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Credit Rating Presentation Denver Public Schools General Obligation Bonds Tax-Exempt, Series 2012B Taxable Qualified Zone Academy Bonds, Series 2012C Taxable Refunding Bonds, Series 2012D November 14, 2012 Presentation Participants General

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SLIDE 1

Credit Rating Presentation

Denver Public Schools General Obligation Bonds

Tax-Exempt, Series 2012B Taxable Qualified Zone Academy Bonds, Series 2012C Taxable Refunding Bonds, Series 2012D

November 14, 2012

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

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Presentation Participants

Denver Public Schools  Tom Boasberg, Superintendent  David Suppes, Chief Operating Officer  David Hart, Chief Financial Officer  Charles Garcia, Financial Planning and Analysis  Chuck Carpenter, Senior Manager of Finance  Scott Smith, Senior Manager of Financial Planning and Analysis  Kathy Rinkel, Executive Director of Finance Financial Advisor (Fiscal Strategies Group, Inc.)  David Paul Series 2012 C& D Bookrunning Underwriter (RBC Capital Markets)  Dan O’Connell, Director  Rudy Andras, Vice President Series 2012 E Bookrunning Underwriter (Stifel Nicolaus)  Josh Benninghoff, Managing Director

General Obligation Bonds, Series 2012 B – D

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

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Presentation Outline

  • 1. District Overview
  • 2. District Tax Base
  • 3. District Debt Management
  • 4. School Finance Funding Trends
  • 5. Economic and Demographic Statistics
  • 6. Series 2012 B – D Plan of Finance
  • 7. Concluding Remarks
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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Plan of Finance and Credit Ratings

Taxable Taxable Tax-Exempt Tax Status General Obligation General Obligation General Obligation Security Refund remaining callable portion of Series 2004 and Series 2004C Bonds New Money for school construction and improvements New Money for school construction and improvements Purpose 2035 Bullet w/ Funded Sinking Fund $16.000 million Series 2012C 2013 – 2022 Serial & 2025 and 2028 Term Bonds 2013 – 2032 Serial Bonds Structure* $67.235 million $450.000 million Par Amount* Series 2012D Series 2012B

* Preliminary, subject to change

AA- Aa2 AA+ Underlying Ratings AA- Aa2 NR State Intercept Ratings S&P Moody’s Fitch

  • The Bonds are general obligations of the District, and are secured by the District’s full faith and credit. All taxable property

within the boundaries of the District is subject to ad valorem property taxation without limitation as to rate.

General Obligation Bonds

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

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Presentation Summary

VOTER SUPPORT

  • Electorate has approved 5 straight bond and/or override elections [Slide 11]
  • Total Override Amount Approved: $111 Million
  • Total Bond Amount Approved: $1.536 Billion
  • 2012 Ballot Initiatives approved with 67% (MLO) and 64% (Bond) in a challenging economic and

tax environment

STRONG FINANCIAL PERFORMANCE

  • Strong management and voter support allows general fund to grow [Slide 32]
  • GAAP general fund balance now at 17% of revenue
  • Strong cash position requiring relatively low Cash Flow Loan Program borrowing vs. past history

ENROLLMENT AND GRADUATION ON THE RISE

  • Enrollment trending upward as district becomes a model for success [Slide 9]
  • Estimated 2012-13 enrollment for 2012-13 budget purposes is 83,230
  • DPS 2012-13 updated enrollment forecast is 84,134
  • Highest enrollment in over 30 years, and fastest growing large school district in the country

TAX BASE WHICH SUPPORTS G.O. BOND REPAYMENT

  • Largest and most diverse tax base in the State of Colorado [Slide 18]
  • Preliminary 2012 assessed value of $10,816,373,040 (without TIF: $10,082,782,062)
  • Total Market Value: $77 Billion of value (down only about 7% from the 2010 peak)
  • Same Tax Base as the City and County of Denver (Rated Aaa / AAA / AAA)

MISSION SUCCESS

  • Student achievement continues to improve
  • Graduation rates continuing to increase, with more students taking and passing AP tests
  • Significant outperformance versus the State in academic growth over the past five years
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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

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Presentation Outline

  • 1. District Overview
  • 2. District Tax Base
  • 3. District Debt Management
  • 4. School Finance Funding Trends
  • 5. Economic and Demographic Statistics
  • 6. Series 2012 B – D Plan of Finance
  • 7. Concluding Remarks
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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Overview of Denver Public Schools

Mission Statement: To provide all students the opportunity to achieve the knowledge and skills necessary to become contributing citizens in our society Board of Education: Seven elected members (two of which are elected at-large) Superintendent: Tom Boasberg – appointed in January 2009 Student Base 1: Estimated Fall 2012 Funded Pupil Count of 76,438 students; Estimated Fall 2012 Enrollment for budget purposes is 83,230 students. DPS updated 2012 enrollment forecast of 84,134. Official count is expected on or around November 17. Employees: 14,469 total employees – 10,019 full-time and 4,550 part-time time Facilities: 72 elementary schools, 15 K-8 schools, 21 middle schools, 22 high schools, 11 alternative education centers, one adult opportunity school and seven additional education centers and seven support buildings Charter Schools: 41 charter schools, including six new charter schools in School Year 2012-2013; 21 charter schools using district facilities

