Systems Replace intrusion detection system

The 1997 Bond Modernization

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In February, 2014, a survey of 500 registered voters was conducted over a seven day period

A telephone survey of 500 likely voters (those having voted in Nov. 2012 and voted in either Nov. 2002, Nov. 2006, Nov. 2010 or June 2012) was conducted between February 21, 2014 and February 27, 2014.

Surveys were conducted during the weekday in the evenings, and on the weekend both in the morning and evening.

The average length of the bond survey was about 8.70 minutes.

Margin of error for the bond survey is +/- 4.33%.

2014 Possible Bond Survey

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2014 Possible Bond SurveyResults

The G.O. bond measure received 72.2% (Yes/Lean Yes) support before voters received information and remained at 72.2% after voters received additional information

There was strong voter support for all of the projects tested (More/Somewhat More Likely)

Bond measure size still to-be-determined, survey based on 3.5% annual assessed value growth and a $59/$100,000 tax rate

Voters in the District indicate strong support for a local school improvement bond program

8

Estimated Cost Cumm. Est. Cost

1. Safety and Security $ 18,473,709 $ 18,473,709

2. Basic Facilities Needs $ 71,701,635 $ 90,175,344

3. STEM/Science Initiative $ 4,496,678 $ 94,672,022

4. Access to Modern Technology:

A. Baseline Technology $ 85,410,038 $180,082,060

B. 21st Century Infrastructure $ 92,702,022 $272,784,082

5. Parity (Transform) $ 73,921,894 $346,705,976

6. Future Project Phase $298,428,492 $645,134,468

Current Facilities/Technology Needs

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From great…

Stowers ES Nixon ES

Cerritos HS

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… to Exceptional

Classroom Inspiration Library Media Inspiration

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Safety and Security

Cerritos ES

Congestion

Improved School Drop-off Area

12

Basic Facilities Needs

Playground Surface InspirationBragg ES

Current Playground

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Basic Needs Continued

Shaded Lunch Area InspirationBragg ES

Current Pergola

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Basic Needs Continued

Cerritos HS

Typical Classroom Configuration

Inspiration Classroom

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STEM and Science Initiative

Cerritos HS

Current Science Lab

Science Lab Inspiration

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Access to Modern Technology

Cerritos HS Current Technology Technology Center Inspiration17

Access to Technology Continued

Melbourne ES

Current Technology Inspirational Technology Access18

Parity and Transformation

Aloha ES

Portable Classroom

Exterior Inspiration

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FACILITIES FUNDING SOURCES

Deferred Maintenance (LCFF) 1,800,000 Developer Fees 200,000 Redevelopment Agency Pass-through 400,000 Joint-use/Grants ????Federal E-Rate Program VariesState Energy Efficient Program 936,000 Surplus Properties ????State Facilities Fund ????

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Proposition 39 Overview

What can be financed?

♦ Acquisition of real property♦ Construction, renovation or replacement

of school facilities♦ Furnishing and equipping of school

facilities

Limitations and Requirements

♦ 2/3rd approval by school board♦ More specific project list♦ Regular elections only♦ $60 per $100,000 of Assessed Value (not

Market Value) tax rate limit for unified school districts

♦ Annual financial and performance audits♦ Citizen oversight committee

Constitutional amendment passed in 2000, lowering voter approval threshold for school district G.O. bonds to 55%

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LA County Unified School Districts Tax Rates

2013/14 Tax Rates per $100,000 of Assessed Value

Palos Verdes PenABC

Culver CityActon-Agua Dulce

BellflowerWest Covina

AzusaGlendaleBurbankDowney

Hacienda-La PuenteAlhambraTorrance

La CanadaClaremont

Las VirgenesManhattan Beach

Norwalk-La MiradaEl Segundo

Sta Monica-MalibuCompton

ArcadiaSan Marino

GlendoraLong Beach

BonitaMonrovia

Redondo BeachMontebello

El RanchoBeverly HillsSan Gabriel

South PasadenaPasadena

ParamountTemple City

Walnut ValleyCovina Valley

BassettCharter Oak

LynwoodDuarte

RowlandLos Angeles

InglewoodBaldwinPomona

$0 $20 $40 $60 $80 $100 $120 $140 $160 $180

ABC has the sec-ond lowest Tax Rate per $100,000 in the County.

