Newark Public Schools: PRESENTATION TO THE CAPITAL PROJECTS CONTROL BOARD – EQUIPMENT LEASE FINANCING June 29th, 2017

Agenda Meeting Purpose Provide Update on Previous Capital Initiatives Discuss the Capital Equipment Lease Financing Next Steps Newark Public Schools | www.nps.k12.nj.us

Purpose This body, the Capital Projects Control Board, previously met in April 2017 to review and approve, by a unanimous vote, $30.5 million in critical capital projects to be funded by a bond/note issue The School Advisory Board, the Local Finance Board, the State Board of Education, and the Newark City Council similarly voted in May 2017 to approve the proposed project list The District has been careful to fund facilities and equipment needs according to the best and most appropriate financing mechanism For example, bond funds did not replace limited Schools Development Authority funding, but supplemented it This meeting is to consider an equipment lease purchase agreement to fund critical academic, facilities, information technology, and security equipment that could not be supported by SDA or bond funds. Newark Public Schools | www.nps.k12.nj.us

The capital projects control board As a State-operated School District, NPS can go through the Capital Projects Control Board if projects are locally financed—as an alternative to the SDA, which the District is working with for additional capital projects By statute, the CPCB is chaired by the State Superintendent, two mayoral appointees, one appointee of the Commissioner of Education, and one appointee of the Director of Local Government Services in DCA The Capital Projects Control Board may authorize both school facilities and other capital projects and fund those projects either by school bonds/notes “or through a lease purchase agreement pursuant to subsection f. of N.J.S.18A:20-4.2” The only criterion the CPCB must consider, by statute, is if the project will “assist the school district under full State intervention in providing a thorough and efficient system of education in that district.” Prior to the 2016 and 2017 meetings, the Capital Projects Control Board has been convened several times in the past decade, with the previous full bond authorization of $63.7mm in 2005 Newark Public Schools | www.nps.k12.nj.us

$30.5 million capital bond Update Final credit approval from financing partner this week, per City of Newark Financial Advisor NW Financial Two top architecture firms working with District to submit final application for “project-by-project” debt service aid (aggregate amount previously approved) Other contracting firms procured and projects scheduled in worker order system Capital funds to be transferred to the District in July 2017 Newark Public Schools | www.nps.k12.nj.us

$30.5 million capital bond recap Newark Public Schools | www.nps.k12.nj.us

Why use an equipment lease financing Essentially a low-interest loan secured by the value of the equipment it is paying for NPS faces unique “one time” budget costs for Central Office move to modern facilities, requiring extraordinary information technology and security expenses Opportunity to save on already budgeted academic equipment expenses Opportunity to make “first in a decade” large investment in school security equipment, complimented by information technology upgrades Centralized location access system for schools, additional cameras and central monitoring station (pilot of select schools) 83 percent of proposed facilities upgrades are targeted at HVAC, meant to automate extremely personnel intensive processes (heat checks, 24/7 in-person boiler monitoring). Newark Public Schools | www.nps.k12.nj.us

Summary of equipment to be funded *Does not include $15,000 in transaction fees Newark Public Schools | www.nps.k12.nj.us

equipment lease financing budget impact Essential “Budget neutral impact” and repayment security achieved by pay off of existing $1.75mm annual lease payment in 2017-18 (the last payment) Interest only payment of $120-$150k in 2017-18; estimated 2.1mm each year until June 2023. Known cost savings of $3million in 2017-18 budget (lease payments as opposed to one time payments for equipment) Cost Avoidance of an additional $3 million from additional mandatory expenses that arose Additional savings from facilities and security automation, as well as service performance, safety enhancements, and efficiency Newark Public Schools | www.nps.k12.nj.us

Next steps School Advisory Board action on July 8th, 2017 meeting, recognizing action of Capital Projects Control Board and passing relevant procurement resolutions Mid July - bid advertised Early August - bids due Late August – financial close and funds made available for draw down Newark Public Schools | www.nps.k12.nj.us

questions Thank you Newark Public Schools | www.nps.k12.nj.us

APPENDECIES Facilities Equipment by Location (Pages 13-14) Detail of Equipment Type by Category (15-17) Newark Public Schools | www.nps.k12.nj.us

Newark Public Schools | www.nps.k12.nj.us

Newark Public Schools | www.nps.k12.nj.us

Newark Public Schools | www.nps.k12.nj.us

Newark Public Schools | www.nps.k12.nj.us

Newark Public Schools | www.nps.k12.nj.us