DPS is the Second Largest School District in Colorado

1 Funded Pupil Count per CDE forecast with ECE=0 and K=.5. Enrollment per DPS forecast of ECE and K=1

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

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DPS’ Community Partnerships

  • 501(c)(3) established in 1992
  • Raises and manages funds to support the District
  • Supported by private foundations, corporations, parents, alumni, DPS employees and

community members

  • 6/30/2012 Net Asset Balance: $6.93 million

DPS Foundation Tax Increment Financing Agreements with Denver Urban Renewal Authority

  • Reimburses District from tax increment revenues which produce over $2 million per
  • year. Funds flow into the District's capital reserve fund and began in calendar year 2006
  • Stapleton: Currently has helped fund the construction of three schools
  • Lowry: Funded construction of one elementary school

City and County of Denver

  • City/DPS Collaborative Partnership Initiative: Goal is to improve student achievement and

strengthen ties within neighborhoods

  • Denver Pre-School Program: Voter approved initiative to provide tuition credits through 2015 to

parents and improvement grants to pre-schools; 0012% sales tax, in FY 2013 this will generate approximately $5.25 million, providing assistance to 2,492 preschool age kids within DPS; Approved by Denver voters in 2006

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Student Achievement Trends

  • The number of students passing Advance Placement test

for School Year 2011-12 has more than doubled from School Year 2004-05. Students achieving a score of 3, 4

  • r 5:

 2004-05: 870 students  2011-12: 1,829

  • District CSAP scores have experienced a positive change

in proficiency in all tested areas (math, reading, science and writing) in the past 7 years AP Tests With Score of 3, 4 or 5 CSAP Growth: District vs. State – All Grades

Achievement Continues to Improve Across All Grades

870 954 1,061 1,071 1,178 1,579 1,584 1,829 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12

Change in TCAP % Proficient: DPS vs. State

12% 14% 11% 11% 2% 4%

  • 2%
  • 2%
  • 4%
  • 2%

0% 2% 4% 6% 8% 10% 12% 14% 16% Reading Math Writing Science DPS (2005-2012) State* (2005-2012)

*State data does not include DPS

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

District Enrollment & Graduation Count Trends

67,521 67,663 69,394 72,115 72,770 75,005 77,276 62,000 64,000 66,000 68,000 70,000 72,000 74,000 76,000 78,000 80,000

06/07 07/08 08/09 09/10 10/11 11/12 12/13*

Funded Pupil Count

Stable Enrollment Growth and Increasing Graduation Rate

  • Fastest growing large school district in Colorado1

– School Year 2012-13 estimated enrollment is up 1.7% from School Year 2011-12 – Average annual increase is 2% – Enrollment forecast predicts significant growth through School Year 2016-17

  • School Year 2011-12 Graduation Count is 29% higher than 2005-06

– Average annual increase is 4% – School Year 2011-12 Graduation Rate is up 8% from 2010-11

*Estimated figure; official count is expected to be available November 17, 2012

Graduation Count

2,642 2,796 2,857 2,893 3,245 3,373 3,414 2000 2200 2400 2600 2800 3000 3200 3400 3600 05/06 06/07 07/08 08/09 09/10 10/11 11/12*

*Preliminary Data

1 Colorado Department of Education Pupil Membership Count among large Colorado school districts,

2008-09 to 2011-12

Enrollment

73,399 73,866 75,269 78,352 79,423 81,870 83,230 68,000 70,000 72,000 74,000 76,000 78,000 80,000 82,000 84,000

06/07 07/08 08/09 09/10 10/11 11/12 12/13* *Estimated figure; official count is expected to be available November 17, 2012

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

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In Addition to Supplemental Funding, Grants Help the District Implement Reforms

DPS has been successful soliciting outside funding for district priorities

  • LEAP Framework (Bill & Melinda Gates

Foundation) and new TIF Grant (Federal)

  • Principal Development (Wallace Foundation

and Michael and Susan Dell Foundation)

  • ELA Summer Academy for English Teachers

(Title I, i 3)

  • Early Childhood Education (Headstart)
  • Common Core State Standards (Race to the

Top State Funding and Colorado Legacy Foundation)

  • Building an Effective Data Culture (Susan

and Michael Dell Foundation)

  • School Turnaround (Tiered Intervention

Grant and Walton Family Foundation) Major Initiatives Funded by Grants

Summary of Grants Received for Reform Efforts - 2008 to Present Foundation (e.g., Anschutz, Gates, Walton, Broad, Wallace, Dell) 60,414,400 Competitive, Federal and State (e.g., Read to Achieve, Teacher Incentive Fund) 62,251,635 Federal Sub-Award-CDE (e.g., Race to the Top) 2,200,000 ARRA Competitive (e.g., Investing in Innovation, Teacher Quality Partnership Grant) 37,541,000 Multi-Year Totals $162,407,035 Source: DPS Foundation Summary of Federal Grant Awards (FY 2011) (2).

