POS-Stockton-USD-2016-GO-Refunding-Bonds

The Refunding Bonds are being issued to provide funds i to refund all of the outstanding callable “Stockton Unified School District, San Joaquin County, California, General Obligation Bo

PRELIMINARY OFFICIAL STATEMENT DATED JANUARY 4, 2016

Standard & Poor's Underlying Rating: “A+”

Moody's Insured Rating: “ _” Moody's Underlying Rating: “A2”

See “RATINGS” herein

In the opinion of Dannis Woliver Kelley, Bond Counsel, based upon an analysis of existing statutes, regulations, rulings, and court decisions and assuming, among other things, the accuracy of certain representations and compliance with certain covenants, interest on the Refunding Bonds is excludable from gross income for federal income tax purposes and is exempt from State of California personal income taxes In the further opinion of Bond Counsel, interest on the Refunding Bonds is not an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations; however, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of,

or the accrual or receipt of interest on, the Refunding Bonds See “TAX MATTERS” herein

$140,000,000∗STOCKTON UNIFIED SCHOOL DISTRICT SAN JOAQUIN COUNTY, CALIFORNIA

2016 GENERAL OBLIGATION REFUNDING BONDS

The Stockton Unified School District (the “District”) is issuing the Stockton Unified School District, San Joaquin County, California, 2016 General Obligation Refunding Bonds (the “Refunding Bonds”) in the aggregate principal amount of $140,000,000*

The Refunding Bonds are being issued to provide funds (i) to refund all of the outstanding callable “Stockton Unified School District, San Joaquin County, California, General Obligation Bonds, Election of 2005, Series 2006” (the “Series 2006 Bonds”), the “Stockton Unified School District, San Joaquin County, California, General Obligation Bonds, Election of 2005, Series 2007” (the “Series 2007 Bonds”), and the “Stockton Unified School District, San Joaquin County, California, General Obligation Bonds, Election of 2008, Series A” (the “Series A Bonds,” and together with the Series 2006 Bonds and the Series 2007 Bonds, the “Prior Bonds”); and (ii) to pay costs of issuance of the Refunding Bonds.

The Board of Supervisors of San Joaquin County (the “County Board of Supervisors”) is empowered and obligated to annually levy ad

valorem taxes, without limitation as to rate or amount, upon all property subject to taxation within the District (except certain personal property

which is taxable at limited rates), for the payment of interest on, and principal of, the Refunding Bonds, all as more fully described herein under

“THE REFUNDING BONDS” and “SOURCES OF PAYMENT FOR THE REFUNDING BONDS.”

The Refunding Bonds will be initially issued and registered in the name of Cede & Co as nominee of The Depository Trust Company, New York, New York (“DTC”) Purchases of the Refunding Bonds are to be made in book-entry form only Purchasers will not receive physical certificates representing their interests in the Refunding Bonds See APPENDIX F – “Book-Entry Only System.”

The Refunding Bonds will be issued as current interest bonds as set forth herein Interest on the Refunding Bonds accrues from their date of delivery at the rates set forth herein, and is payable semiannually on February 1 and August 1 of each year, commencing August 1, 2016 The

Refunding Bonds mature on August 1 in the years and amounts set forth herein See “MATURITY SCHEDULE.” Payments of such principal

and interest on the Refunding Bonds will be paid by U.S Bank National Association, San Francisco, California, as paying agent (“Paying Agent”), to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Refunding Bonds

The Refunding Bonds are subject to optional and mandatory redemption prior to maturity as described herein See “THE REFUNDING BONDS – Redemption.”

This cover page summarizes certain provisions of the Refunding Bonds for brief reference only, and is not a summary of all the provisions Investors must read the entire official statement to obtain information essential in making an informed investment decision

The District has applied for bond insurance, but there is no guarantee that a commitment to insure the Refunding Bonds will be issued, or that the District will obtain such bond insurance

The Refunding Bonds are offered when, as and if issued, subject to the approval as to their legality by Dannis Woliver Kelley, Sacramento, California Bond Counsel Certain legal matters also will be passed upon for the District by Dannis Woliver Kelley, Sacramento, California, as Disclosure Counsel to the District Certain matters will be passed upon for the Underwriters by Norton Rose Fulbright US LLP, Los Angeles, California It is anticipated that the Refunding Bonds in definitive form will be available for delivery to Cede & Co., as nominee of The DTC, on

or about February 2, 2016.

The date of this Official Statement is January , 2016

$140,000,000∗STOCKTON UNIFIED SCHOOL DISTRICT SAN JOAQUIN COUNTY, CALIFORNIA

2016 GENERAL OBLIGATION REFUNDING BONDS

MATURITY SCHEDULE

Maturity Date

(August 1)

Principal Amount

Interest

CUSIP† Base (861419):

$ - _% Term Refunding Bonds due August 1, 20 - Yield _%; Price: _ - CUSIP† :

† CUSIP® is a registered trademark of the American Bankers Association CUSIP Global Services (CGS) is managed

on behalf of the American Bankers Association by S&P Capital IQ Copyright© 2015 CUSIP Global Services All rights reserved CUSIP® numbers are provided for convenience of reference only This data is not intended to create a database and does not serve in any way as a substitute for the CGS database Neither the Underwriters, the District, Bond Counsel, nor Disclosure Counsel is responsible for the selection or correctness of the CUSIP® numbers set forth above

STOCKTON UNIFIED SCHOOL DISTRICT

COUNTY OF SAN JOAQUIN STATE OF CALIFORNIA DISTRICT GOVERNING BOARD

Kathleen Garcia, President Gloria Allen, Vice President Maria Mendez, Clerk Andrea L Burrise, Trustee Colleen Keenan, Trustee Angela Phillips, Trustee Steve Smith, Trustee

DISTRICT ADMINISTRATION

Julie Penn, Interim Superintendent Lisa Grant-Dawson, Chief Business Official

FINANCIAL ADVISOR

Dale Scott & Co., Inc

San Francisco, California

BOND COUNSEL AND DISCLOSURE COUNSEL

Dannis Woliver Kelley

Sacramento, California

UNDERWRITERS’ COUNSEL

Norton Rose Fulbright US LLP

Los Angeles, California

PAYING AGENT, TRANSFER AGENT, AND BOND REGISTRAR

U.S Bank National Association

San Francisco, California

VERIFICATION AGENT

Causey Demgen & Moore P.C

Denver, Colorado

TABLE OF CONTENTS

Page

INTRODUCTION 1

THE REFUNDING BONDS 4

Authority for Issuance; Purpose 4

Payment of Principal and Interest 5

Security 5

Book-Entry-Only System 6

Paying Agent 6

Redemption 6

Registration, Transfer and Exchange of Refunding Bonds 9

Defeasance of Refunding Bonds 10

BOND INSURANCE 10

SOURCES OF PAYMENT FOR THE REFUNDING BONDS 10

Payment of Principal and Interest 10

Ad Valorem Taxes 11

Property Tax Collection Procedures 11

Assessed Valuations 12

Appeals and Adjustments of Assessed Valuations 15

Teeter Plan 16

District Tax Rates 17

Largest Property Owners 18

Direct and Overlapping Debt 18

DEBT SERVICE SCHEDULE 20

COMBINED DEBT SERVICE SCHEDULE 20

PLAN OF REFUNDING 22

Application and Investment of Refunding Bond Proceeds 22

SOURCES AND USES OF FUNDS 24

SAN JOAQUIN COUNTY INVESTMENT POOL 24

LEGAL OPINION 24

TAX MATTERS 25

CONTINUING DISCLOSURE 27

NO MATERIAL LITIGATION 27

RATINGS 28

UNDERWRITING 28

FINANCIAL ADVISOR 29

ESCROW VERIFICATION 29

COMPENSATION OF PROFESSIONALS 29

ADDITIONAL INFORMATION 29 APPENDIX A General and Financial Information of the District A-1 APPENDIX B Audited Financial Statements of the District for Fiscal Year Ended June 30, 2014 B-1 APPENDIX C General Information About the County of San Joaquin and City of Stockton C-1 APPENDIX D Form of Opinion of Bond Counsel D-1 APPENDIX E Form of Continuing Disclosure Certificate E-1 APPENDIX F Book-Entry-Only System F-1

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT

This Official Statement, which includes the cover page, the inside cover page, and the appendices, does not constitute an offer to sell or the solicitation of an offer to buy, nor may there be any sale of the Refunding Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation, or sale No dealer, broker, salesperson, or other person has been authorized by the District or the Underwriters to give any information or to make any representations other than those contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized by the District or the Underwriters

The information set forth in this Official Statement has been furnished by the District and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness All summaries of the District Resolution or other documents referred to in this Official Statement are made subject to the provisions of such documents and qualified in their entirety to reference such documents, and do not purport to be complete statements of any or all of such provisions

When used in this Official Statement and in any press release and in any oral statement made with the approval of an authorized officer of the District, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions identify “forward-looking statements.” Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward- looking statements Any forecast is subject to such uncertainties Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material

The Underwriters have provided the following statement for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as a part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information

