$816,805,000* School District of Philadelphia General Obligation - PowerPoint PPT Presentation

$816,805,000* School District of Philadelphia General Obligation & General Obligation Refunding Bonds, Series D, E & F of 2016 $560,805,000* State Public School Building Authority School Lease Revenue Refunding Bonds, Series 2016A ____________________ * Preliminary, Subject to Change

School District of Philadelphia Investor Presentation Agenda 1. Welcome & Introductions 2. Overview of the District & Recent Developments 3. General Obligation Credit 4. Lease Revenue Credit 5. Transaction Summary 1

School District of Philadelphia Disclaimer This investor presentation that you are about to view is provided as of October 14, 2016 for a proposed offering of State Public School Building Authority School Lease Revenue Refunding Bonds and The School District of Philadelphia General Obligation Bonds (together the “2016 Bonds”). This presentation has been prepared for information purposes only and solely for use in connection with the proposed transactions. This document does not purport to be complete and investors are strongly recommended to read each preliminary official statement for the applicable series of the 2016 Bonds in its entirety before making an investment decision. The information contained herein and in each Preliminary Official Statement is subject to completion and amendment. Any offer or solicitation with respect to the 2016 Bonds will be made only by means of a final official statement relating to the applicable Series of 2016 Bonds. If you are viewing this investor presentation after the date stated above, events may have occurred that may have and/or could have a material adverse effect on information presented. This presentation does not constitute nor does it form part of an offer to sell or purchase, or the solicitation of an offer to sell or purchase, any securities or an offer or recommendation to enter into any transaction described herein nor does this presentation constitute an offer, commitment or obligation on the part of the issuers, underwriters or any of their affiliates to provide, issue, arrange or underwrite any financing or enter into any transaction. You will be responsible for making your own independent investigation and appraisal of the risks, benefits, appropriateness and suitability of the proposed transactions described in this presentation and neither the State Public School Building Authority, The School District of Philadelphia nor the underwriters are making any recommendation (personal or otherwise) or giving any investment advice and will have no liability with respect thereto. Neither the State Public School Building Authority, The School District of Philadelphia nor the underwriters make any representation or warranty as to the (i) accuracy, adequacy or completeness of any information in this investor presentation, or (ii) legal, tax or accounting treatment of any purchase of 2016 Bonds by you or any other effects such purchase may have on you and your affiliates. This investor presentation contains “forward ‐ looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties materialize or the assumptions prove incorrect, the results may differ materially from those expressed or implied by such forward ‐ looking statements. Accordingly, we caution you not to place undue reliance on these statements. All statements other than the statements of historical fact could be deemed forward ‐ looking. All opinions, estimates, projections, forecasts and valuations are preliminary, indicative and are subject to change without notice. THE PRINTING, DUPLICATING, DOWNLOADING, SCREEN CAPTURING, ELECTRONIC STORING, RECORDING, PUBLISHING OR DISTRIBUTING OF THIS INVESTOR PRESENTATION IN ANY MANNER IS STRICTLY PROHIBITED. By viewing this investor presentation you acknowledge that you understand and agree to the foregoing provisions. 2

School District of Philadelphia Introductions The School District of Philadelphia Marjorie G. Neff, SRC Chair Dr. William R. Hite, Jr., Superintendent of Schools Uri Monson, Chief Financial Officer Erin O. Davis, Deputy CFO Eckert Seamans Cherin & Phoenix Capital Partners BofA Merrill Lynch Mellott, LLC Financial Advisor Senior Managing Underwriter Bond Counsel Joan N. Stern Andre Allen Anthony Griffith Robert I. Tuteur 3