  • Dept. of Education –Direct: (e.g. Teacher Incentive Fund, Early Reading First,

Urban Principal Leadership) 7,037,867

  • Dept. of Education: Pass Through: (e.g., Title I,II,III)

70,595,832 ARRA (e.g., Title I, Part A, IDEA Part B, State Stabilization Fund) 47,134,855 Other Federal (e.g., Headstart, JROTC Career Academy) 5,220,013 Total $155,327,633 Source: DPS 2011 FY Single Audit Report

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Election History – Community Support

Strong History of Election Success

Win (68%) $454,000,000 Bond 2008 Win $12,099,253 Override 1988 Win (57%) $17,000,000 Override 1998 Win (56%) $305,000,000 Bond 1998 Loss $29,750,000 Override 1995 Win $199,600,000 Bond 1990 Win N/A De-Bruce 1999 Win (60%) $20,000,000 Override 2003 Win (57%) $310,800,000 Bond 2003 Win (51%) $25,000,000 ProComp Override 2 2005 Win (68%) $49,000,000 Override 1 2012 Win (64%) $466,000,000 Bond 2012 Result Amount Type Year

1 Fixed mill levy 2 Annually adjusted for CPI

DPS Election History Since 1988 Comparison of Metro Area School District Taxes Per $100,000 in Home Value

559 500 489 488 458 402 399 388 357 $0 $100 $200 $300 $400 $500 $600 A d a m s 1 2 A u r

  • r

a W e s t m i n s t e r 5 C h e r r y C r e e k L i t t l e t

  • n

J e f f e r s

  • n

C

  • D

e n v e r D

  • u

g l a s C

  • B
  • u

l d e r Tax Bill per $100k Home Value 10 20 30 40 50 60 70 80 Mills District Mills

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

2012 Election: Regional Investments

Note: Numbers shown above are estimates based on 2011-12 enrollment and SPF status. Enrollment: 13,467 (17%) Population: 108,102 (18%) 30 schools Maintenance $88M New Capacity $8M Technology $6M Total Bond $102M $7,574 pp Mill Levy $9.3M $691 pp Enrollment: 27,266 (35%) Population: 143,710 (24%) 47 schools Maintenance $38M New Capacity $96M Technology $12M Total Bond $146M $5,208 pp Mill Levy $16.8M $616 pp District-Wide Bond Projects $12M – District-wide facilities (e.g. bus terminals, data center) $6M – Enterprise software applications Enrollment: 17,738 (23%) Population: 117,053 (19%) 27 schools Maintenance $36M New Capacity $36M Technology $8M Total Bond $80M $4,510 pp Mill Levy $11.9M $671 pp Enrollment: 10,360 (13%) Population: 113,942 (19%) 19 schools Maintenance $32M New Capacity $27M Technology $4M Total Bond $64M $6,178 pp Mill Levy $5.8M $559 pp Enrollment: 8,901 (12%) Population: 117,414 (20%) 17 schools Maintenance $24M New Capacity $28M Technology $4M Total Bond $56M $6,291 pp Mill Levy $5.2M $584 pp

Every student in the District will directly benefit from both mill levy and bond funds

  • $466 Million of 2012 Bond Proceeds to be used for: Critical Facility Maintenance Deficiencies, Renovate/Expand Existing Facilities, Build New

Facilities to Address Overcrowding, Expand Technology

  • $49 Million of 2012 Mill Levy Revenues to be used for: Instructional Support, Enrichment Programs, Early Childhood Education, Curricular Materials,

Student & Community Support

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

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Charter Schools: Essential to the Strategy in DPS

Sustainable Cost Sharing

  • DPS captures substantial revenues from charter schools for building use, special education, pension obligations,

transportation and administration

  • Charter schools contribute to the district’s Taxable Certificates (Series 2011A1-4 & Series 2011B)

Excellent Use of Existing Building Capacity

  • DPS offers district owned buildings to high performing charter schools. 21 charter schools are in district facilities,

paying a cost-based facility use fee.

  • DPS maximizes building efficiency by sharing campuses.

Strong Academic Performance & Enrollment Trends

  • 7 of 14 Distinguished schools in DPS are charter schools
  • DPS encourages charter schools as a strategy to improve academic performance and increase enrollment by

capturing more students that live within and outside Denver’s boundary

  • Charter schools make up 13.7% of district enrollment (funded pupil count*)

Source: http://www.boarddocs.com/co/dpsk12/Board.nsf/files/8U9TEK770585/$file/Adopted%20Board%20Book%20Presentation.pdf

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Comparison of General Fund Allocation to Charter Schools and District Managed Schools

Cost Structure

27% 1,871 Total Offsetting District Costs 73% 4,997 Net Received by Charter

  • At cost

Other Purchased Services

  • 7%

(460) Taxable Certificates

  • 10%

(673) DPS Facility Use

  • 7%

(511) Special Ed (severe and mild)

  • 3%

(227) DPS Overhead 100% 6,868 Allocation to Charter 100% 6,868 PPR from State Charter

Notes: 1) Average per student allocation to district-managed schools based on Grades 1-12 Total Enrollment 2) Both entities contribute equally to PERA, based on individual payroll 3) District-managed pay pro-rata share of Taxable Certificates as a % of payroll

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Use of Shared Campuses to Facilitate Enrollment Growth, Provide New Options & Share Facility Operating Costs

