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Illinois County School Facility TaxPublic Act 97-0542

Presentation to McLean County School DistrictsSeptember 25, 2013

2Presented by Stifel, Nicolaus & Co., Inc.70 West Madison Street, Suite 2400, Chicago, Illinois 60602Telephone: 312/269-0329

501 North Broadway, St. Louis, Missouri, 63102Telephone: 314/342-2993

2101 Eastland Drive, Suite B, Bloomington, Illinois 61704Telephone: 309/661-0004Kevin HeidSenior Vice President309-661-0004heidk@stifel.comAnne NobleSenior Vice President800-230-5151 x8488noblea@stifel.comSean McCarthyFirst Vice President800-230-5151 x2737mccarthys@stifel.comTom CrabtreeFirst Vice President800-230-5151 x8457crabtreet@stifel.comJim BurgettFirst Vice President618-830-9782burgettj@stifel.com3Nontraditional Approach for Illinois Public SchoolsSales tax vs. Real Estate tax for school capitalAllows county voters to approve a sales tax to fund school facility costs1% maximum in % increments

Law went into effect October 2007

Law was based on similar law that is currently in place in every county in Iowa

Law was amended in August 2011County Board no longer has to approve the tax4

Illinois County School Facility Tax Act:Election Results and Future Votes

XXXXXXXXCounties where the CSFT has passed (18)Counties where the CSFT failed in the November 2008 (X), April 2009 (X), February 2010 (X), November 2010 (X), April 2011 (X) Elections, March 2012 (X) Elections, November 2012 (X)Elections and (X)2013 Elections (41)

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X

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XXXXCounties considering placing CSFT on the ballot March 2014

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5Sales Tax Base:Everything in the municipal and county sales tax base is included in the tax base except for:Cars, Trucks, ATVsBoats & RVsMobile homesUnprepared FoodDrugs (including over-the-counter and vitamins)Farm Equipment and PartsFarm Inputs

Services are not taxed

If it is not currently taxed, it will not be taxed

Low Impact on Key Business and Fixed Income Persons6Use of Sales Tax RevenuesUses of Sales TaxIneligible UsesNew FacilitiesDirect Instructional Costs Additions & RenovationsText BooksSecurity, Entrances, Safety, Disabled AccessBusesOngoing MaintenanceDetached Furniture & FixturesArchitectural PlanningComputersDurable Equipment (non-moveable items)Moveable EquipmentFire Prevention and Life SafetyOperating CostsLand AcquisitionSalaries and OverheadEnergy EfficiencyParking LotsDemolitionRoof RepairsAbatement of Property Taxes Levied to Pay Bonds Issued for Capital Purposes7How to Use Sales Taxes Pay as you go capital projectsSales tax can be saved up over timeIssue new bonds for current capital needsSupport bonds with sales taxRetire existing debt issued for capital purposesAbate taxes Refund qualifying debtOr any combination of the above 8D R A F TThe Money Follows the Student

Source of Sales Tax Revenues9Property taxes are paid just by home and property owners in the County

Sales tax is paid by all shoppers, including visitors, passers-through on the interstate and college students

Approximately 22% of McLean County sales tax revenue for the schools is produced by shoppers who do not reside in the County

An additional 15% of McLean CSFT revenues is estimated to be produced by ISU and Illinois Wesleyan students

Source: PGAV Planners and ESRI10How to Place Before Voters?School boards pass a resolution

When School Boards representing more than 50% of the resident student enrollment in the county adopt resolutions, the Regional Superintendent must certify the question to the County clerk

County Clerk will place on the ballot at the next regularly scheduled election11Required Language on the BallotBallot Language (cannot change):Shall a retailers occupation tax and a service occupation tax (commonly referred to as a Sales Tax) be imposed in (name of county) at a rate of (insert rate) to be used exclusively for school facility purposes?

Simple majority of votes cast needed to pass l

12Distribution of Sales Tax

R.O.E.