This Official Statement is submitted in connection with the sale of the Refunding Bonds referred

to herein and may not be reproduced or used, in whole or in part, for any other purpose This Official Statement is not a contract between any bond owner and the District or the Underwriters

This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice Neither the delivery of this Official Statement nor any sale of the Refunding Bonds will, under any circumstances, give rise to any implication that there has been no change in the affairs of the District, the County (as defined herein), the other parties described in this Official Statement, or the condition of the property within the District since the date of this Official Statement

The Refunding Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon exceptions therein for the issuance and sale of municipal securities The Refunding Bonds have not been registered or qualified under the securities laws of any state

In connection with the offering of the Refunding Bonds, the Underwriters may over allot or effect transactions that stabilize or maintain the market price of the Refunding Bonds, at a level above that which might otherwise prevail in the open market Such stabilizing, if commenced, may be discontinued

at any time The Underwriters may offer and sell Refunding Bonds to certain dealers and banks at prices lower than the initial public offering price stated on the inside cover page hereof, and said initial public offering price may be changed from time to time by the Underwriters

$140,000,000∗STOCKTON UNIFIED SCHOOL DISTRICT SAN JOAQUIN COUNTY, CALIFORNIA

2016 GENERAL OBLIGATION REFUNDING BONDS

INTRODUCTION

This Introduction is not a summary of this Official Statement It is only a brief description

of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page, the inside cover page, and the appendices hereto, and the documents summarized or described herein A full review should be made of the entire Official Statement The offering of the Refunding Bonds to potential investors is made only

by means of the entire Official Statement

This Official Statement, which includes the cover page, the inside cover page, and the attached appendices, sets forth certain information concerning the sale and delivery by the Stockton Unified School District (the “District”) of $140,000,000*principal amount of Stockton Unified School District, San Joaquin County, California, 2016 General Obligation Refunding Bonds (the “Refunding Bonds”), as described more fully herein

The District The District was established on July 1, 1936, and is located in San Joaquin

County (the “County”), in California’s Central Valley The boundaries of the District encompass

an area of approximately 55 square miles The District is located approximately 58 miles south

of Sacramento, the State Capitol, 78 miles east of the San Francisco Bay Area, and 337 miles north of Los Angeles The District has fifty-four schools, including forty-one K-8 schools (including one K-5 school, and two charter schools (Pittman and Nightingale Elementary), eleven high schools (including four specialty high schools (Jane Fredrick, Weber Institute, Merlo Institute, Stockton High)) and three specialty charter high schools (Pacific Law Academy, Stockton Early College Academy, Health Careers Academy)), one K-12 special education school, and one adult education school The District also maintains an independent study program and a child development program The average daily attendance (the “ADA”) in the District for 2013-14 was 32,492 students, 32,753 students in 2014-15, and is projected to be 32,734 students in 2015-16

Description of the Refunding Bonds The Refunding Bonds will be dated their date of

delivery and will be issued as fully registered bonds, without coupons, in the denominations of

$5,000 or any integral multiple thereof Interest payable with respect to the Refunding Bonds will be payable on February 1 and August 1 of each year, commencing August 1, 2016 and principal payable with respect to the Refunding Bonds will be paid on the dates as set forth on the inside cover page of this Official Statement See “THE REFUNDING BONDS – Payment of Principal and Interest.”

Registration The Refunding Bonds will be issued in fully registered form only,

registered in the name of Cede & Co as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the Refunding Bonds (the

“Beneficial Owners”) under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein Beneficial Owners will not be entitled to receive physical delivery of the Refunding Bonds See “THE REFUNDING BONDS – Book-Entry-Only System.”

Redemption The Refunding Bonds are subject to optional and mandatory sinking fund

redemption prior to their respective maturity dates See “THE REFUNDING BONDS – Redemption.”

Authority for Issuance of the Refunding Bonds The Refunding Bonds are issued

pursuant to the Constitution and laws of the State of California (the “State”), including the provisions of Articles 9 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, and applicable provisions of the Education Code of the State The Refunding Bonds are authorized to be issued pursuant to that certain resolution adopted by the Governing Board of the Stockton Unified School District (the “Board”) on October 13, 2015 (the

“Resolution”), and are issued pursuant to that certain Paying Agent Agreement dated as of January 1, 2016 (the “Paying Agent Agreement”) between the District and the Paying Agent See “THE REFUNDING BONDS – Authority for Issuance; Purpose.”

Security for the Refunding Bonds The Refunding Bonds are general obligation bonds of

the District payable solely from ad valorem taxes The County Board of Supervisors has the power and is obligated to annually levy ad valorem taxes for the payment of the Refunding

Bonds and the interest thereon upon all property within the District subject to taxation without limitation of rate or amount (except certain personal property which is taxable at limited rates)

Proceeds of the ad valorem tax levy will be transferred semiannually by the San Joaquin County

Treasurer-Tax Collector (the “Treasurer”) to the Paying Agent and deposited in the Debt Service Fund for the Refunding Bonds See “SOURCES OF PAYMENT FOR THE REFUNDING BONDS.”

Senate Bill 222 (Stats 2015, Chapter 78) (“SB 222”) added Section 53515 to the California Government Code and amended Section 15251 of the Education Code Pursuant to Section 53515, all general obligation bonds issued by local agencies, including refunding bonds, will be secured by a statutory lien on all revenues received pursuant to the levy and collection of

ad valorem property taxes The lien will automatically attach, without further action or

authorization by the governing board of the local agency, and will be valid and binding from the time the bonds are executed and delivered The revenues received pursuant to the levy and

collection of the ad valorem property tax will be immediately subject to the lien, and the lien will

be enforceable against the local agency, its successor, transferees and creditors, and all others asserting rights therein, irrespective of whether those parties have notice of the lien and without the need for physical delivery, recordation, filing or further act Because SB 222 became effective on January 1, 2016, the Refunding Bonds will be secured by a statutory lien on all

revenues received from the levy of ad valorem property taxes for the payment the Refunding

Bonds

Purpose of Issue The proceeds of the Refunding Bonds will be used to: (i) refund all of

the outstanding callable “Stockton Unified School District, San Joaquin County, California, General Obligation Bonds, Election of 2005, Series 2006” (the “Series 2006 Bonds”), the

“Stockton Unified School District, San Joaquin County, California, General Obligation Bonds, Election of 2005, Series 2007” (the “Series 2007 Bonds”), and the “Stockton Unified School District, San Joaquin County, California, General Obligation Bonds, Election of 2008, Series A” (the “Series A Bonds,” and together with the Series 2006 Bonds and the Series 2007 Bonds, the

“Prior Bonds”); and (ii) pay costs of issuance of the Refunding Bonds See “PLAN OF REFUNDING – Application and Investment of Refunding Bond Proceeds.”

Offering and Delivery of the Refunding Bonds The Refunding Bonds are offered when,

as, and if issued and received by the purchasers, subject to approval as to their legality by Dannis Woliver Kelley, Sacramento, California, Bond Counsel (“Bond Counsel”) It is anticipated that the Refunding Bonds will be available for delivery in New York, New York on or about February 2, 2016

Legal Matters Issuance of the Refunding Bonds is subject to the approving opinion of

Bond Counsel, to be delivered in substantially the form attached hereto as APPENDIX D Dannis Woliver Kelley, Sacramento, California, will also serve as Disclosure Counsel (“Disclosure Counsel”) to the District Payment of the fees of Bond Counsel and Disclosure Counsel is contingent upon issuance of the Refunding Bonds

Tax Matters In the opinion of Bond Counsel, based upon an analysis of existing statutes,

regulations, rulings, and court decisions, and assuming, among other things, the accuracy of certain representations and compliance with certain covenants, interest on the Refunding Bonds

is excludable from gross income for federal income tax purposes, and is exempt from State of California personal income taxes In the opinion of Bond Counsel, such interest is not an item of tax preference for purposes of the federal individual or corporate alternative minimum taxes; however, such interest is included in adjusted current earnings in calculating corporate alternative minimum taxable income Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of the Refunding Bonds or the accrual

or receipt of such interest See “TAX MATTERS.”

Continuing Disclosure The District has covenanted and agreed that it will comply with

and carry out all of the provisions of the Continuing Disclosure Certificate The form of the Continuing Disclosure Certificate is included in APPENDIX E See “CONTINUING DISCLOSURE.”

Other Information This Official Statement speaks only as of its date, and the

information contained herein is subject to change For limiting factors about this Official Statement, see “GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT.”