Montbello HS: 206 open seats Shares with Collegiate Prep and DCIS Evie Dennis Campus: Shared between Vista / DSST / SOAR / WDP Noel: 176 open seats Shares with KIPP / Noel Community Arts Smiley: 255 open seats Shares with Venture Prep Cole: 305 open seats Shares with DSST West HS: 1,035 open seats Shares with West Gen, West Leadership Merrill: 315 open seats Shares with C3 (Fall 2012) North HS: 1,139 open seats Shares with WDP Highlands MS Lake IB MS: 182 open seats Shares with WDP Lake Rishel: 310 open seats Now KIPP HS + MSLA shared College Heights Campus: Shared between Summit / DSST / SWEC

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

DPS Maximizes Spending Directly in the Classroom

1 2 3 4 5 6 7 8 08/09 09/10 10/11 11/12 12/13 %

8 6 7 6 6 8 6 12 15 11 10 2 4 6 8 10 12 14 16 Charlotte Duval Chicago Denver PGCPS Philadelphia

  • St. Paul

Atlanta Wash D.C. Boston Rochester %

DPS% of Budget on Central Overhead Comparison of DPS Against Other Districts: FY 2010

DPS continues to reduce centrally budgeted services and remains strong among comparative urban districts with the lowest percentage of central funding

Sources: DPS and Education Resource Strategies: FY 2009-10

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

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Presentation Outline

  • 1. District Overview
  • 2. District Tax Base
  • 3. District Debt Management
  • 4. School Finance Funding Trends
  • 5. Economic and Demographic Statistics
  • 6. Series 2012 C – E Plan of Finance
  • 7. Concluding Remarks
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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Tax Base Comparison

DPS to Its Colorado School District Peers

1 2013 Preliminary Figures 2 FY 2011-12 Full-Time Equivalent Count, does not include online students

Note: All districts have FTE pupil count of at least 25,000

$353,449 $49,924 35,494 $12,545,334,257 $1,772,018,910 Aa2 / NR / NR Adams-Arapahoe 28J School District $474,795 $51,420 35,736 $16,967,028,833 $1,837,515,272 Aa2 / AA- / NR Adams 12 Five Star Schools $671,126 $85,537 27,184 $18,243,898,397 $2,325,241,920 Aa2 / AA- / NR Colorado Springs 11 School District $736,538 $95,293 25,789 $18,994,209,514 $2,457,461,202 Aa2 / AA- / NR

  • St. Vrain Valley RE 1J School District

$780,971 $94,520 25,480 $19,898,745,982 $2,408,330,888 Aa2 / NR / AA+ Poudre R-1 School District $786,276 $89,779 79,193 $62,267,535,652 $7,109,881,457 Aa2 / AA- / NR Jefferson County R-1 School District $701,188 $87,363 49,313 $34,577,334,341 $4,308,096,296 Aa1 / AA / NR Cherry Creek 5 School District $714,547 $81,859 56,103 $40,087,874,440 $4,592,507,520 Aa1 / NR / AA+ Douglas County RE 1 School District $1,064,730 $149,665 72,271 $76,948,580,213 $10,816,373,040 Aa2 / AA- / NR Denver County 1 School District $1,392,755 $171,713 27,866 $38,809,809,931 $4,784,865,469 Aa1 / AA / AA+ Boulder Valley RE 2 School District MV Per Pupil AV Per Pupil FTE Pupils2 Total Market Value 1 Total Assessed Value (w/ TIF) 1 GO Ratings School District

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

DPS and the City & County of Denver

$941,484,000 3 $10,816,373,040 Aaa / AAA /AAA City & County of Denver ~$1,475,215,000 2 $10,816,373,040 Aa2 / AA- / NR Denver County 1 School District Total GO Debt Total Assessed Value 1 GO Ratings

1 2013 Preliminary Figures 2 Assumes Series 2012C-E 3 Data from 2011 CAFR

Sources: Moody’s Investor Services, Standard & Poor’s and Fitch Ratings

Aa2 / AA / AA+ Aa2 / AA / NR Aa1 / AA / NR Aa1/ AAA / NR Aaa / AA+ / AA+ Aaa / AAA / NR Aaa / NR / AAA Aaa/ AA+ / NR School District Go Ratings Columbus City Schools | City of Columbus OH Maricopa City Schools | City of Phoenix AZ Albuquerque Schools | City of Albuquerque NM Omaha Public Schools | City of Omaha NE Austin ISD | City of Austin TX Lincoln Public Schools | City of Lincoln NE Salt Lake City Schools | City of Salt Lake UT Seattle Public Schools | City of Seattle WA School District | ‘ AAA’ Municipality State

  • DPS shares the same Assessed Value and Tax Collections with the City & County of Denver but is rated significantly lower
  • When compared to other current GO ratings of Large Urban School Districts and their respective ‘AAA’ Rated Municipalities
  • Denver Public School’s underlying rating should fall in line with peers
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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

DPS Property Market Value Is Nearly 5 Times Higher Than 20 Years Ago

$12.0$13.5 $17.0 $21.0 $26.5 $36.7 $45.0 $48.2 $55.2 $57.1 $54.4 $8.8 $8.6 $8.8 $10.3 $12.8 $15.6 $16.7 $17.6 $21.6 $25.7 $22.8 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 9 3 / 9 4 * 9 4 / 9 5 9 5 / 9 6 * 9 6 / 9 7 9 7 / 9 8 * 9 8 / 9 9 9 9 / * / 1 1 / 2 * 2 / 3 3 / 4 * 4 / 5 5 / 6 * 6 / 7 7 / 8 * 8 / 9 9 / 1 * 1 / 1 1 1 1 / 1 2 * 1 2 / 1 3

$ in Billions

Residential Market Value Non-Residential Market Value

District Residential Market & Assessed Value Shares

41.4% 40.7% 40.7% 42.5% 43.5% 37.9% 40.2%

61.4% 67.1% 67.2% 72.9% 73.7% 68.9% 71.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

94/95 97/98 00/01 03/04 06/07 09/10 12/13 Market Value Assessed Value

DPS Residential Property Tax Base Has Been Relatively Stable Over Time

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Actual Assessed Valuation Growth & Expectations

Note: * indicates biennial reappraisal period.

