Shelton School District Long Range Tax Rate Planning January 6, 2015 Jon Gores Managing Director Phone: (206) 389-4043 E-mail: jgores@dadco.com

Washington State Election Results School Districts Only 2012 M&O Levies 166 Passed and 6 Failed Capital Projects Levies 34 Passed and 3 Failed Transportation Levies N/A Bond Authorizations 12 Passed and 6 Failed 2013 M&O Levies 44 Passed and 1 Failed Capital Project Levies 16 Passed and 2 Failed Transportation Levies 1 Passed and 0 Failed Bond Authorizations 15 passed and 16 Failed 2014 M&O Levies 159 Passed and 3 Failed Capital Project Levies 49 Passed and 3 Failed Transportation Levies 1 Passed and 1 Failed Bond Authorizations 13 Passed and 27 Failed Source: Washington Secretary of State: Election and Voting website and individual County Auditor websites.

Capital Projects Levies Washington State Election Results School Districts Only February M&O Levies 152 Passed and 2 Failed Capital Projects Levies 44 Passed and 0 Failed Transportation Levies 1 Passed and 0 Failed Bond Authorizations 11 Passed and 13 Failed April M&O Levies 4 Passed and 0 Failed Capital Projects Levies 1 Passed and 0 Failed Transportation Levies N/A Bond Authorizations 1 Passed and 11 Failed August M&O Levies 1 Passed and 1 Failed Capital Projects Levies 1 Passed and 1 Failed Bond Authorizations 0 Passed and 1 Failed November M&O Levies 2 Passed and 0 Failed Capital Projects Levies 2 Passed and 2 Failed Transportation Levies 0 Passed and 1 Failed Bond Authorizations 1 Passed and 2 Failed

Voting Patterns Bond Issues Passed per Year Schools Only (Years 1993 through November 2014 Inclusive) Schools Only Source: State of Washington, Office of Superintendent of Public Instruction

Voting Patterns Bond Issues Passed by Month – Statewide Schools Only (Years 1992 through November 2014 inclusive) Schools Only 66% Source: State of Washington, Office of Superintendent of Public Instruction

Bonds/M&O Levies on the Same Ballot Source: OSPI and County Auditors/Elections Departments.

M&O / Capital Levies on the Same Ballot

Tax Rate Planning Assumptions for Tax Rate Planning Interest Rates Bond Rating Assessed Value Bond Structure

Tax Rate Planning A. Interest Rates - Lower interest rates result in lower tax rates for bonds. - Interest rates are determined when bonds are actually sold. - Assumption: Future Bond Sales Current rates plus 2.0 % (200 basis points).

Moody’s Investors Service – Founded 1909 Tax Rate Planning B. Bond Rating - A higher bond rating results in lower interest rates. - Assumption: Aa1 (with State Guarantee) A1 District Rating (Pending) A Guide to Bond Ratings Moody’s Investors Service – Founded 1909 Highest Quality Aaa Aa1, Aa2, Aa3 A1, A2, A3 Baa1, Baa2, Baa3 Lowest Quality NR (Nonrated)

Financial Performance Tax Rate Planning C. Bond Rating (continued) Bond raters consider the local economy, District finances, and other factors Assumption: Aa1 (State Guarantee) A1 (District Rating, Pending) The Rating Governmental Factors Economy Debt Factors Financial Performance Debt Factors Economy

Tax Rate Planning D. Assessed Value * * Preliminary

Tax Rate Planning D. Assessed Value (continued) Actual Growth -4.7% 5yr Avg. Annual Growth Rate

Tax Rate Planning Projected Assessed Value Growth D. Assessed Value (continued) Projected Assessed Value Growth Final 2014: -5.27% annual growth Preliminary 2015: .053% growth Projected 2016: 0% growth Projected 2017-2021: 1% annual growth Projected 2022-2040: 1.50% annual growth Higher assessed values will lower the District’s tax rates (but not the overall payment) An individual’s taxes will be based on the assessed value for their property New construction vs. increase in value of existing property