2% withheld by IL Dept. of Revenue - Same as all local sales taxesDistributed by R.O.E. on a per resident-pupil basisThe money follows the studentElection DateNo Election November 2013Mar. 18, 2014Nov. 4, 2014Pass Resolution (School Districts)Dec. 30, 2013Aug. 18, 2014Certify the Resolution (County Clerk) No later than Jan. 9, 2014 No later than Aug. 27, 2014ElectionMar. 18, 2014Nov. 4, 2014File with IL Dept. of Rev. to Enact TaxNo later than Oct. 1, 2014No later than April,1, 2015Sales Tax Goes into EffectJan. 1, 2015July 1, 2015Regional Superintendent Receive Funds from StateApproximately 90 Days after Jan.1, 2015Approximately 90 Days after July 1, 2015District Receives New Sales Tax RevenuesApril 2015October 201513Timeline is Critical14Its Different BecauseCommunication challengesUnfamiliar type of school funding explain WHAT and WHYRequires explanation of need, by district

Organization is more complicatedCoordinating multiple districts a challengeUnity among school districts is key

15Its Different BecauseCommunity support can be elusiveAbatement is hard to understandConsider projects needs that can be touched and seenOpposition more likelySales tax referenda can attract organized oppositionOther municipalities might oppose referendum16Its Like a District ReferendumTime is your most important asset dont waste itBuild foundation from community engagement regarding facility needsSomeone has to take ownership to organize (county-wide)District leadership commitment to informational communicationsStrong campaign leadership for any Vote Yes Committee

Roles in a CampaignDistrict employees on the clock and on school property can only share factual information relating to any referendum no vote yes activitiesDistricts (and district website/email) can only distribute factual information, fliers, newsletters, etc. no vote yes Vote Yes committee can include volunteers who are school employees or board members on their personal time17Next StepsStart talking NOW with community regarding possible use of sales tax revenue seek inputIdentify inter-district communication coordinator (cat herder)Community support group organizesDevelop purpose statements and pass resolutionsDo not assume work ends after resolutions are passedTalk about what and why CSFT 24/7

1819Introductory VideoBelow is a link to a 10 minute video that gives a non-technical introduction to the basics of the County School Facilities Sales Tax and how it has been used across the State.

http://www.youtube.com/watch?v=Mv9LmF6baMM

20Key ResourcesLynda K. GivenKyle HardingChapman and Cutler111 West Monroe StreetChicago, IL 60603-4080Phone: 312/845-3000given@chapman.comharding@chapman.comJane QuinlanRegional Superintendent Champaign County Regional Office of Education #9200 South Fredrick StreetRantoul, IL 61866Phone: 217/893-3219jquinlan@roe9.k12.il.usGloria DavisSuperintendentDecatur School District 61101 W. Cerro Gordo StreetDecatur, IL 62523217/424-3010gjdavis@dps61.orgGregg FuerstenauSuperintendentTaylorville CUSD 3512 West Spresser StreetTaylorville, IL 62568217/824-4951gfuerstenau@taylorvilleschools.comJon KilgoreSuperintendentPontiac THSD #901100 East Indiana Ave.Lincoln, IL 61764Phone: 815/844-6113kilgorej@pontiac.k12.il.usGloria CrookRevenue Tax Specialist Department of Revenue101 West Jefferson StreetSpringfield, IL 62702217/785-597021Important Disclosures and Certifications

Pursuant to revised Municipal Securities Rulemaking Board (MSRB) Rule G-23 (the Rule), in connection with new issues for which the Time of Formal Award occurs after November 27, 2011, a broker, dealer, or municipal securities dealer (dealer) is prohibited from acting as a Financial Advisor or Municipal Advisor, as defined in Section 15B of the Exchange Act of 1934 (as amended), to an issuer for a particular issue sold on a negotiated or competitive bid basis and subsequently switching roles to act as underwriter or placement agent with respect to the same issue. In compliance with the rules set forth by the MSRB, Stifel, Nicolaus & Company, Inc. (Stifel) is acting as an underwriter or placement agent and not a Financial Advisor or Municipal Advisor in connection with all services proposed and/or provided. MSRB Notice 2011-29 (the Notice) defines as underwritings both (i) the acquisition of all or any portion of an issue, directly or indirectly, from the issuer as principal, either alone or as a participant in a syndicate or other similar account formed for that purpose and (ii) acting as an agent for the issuer in arranging the placement of an issue. Additionally, the MSRB defines the role of an underwriter in the Notice, which states, the primary role of an underwriter is to purchase securities in an arms-length commercial transaction between the issuer and the underwriter and, the underwriter has financial and other interests that differ from those of the issuer. Furthermore, the Rule states that an underwriter may provide advice concerning the structure, timing, terms, and other similar matters related to the issuance of municipal securities to the extent the underwriter discloses that such advice is provided with respect to the underwriting and not in relation to a financial advisory relationship, as specifically defined in the Rule. Accordingly, any such services provided by Stifel as they relate to our role as underwriter or placement agent should not be construed as those of a Financial Advisor or Municipal Advisor and such notice, as described above, is hereby provided as set forth in the Rule.