2.5% 21.4% 1.1% 4.7% 0.7% 4.2% 0.2% 17.1% 1.6% 10.6%

  • 0.9%
  • 8.6%
  • 1.2%

0.6% 0.6% 3.7% 0.6% 4.0% 0.6% 4.0%

  • 15.0%
  • 10.0%
  • 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% / 1 1 / 2 * 2 / 3 3 / 4 * 4 / 5 5 / 6 * 6 / 7 7 / 8 * 8 / 9 9 / 1 * 1 / 1 1 1 1 / 1 2 * 1 2 / 1 3 1 3 / 1 4 * 1 4 / 1 5 1 5 / 1 6 * 1 6 / 1 7 1 7 / 1 8 * 1 8 / 1 9 1 9 / 2 *

ACTUAL PROJECTED

Average 00/01 – 12/13 Reappraisal Year AV Growth = 8.2% Average 00/01 – 12/13 NonReappraisal Year AV Growth = .6%

Assessed Value Growth (WITHOUT TIF)

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Although TIF is Growing, It Has Minimal Impact on Overall AV Growth

Note: * indicates biennial reappraisal period.

2.45% 21.36% 1.12% 4.67% 0.69% 4.16% 0.21% 17.10% 1.61% 10.65%

  • 0.94%
  • 8.64%
  • 1.16%
  • 15.0%
  • 5.0%

5.0% 15.0% 25.0% 35.0% 45.0% 00/01 01/02* 02/03 03/04* 04/05 05/06* 06/07 07/08* 08/09 09/10* 10/11 11/12* 12/13

Assessed Value Growth (WITHOUT TIF)

  • 0.62%
  • 0.35%
  • 0.71%
  • 0.51%
  • 0.65%
  • 0.81%
  • 0.90%
  • 0.29%

0.07%

  • 0.50%
  • 0.09%
  • 0.05%
  • 0.11%
  • 1.00%
  • 0.80%
  • 0.60%
  • 0.40%
  • 0.20%

0.00% 0.20% 00/01 01/02* 02/03 03/04* 04/05 05/06* 06/07 07/08* 08/09 09/10* 10/11 11/12* 12/13

Change In AV Due To TAX Increment Value Change

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

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Presentation Outline

  • 1. District Overview
  • 2. District Tax Base
  • 3. District Debt Management
  • 4. School Finance Funding Trends
  • 5. Economic and Demographic Statistics
  • 6. Series 2012 B – D Plan of Finance
  • 7. Concluding Remarks
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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

2012 Ballot Question Parameters

$466 Million General Obligation Bonds & $49 Million Mill Levy Override Constraints

DPS Plan of Finance Objectives

  • Bond Mill Levy – 3 mills annually (for first 3 years) – Floats Up or Down Thereafter
  • Total Mill Levy (on 2012 Ballot Question(s) (with 4.86 override) – 7.86 mill Increase
  • Typical $225,000 Residential Tax Bill Increase Approximately $136 in 1st Year
  • Override Revenue Expected to Grow as Assessed Value Grows Over the Long-Term

Legal

  • Unlimited Tax GO Pledge
  • Bond - $738 million total repayment cost
  • $47.9 million maximum annual tax increase
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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Long-Term Debt

  • As of June 30, 2012, the District had one
  • utstanding capital lease purchase obligation for

equipment, with a lease term of 15 months. As of June 30, 2012, the liability under this lease was $298,454 DPS currently has $1 billion in GO Bonds outstanding

$1,009,215,000 Total 129,870,000 GO Refunding Bonds, Series 2012A 85,390,000 GO Refunding Bonds, Series 2010C 1,545,000 GO BABs, Series 2010B 29,260,000 GO QSCBs, Series 2010A 42,745,000 GO Refunding Bonds, Series 2009G 24,650,000 GO Refunding Bonds, Series 2009F 250,000,000 GO BABs, Series 2009C 24,022,000 GO QSCBs, Series 2009B 149,170,000 GO Bonds, Series 2009A 129,510,000 GO Refunding Bonds, Series 2005A 83,570,000 GO Refunding Bonds, Series 2004C 25,820,000 GO Refunding Bonds, Series 2004B 25,665,000 GO Bonds, Series 2004 7,998,000 GO QZABs, Series 2001 A&B Amount Outstanding

