ARROWHEAD UNION HIGH SCHOOL DISTRICT Presented By: Robert W. Baird - PowerPoint PPT Presentation

Appendix J - District's Debt Position ARROWHEAD UNION HIGH SCHOOL DISTRICT Presented By: Robert W. Baird & Co. Michel D. Clark Director 777 East Wisconsin Avenue Milwaukee, WI 53202 414.765.7326 mdclark@rwbaird.com Page 1

Credit Rating Bond Credit Rating Services • Moody’s Investors Service Standard & Poor’s Aaa AAA High High Arrowhead’s Rating • Aa1 • AA+ • Aa2 • AA • Aa3 • AA- Medium Medium • A1 • A+ • A2 • A • A3 • A- Bond Insurance • Used less in the market today due to credit quality concerns of private insurance companies • Currently there is only one company that is valued by investors • Bond insurance is still used on many bond issues where it provides a higher (enhanced) credit rating compared to the issuer *The better the credit, the lower the interest cost. Page 2

Credit Rating Breakdown Moody's S & P Aa1 (GSR) Aaa (GSR) A 11 6 8 5% 3% A- BBB+ 8% 3 A+ 2 A1 (GSR) 3% 29 2% 60 30% 29% AA+ 1 1% Aa2 (GSR) AA 65 24 Aa3 (GSR) 32% AA- 25% 65 30 31% 31% Of the 426 Wisconsin School Districts, 265 are rated: • 207 are rated by Moody’s (recalibrated) • 97 are rated by S&P Page 3

Historical Tax-Exempt Borrowing Rates 1970 - Present % of Time Rates Have Been Above or Below Their Current Level Since 1970 14.00% >100 bps 38.81% +100 to +76 bps 4.72% 13.00% +75 to +51 bps 6.26% +50 to +26 bps 6.49% 12.00% +25 to +6 bps 5.51% Current (5.41%) ± 5 bps 3.78% 11.00% -6 to -25 bps 8.22% -26 to -50 bps 8.73% 10.00% -51 to -75 bps 4.25% -76 to -100 bps 6.26% 9.00% <-100 bps 6.96% 8.00% Average: 6.45% 7.00% 6.00% 5.00% 4.00% Current Rate as of 01/20/2011: 5.41% 3.00% Jan-70 Jan-72 Jan-74 Jan-76 Jan-78 Jan-80 Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Source: The Bond Buyer Page 4

School District’s Debt Limit Outstanding Debt as of 12/31/11 $14,025,000 5% Excess Capacity $262,488,776 95% Total Capacity based on 5% of the School District’s 2010 Equalized Valuation (TID-In) of $5,530,275,528 or $276,513,776. Page 5

Passed Referendum History November 3, 1992 November 2, 1999 • $6,000,000 to Issue Debt • $19,800,000 to Issue Debt • $342,212 Recurring Page 6

Existing Debt .- - V) FUND 39 FUND 39 FUND 39 Issue: 1 Issue: 2 Issue: 3 Amount: $11,360,000 Amount: $7,950,000 Amount: $6,835,000 Type: G.O. School Building Bonds Type: G.O. Refunding Bonds (AR) Type: G.O. Refunding Bonds (AR) Dated: April 1, 2000 Dated: May 1, 2001 Dated: May 15, 2002 Callable: March 1, 2010 @ par Callable: March 1, 2011 @ par Callable: March 1, 2012@ par Year PRINCIPAL RATE INTEREST TOTAL PRINCIPAL RATE INTEREST TOTAL PRINCIPAL RATE INTEREST TOTAL Due 3/1 3/1 & 9/1 3/1 3/1 & 9/1 3/1 3/1 & 9/1 2011 $430,000 5.35% $11,503 $441,503 $40,000 4.50% $188,264 $228,264 $465,000 4.150% $292,710 $757,710 2012 *** 5.45% *** 4.55% $925,000 4.250% $263,405 $1,188,405 2013 *** 5.50% *** 4.65% $965,000 4.375% $222,639 $1,187,639 2014 *** 6.00% *** 5.00% $515,000 4.500% $189,943 $704,943 2015 *** 5.65% *** 4.75% $540,000 4.550% $166,070 $706,070 2016 *** 5.70% *** 4.85% $565,000 4.650% $140,649 $705,649 2017 *** 5.75% *** 4.90% $595,000 4.750% $113,381 $708,381 2018 *** 5.80% *** 4.90% $630,000 5.000% $83,500 $713,500 2019 *** 5.85% *** 5.00% $660,000 5.000% $51,250 $711,250 2020 *** 5.90% *** 5.00% $695,000 5.000% $17,375 $712,375 $430,000 $11,503 $441,503 $40,000 $188,264 $228,264 $6,555,000 $1,540,922 $8,095,922 *** Advance Refunded by 2002 Bonds *** Current Refunded by 2010 Bonds *** Advance Refunded by 2001 Bonds Moody's Rating: Aa2 Paying Agent: District Page 7