School District of Philadelphia Transaction Overview State Public School Building General Obligation General Obligation Bonds, General Obligation Bonds, Authority (SPSBA) School Refunding Bonds, Series F of Series D of 2016 Series E of 2016 (QSCBs) Lease Revenue Refunding 2016 Bonds, Series 2016A Delivery Date 1 November 16, 2016 November 16, 2016 November 16, 2016 November 16, 2016 Par Amount (1) $89,020,000 $147,620,000 $580,165,000 $560,805,000 Purpose New Money New Money Refunding Refunding Taxable – Direct Pay Qualified Tax Status Tax ‐ Exempt Tax ‐ Exempt Tax ‐ Exempt School Construction Bonds Maturities (1) Sept. 1, 2017 ‐ 2028 Sept. 1, 2042 Sept. 1, 2017 ‐ 2038 June 1, 2017 ‐ 2036 A2/A+ (PA Intercept) A2/A+ (PA Intercept) A2/A+ (PA Intercept) A2/A+ (PA Intercept) Ratings (M/F) Ba3/BB ‐ (Underlying) Ba3/BB ‐ (Underlying) Ba3/BB ‐ (Underlying) Ba3/BB ‐ (Underlying) • Payment by Treasurer to Primary Trustee of State • Daily Deposit of School District Tax Revenues collected by School Tax Collector Source of Appropriation on specified • State ‐ Aid Intercept backstop (Pre ‐ Default) Payment dates in advance of Debt Service Payment Dates • Priority of payment of $966mm of Daily Deposit Tax Revenues • Payment of Appropriations • PA School Code prevents amount or rate of tax from being reduced by City Council while for intercepted debt service Key Features School District is declared distressed now insulated from • Payment of Appropriations for intercepted debt service now insulated from potential potential budget delays Commonwealth budget delays ____________________ 1) Preliminary, Subject to Change 4

Overview of the District & Recent Developments

School District of Philadelphia Overview of the District & Recent Developments Overview of the School District Comprised of 218 public schools, 83 charter schools and ■ 26 alternative educational schools and programs The largest school district in Pennsylvania ■ The eighth largest enrollment in the nation ■ Approximately 202,700 students (including charter ■ school students and students attending alternative education) enrolled throughout the School District as of June 2016 The boundaries of the District are coterminous with the ■ boundaries of the City of Philadelphia A separate and independent home rule district of the ■ first class established by the Philadelphia Home Rule Charter 5

School District of Philadelphia Overview of the District & Recent Developments Governance & School Reform Commission In 1998 and 2001, the Philadelphia School Code of 1949 (“School Code”) was amended by the State General Assembly to ■ include criteria for a determination by the Secretary of Education that a school district of the first class is distressed On December 22, 2001 the District was declared financially distressed and the School Reform Commission (“SRC”) was ■ established pursuant to the School Code The District is currently governed by the SRC with the following members appointed by the Governor and the Mayor of ■ the City of Philadelphia: Name Title Date of Expiration of Term Appointed By Appointment Marjorie G. Neff Chair August 2014 January 2017 Mayor* William J. Green Commissioner January 2014 January 2019 Governor Feather O. Houstoun Commissioner May 2012 January 2017 Governor Farah Jimenez Commissioner January 2014 January 2019 Governor Sylvia P. Simms Commissioner January 2013 January 2017 Mayor On October 6, 2016 it was announced that Ms. Neff and Ms. Houstoun have resigned, effective November 3, 2016 and ■ October 14, 2016, respectively District management: Dr. William R. Hite, Jr., Superintendent of Schools ■ Uri Monson, Chief Financial Officer * Appointed Chair by the Governor; appointed Commissioner by the Mayor of the City of Philadelphia 6

School District of Philadelphia Overview of the District & Recent Developments District’s Strategic Planning Clearly defined long ‐ term goals, and five year goals tied to District Spending Plan ■  Anchor Goal 1 : 100% of students will graduate ready for college and career Current: 65% graduation rate 5 year milestone: 80% graduation rate  Anchor Goal 2 : 100% of eight year olds will read on grade level Current: 33% on grade level at age 8 5 year milestone: 66% on grade level at age 8  Anchor Goal 3 : 100% of schools will have great principals and teachers Current: 6% distinguished* teachers and principals 5 year milestone: Engaged and supported teachers and principals with strong instructional skills  Anchor Goal 4 : SDP will have 100% of the funding needed for great schools, and not operate at a deficit Current: Narrow current fiscal year surplus with projected out ‐ year deficits 5 year milestone: Projected structural balance for each year of ensuing Five ‐ Year Plan *Pennsylvania’s Act 82 states that all professional employees must be evaluated once a year and temporary professional employees must be evaluated twice a year. Act 82 requires that all teachers will be rated as Distinguished, Proficient, Needs Improvement, or Failing. Distinguished is described as “the employee’s performance consistently reflects teaching at the highest level of practice.” 7