DPS currently has $808 million in COPs outstanding

$808,487,160 Total Fixed 396,235,000 Taxable COPs, Series 2011B Variable 100,000,000 Taxable COPs, Series 2011A-4 Variable 100,000,000 Taxable COPs, Series 2011A-3 Variable 100,000,000 Taxable COPs, Series 2011A-2 Variable 96,045,000 Taxable COPs, Series 2011A-1 Fixed 16,207,160 COPs, Series 1997 Type Amount Outstanding

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26

DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Long-Term GO Debt Burden

1.03% 1.55% 0.66% 1.88% 1.31% 1.25% 1.02% 0.83% 1.12% 0.51% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 2.50% 9 7 / 9 8 * 9 8 / 9 9 9 9 / * / 1 1 / 2 * 2 / 3 3 / 4 * 4 / 5 5 / 6 * 6 / 7 7 / 8 * 8 / 9 9 / 1 * 1 / 1 1 1 1 / 1 2 * 1 2 / 1 3 1 3 / 1 4 * 1 4 / 1 5 1 5 / 1 6 *

GO Debt As % Of Estimated Full Value

After 1998 $305 Million Bond Election After 2003 $310.8 Million Bond Election After 2008 $454 Million Bond Election After 2012 $466 Million Bond Election Larger Than Typical Increase Partly Due To 7% Full Value Decline In 2012

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Taxable Certificates of Participation Overview

Background: In 2008, DPS issued Certificates of Participation with the long-term strategy to lower DPS’ annual pension related costs below 8.50% UAAL funding rate by fully funding the pension and allowed for the merger with PERA to increase the portability of teacher pensions Series 2011 Restructure: DPS refinanced half of the Series 2008 Taxable COPs to fixed rate obligations ($396.235 million) and refunded the remaining variable rate issues ($396.045 million), removing FSA insurance and Dexia credit facilities. Structure has no swap acceleration or termination risk Variable Rate Series 2011A1-4: The Variable Rate Certificates have an all-in rate (as of 10/24/2012) of 7.69% and are secured by letters of credit with the Royal Bank of Canada, JP Morgan Chase and Wells

  • Fargo. All three expire in April 2014. Each Series is hedged with a floating to fixed swap:

4.959% 4.909% 4.909% Fixed Rates Payable by Corporation Wells Fargo Royal Bank of Canada Bank of America Counterparty Aa3 / AA- Aa3 / AA- A3 / A Current Long- Term Rating $96,045,000 $100,000,000 $200,000,000 Notional Amt 1-M LIBOR 1-M LIBOR 1-M LIBOR Variable Rate Payable to Corporation

Fixed Rate Series 2011B: The fixed rate leases have all-in TIC of 7.20%, which includes the swap termination payment to JP Morgan

Currently functioning within DPS’ objectives

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Taxable Certificates of Participation Overview

Active Management of the Remaining Variable Rate Certificates

  • DPS has a formal debt and derivatives policy

 http://www.dpsk12.org/policies/

  • The BOE passed a parameters resolution with criteria to convert all or a

portion of the Series 2011A to a fixed rate to achieve an all-in cost of 7.25% inclusive of swap mark to market

  • District receives weekly market update (adjacent) on the economics of

converting to fixed rate COPs

  • Finance & Audit Committee provides quarterly updates and annual review

to the BOE  Compares budget to actual  Reviews parameters resolution

  • District is currently exploring options well in advance of expiration of

letters of credit in April of 2014 and the implementation of Basel III :  Fixing out remaining variable rate certificates  Renewing LOCs  Floating rate note market offers potential alterative to variable rate structure that would eliminate risks associated with bank letters of credit

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

29

Presentation Outline

  • 1. District Overview
  • 2. District Tax Base
  • 3. District Debt Management
  • 4. School Finance Funding Trends
  • 5. Economic and Demographic Statistics
  • 6. Series 2012 B – D Plan of Finance
  • 7. Concluding Remarks
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30

DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Post-2008 Finance Act Funding Has Been Challenging …

  • From FY 09 – FY 13 DPS has seen State Equalization support decline by a cumulative $250 million from that which should

have occurred under Amendment 23 (AARA funds made up for $21.2 million of the loss in FY 2011)

  • The “Negative Factor” for FY 2013 was just over $100 million
  • Actual Per Pupil SFA funding in FY 13 will be $527 less when compared to its FY 10 highpoint

Denver Public Schools Total Program Funding

Source: Colorado Department of Education Funded Pupil Count Per Pupil SFA Funding $7,104 $7,283 $7,495 $6,939 $6,871 $6,868 $7,104 $7,672 $7,744 $8,188 $7,894 $7,294 $6,000 $6,500 $7,000 $7,500 $8,000 $8,500 FY 07/08 FY 08/09 FY 09/10 FY 10/11 FY 11/12 FY 12/13

Amendment 23 Required Funding Actual Funding

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

… But FY 13/14 Looks More Promising

  • Based on the just released Governor’s budget request for FY 13/14, DPS will likely see the first increase in per pupil funding

since FY 09/10

  • The “Negative Factor” in the School Finance Act for FY 13/14, due to a 3.2% increase in per pupil funding in the Governor’s

budget, will be reduced slightly

  • The 3.2% increase is slightly better than DPS expectations (DPS used a 2% inflation rate for 2012 – affecting FY 13/14 funding)

