Capital Expenditure Recap Refinance Discussion September 8, 2015 Anna Pimentel Director, Fiscal Services Jamie Metcalf Asst. in Training – Director, Fiscal Services Ken Forrest Chief Business Officer 1

Capital Expenditure Accounting 2 In accordance with Government Fund Accounting and the California K-12 Standardized Account Code Structure (SACS) the District utilizes a number of different funds to account for Capital Expenditures. Fund 14 Deferred Maintenance Fund The Deferred Maintenance Fund is used to account separately for State apportionments and the District's contributions for deferred maintenance purposes (Education Code Sections ) and for items of maintenance approved by the State Allocation Board.

3 Fund 21 Building Fund The Building Fund exists primarily to account separately for proceeds from the sale of bonds (Education Code Section 15146) and may not be used for any purposes other than those for which the bonds were issued. In addition, it accounts for proceeds received from the issuance of certificates of participation for the purpose of funding land acquisition and school facility construction projects. Fund 25 Capital Facilities Fund The Capital Facilities funds are used to account for and report financial resources that are restricted, committed, or assigned to the acquisition or construction of major capital facilities and other capital assets (other than those financed by proprietary funds and trust funds). Capital Expenditure Accounting

4 Fund 35 School Facilities Fund The School Facilities Fund is established pursuant to Education Code Section to receive apportionments from the 1998 State School Facilities Fund (Proposition lA), the 2002 State School Facilities Fund (Proposition 47), or the 2004 State School Facilities Fund (Proposition 55) authorized by the State Allocation Board for new school facility construction, modernization projects, and facility hardship grants, as provided in the Leroy F. Greene School Facilities Act of 1998 (Education Code Section et seq.) Capital Expenditure Accounting

5 Fund 40 Special Reserve Fund for Capital Outlay Projects The Special Reserve Fund for Capital Outlay Projects exists primarily to provide for the accumulation of General Fund monies for capital outlay purposes (Education Code Section 42840). Fund 48 Mello-Roos CFD #1 Fund 49 Mello-Roos CFD #2 The Mello-Roos Capital Project Funds are used to account for capital projects financed by the Community Facilities Districts that are considered component units of the District under generally accepted accounting principles. Capital Expenditure Accounting Revenue/Expenditures Tracked In These Two Funds Internally – Reported To State/County As Combined Fund 49 As Required By SACS

CFD’s Often Not Clearly Understood 6 The Mello-Roos Community Facilities Act of 1982 (the “Act” or “Mello-Roos” – named after its authors, the late former State Senator Henry Mello and former Assemblyman Mike Roos) is an enormously flexible tool placed at the disposal of local governmental agencies* within the State to help them finance needed community facilities and services through the levy of voter approved special taxes. The powers the Act can confer through the formation of a community facilities district (“CFD”) are, at the most basic level, the legal authority to levy and collect a special tax, to use that revenue to finance specified facilities and services, and to borrow money (by issuing bonds or incurring other debt) to assist with financing the facilities. Details of our two CFD’s are provided in this presentation in an attempt to provide some clarity surrounding Mello-Roos taxes.

CFD #1 -- Fund 49 7 Community Facilities District No. 1 (Vacaville) Description of Ballot Question: Shall Community Facilities District No. 1 of the Travis Unified School District incur an indebtedness and issue bonds in the maximum aggregate principal amount of fifteen million ($15,000,000) with interest at a rate or rates not to exceed the maximum interest permitted by law at the time of sale of bonds, the proceeds of which will be used to finance the acquisition of sites and facilities, the construction of school support facilities, the acquisition of equipment, and such modifications and additions to existing facilities as are necessary to meet student population needs within the boundaries of CFD No. 1; shall special tax payable solely from the lands within Community Facilities District No. 1 with a maximum rate and method of apportionment as provided in Resolution 8, , which is incorporated herein, pay the principal of and interest on such bonds be levied; and shall the appropriate limit of said Community Facilities District No. 1 be established in the amount of fifteen million dollars ($15,000,000) annually. (Election was held 5/8/1990.)

CFD # 1 -- Fund 49 8 The authorized facilities which are being paid for by the special taxes, and by the money received from the sale of bonds which are being repaid by the special taxes, to the extent that financing is available are: Construction of an elementary school. Renovation and/or expansion of facilities at Golden West Middle School. Renovation and/or expansion of facilities at Vanden Senior High School. Addition of student capacity at Cambridge Elementary School. Renovation and/or expansion of facilities at Travis Elementary School. Purchase of school buses, land and/or improvements. Construction and/or expansion of related support facilities.