Copies of documents referred to herein and information concerning the Refunding Bonds are available from the Office of the Superintendent, Stockton Unified School District, 701 North

Madison Street, Stockton, California 95202; telephone (209) 933-7055 (the “Superintendent’s Office”) The District may impose a charge for copying, mailing, and handling

This Official Statement is not to be construed as a contract with the purchasers of the Refunding Bonds Statements contained in this Official Statement which involve estimates, forecasts, or matters of opinion, whether or not expressly so described herein, are intended solely

as such and are not to be construed as representations of fact The summaries and references to documents, statutes, and constitutional provisions referred to herein do not purport to be comprehensive or definitive, and are qualified in their entireties by reference to each of such documents, statutes, and constitutional provisions

The information set forth herein has been obtained from official sources which are believed to be reliable, but the information is not guaranteed as to accuracy or completeness, and

is not to be construed as a representation by the District The information and expressions of opinions herein are subject to change without notice, and neither delivery of this Official Statement nor any sale made hereunder, shall under any circumstances create any implication that there has been no change in the affairs of the District since the date hereof This Official Statement is submitted in connection with the sale of the Refunding Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose

THE REFUNDING BONDS Authority for Issuance; Purpose

The Refunding Bonds are issued pursuant to the Constitution and laws of the State of California (the “State”), including the provisions of Articles 9 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, and applicable provisions of the Education Code of the State The Refunding Bonds are authorized to be issued pursuant to the Resolution and the Paying Agent Agreement The Government Code permits the issuance of

bonds payable from ad valorem taxes without a vote of the electors solely in order to refund

other outstanding bonds which were originally approved by such a vote, provided that the total debt service to maturity on the refunding bonds not exceed the total debt service to maturity on the bonds being refunded

The proceeds of the Refunding Bonds will be used to refund the Prior Bonds, and to pay costs of issuance of the Refunding Bonds See “PLAN OF REFUNDING – Application and Investment of Refunding Bond Proceeds.”

Description of the Refunding Bonds

The Refunding Bonds will be executed in the aggregate principal amount of

$140,000,000* The Refunding Bonds will be dated their date of delivery, and will be issued in fully registered form without coupons, in the denomination of $5,000 or any integral multiple of

$5,000 The Refunding Bonds will mature and will bear interest at the rate (calculated on the basis of a 360 day year composed of twelve, 30 day months) as provided on the inside cover page hereof, payable on February 1 and August 1 of each year, commencing August 1, 2016

*

Preliminary, subject to change.

The Refunding Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co as nominee for DTC Purchasers will not receive physical certificates representing their interest in the Refunding Bonds

So long as the Refunding Bonds are registered in the name of DTC, or its nominee, all payments of principal and interest on the Refunding Bonds will be paid to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Refunding Bonds See APPENDIX F – “Book-Entry-Only System.”

In the event that the Refunding Bonds are no longer registered in book-entry form, payment of interest on any Refunding Bond on any Interest Payment Date will be made to the person appearing on the registration books of the Paying Agent, as the owner thereof, as of the Record Date immediately preceding such Interest Payment Date Interest will be paid by check mailed to the owner on the Interest Payment Date at his address as it appears on such registration books or at such other address as he may have filed with the Paying Agent for that purpose, on or before the Record Date “Interest Payment Date” is the date or dates on which installments of interest are due and payable with respect to the Refunding Bonds The owner in an aggregate principal amount of $1,000,000 or more may request in writing to the Paying Agent that such owner be paid interest by wire transfer to the bank and account number on file with the Paying Agent as of the Record Date “Record Date” for the Refunding Bonds means the fifteenth day of the month immediately preceding the relevant Interest Payment Date The principal payable on the Refunding Bonds shall be payable upon maturity or redemption upon surrender at the principal office of the Paying Agent The interest and principal on the Refunding Bonds shall be payable in lawful money of the United States of America

Payment of Principal and Interest

The Refunding Bonds are issued as current interest bonds as set forth herein on the inside front cover Interest on the Refunding Bonds accrues from their date of delivery at the rates set forth on the inside cover of the Official Statement, and is payable on August 1, 2016, and semiannually thereafter on February 1 and August 1 of each year The Refunding Bonds mature

on August 1 in the years and amounts set forth herein See “MATURITY SCHEDULE” on the inside cover Interest accruing on the Refunding Bonds will be computed using a year of 360 days consisting of twelve, 30-day months

Security

Obligation to Levy Taxes for Payment of Refunding Bonds The County Board of

Supervisors and officers of the County are obligated by statute to provide for the levy and collection of property taxes in each year sufficient to pay all principal and interest coming due on the Refunding Bonds in such year, and to pay from such taxes all amounts due on the Refunding Bonds The District shall take all steps required by law and by the County to ensure that the County Board of Supervisors shall annually levy a tax upon all taxable property in the District sufficient to redeem the Refunding Bonds, and to pay the principal and interest thereon as and

when the same become due Further information regarding ad valorem property taxation in

general and within the District in particular may be found herein See “SOURCES OF

Payment of Principal and Interest At least one business day prior to the date any

payment is due in respect of the Refunding Bonds, the District will cause monies to be deposited with the Paying Agent sufficient to pay the principal and the interest (and premium, if any) to become due on all Refunding Bonds outstanding on such payment date When and as paid in full, and following surrender thereof to the Paying Agent, all Refunding Bonds shall be cancelled

by the Paying Agent, and thereafter, shall be destroyed The Paying Agent hereby acknowledges that pursuant to the general laws of the State of California, the obligation to levy and collect taxes for the payment of the Refunding Bonds, and to pay principal and interest on the Refunding Bonds when due, are legal obligations of the County and the Treasurer, and shall be performed by the Treasurer

Book-Entry-Only System

The Refunding Bonds will be issued in fully registered form only, registered in the name

of Cede & Co as nominee of DTC, and will be available to the Beneficial Owners of the Refunding Bonds in the denominations set forth on the inside cover page hereof, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein Beneficial Owners will not be entitled to receive physical delivery of the Refunding Bonds See APPENDIX F – “Book-Entry-Only System.” In the event that the book-entry-only system described below is no longer used with respect to the Refunding Bonds, the Refunding Bonds will be registered as described above

Paying Agent

U.S Bank National Association, San Francisco, California, will act as the registrar, transfer agent, and paying agent for the Refunding Bonds As long as DTC is the registered owner of the Refunding Bonds and DTC’s book-entry method is used for the Refunding Bonds, the Paying Agent will send any notice of prepayment or other notices to owners only to DTC Any failure of DTC to advise any DTC Participant, or of any DTC Participant to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity or sufficiency of the proceedings relating to the prepayment of the Refunding Bonds called for prepayment or of any other action covered by such notice

The Paying Agent, the District, the County, and the Underwriters of the Refunding Bonds have no responsibility or liability for any aspects of the records relating to or payments made on account of beneficial ownership, or for maintaining, supervising or reviewing any records relating to beneficial ownership, of interests in the Refunding Bonds

Redemption *

Optional Redemption of Refunding Bonds The Refunding Bonds maturing on or before

August 1, , shall not be subject to redemption prior to their respective stated maturities Refunding Bonds maturing on or after August 1, , are subject to redemption prior to their respective stated maturities, at the option of the District, from any source of available funds, as a whole or in part (by such maturities as may be specified by the District and by lot within a maturity), on any date on or after August 1, _, at redemption prices equal to the principal

*

amount of Refunding Bonds called for redemption, plus accrued interest to the date fixed for redemption

Mandatory Sinking Account Redemption of Refunding Term Bonds The Refunding

Term Bonds maturing on August 1, 20 are subject to mandatory sinking fund redemption in part by lot on August 1 of each year, in accordance with the schedules set forth below The Refunding Term Bonds so called for mandatory sinking fund redemption shall be redeemed at the principal amount of such Refunding Bonds to be redeemed, plus accrued but unpaid interest, without premium

Mandatory Redemption Dates

(August 1) Mandatory Sinking Account Payment

* Final maturity

Selection of Refunding Bonds for Redemption If less than all the outstanding

Refunding Bonds are to be redeemed, not more than 60 days prior to the redemption date the Paying Agent shall select the particular Refunding Bonds to be redeemed from the outstanding Refunding Bonds that have not previously been called for redemption, in minimum denominations of $5,000, at the direction of the District, and if no such direction has been provided, by lot in any manner that the Paying Agent in its sole discretion shall deem appropriate and fair The Paying Agent shall promptly notify the District in writing of the Refunding Bonds selected for redemption and, in the case of a Bond selected for partial redemption, the principal amount to be redeemed

Notice of Redemption Notice of redemption of any Refunding Bond is required to be

given by the Paying Agent not less than 30 nor more than 60 days prior to the redemption date: (a) by first class mail to the respective owners of any Refunding Bond designated for redemption

at their addresses appearing on the bond register; (b) by registered or overnight mail to the securities depositories and the information service as identified in the Paying Agent Agreement

if the Refunding Bonds are not registered solely to a security depository; and (c) as may be further required in accordance with the Continuing Disclosure Certificate of the District See APPENDIX E – “Form of Continuing Disclosure Certificate.”