Existing Debt .- - FUND 39 Issue: 4 Amount: $8,305,000 Type: G.O. Refunding Bonds (CR) Dated: December 1, 2010 TOTAL FUND 39 EXISTING DEBT Callable: Noncallable Year PRINCIPAL RATE INTEREST TOTAL PRINCIPAL INTEREST TOTAL Due 3/1 3/1 & 9/1 2011 $370,000 2.000% $221,038 $591,038 $1,305,000 $713,514 $2,018,514 2012 $495,000 2.000% $287,300 $782,300 $1,420,000 $550,705 $1,970,705 2013 $510,000 3.000% $274,700 $784,700 $1,475,000 $497,339 $1,972,339 2014 $1,015,000 3.000% $251,825 $1,266,825 $1,530,000 $441,768 $1,971,768 2015 $980,000 4.000% $217,000 $1,197,000 $1,520,000 $383,070 $1,903,070 2016 $945,000 4.000% $178,500 $1,123,500 $1,510,000 $319,149 $1,829,149 2017 $930,000 4.000% $141,000 $1,071,000 $1,525,000 $254,381 $1,779,381 2018 $985,000 4.000% $102,700 $1,087,700 $1,615,000 $186,200 $1,801,200 2019 $1,015,000 4.000% $62,700 $1,077,700 $1,675,000 $113,950 $1,788,950 2020 $1,060,000 4.000% $21,200 $1,081,200 $1,755,000 $38,575 $1,793,575 $8,305,000 $1,757,963 $10,062,963 $15,330,000 $3,498,651 $18,828,651 Refunded 5/1/2001 G.O. Bonds Refunded 1/2/2009 STFL Credit: Moody's Aa1 Paying Agent: District Page 8

Summary of Refinancing Issues $7,950,000 $11,360,000 $7,950,000 $6,835,000 $8,305,000 G.O. Refunding G.O. School G.O. Refunding G.O. Refunding G.O. Refunding Bonds Building Bonds Bonds Bonds Bonds Advance Advance Current Refunding • Dated March 1, • Dated April 1, 2000 Refunding Refunding 2000 • Total Principal & • Refunding of 2009 TOTAL • Total Principal & Interest: State Trust Fund • Refunding of April 1, • Refunding of March Interest: $20,578,890 Loan 2000 Bonds 1, 2000 Bonds GROSS $13,811,868 (2014-2020) (2011-2020) • Refunding of May 1, SAVINGS 2001 Bonds (2012- • Dated May 1, 2001 • Refunding of April 1, 2020) 2000 Bonds (2012- $1,758,183 • Total Principal & 2013) • Dated December 1, Interest: 2010 $14,000,400 • Dated May 15, 2002 • Total Principal & • Gross Savings: • Total Principal & Interest: Interest: $300,191 $10,062,963 $10,932,401 • Gross Savings • Gross Savings: $1,245,443 $212,548 Page 9

Tax Impact Summary of Example 2012 Referendum Financing Questions Example $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 Referendum Amount Maximum Debt Levy Tax Rate $0.07 $0.15 $0.22 $0.30 $0.37 Impact (over 2011-12) (Per $1,000 of property value) Maximum Tax Impact on Property with Fair Market Value of: $150,000 Property Annual $10.50 $22.50 $33.00 $45.00 $55.50 Monthly $0.88 $1.88 $2.75 $3.75 $4.63 $200,000 Property Annual $14.00 $30.00 $44.00 $60.00 $74.00 Monthly $1.17 $2.50 $3.67 $5.00 $6.17 $300,000 Property Annual $21.00 $45.00 $66.00 $90.00 $111.00 Monthly $1.75 $3.75 $5.50 $7.50 $9.25 Key Assumptions: 1. Tax base growth of -1% in 2011 and 2012, 0% in 2013 and 2014, and 1% in 2015 and thereafter. 2. State aid tertiary impact of -49.58%. 3. Estimated interest rates on 20-year financing of 5.50%. Page 10