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LA County Unified Districts Bond Dollars per Student

Cumulative Bond Authorizations Per Student (at time of Election)

ABC UnifiedCompton Unified

West Covina UnifiedHacienda la Puente Unified

Downey UnifiedMontebello Unified

Bellflower UnifiedNorwalk-La Mirada Unified

Culver City UnifiedAlhambra Unified

Acton-Agua Dulce UnifiedLynwood Unified

Azusa UnifiedClaremont Unified

Bassett UnifiedSouth Pasadena Unified

Palos Verdes UnifiedBaldwin Park Unified

Glendora UnifiedParamount UnifiedLa Cañada UnifiedEl Rancho Unified

Walnut Valley UnifiedCharter Oak Unified

Monrovia UnifiedPomona Unified

Bonita UnifiedBurbank Unified

Inglewood UnifiedTorrance UnifiedGlendale Unified

San Marino UnifiedLong Beach Unified

Covina-Valley UnifiedLas Virgenes UnifiedSan Gabriel Unified

Rowland UnifiedEl Segundo Unified

Duarte UnifiedArcadia Unified

Manhattan Beach UnifiedTemple City Unified

Pasadena UnifiedLos Angeles Unified

Redondo Beach UnifiedSanta Monica-Malibu Unified

Beverly Hills Unified

$0 $20,000 $40,000 $60,000 $80,000 $100,000

ABC has the lowest bond authorization amount per Student in the County

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Assessed Value History

Compound Annual Growth Rates

5 year 0.78%

10 Year 4.05%

20 Year 3.67%

Total Assessed Value

4.3%10.6%

9.1%8.3%

6.4%3.9%

2.4%-0.4% 0.7%

0.7% 1.3%4.3%

7.8%4.8%

4.9%7.0%

6.5%

8.8%

8.2%

7.1%

6.6% -1.9% -1.1%2.0%

2.1%

2.9%

Fiscal Year

Ass

ess

ed V

alu

e (

bill

ion

s)

Note: Annual percentage changes listed above assessed value figures

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Bond Sizing Analysis

Sample Bond Issuance Schedules ($ millions)

Tax Rate(per $100,000 of AV)

YearTotal

2015 2018 2021

$50.00 $69.1 $62.3 $63.8 $195.2

$55.00 $76.0 $68.5 $70.2 $214.7

$60.00 $82.9 $74.7 $77.4 $235.0

New Bond Authorization Overview• Will fully comply with AB 182• Would not require the use of Capital

Appreciation Bonds• Uses reasonable AV growth

projections in order to not “over promise” voters

Assumptions:• Three financings: 2015, 2018, and 2021• 30-year amortization, Current Interest Bonds Only• Current interest rates: 4.5%• 3.5% annual assessed value growth

Bond authorization amount determined by project needs and capacity of tax base

For a property with a Assessed Value (not Market) of $300,000, the additional tax will be $180 per year, or 49 cents a day.

25

Additional Tax per Household

YearDistrict Average

Assessed ValuationAdditional Tax Per $60

for $100,000 in AV

2013-14 291,000 - 1 2014-15 296,820 178 2 2015-16 302,756 182 3 2016-17 308,812 185 4 2017-18 314,988 189 5 2018-19 321,288 193 6 2019-20 327,713 197 7 2020-21 334,268 201 8 2021-22 340,953 205 9 2022-23 347,772 209

10 2023-24 354,727 213 11 2024-25 361,822 217 12 2025-26 369,058 221 13 2026-27 376,440 226 14 2027-28 383,968 230 15 2028-29 391,648 235 16 2029-30 399,481 240 17 2030-31 407,470 244 18 2031-32 415,620 249

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Additional Tax per HouseholdYear

District Average Assessed Valuation

Additional Tax Per $60 for $100,000 in AV

19 2032-33 423,932 254 20 2033-34 432,411 259 21 2034-35 441,059 265 22 2035-36 449,880 270 23 2036-37 458,878 275 24 2036-37 468,055 281 25 2038-39 477,416 286 26 2039-40 486,965 292 27 2040-41 496,704 298 28 2041-42 506,638 304 29 2042-43 516,771 310 30 2043-44 527,106 316 31 2044-45 537,648 210 32 2045-46 548,401 214 33 2046-47 559,369 95 34 2047-48 570,557 97 35 2048-49 581,968 99 36 2049-50 593,607 101