CFD #2 -- Fund 48 9 Community Facilities District No.2 (Gold Ridge) Description of Ballot Question: Shall the Travis Unified School District incur an indebtedness and issue bonds in the maximum aggregate principal amount of not to exceed $150,000,000 with interest at a rate or rates not to exceed the maximum interest rate permitted by law at the time of sale of such bonds on behalf of Community Facilities District No.2 (Gold Ridge) (the “CFD”), the proceeds of which bonds will be used to acquire and/or construct certain facilities and pay for the costs of issuing the bonds and related expenses; shall a special tax payable solely from lands within the CFD be levied annually, commencing in the District’s fiscal year upon lands within the CFD to pay for the principal and interest upon such bonds and certain services and pay the costs of the District in administering the CFD; and shall the annual appropriations limit of the CFD be established in the amount of $75,000,000? (Election held 10/13/1998.)

CFD # 2 -- Fund The authorized facilities which are being paid for by the special taxes, and by the money received from the sale of any bonds which will be repaid by the special taxes, to the extent that financing is available, are: Elementary, Middle, and High School facilities to serve students coming from residential units constructed within the boundaries of CFD No. 2 Support facilities to include but not limited to, administration, food service, maintenance, and transportation to serve students coming from residential units constructed within the boundaries of CFD No. 2.

11 CFD Expenditure Summary By Year Combined -- Fund 49

12 CFD No. 1 has a bond authorization of $15 million and does not have a set term. At the time, the CFD Act did not require that the term be specified. CFD No. 2 has a bond authorization of $150 million with a maximum term of 40 years. Additionally, the rate and method of apportionment of the special tax has a parcel- specific 30-year term. CFD Additional Notes Combined -- Fund 49

13 Outstanding Debt Possible Interest Savings? The 2006 Certificates of Participation (COPs) were issued on April 26, 2006 in the amount of $24,520,000. The 2006 COPs were issued for the purpose of acquiring land for one new school, construction of improvements to expand and modernize Vanden High School and construction of a new elementary school if/when needed and additional facilities for 7th and 8th grade students. Approximately $22,770,000 of the outstanding 2006 COPs are eligible for refunding. The 2006 COPs have an average interest rate of 4.94%. The 2006 COPs have a final maturity date on September 1, 2036 and may be called on September 1, We are working with to obtain expert advice concerning our outstanding debt.

14 Outstanding Debt Possible Interest Savings? The 2007 Certificates of Participation (COPs) were issued on July 11, 2007 in the amount of $12,995,000. The 2007 COPs were issued for the purpose of refunding certificates of participation issued by the District in 1997 (1997 COP). Approximately $9,350,000 of the 2007 COPs are outstanding, but only $3,910,000 are eligible for refunding. The refundable 2007 COPs have an average interest rate of 4.91%. The refundable 2007 COPs have a final maturity date on September 1, 2027 and may be called on September 1, At this time the economics of an advanced refunding of the 2007 COP does not achieve the threshold of savings which we would recommend pursuing.

15 Outstanding Debt Possible Interest Savings? Current interest rates, coupled with the District’s credit rating, provide the District with a favorable opportunity to refinance approximately $22,770,000 of the 2006 COPs. Based on conservative assumptions, we estimate that the District would receive annual savings of approximately $90,000 or over $2 million between now and September 1, 2036, the final maturity date of the 2006 COP. On a net present value basis, the savings equate to approximately $1.45 million or 6.4% of the COPs being refunded. The savings are net of the earnings on the reserve fund investment.

16 Refinancing Comments 2006 COP was issued with the intention that CFD #2 would be the source of repayment COP was issued with the intention that CFD #1 would be the source of repayment. Should the refinancing be authorized and executed the Board would be provided with options for the use of the savings such as: 1) Reduce the CFD taxes. 2) Use the savings for projects. 3) Combination of 1 & 2.

Capital Expenditures Including Bond Proceeds Where have our capital funds been invested? Since 2006 there have been 33 separate projects, some still in progress. Total expenditures to date including Bond Proceeds has been $35,472,191. Every school has seen some improvements or repairs.

Capital Expenditures Including Bond Proceeds

Capital Expenditures Including Bond Proceeds

20 Despite these expenditures our capital needs remain significant. Currently the District has sufficient capacity, as shown by the next slide, however this may change in the future as development continues. As a result we will be working with Capitol | PFG to develop a more comprehensive bond plan to reflect the capital needs and priorities contained in the facilities master plan currently in development Capital Expenditures Including Bond Proceeds

21 School Facility Utilization

In order to have an idea of what it takes to build or remodel our school facilities it is helpful to see the current estimated costs. 22 School Cost Estimates August 2015 We are currently conducting a facilities needs analysis and anticipate this being ready for discussion early 2016.

23 So tonight we are asking for permission to proceed with an analysis of our refinancing potential and a comprehensive bond plan. Thank You Permission To Proceed

Questions? 24