Notice of any redemption of the Refunding Bonds will specify: (i) the date of such notice; (ii) the name of the Refunding Bonds and the date of issue of the Refunding Bonds; (iii) the redemption date; (iv) the redemption price; (v) the dates of maturity of the Refunding Bonds to be redeemed; (vi) if less than all of the Refunding Bonds of any maturity are to be redeemed, the distinctive numbers of the Refunding Bonds of each maturity to be redeemed; (vii)

in the case of Refunding Bonds redeemed in part only, the respective portions of the principal amount of the Refunding Bonds of each maturity to be redeemed; (viii) the CUSIP number, if any, of each maturity of Refunding Bonds to be redeemed; (ix) a statement that such Refunding

places designated by the Paying Agent; (x) a statement that on the redemption date there will become due and payable the redemption price of the Refunding Bond (or the specified portion of the principal amount if Refunding Bonds are redeemed in part only), together with interest accrued thereon to the redemption date; (xi) notice that further interest on such Refunding Bonds will not accrue after the designated redemption date; and (xii) such redemption notices may state that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Refunding Bonds Notice of any optional redemption shall further state that the optional redemption is conditional upon the Paying Agent’s receipt, on or before the redemption date, of moneys that, together with other available amounts held by the Paying Agent, are sufficient to pay the principal of, interest, and any premium due on the Refunding Bonds called for redemption, and that the optional redemption notice will have no force and effect if such moneys is not received and that the District will not be required to redeem those Refunding Bonds

A certificate of the Paying Agent or the District that notice of call and redemption has been given to Owners and to the securities depositories and the information service shall be conclusive as against all parties The actual receipt by the Owner of any Refunding Bond or by any securities depository or information service of notice of redemption shall not be a condition precedent to redemption, and failure to receive such notice, or any defect in the notice given, shall not affect the validity of the proceedings for the redemption of such Refunding Bonds or the cessation of interest on the date fixed for redemption

When notice of redemption has been given substantially as provided in the Paying Agent Agreement, and when the redemption price of the Refunding Bonds called for redemption is set aside, the Refunding Bonds designated for redemption shall become due and payable on the specified redemption date, and interest shall cease to accrue thereon as of the redemption date, and upon presentation and surrender of such Refunding Bonds at the place specified in the notice

of redemption, such Refunding Bonds shall be redeemed and paid at the redemption price thereof out of the money provided therefore The Owners of such Refunding Bonds so called for redemption after such redemption date shall look for the payment of such Refunding Bonds and the redemption premium thereon, if any, only to the Redemption Fund established for such purpose All Refunding Bonds redeemed shall be cancelled forthwith by the Paying Agent and shall not be reissued

Right to Rescind Notice The District may rescind any optional redemption and notice

thereof for any reason on any date prior to the date fixed for redemption by causing written notice of the rescission to be given to the owners of the Refunding Bonds called for redemption Any optional redemption and notice thereof shall be rescinded if for any reason on the date fixed for redemption monies are not available in the Redemption Fund or otherwise held in trust for such purpose in an amount sufficient to pay in full on said date the principal and interest on the Refunding Bonds called for redemption Notice of rescission of redemption shall be given in the same manner in which notice of redemption was originally given The actual receipt by the Owner of any Refunding Bond of notice of such rescission shall not be a condition precedent to rescission, and failure to receive such notice or any defect in such notice shall not affect the validity of the rescission

Deposit of Redemption Price Before optionally redeeming the Refunding Bonds, the

District shall establish a special fund designated as the “Redemption Fund.” The District shall establish such subaccounts in the Redemption Fund as necessary to segregate amounts deposited therein for different purposes All moneys deposited by the District for the purpose of optionally redeeming the Refunding Bonds shall, unless otherwise directed by the District, be deposited in the Redemption Fund Prior to any date fixed for redemption of the Refunding Bonds, the District shall deposit with the Paying Agent an amount of money sufficient to pay the redemption price of all the Refunding Bonds that are to be redeemed on that date Such money shall be held in trust for the benefit of the persons entitled to such redemption price All such amounts deposited in the Redemption Fund shall be used and withdrawn solely for the purpose

of redeeming the Refunding Bonds, in the manner, at the times, and upon the terms and conditions specified in the Paying Agent Agreement If, after all of the Refunding Bonds have been redeemed and cancelled or paid and cancelled, there are monies remaining in the Redemption Fund of the District or otherwise held in trust for the payment of redemption price

of the Refunding Bonds, said monies shall be held in or returned or transferred to the Debt Service Fund of the District for payment of any outstanding bonds of the District payable from said fund; provided, however, that if said monies are part of the proceeds of bonds of the District, said monies shall be transferred to the fund created for the payment of principal of and interest

on such bonds If no such bonds of the District are at such time outstanding, said monies shall be transferred to the general fund of the District as provided and permitted by law

Registration, Transfer and Exchange of Refunding Bonds

The Paying Agent will keep or cause to be kept, at its principal corporate trust office, sufficient books for the registration and transfer of the Refunding Bonds (the “Bond Register”), which shall at all times be open to inspection by the District, and, upon presentation for such purpose, the Paying Agent shall, under such reasonable regulations as it may prescribe, register

or transfer, or cause to be registered or transferred, on said books, the Refunding Bonds

In the event that the book-entry system described herein is no longer used with respect to the Refunding Bonds, the following provisions will govern the registration, transfer, and exchange of the Refunding Bonds

Any Refunding Bond may be transferred in the Bond Register by the person in whose name it is registered, in person or by the duly authorized attorney of such person, upon surrender

of the Refunding Bond to the Paying Agent for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Paying Agent

Whenever any Refunding Bond is surrendered for transfer, the designated District officials shall execute and the Paying Agent shall authenticate and deliver a new Refunding Bond of the same maturity, for a like aggregate principal amount and bearing the same rate of interest All fees and costs of any transfer of the Refunding Bond shall be paid by the bondholder requesting such transfer

The Refunding Bonds may be exchanged at the Paying Agent’s office, or such other place as the Paying Agent shall designate, for a like aggregate principal amount of Refunding

costs of any exchange of the Refunding Bond shall be paid by the bondholder requesting such exchange

No transfer or exchange of Refunding Bonds shall be required to be made by the Paying Agent during the period from the close of business on the Record Date next preceding any Interest Payment Date to and including such Interest Payment Date

Defeasance of Refunding Bonds

If at any time the District shall pay or cause to be paid or there shall otherwise be paid to the Owners of all outstanding Refunding Bonds all of the principal and interest represented by the Refunding Bonds, then such Owners shall cease to be entitled to the obligation to levy taxes for payment of the Refunding Bonds, and such obligation and all agreements and covenants of the District to such Owners under the Paying Agent Agreement, and under the Refunding Bonds shall thereupon be satisfied and discharged and shall terminate, except only that the District shall remain liable for payment of all principal and interest on the Refunding Bonds

The District may pay and discharge any or all of the Refunding Bonds by depositing in trust with the Paying Agent or an escrow agent, at or before maturity, money or non-callable direct obligations of the United States of America or other non-callable obligations, the payment

of the principal of and interest on which is guaranteed by a pledge of the full faith and credit of the United States of America, in an amount that will, together with the interest to accrue thereon and available monies then on deposit in the Debt Service Fund of the District, be fully sufficient,

in the opinion of a certified public accountant licensed to practice in the State, to pay and discharge the indebtedness on such Refunding Bonds (including all principal and interest) at or before their respective maturity dates

BOND INSURANCE

The District has applied for bond insurance to guarantee the scheduled payment of principal of and interest on the Refunding Bonds, and if a commitment is issued to insure the Refunding Bonds, will determine prior to the sale of the Refunding Bonds whether to obtain such insurance

SOURCES OF PAYMENT FOR THE REFUNDING BONDS

The Refunding Bonds are general obligation bonds of the District payable from ad valorem taxes The County Board of Supervisors has the power and is obligated to levy ad valorem taxes upon all property within the District subject to taxation without limitation of rate

or amount, for the payment of the Refunding Bonds and the interest thereon, in accordance with and subject to the Bond Law The Refunding Bonds are not a debt of the County

Payment of Principal and Interest

At least one business day prior to the date any payment is due in respect of the Refunding Bonds, the District will cause monies to be deposited with the Paying Agent sufficient

to pay the principal and interest to become due on all Refunding Bonds outstanding on such payment date When and as paid in full, and following surrender thereof to the Paying Agent, all

Refunding Bonds shall be cancelled by the Paying Agent, and thereafter shall be destroyed The Paying Agent hereby acknowledges that pursuant to the general laws of the State of California, the obligation to levy and collect taxes for the payment of the Refunding Bonds, and to pay principal and interest on the Refunding Bonds when due, are legal obligations of the County and the Treasurer, and shall be performed by the Treasurer

Ad Valorem Taxes

The County Board of Supervisors is empowered and is obligated to levy ad valorem

taxes, without limitation as to rate or amount, for the payment of the principal and interest on the Refunding Bonds, upon all property subject to taxation by the District (except certain personal property which is taxable at limited rates) Such taxes will be levied annually in addition to all other taxes during the period that the Refunding Bonds are outstanding in an amount sufficient to pay the principal and interest on the Refunding Bonds when due Such taxes, when collected, will be placed by the County in the District’s Interest and Sinking Fund for the Refunding Bonds, which is segregated and maintained by the County and used for the payment of the

Refunding Bonds Although the County is obligated to levy an ad valorem tax for the payment

of the Refunding Bonds, and will maintain the Interest and Sinking Fund for the repayment of the Refunding Bonds, the Refunding Bonds are not a debt of the County

The amount of the annual ad valorem tax levied by the County to repay the Refunding

Bonds will be determined by the relationship between the assessed valuation of taxable property

in the District and the principal and interest (the “Debt Service Deposit”) due on the Refunding Bonds in any year Fluctuations in the Debt Service Deposits and the assessed value of taxable property in the District may cause the annual tax rate to fluctuate Economic and other factors beyond the District’s control, such as economic recession, deflation of land values, a relocation out of the District by one or more major property owners, or the complete or partial destruction

of such property caused by, among other eventualities, an earthquake, flood or other natural disaster, could cause a reduction in the assessed value of the District and necessitate an unanticipated increase in annual tax levy

Property Tax Collection Procedures

Taxes are levied by the County for each fiscal year on taxable real and personal property which is situated in the District as of the preceding January 1 For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll The “secured roll” is that part of the assessment roll containing State-assessed public utilities property and real property having a tax lien which is sufficient, in the opinion of the County Assessor, to secure payment of the taxes Other property

is assessed on the “unsecured roll.”

Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment Property on the secured roll with respect to which taxes are delinquent becomes tax defaulted on or about June 30 of the fiscal year Such property may thereafter be redeemed by payment of a penalty of

1.5% per month to the time of redemption, plus costs and a redemption fee If taxes are unpaid for a period of five years or more, the property is subject to sale by the Treasurer

Property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent, if unpaid, on August 31 A 10% penalty attaches to delinquent unsecured taxes If unsecured taxes are unpaid at 5:00 p.m on October 31, an additional penalty of 1.5% attaches to them on the first day of each month until paid The taxing authority has four ways of collecting delinquent unsecured personal property taxes: (1) bringing a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain

a lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Clerk and County Recorder’s office in order to obtain a lien on certain property of the taxpayer; and (4) seizing and selling personal property, improvements, or possessory interests belonging or assessed to the assessee

Assessed Valuations

The assessed valuation of property in the District is established by the San Joaquin County Assessor, except for public utility property which is assessed by the State Board of Equalization Assessed valuations are reported at 100% of the “full value” of the property, as defined in Article XIIIA of the California Constitution Prior to 1981-82, assessed valuations were reported at 25% of the full value of property For a discussion of how properties currently are assessed, see APPENDIX A – “General and Financial Information – Constitutional and Statutory Provisions Affecting District Revenues and Appropriations.”

Certain classes of property such as churches, colleges, not-for-profit hospitals, and charitable institutions are exempt from property taxation and do not appear on the tax rolls

Property within the District had a total assessed valuation for fiscal year 2015-16 of

$11,363,879,768, an increase of 5.24% from fiscal year 2014-15 Shown in the following table are the assessed valuations for the District for the past thirteen fiscal years Notwithstanding the increase in the local real estate market, it is possible that the assessed valuation in the District could be reduced in future fiscal years The reductions in assessed valuation in prior years incorporate the San Joaquin County Assessor’s review of properties eligible for a temporary reduction in assessed value under Proposition 8 Proposition 8 was a Constitutional amendment passed by the voters in 1978, which allows for a temporary reduction in assessed value when a property’s market value declines below its assessed value The County Assessor initiated an annual review process in 2008 to identify and grant Proposition 8 reductions for eligible properties For fiscal year 2015-16, their review included all single family residences and condominiums, most multi-family dwellings, apartments and commercial and industrial properties In the event of reductions in assessed valuation, the County is obligated to increase the tax levy to an amount sufficient to pay the Refunding Bonds

Table No 1

STOCKTON UNIFIED SCHOOL DISTRICT

Assessed Valuation Fiscal Year 2003-04 through Fiscal Year 2015-16

Local Secured Utility Unsecured

Total Before Redevelopment Increment

Annual % Change 2003-04 $ 6,934,435,514 $19,475,505 $ 676,114,093 $ 7,630,025,112 2004-05 7,682,153,155 20,111,094 866,166,471 8,568,430,720 12.30% 2005-06 8,767,760,092 19,918,158 951,429,087 9,739,107,337 13.66 2006-07 10,367,473,365 17,992,173 971,381,470 11,356,847,008 16.61 2007-08 11,343,010,193 5,870,578 978,402,377 12,327,283,148 8.54 2008-09 11,137,725,075 5,863,182 1,313,924,394 12,457,512,651 1.06 2009-10 9,821,585,043 7,324,121 1,361,388,657 11,190,297,821 -10.17 2010-11 9,033,956,644 7,362,580 1,278,728,559 10,320,047,783 -7.78 2011-12 8,648,164,266 7,447,950 1,249,996,437 9,905,608,653 -4.02 2012-13 8,469,726,547 7,926,415 1,283,358,369 9,761,011,331 -1.46 2013-14 8,758,773,565 6,849,730 1,268,756,775 10,034,380,070 2.80 2014-15 9,426,671,626 6,831,572 1,364,575,260 10,798,078,458 7.61 2015-16 9,973,673,108 6,821,095 1,383,385,565 11,363,879,768 5.24

Source: California Municipal Statistics, Inc

Assessed valuation of parcels by land use in the District as of fiscal year 2015-16 is shown below

(1) Local secured assessed valuation; excluding tax-exempt property

Source: California Municipal Statistics, Inc

Set forth in the following table is the per parcel assessed valuation of single family homes

in the District for year 2015-16

Table No 3

STOCKTON UNIFIED SCHOOL DISTRICT Per Parcel Assessed Valuation of Single Family Homes

Fiscal Year 2015-16

Parcels Assessed Valuation Assessed Valuation Assessed Valuation Single Family Residential 43,064 $5,151,989,723 $119,636 $107,730

2015-16 No of % of Cumulative Total % of Cumulative Assessed Valuation Parcels (1) Total % of Total Valuation Total % of Total

(1) Improved single family residential parcels Excludes condominiums and parcels with multiple family units

Source: California Municipal Statistics, Inc

Appeals and Adjustments of Assessed Valuations

Under California law, property owners may apply for a reduction of their property tax assessment by filing a written application, in form prescribed by the State Board of Equalization, with the appropriate county board of equalization or assessment appeals board In most cases, the appeal is filed because the applicant believes that present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value Any reduction in the assessment ultimately granted as a result of such appeal applies to the year for which application is made and during which the written application was filed Such reductions are subject to yearly reappraisals and may be adjusted back to their original values when market

again is subject to the annual inflationary factor growth rate allowed under Article XIIIA See APPENDIX A - “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS – Article XIIIA of the California Constitution” herein

A second type of assessment appeal involves a challenge to the base year value of an assessed property Appeals for reduction in the base year value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter The base year is determined by the completion date of new construction or the date of change of ownership Any base year appeal must be made within four years of the change of ownership or new construction date

No assurance can be given that property tax appeals in the future will not significantly reduce the assessed valuation of property within the District

Teeter Plan

The District’s total secured tax collections and delinquencies are apportioned on a County-wide basis, according to the District’s designated tax rate amount Therefore, the total secured tax levies, as well as collections and delinquencies reported, do not represent the actual secured tax levies, collections and delinquencies of tax payers within the tax areas of the District

In addition, the District’s total secured tax levy does not include special assessments, supplemental taxes or other charges which have been assessed on property within the District or other tax rate areas of the County

The County has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”) as provided for in the State Revenue and Taxation Code, which requires the County to pay 100% of secured property taxes due to local agencies in the fiscal year such taxes are due Pursuant to these provisions, each county operating under the Teeter Plan establishes a delinquency reserve and assumes responsibility for all secured delinquencies, assuming that certain conditions are met

Because of this method of tax collection, the K-12 districts, including the District, located

in counties operating under the Teeter Plan and participating in the Teeter Plan are assured of 100% collection of their secured tax levies if the conditions established under the applicable county’s Teeter Plan are met However, such districts are no longer entitled to share in the receipt of any penalties due to delinquent payments This method of tax collection and distribution is subject to future discontinuance at the County’s option if the delinquency rate for

all ad valorem property taxes levied within the District exceeds 3% in any year, or if demanded

by the participating taxing agencies In the event that the Teeter Plan were terminated, the

amount of the levy of ad valorem property taxes in the District would depend upon the collection

of the ad valorem property taxes and the delinquency rates experienced with respect to the

parcels within the District

The following table shows the secured tax charges and delinquencies for the District for fiscal years 2009-10 through 2014-15

Table No 4 STOCKTON UNIFIED SCHOOL DISTRICT Secured Tax Charges and Delinquencies (1) Fiscal Year 2009-10 through 2014-15

Secured Tax Charge(2)

Amount Delinquent June 30

% Delinquent June 30

(2) 1% general fund apportionment

Source: California Municipal Statistics, Inc

District Tax Rates

The table below summarizes the typical tax rates levied by all taxing entities in a typical Tax Rate Area (TRA 3-000) within the District

Table No 5

STOCKTON UNIFIED SCHOOL DISTRICT Typical Total Tax Rates (TRA 3-000) Fiscal Year 2010-11 through 2015-16

Largest Property Owners

The following table shows the 20 largest owners of taxable property in the District as determined by secured assessed valuation in fiscal year 2015-16

