1 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. Pleasanton ISD The Basics of School Finance Presented by Omar Garcia, BOSC, Inc. September 9, 2014

2 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. Levels of M&O Tax Rate  Compressed Tax Rate  PISD’s compressed tax rate is $1.00  “Golden” Pennies (maximum = 6)  PISD has 4….would have to have a TRE to get remaining 2 (M&O tax rate would have to be $1.06)  “Copper” Pennies (max = $1.17 – (Compressed Rate + 6))  PISD has none

3 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. The Basic Program (Tier I) Regular Ed Allotment +Special Ed Allotments +Career & Tech Ed Allotment +Bilingual Ed Allotment +Compensatory Ed Allotments +Gifted &Talented Ed Allotment +Transportation Allotment +Public Education Grant Allotment +High School Allotment Total Cost of Tier I

4 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. The Basic Program (Tier I)  Question: Who pays for the Total Cost of this basic program?  Answer: PISD’s compressed rate of $1.00 goes towards paying for that cost  The state will pay for the rest , estimated: PISD’s Tier I cost = $23.1M PISD’s $1.00 raises $17.6M ($1.76B in prior-yr value x $1.00) State pays the remaining $5.5M (called Tier I state aid)

5 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. The Basic Program (Tier I) , estimated: PISD’s Tier I cost = $23.1M PISD’s $1.00 raises $22.1M ($2.21B in prior-yr value x $1.00) State only pays $1M

6 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested.

7 The Basic Program (Tier I) , estimated with only a 10% growth in value PISD’s Tier I cost = $23.1M PISD’s $1.00 raises $24.3M ($2.43B in prior-yr value x $1.00) State pays $0

8 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. The “Enrichment” Program (Tier II)  The “Golden” Penny Level:  Each of PISD’s 4 pennies is guaranteed to bring in $61.86 per WADA in Guarantee = $61.86 per penny per WADA PISD raises $40.44 per penny per WADA (using prior-yr value) State matches with $21.42 per penny per WADA (State matching is called Tier II state aid)

9 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. The “Enrichment” Program (Tier II)  , estimated: Guarantee = $61.86 per penny per WADA PISD raises $50.81 per penny per WADA State matches with $11.05 per penny per WADA  , estimated with only a 10% growth in value Guarantee = $61.86 per penny per WADA PISD raises $55.83 per penny per WADA State matches with $6.03 per penny per WADA

10 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. The “Enrichment” Program (Tier II)  The “Copper” Penny Level:  PISD has no pennies at this level but this level works the same way as the golden level, but the guarantee is only $31.95 per penny per WADA , estimated: Guarantee = $31.95 per penny per WADA PISD raises $40.44 per penny per WADA (using prior-yr value) No State matching  PISD could only keep $31.95 per penny per WADA and the $8.49 per penny per WADA “excess” would be recaptured

11 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. The Facilities Program  The state has 2 programs to help districts meet their facilities debt  Existing Debt Allotment (EDA)  Instructional Facilities Allotment (IFA)  Each I&S penny levied is guaranteed to bring in $35 per ADA  PISD no longer qualifies for either program , estimated: Guarantee = $35.00 per penny per ADA PISD raises $54.19 per penny per ADA (using prior-yr value) No State Matching and no recapture on I&S

12 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. Chapter 41 (Recapture)  Two levels of recapture  1 st level is applied to the district’s compressed tax rate  2 nd level is applied to the district’s “copper” pennies  No recapture on the “golden” pennies  1 st level begins at $504,000 in wealth per WADA ( )  2 nd level begins at $319,500 in wealth per WADA – TEA uses this level to label a district as Chapter 41  PISD’s estimated wealth per WADA (again using prior-yr value) in is $404,449 so therefore PISD will be labeled a Chapter 41 district

13 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. Chapter 41 (Recapture)  Just because a district is labeled Chapter 41 does not necessarily mean it will have to pay recapture  PISD ‘s wealth per WADA in is below $504,000 so therefore, the 1 st level of recapture does not apply  PISD’s wealth per WADA in is above $319,500 but it has no “copper” pennies, so therefore, the 2 nd level of recapture does not apply  PISD ‘s wealth per WADA in will be slightly above 504,000 ($508,140) so therefore, the 1 st level of recapture will apply