Additional information is available upon requestStifel, Nicolaus & Company, Inc., 501 N. Broadway, St. Louis, MO 6310222This presentation contains proprietary information compiled by Stifel Nicolaus. Reproductions can be made with permission from Stifel Nicolaus. Please call Tom Crabtree for permission at1(800) 230 5151Extension 8457THANKSDebt Capacity and Abate Impact County School Facility TaxWorksheet for McLean County SchoolsDebt Capacity and Abatement Impact Per District123456789101112CountyDistrict2011-12 Housed Enrollment from Fall Housing Report2011-12 Housed Enrollment adjusted for In-County Resident Students (1)Percent of TotalAdjusted Annual CSFT per District (2)Estimated Proposed Debt Issuance with 1% Annual Growth in Sales Tax, 1.25x Coverage @ 5% Rate for 20 Years (3)2012 District EAV (4)Final Maturity of Existing DebtLevy Year 2012 Debt Service per District from ISBE Annual Financial ReportPotential Abatement Available Based on LESSER of CSFT Funds or FY 2014 Debt ServiceEffective Abatement $ Amount per $100,000 House Value Based on column 11McLeanLeRoy CUSD 28308253.4%$607,428$6,561,718$84,541,32412/1/26$681,428$0.72$239.50McLeanTri Valley CUSD 31,0291,0294.3%$757,628$8,184,252$142,608,46512/1/22$578,106$0.41$135.13McLeanHeyworth CUSD 49639624.0%$708,298$7,651,361$80,530,72512/1/27$590,354$0.73$244.36McLeanMcLean County USD 512,89412,89453.4%$9,493,546$102,553,688$2,042,044,48712/1/29$19,517,045$0.46$154.97McLeanLexington CUSD 75155152.1%$379,182$4,096,103$65,334,81112/1/26$515,191$0.58$193.46McLeanOlympia CUSD 161,9118353.5%$614,791$6,641,254$261,837,26312/1/25$1,861,088$0.23$78.27McLeanRidgeview CUSD 196256252.6%$460,173$4,970,999$109,548,24712/1/23$1,060,416$0.42$140.02McLeanBloomington SD 875,4745,47422.7%$4,030,376$43,537,993$839,232,51612/1/24$3,785,526$0.45$150.36DeWittBlue Ridge CUSD 18750.3%$55,221$596,520$116,313,872$527,237$0.05$15.83FordGibson City-Melvin-Sibley CUSD 580.0%$5,890$63,629$108,258,318$516,479$0.01$1.81LivingstonPrairie Central CUSD 84631.9%$341,208$3,685,890$192,548,646$182,015$0.09$31.51WoodfordEl Paso-Gridley CUSD 114501.9%$331,324$3,579,119$145,825,089$1,126,892$0.23$75.74WoodfordEureka CUD 14010.0%$736$7,954$177,465,887$0$0.00$0.00Total24,24124,156100%$17,785,801$192,130,478$4,366,089,650Per Student Revenue Estimate$736Prepared by Stifel Nicolaus & Company, Inc. on:September 9, 2013For additional Information please contact:Tom Crabtreeat 1-800-230-5151 ext. 8457(1) K-12 Housed Enrollment from the ISBE Fall Housing Report and adjusted to reflect in-county estimates by each district (Eureka, 1 if any, Prairie based on % of EAV)(2) Based on 1% sales tax, derived from the Illinois Department of Revenue CST data, also excludes registered vehicles, less 2% State fee(3) Assumes 1% annual growth in sales tax(4) As reported by ISBE Annual Financial Reports and County17,785,801

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3% 30yr CalcRate5.00%PV Cashflow$6,561,718.04outputRaw1.25 coverage1st yr revenue input1607,428485,9422613,5021%490,8023619,6371%495,7104625,8341%500,6675632,0921%505,6746638,4131%510,7307644,7971%515,8388651,2451%520,9969657,7571%526,20610664,3351%531,46811670,9781%536,78312677,6881%542,15013684,4651%547,57214691,3101%553,04815698,2231%558,57816705,2051%564,16417712,2571%569,80618719,3801%575,50419726,5731%581,25920733,8391%587,07121741,1771%592,94222748,5891%598,87123756,0751%604,86024763,6361%610,90925771,2721%617,01826778,9851%623,18827786,7751%629,42028794,6431%635,71429802,5891%642,07130810,6151%648,492

