AMBAC. - CA.gov

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NEW ISSUE BOOK-ENTRY ONLY

OFFICIAL STATEMENT Bank Qualified

RATING Moody's: Aaa S&P:AAA Fitch: AAA (See "RATINGS" herein)

In the opinion of Orrick, Herrington & Sutcliffe and Lofton, De Lancie & Nelson, Co-Bond Counsel, based on an analysis of existing laws, regulations, rufings and court aecisions and assuming, amon! other matters, compliance with certain covenants interest on the Bonds is excluded from ~oss income for federal income tax purposes and rs exenpt from State of California personal income taxes. In the opinion cf CoBond Counsel, interest on the lJonds is not a specific preference item Jor/urposes of the federal individual or corporate alternative minimum taxes, altlwugh Co-Bond Counsel observes tlrat it is included in adjuste current earnings wlten calculating corporate alternative minimum taxable income. Co-Bond Counsel expresses no opinion regarding any other tax consequences caused by the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See "TAX EXEMPTIONH herein.

$9,000,000 PERALTA COMMUNITY COLLEGE DISTRICT

(ALAMEDA COUNTY, CALIFORNIA) GENERAL OBLIGATION BONDS,

ELECTION OF 1992, SERIES B Dated: February 1, 1995 Due: August 1, as shown below

The Bonds were issued to finance the acquisition, construction and rehabilitation of school facilities. The Bonds are general obligations of the Peralta Community College District (the "District") and the Board of Supervisors of Alameda County is empowered and is obligated to levy aa valorem taxes, without limitations of rate or amount, for the payment of interest on and principal of the Bonds, upon all property subject to taxation by the District (except certain personal property which is taxable at limitea rates). To the extent more fully described herein, the Bonds are legal investments for commercial banks in the State of California and are eligible to secure deposits of public moneys in the State of California.

Interest due with respect to the Bonds is Eayable semiannually on February 1 and Augt!St 1 of each r,ear commencing February 1, 1996. The Bonds will be delivered in fully registered form only and, when executed and delivered, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"). Ownership interests in the Bonds will be in denominations of $5,000 or any integral multiple Thereof. Beneficial owners of the Bonds will not receive physical certificates representing their interests in the Boncfs, but will receive a credit balance on the books of the nominees for such beneficial owners. The principal and interest with respect to the Bonds will be paid by Bank of America National Trust and Savings Association, Los Angeles, California as bond registrar, transfer agent, and paying agent (the "Paying Agent") to OTC, which will in turn remit such principal and interest to its participants for subsequent disbursement to the beneficia[ owners of the Bonds as described herein. See ''THE BONDS - Book-Entry: Only System." The Bonds are subject to redemption prior to maturity. See "Redemption" herein. Payment of the principal of and interest on the Bonds when due will be insured by a municipal bond insurance policy to be issued &y AMBAC Indemruty Corporation simultaneously with the delivery of the Bonds.

AMBAC. MA TIJRITY SCHEDULE

Maturity Principal Coupon Price or Maturity Principal Coupon Price or {Aug, l} Amf.mnt ~ Tukl (A:ug. ll Am2:Y.nt Rab: ~

1996 $190,000 6.375% 4.900% 2008 $385,000 6.375% 6.050% 1997 205,000 6.375 5.050 2009 410,000 6.375 6.150 1998 215,000 6.375 5.150 2010 435,000 6.375 6.200 1999 230,000 6.375 5.250 2011 460,000 6.375 6.250 2000 240,000 6.375 5.350 2012 485,000 6.375 6.300 2001 255,000 6.375 5.450 2013 515,000 6.400 6.423 2002 270,000 6.375 5.500 2014 545,000 6.400 6.423 2003 290,000 6.375 5.550 2015 580,000 6.400 6.444 2004 305,000 6.375 5.650 2016 615,000 6.400 6.443 2005 325,000 6.375 5.750 2017 650,000 6.400 6.453 2006 345,000 6.375 5.850 2018 685,000 6.400 6.452 2007 365,000 6.375 5.950

The following firm setved as financial advisor to the District in the structuring of this financing: DALE SCOIT & COMPANY INC.