2 Diamond Foods Inc Industrial 70,151,185 0.70

3 Corn Products International Inc Industrial 69,596,882 0.70

4 ARC BBSTNCA001 Industrial 64,550,430 0.65

5 California Water Service Company Water Company 61,202,276 0.61

6 Central Valley Indust Core Holdings LLC Industrial 60,241,163 0.60

7 US Cactus Stockton LLC Industrial 48,449,050 0.49

8 WTM Glimcher LLC Shopping Center 45,958,436 0.46

9 Sherwood Mall LLC Shopping Center 44,909,658 0.45

10 Arch Road LP Industrial 43,787,731 0.44

11 Tru Properties Inc Industrial 40,803,535 0.41

12 Buzz Oates LLC Industrial 40,063,399 0.40

13 Verde Gibraltar LLC Industrial 39,400,352 0.40

14 R&B Foods Industrial 38,250,281 0.38

15 Stonecreek Village Shopping Center LLC Shopping Center 36,041,741 0.36

16 Applied Aerospace Structures Industrial 28,882,141 0.29

17 Pacific Town Center Stockton LP Shopping Center 28,694,758 0.29

18 Westcore Zephyr LLC Industrial 24,077,537 0.24

19 Duraflame Inc Industrial 23,743,132 0.24

20 Pace Supply Corp Industrial 22,711,844 0.23

$943,241,155 9.46%

(1) 2015-16 Local Secured Assessed Valuation: $9,973,673,108

Source: California Municipal Statistics, Inc

Direct and Overlapping Debt

Set forth on the following page is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc., dated as of December 23, 2015 The Debt Report is included for general information purposes only The District has not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith

The Debt Report generally includes long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the District in whole or

in part Such long-term obligations generally are not payable from revenues of the District (except as indicated) nor are they necessarily obligations secured by land within the District In

many cases, long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency

City of Stockton Community Facilities Districts 100.000 24,380,000 City of Stockton 1915 Act Bonds 100.000 6,910,000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $463,703,080 DIRECT AND OVERLAPPING GENERAL FUND DEBT:

San Joaquin County Certificates of Participation 18.195% $ 25,914,229

City of Stockton General Fund Obligations 49.479 61,306,955 City of Stockton Pension Obligation Bonds 49.479 58,353,059 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $185,849,243 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): $102,873,209

(1)

Based on 2014-15 ratios

(2) Excludes issue to be sold

(3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations Qualified Zone Academy Bonds are included based on principal due at maturity

Ratios to 2015-16 Assessed Valuation:

Direct Debt ($410,192,362) 3.61%

Total Overlapping Tax and Assessment Debt 4.08%

Combined Direct Debt ($450,467,362) 3.96%

Combined Total Debt 6.62%

Ratio to Redevelopment Incremental Valuation ($1,772,707,220):

Total Overlapping Tax Increment Debt 5.80%

Source: California Municipal Statistics, Inc.

DEBT SERVICE SCHEDULE

The following schedule shows the annual debt service schedule with respect to the Refunding Bonds

REFUNDING BONDS DEBT SERVICE SCHEDULE

Year Ending

Debt Service

COMBINED DEBT SERVICE SCHEDULE

Upon issuance of the Refunding Bonds, the schedule on the following page shows the combined debt service with respect to general obligation bonds (and refunding general obligation bonds) issued pursuant to the District's prior general obligation bonds authorizations (assuming

no optional redemptions) See APPENDIX B – “Audited Financial Statement of the District for Fiscal Year Ended June 30, 2014” – Note 6 – Long-Term Liabilities, attached hereto

STOCKTON UNIFIED SCHOOL DISTRICT COMBINED GENERAL OBLIGATION BONDS DEBT SERVICE SCHEDULES

Series 2012 Refunding Bonds

Series 2014 A &

Series 2014 B Refunding Bonds

2015 Series A Ed-Tech

Series B Bonds

2016 Refunding Bonds

Combined Debt Service

PLAN OF REFUNDING Application and Investment of Refunding Bond Proceeds

A portion of the proceeds from the sale of the Refunding Bonds will be deposited in an escrow fund (the “Escrow Fund”) to be created and maintained by U.S Bank National Association, acting as Escrow Agent under that certain Escrow Agreement between the District and the Escrow Agent, dated as of January 1, 2016 On February 4, 2016 moneys in the Escrow Fund will be applied to the redemption of the following Series 2006 Bonds at a redemption price

of 100% of par, plus interest accrued and not yet paid on the Series 2006 Bonds:

On August 1, 2016 moneys in the Escrow Fund will be applied to the redemption of the following Series A Bonds at a redemption price of 102% of par, plus interest accrued and not yet paid on the Series A Bonds:

A portion of the proceeds of the Refunding Bonds will be used to pay costs associated with the issuance of the Refunding Bonds and the refunding of the Prior Bonds Any proceeds of sale of the Refunding Bonds not needed to fund the escrow or pay costs of issuance of the Refunding Bonds will be transferred by the Paying Agent to the Treasurer for deposit into the Interest and Sinking Fund of the District Proceeds of taxes held in the Interest and Sinking Fund for payment of the Refunding Bonds will be invested on behalf of the District by the Treasurer pursuant to law and the investment policy of the County See “SAN JOAQUIN COUNTY INVESTMENT POOL.”

SOURCES AND USES OF FUNDS

The proceeds of the Refunding Bonds are expected to be applied as follows:

Principal Amount Net Original Issue Premium

Total Sources

Uses of Funds

Escrow Fund Underwriters’ Discount Costs of Issuance (1)

Total Uses

(1) Includes fees of Bond Counsel, Disclosure Counsel, Paying Agent and Financial Advisor, Verification Agent, rating agency fees, printing fees, [bond insurance premium], and other miscellaneous expenses

SAN JOAQUIN COUNTY INVESTMENT POOL

In accordance with Education Code Section 41001, each California public school district maintains substantially all of its operating funds in the county treasury of the county in which it

is located, and each county treasurer or finance director serves as ex officio treasurer for those school districts located within the county Each county treasurer or finance director has the authority to invest school district funds held in the county treasury Generally, the county treasurer or finance director pools county funds with school district funds and funds from certain other public agencies within the County and invests the cash These pooled funds are carried at cost Interest earnings are accounted for on either a cash or accrual basis and apportioned to pool participants on a regular basis

Each county treasurer is required to invest funds, including those pooled funds described above, in accordance with Government Code Sections 53601 et seq In addition, each county treasurer is required to establish an investment policy which may impose further limitations beyond those required by the Government Code The County’s investment policy can be accessed through the internet at the County Treasurer’s Department, http://www.sjgov.org or by calling the office of the County Treasurer at (209) 468-2133 The County’s current investment policy and investment report for the month ended October 31, 2015, are shown in APPENDIX G – “San Joaquin County Investment Pool Monthly Report Dated October 31, 2015.”

LEGAL OPINION

The proceedings in connection with the issuance of the Refunding Bonds are subject to the approval as to their legality of Dannis Woliver Kelley, Sacramento, California, Bond Counsel for the District The opinion of Bond Counsel with respect to the Refunding Bonds will be delivered in substantially the form attached hereto as APPENDIX D Certain legal matters will also be passed upon for the District by Dannis Woliver Kelley, as Disclosure Counsel and for

Underwriters by Norton Rose Fulbright US LLP, Los Angeles, California, as Underwriters’ Counsel

TAX MATTERS

The following discussion of federal income tax matters written to support the promotion and marketing of the Refunding Bonds was not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding federal tax penalties that may be imposed Each taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor

In the opinion of Dannis Woliver Kelley, Sacramento, California, Bond Counsel, based upon the analysis of existing statutes, regulations, ruling and court decisions, and assuming, among other things, the accuracy of certain representations and compliance with certain covenants, the interest on the Refunding Bonds is excludable from gross income for federal income tax purposes and is exempt from State of California personal income taxes Bond Counsel is also of the opinion that interest on the Refunding Bonds is not an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations, however, such interest is taken into account when determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations A complete copy of the proposed form of Opinion of Bond Counsel is set forth in APPENDIX D hereto

The amount, if any, by which the issue price of any maturity of the Refunding Bonds is less than the amount to be paid at maturity of such Refunding Bonds (excluding amounts stated

to be interest and payable at least annually over the term of such Refunding Bonds) constitutes

“original issue discount,” the accrual of which, to the extent properly allocable to each owner thereof, is treated as interest on the Refunding Bonds which is excluded from gross income for federal income tax purposes and which is exempt from State of California personal income taxes For this purpose, the issue price of a particular maturity of the Refunding Bonds is the first price

at which a substantial amount of such maturity of the Refunding Bonds is sold to the public (excluding bond houses, brokers, or similar persons, or organizations acting in the capacity of underwriters, placement agents, or wholesalers) The original issue discount with respect to any maturity of the Refunding Bonds accrues daily over the term to maturity of such Refunding Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates) The accruing original issue discount is added to the adjusted basis of such Refunding Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Refunding Bonds Owners of the Refunding Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Refunding Bonds with original issue discount, including the treatment of purchasers who do not purchase such Refunding Bonds in the original offering to the public at the first price at which a substantial amount of such Refunding Bonds is sold to the public