14 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. Chapter 41 (Recapture)  In (estimated using 10% growth factor)  PISD ‘s wealth per WADA will be well above $504,000 ($558,257, estimated) so therefore, the 1 st level of recapture will apply  Amount of recapture calculation for 1 st level: Wealth per WADA Allowed = $504,000 PISD’s Wealth per WADA = $558,257 “Excess” Wealth per WADA = $54,257 Percentage “Excess” = 10.8%  Means that for every $1.00 raised at the district’s compressed rate, $.108 will be recaptured (district will keep $.892 of every dollar)

15 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. The Cost of a Bus: M&O vs I&S  In when recapture is more significant: Price-tag on bus = $100,000 If paid for with I&S tax rate, cost would be $100,000 (no recapture on I&S side) If paid for with M&O compressed tax rate, cost would be $112,108 factoring in 10.8% recapture ($112,108 x.892 = $100,000)

16 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. When Boom Goes to Bust  For example, if values were to decline dramatically beginning in tax year 2015: School YearPrior-Yr ValueTotal Revenue $751M$26.6M $1.1B$31.2M $1.8B$28.6M $2.2B$21.0M $1.1B$24.0M

17 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. My Contact Info   Phone: toll-free  Cell:

18 © 2011 BOSC, Inc. A subsidiary of BOK Financial Corporation. Broker/Dealer Services and Securities offered by BOSC, Inc., an SEC registered investment adviser, a registered broker/dealer, member FINRA/SIPC. SEC registration does not imply a certain level of skill or training. Insurance offered by BOSC Agency, Inc., an affiliated agency. Investments and insurance are not insured by FDIC, are not deposits or other obligations of, and are not guaranteed by, any bank or bank affiliate. Investments are subject to risks, including possible loss of principal amount invested. BOSC, Inc.’s Specialized Texas School District Finance Team Ryan O’Hara Managing Director, Texas Public Finance 1401 McKinney Street, Suite 1000 │ Houston, Texas Direct: │ Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Ryan O’Hara Managing Director, Texas Public Finance 1401 McKinney Street, Suite 1000 │ Houston, Texas Direct: │ Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Alison M. Long Investment Banker, Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas Direct: │ Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Alison M. Long Investment Banker, Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas Direct: │ Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC William J. Gumbert Head of Municipal (Tier I) Sales, Trading and Underwriting Managing Director, Co-Director of Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas Direct: │ Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC William J. Gumbert Head of Municipal (Tier I) Sales, Trading and Underwriting Managing Director, Co-Director of Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas Direct: │ Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC  Since the financial operations of Texas school districts are unique and the fiscal challenges/solutions are different from other municipal entities, BOSC, Inc. formed its “Texas School District Finance Team” to provide comprehensive and specialized financial services to Texas public school districts. Mike Jolly Investment Banker, Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas Direct: │ Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Mike Jolly Investment Banker, Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas Direct: │ Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Dr. Cathy Bryce Investment Banker, Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Dr. Cathy Bryce Investment Banker, Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Joshua M. McLaughlin Managing Director, Co-Director of Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas Direct: │ Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Joshua M. McLaughlin Managing Director, Co-Director of Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas Direct: │ Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Omar Garcia Investment Banker, Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas Direct: │ Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Omar Garcia Investment Banker, Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas Direct: │ Mobile: │ Fax: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Allen Mattson, CFA Senior Vice President | Manager, Municipal Underwriting and Trading 333 West Campbell Road, Suite 350 │ Richardson, Texas N. Mayfair Road, Suite 303 │ Milwaukee, Wisconsin Direct: │ Mobile: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Allen Mattson, CFA Senior Vice President | Manager, Municipal Underwriting and Trading 333 West Campbell Road, Suite 350 │ Richardson, Texas N. Mayfair Road, Suite 303 │ Milwaukee, Wisconsin Direct: │ Mobile: Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC