ORANGE COUNTY TREASURER/TAX COLLECTOR

AWARDS MEASURE AA

GRADE OF “A”

John Moorlach, C.P.A., CFP, the Treasurer/Tax Collector for the County of Orange, has established five criteria that are used to grade proposed general obligation bonds. The criteria are established in order to ensure the safeguarding of taxpayers’ assets in Orange County. In addition, the criteria and standards enhance the credibility of school districts’ bond processes by providing effective safeguards. These safeguards contribute greatly to the confidence that the taxpayers have in a school district’s ability to effectively manage the funds raised through general obligation bonds.

After a review of the District’s financial practices and procedures, and the degree to which they address the five criteria, Mr. Moorlach awarded the District’s general obligation bond ballot proposition a grade of “A.” Here are the benefits to the District taxpayers of the “A” grade:

· If Measure AA is approved by the voters on March 5, 2002, the District will address all the requirements of Proposition 39 and effectively safeguard the taxpayers’ assets through prudent and effective use of the bond proceeds.

· The Bonds will be sold at the lowest competitive interest rates, thereby creating potential for lower taxes and a shorter term debt than anticipated.

· How the District Meets the Orange County Treasurer’s Criteria that Earned Measure AA a Grade of “A”

Set Aside

When the District receives the SB 50 State School Facility Program funding, a portion of these funds in the amount of 4% of the District’s operating budget will be budgeted to create a “Set Aside Fund.” Additionally, annually funds will be set aside in an interest-earning account, and will be used to procure long term assets and to finance construction in the future when bond funds are no longer available. These funds shall continue until all bonds issued are no longer outstanding. Safeguards implemented to ensure that these designated funds are used specifically for this purpose is in the form of a resolution adopted by the Board of Trustees on January 15, 2002.

Current Budget Maintenance Budget

Redevelopment fees from the cities served by the District, and a portion of the District’s general fund (as a result of unspent “Program” funds, in any particular budget year, when the total funds set aside exceed the projected levels), will be used to maintain a minimum 3% maintenance fund. As a condition of receiving State School Facilities fund the District will be required to fund a 3% maintenance reserve, which may be audited for proper expenditures by State agencies. Currently, the District budget includes 4% of its operating budget for maintenance and facilities. This maintenance level will be continued.

Ability to Issue Bonds Incrementally

Based upon the District’s needs and prevailing interest rates, there will be three (3) issuances of District bonds. Bonds are scheduled to be issued in August 2002, August 2005, and August 2008. Therefore, should assessed valuation increase prior to an incremental bond issuance, the actual tax rate per $100,000 of assessed valuation may be lower than $19.90, and the bonds may be paid off prior to twenty five years, thus creating an advantage for the taxpayers.

Identified Use of Proceeds

Under the leadership of the Board of Trustees (Board) and Superintendent, work began to develop a long-range facility needs plan in the winter of 2000. The Superintendent convened a Districtwide Committee and school committees. The Districtwide Committee included representatives of each school’s local committee. Each local school committee included representatives from all employee groups, parents, students, and community members. The purpose of the committee process was to:

· Identify significant repairs, upgrades, and new construction needs at each school

· Develop a long-term facilities plan for the District

· Recommend effective use for maintenance funds

· Consider use of modernization and new construction funds the District may receive in the future

· Consider the need for a General Obligation Bond

The Board developed the charge for the committees and established the guidelines within which the committees operated and developed recommendations. Members of each school committee participated in extensive discussions with architects and school facilities consultants. Each committee member became quite educated about school facility needs and guidelines. In addition, the school committees participated in campus tours to see first-hand the condition of school facilities. With their local perspectives, each school committee made recommendations regarding needs.

The total requests for facility improvements from the campus committees far exceeded that which could be reasonably raised through all funding sources. Therefore, the Districtwide Committee used the input from the school committees to formulate recommendations to the Superintendent. After synthesizing the input from each school committee, the Districtwide Committee developed a priority list of facility needs that represented a significant level of commonality among the schools. In a report to the Board at an open session meeting, the Superintendent presented the recommendations of the Committee to the Board, which eventually formed the basis of the findings approved by the Board in support of calling for a General Obligation Bond election.

As a result of this process, our District has a long-range facilities plan that will address both student enrollment growth needs and the need to repair and modernize our aging facilities, and there exists greater community understanding and support for addressing the District facility needs. Henry Woo Architects, Inc., has developed a detailed facilities improvement plan for each school.

In adopting the resolution to call for the bond election, the Board certified that it has considered safety, enrollment growth, and information technology needs in developing the Bond Project List contained in Exhibit A-1, which is included as part of Resolution 2001/02 #24. The attached full text of the ballot measure provided the findings which indicate a clear need to build and modernize District facilities. The full ballot measure also documents a list of problems to be corrected and projects to be completed.

Specifically, the following facility needs must be addressed:

· All of the District’s facilities are 35 – 78 years old. In order to provide our local students with the same quality classrooms and facilities comparable to other high-achieving Orange and Los Angeles County school districts, major repairs, upgrades, and classroom construction are necessary to ensure that buildings will remain functional for future generations. The Board has prepared a facilities plan and identified significant repairs and upgrades as specified on the Bond Project List.

· In the last five years, student enrollment due to resident population has increased by 1,243 students. Forecasts based upon the current population in the component elementary schools, new housing construction, and the State Allocation Board findings submitted on August 8, 2001, project a need for additional classrooms to support an additional 2,300 students who will be residents of the District in the next five years.

· The District has sought, and continues to seek, all available outside sources of funding to improve our school buildings, including local, state, and federal grants and state bond funds. Historically, the State requires that local school districts require local funds as a condition of State matching funds.

Oversight Committee

The Board shall establish an Independent Citizens’ Oversight Committee pursuant to Education Code Section 15278 and following to ensure bond proceeds are expended only on the school facilities projects. The committee shall be established within 60 days of the date when the results of the election appear in the minutes of the Board.