Tax Rate Planning E. Bond Structure State law gives Districts great flexibility in determining bond structures Options: Level Debt Level Tax Rate Stepped Level Tax Rate

Mason County School Districts Total Tax Rate Comparison Mason County School Districts 2014 Total Tax Rates District Assessed Value(1) ($) Bonds ($) M&O ($) Capital Projects ($) Trans. ($) Total ($) Hood Canal School District No. 404 1,062,903,829 0.7526 1.3804 -- 2.1330 Pioneer School District No. 402 1,213,031,123 2.3483 Grapeview School District No. 54 611,414,084 1.3607 1.0831 --  2.4438 North Mason School District No. 403 (2) 1,925,028,067 1.2960 2.1456 3.4416 Mary M. Knight School District No. 311(3) 163,512,139 3.7428 Elma School District No. 68/137(3) 733,647,864 4.3217 Southside School District No. 42 192,993,635 1.5130 3.2209 4.7339 McCleary School District No. 65(3) 188,583,770 2.5701 3.3900 5.9601 Shelton School District No. 309 1,603,237,650 1.6996 4.4290 6.1286 (1) Bond Assessed Value does includes TAV. (2) Mason and Kitsap Counties (3) Mason and Grays Harbor Counties Source: County Assessors Offices.

Comparable-sized School Districts Total Tax Rate Comparison Comparable-sized School Districts 2014 Total Tax Rates District Assessed Value(1) ($) Bonds ($) M&O ($) Capital Projects ($) Trans. ($) Total ($) Chimacum School District No. 49 1,643,229,182   1.5060 0.7993 2.3053 Lake Chelan School District No. 129J 1,721,208,391 -- 1.6836 0.7257 2.4093 Chehalis School District No. 302 1,588,307,181 2.7884 North Mason School District No. 403 1,925,028,067 1.2960 2.1456 --  3.4416 Othello School District No. 147 1,036,175,936 2.0540 2.3360 4.3900 Lakewood School District No. 306 1,656,862,983 --- 3.1452 2.1198 5.2650 Yelm Community Schools No. 2 1,922,836,723 1.7918 4.1892 5.9810 Shelton School District No. 309 1,571,277,780 1.6996 4.4290 6.1286 Aberdeen School District No. 5 1,210,852,154 2.0650 4.1694 6.2344 Dieringer School District No. 343 1,317,251,243 2.5683 3.8026 6.3709 White River School District No. 416 1,951,722,118 3.4057 4.0177 7.4234 Granite Falls School District No. 332 1,043,860,623 2.9603 3.8924 0.5964 7.4490 *Bond Assessed Value does not include TAV (1) Individual County Assessed Values

Resolution Filing Deadline (2) Approximate Date Ballots are Mailed (3) 2015 Special Election & Resolution Filing Dates The 2015 special election dates and ballot resolution filing deadlines pursuant to the Revised Code of Washington (“RCW”) are listed below for your information.(1) These are the dates permitted under current law, which are subject to change by the Legislature. 2015 Election Date Resolution Filing Deadline (2) Approximate Date Ballots are Mailed (3) February 10, 2015 December 26, 2014 January 23, 2015 April 28, 2015 March 13, 2015 April 10, 2015 August 4, 2015 (Primary) May 8, 2015 July 17, 2015 November 3, 2015 (General) August 4, 2015 October 16, 2015 (1) This data is for informational purposes only and does not take the place of local, state or federal laws. Specific RCW information can be found at: http://www.secstate.wa.gov/elections/election_laws.aspx. (2) Some dates may have been adjusted to reflect the business day prior to actual resolution filing date, according to RCW 29A.04.330, if falling on a weekend. (3) Applies to both mail and absentee ballots. Absentee ballots are required to be mailed no later than 18 days prior to the election date. RCW 29A.40.070 Source: Washington Secretary of State’s Office, Elections and Voting website.

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