Refunding Bonds purchased, whether at original issuance or otherwise, for an amount greater than their principal amount payable on their respective maturity dates (or, in some cases,

at their earlier call date) (“Premium Bonds”) will be treated as having amortizable bond premium No deduction is allowable for the amortizable premium in the case of bonds, like the

purposes However, a purchaser’s basis in a Premium Bond, and under Treasury Regulations the amount of tax exempt interest received, will be reduced by the amount of amortizable premium properly allocable to such purchaser Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable premium in their particular circumstances

The Internal Revenue Code of 1986, as amended, (the “Code”) imposes various restrictions, conditions, and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Refunding Bonds The District has covenanted to comply with certain restrictions designed to assure that interest on the Refunding Bonds will not be included in federal gross income Failure to comply with these covenants may result in interest on the Refunding Bonds being included in federal gross income, possibly from the date of issuance of the Refunding Bonds The opinion of Bond Counsel assumes compliance with these covenants Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after that date of issuance of the Refunding Bonds may adversely affect the tax status of interest on the Refunding Bonds Prospective Bondholders are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax

Certain requirements and procedures contained or referred to in the Resolution, the tax certificate to be delivered on the date of issuance of the Refunding Bonds (the “Tax Certificate”), and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Refunding Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents Bond Counsel expresses no opinion as to any Refunding Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of bond counsel other than Dannis Woliver Kelley

Although Bond Counsel expects to render an opinion that interest on the Refunding Bonds is excludable from gross income for federal income tax purposes and exempt from State

of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Refunding Bonds may otherwise affect a Beneficial Owner’s federal or state tax liability The nature and extent of these other tax consequences will depend upon the particular tax status of the Beneficial Owner or the Beneficial Owner’s other items of income or deduction Bond Counsel expresses no opinion regarding any such other tax consequences

In addition, no assurance can be given that any future legislation, including amendments

to the Code, if enacted into law, or changes in interpretation of the Code, will not cause interest

on the Refunding Bonds to be subject, directly or indirectly, to federal and/or state income taxation, or otherwise prevent Beneficial Owners of the Refunding Bonds from realizing the full current benefit of the tax status of such interest Prospective purchasers of the Refunding Bonds should consult their own tax advisers regarding any pending or proposed federal and/or state tax legislation Further, no assurance can be given that the introduction or enactment of any such future legislation, or any action of the Internal Revenue Service (“IRS”), including but not limited to regulation, ruling, or selection of the Refunding Bonds for audit examination, or the course or result of any IRS examination of the Refunding Bonds, or obligations that present similar tax issues, will not affect the market price or liquidity of the Refunding Bonds

The rights of the owners of the Refunding Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditor’s rights heretofore or hereafter enacted to the extent constitutionally applicable, and their enforcement may also be subject to the exercise of judicial discretion in appropriate cases

The IRS has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and target audits It is possible that the Refunding Bonds will be selected for audit by the IRS It is also possible that the market value of the Refunding Bonds might be affected as a result of such an audit of the Refunding Bonds (or by an audit of similar bonds)

CONTINUING DISCLOSURE

The District has covenanted for the benefit of holders and Beneficial Owners of the Refunding Bonds to provide certain financial information and operating data relating to the District (the “Annual Report”) not later than 290 days after the end of the District’s fiscal year (which currently ends on June 30), commencing with the report for the 2014-15 fiscal year, and

to provide notices of the occurrence of certain enumerated significant events The Annual Report will be filed by the District with the Municipal Securities Rulemaking Board (“MSRB”) through its Electronic Municipal Market Access System (“EMMA System”) The notices of significant events will be filed by the District in the same manner as an Annual Report The specific nature of the information to be contained in the Annual Report and in the notices of significant events is summarized under the caption APPENDIX E – “Form of Continuing Disclosure Certificate.” These covenants have been made in order to assist the Underwriters in complying with S.E.C Rule 15c2-12(b)(5) (the “Rule”)

The District has existing disclosure undertakings that have been made pursuant to the Rule in connection with the issuance of the District’s outstanding general obligation bonds and refunding general obligation bonds During the last five years, each of the annual reports to be filed with respect to the District’s continuing disclosure undertakings were filed in a complete and timely manner However, event notices regarding changes to the underlying ratings of certain of its bonds, and downgrades of bond insurance companies that insured bonds related to such undertakings, were not filed in a timely manner Notices of the rating changes have been made as of this date Accordingly, the District is presently in compliance with its existing continuing disclosure undertakings In order to assist it in complying with its disclosure undertakings for its outstanding bonds and the Refunding Bonds, the District has engaged Dale Scott & Company, its Financial Advisor, to serve as its dissemination agent with respect to each

of its disclosure undertakings, including the Continuing Disclosure Certificate to be executed in connection with the Refunding Bonds

NO MATERIAL LITIGATION

No litigation is pending or threatened concerning the validity of the Refunding Bonds, and a certificate to that effect will be furnished to purchasers at the time of the original delivery

of the Refunding Bonds The District is not aware of any litigation pending or threatened that

(i) questions the political existence of the District; (ii) contests the District’s ability to receive ad

valorem taxes or to collect other revenues; or (iii) contests the District’s ability to issue and retire

RATINGS

Standard & Poor’s Ratings Services (“Standard & Poor’s”) and Moody’s Investors Service (“Moody’s”) is expected to assign their municipal bond ratings of “ _” and “ _,” respectively, to the Refunding Bonds[, based upon the issuance by of the Policy] [Standard & Poor’s and Moody’s have assigned their underlying rating of “A+” and “A2,” respectively, to the Refunding Bonds.] There is no assurance the credit ratings given to the Refunding Bonds will be maintained for any period of time or that the ratings may not be lowered or withdrawn entirely by Standard & Poor’s or Moody’s if, in their judgment, circumstances so warrant Any such downward revision or withdrawal of such ratings may have

an adverse effect on the market price of the Refunding Bonds Such ratings reflect only the views of Standard & Poor’s and Moody’s, respectively, and an explanation of the significance of such ratings may be obtained from Standard & Poor’s and Moody’s, respectively

UNDERWRITING

The Refunding Bonds are being purchased by Morgan Stanley & Co LLC as representative of itself and Wells Fargo Securities (together, the “Underwriters”) The Underwriters have agreed to purchase the Refunding Bonds at a price of $ _, which equals the principal amount of the Refunding Bonds of $ _, [plus net original premium of $ _,] less the underwriters’ discount of $ _ The Underwriters will retain $ _ to pay the costs of issuance of

$ _, [plus the bond insurance premium of $ _] The purchase contract relating to the Refunding Bonds provides that the Underwriters will purchase all of the Refunding Bonds (if any are purchased), and provides that the Underwriters’ obligation to purchase is subject to certain terms and conditions, including the approval of certain legal matters by counsel

The Underwriters may offer and sell Refunding Bonds to certain dealers and others at prices lower than the offering prices stated on the cover page hereof The offering prices may be changed by the Underwriters

The following information has been provided by the Underwriters, Morgan Stanley & Co LLC and Wells Fargo Securities, respectively:

Morgan Stanley & Co LLC Morgan Stanley, parent company of Morgan Stanley & Co

LLC., an underwriter of the Refunding Bonds, has entered into a retail distribution arrangement with Morgan Stanley Smith Barney LLC As part of the distribution arrangement, Morgan Stanley & Co LLC may distribute municipal securities to retail investors through the financial advisor network of Morgan Stanley Smith Barney LLC As part of this arrangement, Morgan Stanley & Co LLC may compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the Refunding Bonds

Wells Fargo Securities Wells Fargo Securities is the trade name for certain securities-related

capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Bank, National Association

Wells Fargo Bank, National Association ("WFBNA") one of the underwriters of the Refunding Bonds, has entered into an agreement (the "Distribution Agreement") with its affiliate, Wells Fargo Advisors, LLC ("WFA"), for the distribution of certain municipal securities offerings, including the Refunding Bonds Pursuant to the Distribution Agreement, WFBNA will share a portion of its underwriting or remarketing agent compensation, as applicable, with respect to the Refunding Bonds with WFA WFBNA also utilizes the distribution capabilities of its affiliate Wells Fargo Securities, LLC (“WFSLLC”), for the distribution of municipal securities offerings, including the Refunding Bonds In connection with utilizing the distribution capabilities of WFSLLC, WFBNA pays a portion of WFSLLC’s expenses based on its municipal securities transactions WFBNA, WFSLLC, and WFA are each wholly-owned subsidiaries of Wells Fargo & Company

FINANCIAL ADVISOR

Dale Scott & Co., Inc is serving as Financial Advisor to the District with respect to the Refunding Bonds The Financial Advisor has assisted the District in the matters relating to the planning, structuring, execution and delivery of the Refunding Bonds Because of its limited participation in reviewing this Official Statement, the Financial Advisor assumes no responsibility for the accuracy or completeness of any of the information contained herein

ESCROW VERIFICATION

Upon delivery of the Refunding Bonds, Causey Demgen & Moore P.C will deliver a report on the mathematical accuracy of certain computations based upon certain information and assertions provided to them by the Underwriters relating to (a) the adequacy of the moneys in the Escrow Fund, to pay the redemption price of and interest on the Prior Bonds, and (b) the computations of yield of the Refunding Bonds which support Bond Counsel’s opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes

References are also made herein to certain documents and reports relating to the District; such references are brief summaries and do not purport to be complete or definitive Copies of such documents are available upon written request to the District

Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact This Official Statement is not to be construed as a contract or agreement between the District and the purchasers or owners of any of the Refunding Bonds

The execution and delivery of this Official Statement have been duly authorized by the District

STOCKTON UNIFIED SCHOOL DISTRICT

By:

Julie Penn, Interim Superintendent

APPENDIX A GENERAL AND FINANCIAL INFORMATION OF THE DISTRICT

General Information

The Stockton Unified School District (the “District”) was established on July 1, 1936, and is located in San Joaquin County (the “County”), in California’s Central Valley The boundaries of the District cover an area of approximately 55 square miles The District is located approximately 58 miles south of Sacramento, the State Capitol, 78 miles east of the San Francisco Bay Area, and 337 miles north of Los Angeles The District has fifty-four schools, including forty-one K-8 schools (including one K-5 school, and two charter schools (Pittman and Nightingale Elementary), eleven high schools (including four specialty high schools (Jane Fredrick, Weber Institute, Merlo Institute, Stockton High) and three specialty charter high schools (Pacific Law Academy, Stockton Early College Academy, Health Careers Academy)), one K-12 special education school, and one adult education school The District also maintains

an independent study program and a child development program The ADA in the District for 2013-14 was 32,492 students, 32,753 students in 2014-15, and is projected to be 32,734 students

in 2015-16

Administration

Board of Trustees The District is governed by a seven-member Board of Trustees (the

“Governing Board”), each member of which is elected to a four-year term Current members of the Governing Board, together with their office and the date their term expires, are listed below:

Interim Superintendent, Julie Penn Ms Penn has been employed by the District since

1994 and, prior to her appointment as Interim Superintendent, was the Assistant Superintendent

of Student Support Services from 2006 to 2014 She also served as the Deputy Superintendent from September of 2011 to July of 2012 Ms Penn holds a M.A in Education from California Polytechnic State University in San Luis Obispo, a Pupil Personnel Services Credential from California State University Sacramento, and a Professional Administrative Credential from California State University, Stanislaus

Chief Business Official Lisa Grant-Dawson, Chief Business Official, Stockton Unified

School District, has been employed by the District since July 2015 She was previously the Assistant Superintendent of Business Services, Hayward Unified School District from July 2013-

2006 – June 2013 Prior to entering the Educational Industry, Ms Grant-Dawson held progressive business/accounting positions in companies such as Johnson and Johnson and Fresh Express Foods Ms Grant-Dawson has earned a B.S in Business Management (2004) and Masters in Business Administration (2006) from the University of Phoenix, after attending Tuskegee University from 1987 – 1991, where she majored in Accounting

Recent Enrollment Trends

The following table shows enrollment history for the District for the preceding nine fiscal years and the projected enrollment through fiscal year 2015-16

STOCKTON UNIFIED SCHOOL DISTRICT

Annual Enrollment Fiscal Years 2004-05 through 2014-15, and Projected Enrollment Fiscal Years 2015-16

Annual Change

table on the following page shows the District’s bargaining units, number of employees, and contract status:

STOCKTON UNIFIED SCHOOL DISTRICT Bargaining Units, Number of Employees, and Contract Status

Stockton Pupil Personnel

Association

California School Employees’

Operating Engineers Local No 3

(Police Unit)

California School Employees

Association, Chapter 885

(Transportation Department Bus

Drivers)

District Retirement Systems

The District participates in the California State Teacher’s Retirement System (“STRS”) This plan covers basically all full-time certificated and part-time contracted employees The District’s contributions to STRS for fiscal years 2011-12, 2012-13, 2013-14, and 2014-15 were

$11,562,625, $11,942,624, $12,094,365, and $24,571,312, respectively The projected contribution for fiscal year 2015-16 is $17,203,110 Each of these contributions equals 100% of the required contribution for such fiscal year

The District also participates in the California Public Employees’ Retirement System (“PERS”) This plan covers all classified personnel who are employed four or more hours per day The District’s contributions to PERS for fiscal years 2011-12, 2012-13, 2013-14, and

contribution for fiscal year 2015-16 is $7,554,132 Each of these contributions equals 100% of the required contribution for such fiscal year Both STRS and PERS are operated on a statewide basis For more information on the District’s retirement systems, see APPENDIX B – “Audited Financial Statements of the District for Fiscal Year Ended June 30, 2014” – Note 8– Employee Retirement Systems, attached hereto

Assembly Bill 1469 (“AB 1469”) was signed into law by the Governor in connection with the State’s adoption of the fiscal year 2014-15 budget AB 1469 addresses the unfunded liabilities of the STRS pension plan by increasing contributions of plan members, employers (including the District), and the State Pursuant to AB 1469, employer contribution rates to STRS will increase over the next seven years from 8.88% in fiscal year 2014-15 to 19.1% in fiscal year 2020-21, as shown in the following table After fiscal year 2020-21, employer contribution rates will be determined by the STRS board to reflect the amount of contribution necessary to eliminate unfunded liabilities by June 30, 2046

AB 1469 STRS EMPLOYER CONTRIBUTION RATES

Fiscal Year

% Increase from FY 2013-14 Rate*

* Fiscal year 2013-14 rate of 8.25%

State Pensions Trusts

Both the PERS and STRS systems are operated on a statewide basis District contribution rates to PERS vary annually depending on changes in actuarial assumptions and other factors, such as liability Contributions to STRS can only be changed legislatively Both PERS and STRS have substantial State unfunded actuarial liabilities, being $57 billion for PERS

as of June 30, 2012 (the date of the last actuarial valuation for PERS) and $73.7 billion for STRS

as of June 30, 2013 (the date of the last actuarial valuation for STRS)

On September 12, 2012, Governor Brown signed Assembly Bill 340 (“AB 340”), which enacted the California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) and amended various sections of the California Education and Government Codes AB 340 increased the retirement age for new State, school, and city and local agency employees depending on job function; capped the annual PERS and STRS pension benefit payouts; addressed numerous abuses of the system; and required State, school, and certain city and local agency employees to pay at least half of the costs of their PERS pension benefits PEPRA applies to all public employers except the University of California, charter cities and charter counties (except to the extent they contract with PERS.)

AB 340 went into effect on January 1, 2013, with respect to new State, school, and city and local agency employees hired on and after that date Existing employees who are members

of employee associations, including employee associations of the District, have a five-year window to negotiate compliance with AB 340 through collective bargaining If no deal is reached by January 1, 2018, a city, public agency or school district could force employees to pay their half of the costs of PERS pension benefits, up to 8% of pay for civil workers and 11% or 12% for public safety workers

PERS has predicted that the impact of AB 340 on employers, including the District and other employers in the STRS system, and employees will vary, based on each employer’s current level of benefits To the extent that the new formulas reduce retirement benefits, employer contribution rates could decrease over time as current employees retire and employees subject to the new formulas make up a larger percentage of the workforce This change would, in some circumstances, result in a lower retirement benefit for employees than they currently earn PERS further noted that changes resulting from AB 340 could have an adverse impact on public sector recruitment in areas that have historically experienced recruitment challenges due to higher pay for similar jobs in the private sector

With respect to STRS, the provisions of AB 1469, as described above, addressed the contribution requirements of STRS members, employers, and the State

More information about AB 340 can be accessed through the PERS’ web site at

www.calpers.ca.gov and through the STRS’ website at www.calstrs.com The references to these

internet websites are shown for reference and convenience only; the information contained within the websites may not be current and has not been reviewed by the District and is not incorporated herein by reference

Post-Retirement Health Care Obligations of District

In addition to the STRS and PERS benefits described above, the District provides retirement health care benefits to all employees who retire from the District on or after attaining age 55 with at least 10 years of service As of June 30, 2014, 273 retirees met these eligibility requirements Benefits are provided for retirees aged 55 to 65 The District pays up to $1,832.90 per month for health benefits of retirees on a pay-as-you-go basis The liability at June 30, 2014

post-is estimated at $22,846,520, which conspost-ists of future costs associated with premium-based health plans, as well estimated future costs of self-insured plans For more information on the District’s post-retirement health care benefits, see APPENDIX B – “Audited Financial Statements of the District for Fiscal Year Ended June 30, 2014” – Note 6 – Long-Term Liabilities – Post-Employment Healthcare Benefits, attached hereto

Insurance

The District maintains property insurance with the Northern California Regional Liability Excess Fund for claims up to $250,000,000, with a self-insured retention (SIR) limit of $150,000 per occurrence The District maintains liability insurance through the Northern California Regional Liability Excess Fund for claims up to $50,000,000, with a self-insured retention of

$100,000 per occurrence The District is self-insured for dental and vision coverage for all