Denver Public Schools Total Program Funding

Source: Colorado Department of Education analysis, November 1, 2012 Funded Pupil Count Per Pupil SFA Funding $7,104 $7,283 $7,495 $6,939 $6,871 $6,868 $7,070 $7,104 $7,672 $7,744 $8,188 $7,894 $7,294 $6,000 $6,500 $7,000 $7,500 $8,000 $8,500 FY 07/08 FY 08/09 FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14

Amendment 23 Required Funding Actual Funding

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

In A Difficult Funding Situation Financial Results Improved

  • 5%

0% 5% 10% 15% 20% 25% 2 2 1 2 2 2 3 2 4 2 5 2 6 2 7 2 8 2 9 2 1 2 1 1 2 1 2 Cash as % of GF Revenue GAAP Fund Balance as % of GF Revenue

124,296,873 122,058,616 95,585,702 56,899,050 66,477,987 72,332,730 56,242,567 45,854,201 42,042,339 38,243,478 31,744,329 37,519,404 41,446,522 Cash Position 81,874,574 64,000,000 120,500,000 166,000,000 168,000,000 143,700,000 177,500,000 164,200,000 187,400,000 N/A N/A N/A N/A State Loan Program Cash Borrowed March 13 March 11 May 11 May 12 May 13 May 11 June 10 June 27 June 25 N/A N/A N/A N/A Loan Repayment Date 101,669,568 634,318,574 1 2012 116,513,738 669,438,042 2011 63,251,930 667,351,646 2010 28,625,407 625,758,568 2009 34,883,716 608,361,819 2008 32,431,028* 587,121,645 2007 21,931,135* 574,378,599 2006 18,422,385* 524,298,400 2005 9,298,874 509,717,246 2004 (2,047,811) 483,521,913 2003 13,290,139 465,287,804 2002 14,585,345 434,235,111 2001 10,182,555 410,196,361 2000 GAAP Fund Balance General Fund Revenue FY Year

DPS’ cash has increased, which has reduced the need for borrowing from the State

1 Decline in total General Fund revenue due to change in accounting treatment of property tax

revenue attributable to ProComp. Historically, ProComp revenue was recorded in the General Fund and then transferred to the ProComp Fund. ProComp property tax revenue is now directly recorded in the Pro-Comp fund. Additionally, one-time revenue related to Ed Jobs and ARRA Stabilization was not available in FY11-12. The changes to funding were offset by an increase of approximately 2,200 funded pupils.

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

DPS’ Mill Levy Override History & Expectation For Revenue

Fixed $ Amt $16,483,032 $20,000,000 2003 Fixed $ Amt $6,174,938 $12,099,253 1988 Fixed $ Amt $12,482,151 $17,000,000 1998 Inflation Adjusted $28,402,005 $25,000,000 2006 Fixed Mill Levy $49,000,000 2012 Type 2012 Inflation Adjusted Amt Amount Year

Override History Comparison of 2012 Override Revenue to Prior Fixed $ Overrides

$49.0 $49.3 $49.6 $51.4 $51.8 $53.8 $54.2 $56.3 $56.7 $58.9 $49.1 $49.1 $49.1 $49.1 $49.1 $49.1 $49.1 $49.1 $49.1 $49.1 $40.0 $45.0 $50.0 $55.0 $60.0 $65.0 $70.0 12/13 13/14* 14/15 15/16* 16/17 17/18* 18/19 19/20* 20/21 21/22*

$ in Millions

2012 Override Revenue With AV Growth 4.0% Reappraisal Years .6% Nonreappraisal Years 1988/1998/2003 Fixed $ Amount Override Revenue

Denver Public Schools Override Capacity will be about $43 million after the election, growing to about $70 million by 2017

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

34

Presentation Outline

  • 1. District Overview
  • 2. District Tax Base
  • 3. District Debt Management
  • 4. School Finance Funding Trends
  • 5. Economic and Demographic Statistics
  • 6. Series 2012 B – D Plan of Finance
  • 7. Concluding Remarks
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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Colorado’s Outlook

Economic Outlook: 8th Employment Outlook: 9th (Up from 40th in 2009- 10) Highly Educated: 3rd Fastest Growing: 4th Top-10 rankings for 4th grade and 8th grade reading proficiencies Highest ACT and SAT scores: 1st Entrepreneurial Activity Index: 4th High Tech Employment: 3rd How Colorado Ranks Amongst Other States:

Summary of Metro Denver Economic Development Corporation’s 2012 Report

Source: Metro Denver’s Towards a More Competitive Colorado Report (October 24, 2012)

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Denver Economic & Demographic Trends

1 2 3 4 5 6 7 8 9 10 2007 2008 2009 2010 2011 2012* % Denver Colorado

Labor Statistics

Major Denver Metro Areas Employers1

  • 2012 Denver and Colorado unemployment rates are down

from 2011

  • Denver labor force continue to grow, up to 322,658 in 2012
  • ver 317,206 in 2007

 Higher growth (1.7%) then the Colorado labor force (1.5%)

  • Diverse industry within the City & County of Denver

 Largest sector: Government jobs – 16% of total employment

  • Denver per capita income is higher than Colorado and the

nation

10,813 City Government City & County of Denver 13,087 Education Denver Public Schools 16,861 Education University of Colorado 25,238 Retail Discount Wal-Mart Stores Inc. 9,137 Retail Grocery Safeway, Inc. 8,000 Health Care SCL HealthOneLLC 9,000 Health Care HCA-HealthOneLLC 9,617 Retail Grocery King Soopers, Inc. 29,510 State Government State of Colorado 40,296 Federal Government Federal Government Estimated # of Employees Product / Service Firm

*Through September 30, 2012

Denver Unemployment Lags Behind the State Denver Income Surpasses the State and the U.S.