Total Average Additional Tax per Household 8,040$

Assuming the AV will increase by 2 percent per Proposition 13 limitation 27

Year ADA Enrollment Percent04/05 21,117 21,944 96.23%05/06 20,665 21,660 95.41%06/07 20,330 21,155 96.10%07/08 20,122 20,839 96.56%08/09 20,031 20,787 96.36%09/10 19,923 20,801 95.78%10/11 19,949 20,767 96.06%11/12 20,050 20,744 96.65%12/13 20,178 21,004 96.07%13/14 20,229 21,054 96.08%

ADA & Enrollment - 10 years

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Hypothetical Bond Fund Allocation by Student(Actual Bond Allocation will be determined by future Board actions)

Assumptions:

Proposed Bond Amount $235,000,000 ($60 tax rate per

$100,000 AV)

Less: 5% allocated to Adult School, Nutrition Services,

Warehouse, MOT, District Office… ($11,750,000)

Net Amount for schools $223,250,000

LOCATION Student Amount

ALOHA 390 4,140,354$

BRAGG 626 6,645,799$

BURBANK 581 6,168,066$

CARVER 622 6,603,333$

CERRITOS 708 7,516,335$

ELLIOTT 535 5,679,716$

FURGESON 411 4,363,296$

GONSALVES 644 6,836,892$

HAWAIIAN 436 4,628,703$

JUAREZ 326 3,460,911$

KENNEDY 471 5,000,273$ 29

LEAL 762 8,089,614$

MELBOURNE 531 5,637,251$

NIEMES 691 7,335,858$

NIXON 783 8,312,556$

PALMS 620 6,582,101$

STOWERS 644 6,836,892$

WILLOW 497 5,276,297$

WITTMANN 593 6,295,461$

CARMENITA 669 7,102,299$

FEDDE 430 4,565,005$

HASKELL 467 4,957,808$

ROSS 650 6,900,590$

TETZLAFF 646 6,858,124$

ARTESIA HS 1,494 15,860,740$

CERRITOS HS 2,166 22,994,888$

GAHR HS 1,949 20,691,153$

WHITNEY HS 1,022 10,849,850$

TRACY HS & ABC SEC. 619 6,571,485$

Cab Lane/Adult Transition 46 488,349$

TOTAL 21,029 223,250,000 30

Hypothetical Bond Fund Allocation by Student(Actual Bond Allocation will be determined by future Board actions)

Citizen Oversight Committee

• Formed within 60 days of school board acknowledging election results

• Independent committee, no District employees or officials, vendors, contractors or consultants

• Minimum of seven members and include:– Member of business organization– Member of senior citizen organization– Member of bona fide taxpayers organization– Parent of a child enrolled in district– Parent of a child enrolled in district and active in parent-teacher organization – Reviews bond expenditures for compliance with Bond Project List

• Reviews bond expenditures for compliance with Bond Project List

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Bond Audits

• Annual Performance Audit– Independent audit to ensure bond proceeds expended only upon

projects listed in Bond Project List

• Annual Financial Audit– Independent audit of financial statements related to bond proceeds

and expenditures

• Audits must be submitted to Citizen Oversight Committee and made publically available

• Audits must be conducted according to Government Audit Standards issued by Comptroller General of the United States

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Bond Resolution

• The Board can not, nor have the authority to raise tax.

• By passing the Bond Resolution, the Board is placing a school bond measure to a vote. This will give voters a chance to approve or reject the school bond.

• The voters will decide on the bond measure.

• Must have at least 55 percent approval from voters.

• Bond money can not be used for salaries.

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NEXT STEPSDate Activities

August 8, 2014

District must deliver the Bond Resolution and Tax Rate Statement to County on or before August 8. At this time, the District can submit a form requesting a certain letter for the measure. (For example, Measure A)

August 12, 2014

The tentative Bond Fund Allocation and Project Priority Order List will be presented to the Board for consideration. The District will work with each site to develop a specific, detail Project List based on the approved tentative Bond Fund Allocation and Project Priority Order.

August 15, 2014The District or Citizen Campaign Committee submits Argument for the Measure on or before August 15, 2014.

September 16, 2014

The Detail Project List and estimate cost, by site, will be presented to the Board for approval

August-October, 2014

Community Forums, Presentations to PTAs; Local Service Clubs; Community Organizations; Civic Groups; Employee Groups.. regarding the Bond Measure

November 4, 2014 Election day

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ABC Unified School District

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