Revenues and CapacityMclean County, IllinoisActual and Projected Estimated County School Facility Tax Annual RevenuesActual20022003200420052006200720082009201020112012Jan-DecCST at 1/4%Adjusted Net CST at 1%% Change482,473.65GrowthGrowthGrowthGrowthGrowthGrowthGrowthGrowthGrowthGrowthGrowth2002$4,116,338$13,820,811N/ARevenues2003$4,342,043$14,578,6275.48%CST at 1/4%*4,116,338N/A4,342,0435.48%4,418,2661.76%4,876,26710.37%4,835,525-0.84%4,811,699-0.49%4,752,263-1.24%4,554,405-4.16%4,615,2091.34%4,749,7402.91%5,297,25611.53%2004$4,418,266$14,834,5481.76%(Less Vehicles Adjustment)**(590,621)(623,006)(633,942)(699,657)(693,812)(690,393)(681,865)(653,476)(662,200)(681,503)(760,062)2005$4,876,267$16,372,31110.37%Adjusted CST3,525,7173,719,0383,784,3244,176,6104,141,7134,121,3064,070,3983,900,9293,953,0094,068,2374,537,1942006$4,835,525$16,235,517-0.84%14,102,86814,876,15015,137,29416,706,44016,566,85416,485,22216,281,59315,603,71615,812,03416,272,94818,148,7772007$4,811,699$16,155,518-0.49%(Less 2% State Fee)(282,057)(297,523)(302,746)(334,129)(331,337)(329,704)(325,632)(312,074)(316,241)(325,459)(362,976)2008$4,752,263$15,955,961-1.24%Net Adjusted CST for County13,820,81114,578,62714,834,54816,372,31116,235,51716,155,51815,955,96115,291,64215,495,79315,947,48917,785,8012009$4,554,405$15,291,642-4.16%Percent Enrollment of the County***100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%2010$4,615,209$15,495,7931.34%13,820,81114,578,62714,834,54816,372,31116,235,51716,155,51815,955,96115,291,64215,495,79315,947,48917,785,8012011$4,749,740$15,947,4892.91%* CST as reported by Illinois Department of Revenue website for Standard Industrial Classification Code Reporting (County Totals) for JeffersonCounty. Reported on sales made from January to December of any calendar year2012$5,297,256$17,785,80111.53%** Vehicle adjustment for 2007 is as reported from the Illinois Department of Revenue for Dec 2006 - Nov 2007. For 2002-2006, the vehicle adjustment is the same proportionate amount of CST at 1/4% as 2007690,393vehicel Deduciton*** This spreadsheet is helpful for determining what any individual district could expect in sales tax revenues based on its percentage enrollment of the County. Here, we've shown the numbers on a county-wide basis by using 100%.14.35%Vehicle Deduciton %Calendar YearAdjusted Net CSFT at 1% (1)% Change2002$13,820,811N/A2003$14,578,6275.48%2004$14,834,5481.76%2005$16,372,31110.37%2006$16,235,517-0.84%2007$16,155,518-0.49%2008$15,955,961-1.24%2009$15,291,642-4.16%2010$15,495,7931.34%2011$15,947,4892.91%2012$17,785,80111.53%q1q2q3q42002926,2281,063,9661,105,5061,160,8542003956,0141,089,8431,119,8651,181,05320041,025,9881,113,6221,160,0111,211,58120051,063,2571,146,7021,234,9861,244,98220061,102,6941,243,0561,303,9681,318,89820071,109,2241,261,4851,291,9331,346,5321,173,3951,307,887Total Debt Capacity016,155,518Revenue CoverageTermDebt Capacity1.25x Coverage20 Years1.25x Coverage30 Years1.25x Coverage40 Years

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2009 ProjectionsQ1Q2Q3Q4Yeargrowth2002159,52025.4%628,5262003164,95826.0%633,7950.84%2004166,09225.2%657,9743.81%2005165,87224.1%687,2514.45%2006178,96624.8%722,4445.12%2007177,59825.0%710,071-1.71%2008177,12124.0%737,3493.84%20090%0%0.0%0.0%689,043-6.55%Avg25%Avg3%Avg Annual Growth

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