10,000 20,000 30,000 40,000 50,000 60,000 2006 2007 2008 2009 2010 $ Denver Colorado United States

1 As of May 2012

Source: Denver Public Schools POS Appendix C

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Denver Economic & Demographic Trends

  • Denver’s population continues to grow after experiencing a

decrease in the 1980s and 1990s  From 2010 to 2011, Denver’s population grew faster than the Denver Metro Area and State averages

  • Building permit activity is decreasing, however,

foreclosures also continue to fall

Population & Building Activity

Population

500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 1970 1980 1990 2000 2010 2011 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Denver Metro Denver 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2007 2008 2009 2010 2011 2012* Permits 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Foreclosures Commercial/Residential Permits Multi Family Permits Single Family Permits Foreclosures Filed

Building Permits vs. Foreclosures

Source: Denver Public Schools POS Appendix C * Permit data through August 31, 2012, foreclosure data through September 30, 2012

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

38

Presentation Outline

  • 1. District Overview
  • 2. District Tax Base
  • 3. District Debt Management
  • 4. School Finance Funding Trends
  • 5. Economic and Demographic Statistics
  • 6. Series 2012 B – D Plan of Finance
  • 7. Concluding Remarks
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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Denver Public Schools, Series 2012B – D

Expected Pricing on December 4, 2012

December 1, 2028 December 1, 2034 December 1, 2032 Final Maturity Refunding Serial Bonds & Term Bonds $67.235 million Taxable Series, 2012D* New Money Bullet w/ Funded Sinking Fund $16.000 million Taxable QZABs, Series 2012C* New Money Purpose Serial Bonds Structure $450.000 million Par Amount Tax-Exempt, Series 2012B*

  • Maintaining, repairing and renovating existing school

buildings

  • Addressing critical health, safety and security concerns
  • Providing technology for 21st Century learning
  • Constructing additions and new buildings to address
  • vercrowding
  • Accommodating the expansion of early childhood

education and full-day kindergarten Series 2012D Refunding: Use of Proceeds Series 2012B&C New Money: Use of Proceeds

  • Refund Outstanding Series 2004 Maturities for Debt

Service Savings  Remaining portion of 2014 – 2023 Serial Bonds  Remaining portion of 2028 Term Bond

  • Refund Outstanding Series 2004C G.O. Refunding Bond

Maturities for Debt Service Savings  2015 – 2018 Serial Bonds

* Preliminary, subject to change

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40

DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

Denver Public Schools, Series 2012 B – D

20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Debt Service

Total Outstanding Debt

Post-Series 2012 B – D General Obligation Debt Profile*

* Preliminary, subject to change

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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

41

  • Price Bonds

Denver Public Schools, Series 2012 B – D

Week of November 26 December 4 December 19 Week of November 26

  • Receive Ratings
  • Preliminary Official Statement Distributed
  • Bond Closing

Financing Schedule

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42

DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

42

Presentation Outline

  • 1. District Overview
  • 2. District Tax Base
  • 3. District Debt Management
  • 4. School Finance Funding Trends
  • 5. Economic and Demographic Statistics
  • 6. Series 2012 B – D Plan of Finance
  • 7. Concluding Remarks
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DENVER PUBLIC SCHOOLS GENERAL OBLIGATION BONDS, SERIES 2012 B – D

43

Presentation Conclusion

VOTER SUPPORT

  • Electorate has approved 5 straight bond and/or override elections [Slide 11]
  • Total Override Amount Approved: $111 Million
  • Total Bond Amount Approved: $1.536 Billion
  • 2012 Ballot Initiatives approved with 67% (MLO) and 64% (Bond) in a challenging economic and

tax environment

STRONG FINANCIAL PERFORMANCE

  • Strong management and voter support allows general fund to grow [Slide 32]
  • GAAP general fund balance now at 17% of revenue
  • Strong cash position requiring relatively low Cash Flow Loan Program borrowing vs. past history

ENROLLMENT AND GRADUATION ON THE RISE

  • Enrollment trending upward as district becomes a model for success [Slide 9]
  • Estimated 2012-13 enrollment for 2012-13 budget purposes is 83,230
  • DPS 2012-13 updated enrollment forecast is 84,134
  • Highest enrollment in over 30 years, and fastest growing large school district in the country

TAX BASE WHICH SUPPORTS G.O. BOND REPAYMENT

  • Largest and most diverse tax base in the State of Colorado [Slide 18]
  • Preliminary 2012 assessed value of $10,816,373,040 (without TIF: $10,082,782,062)
  • Total Market Value: $77 Billion of value (down only about 7% from the 2010 peak)
  • Same Tax Base as the City and County of Denver (Rated Aaa / AAA / AAA)

MISSION SUCCESS

  • Student achievement continues to improve
  • Graduation rates continuing to increase, with more students taking and passing AP tests
  • Significant outperformance versus the State in academic growth over the past five years