The Bonds were sold by competitive bid held January 19, 1995 and awarded within 26 hours as set forth in the Official Notice of Sale dated December 13, 1994. The Bonds will be offered when, as and if issued subject to the approval of legalitv by Orrick, Herrington & Sutcliffe and Lofton, De Lancie & Nelson, Co-Bond Counsel. It is anticipated that the Bonds, in definitive form, wil[ be available for delivery to DTC on or about February 2, 1995.

This Official Statement is dated January 19, 1995.

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

This Official Statement is not to be construed as a contract with the purchasers of the 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 representation of facts.

The information set forth herein has been obtained from sources believed to be reliable but it is not guaranteed as to accuracy or completeness, and is not to be construed as representation by Dale Scott & Company Inc. or Bank of America National Trust and Savings Association.

The District has, by resolution adopted on October 25, 1994, designated the Series B Bonds as "qualified tax-exempt obligations" pursuant to Section 265(b )(3) of the Code. Such section provides an exception to the prohibition against the ability of a "financial. institution" (as defined in the Internal Revenue Code of 1986) to deduct its interest expense allocable to tax-exempt interest.

WITH RESPECT TO THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE mATWHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANYTIME.

-PERALTA COMMUNITY COLLEGE DISTRICT

ALAMEDA COUNTY STATE OF CALIFORNIA

County Board of Supervisors

Edward Campbell, President, District 1 Gail Steele, District 2

Dawn Pera.ta, District 3 Mary King, District 4

Keith Carson, District 5

District Board of Trustees

Amey Stone, President Lynn Baranco, Vice President

Tom Brougham Darrell Carter Susan Duncan

Dorothy "Doddie" Gifford Brenda Knight

District Administrative Staff

Robert J. Scannell, Chancellor A. J. Harrison II, Vice Chancellor, Financial Services Wise E. Allen, Vice Chancellor, Educational Services

Clint Hilliard, Vice Chancellor, Administrative Services

Financial Advisor

Dale Scott & Company Inc. 400 Montgomery Street, Suite 805 San Francisco, California 94104

Co-Bond Counsel

Orrick Herrington & Sutcliffe 400 Sansome Street

San Francisco, California 94111

Lofton, De Lande & Nelson 505 Montgomery, Suite 1550

San Francisco, California 94111

Paying Agent

Bank of America Corporate Trust Services 333 South Beaudry A venue, 25th Floor, Suite 8510

Los Angeles, California 90017

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TABLE OF CONTENTS

INTRODUCTION .............................................................................................................. l

THE BONDS ..................................................................................................................... 1 Authority for Issuance ............................................................................................ 1 Terms of Sale ......................................................................................................... 1 Description of the Bonds .......................................................................................... 1 Book-Entry Only System ........................................................................................ 2 Interest .................................................................................................................. 3 Redemption ........................................................................................................... 3

Optional Redemption ................................................................................. 3 Notice of Redemption ................................................................................. 4

Payment ................................................................................................................ 4 • Legal Opinion ........................................................................................................ 4 Security ................................................................................................................. 5 Bond Insurance ....................................................................................................... 5 Purpose of the Issue ................................................................................................ 7 Annual Debt Service ................................................................................................ 8

THE DISTRICT .................................................................................................................. 9 General Information ............................................................................................... 9 Employee Relations ............................................................................................... 10 Pension Plans ......................................................................................................... 11

DISTRICT DEBT STRUCTURE ........................................................................................... 11 Short-Term Borrowing ............................................................................................ 11 Lease Obligations .................................................................................................. 11 Long-Term Borrowing ............................................................................................. 11 Property Tax Collection Procedures ......................................................................... 13 Unitary Taxation of Utility Property ..................................................................... 13 Tax Levies and Delinquencies ................................................................................. 14 The Teeter Plan ...................................................................................................... 14 County Pooled Investment ........................................................................................ 15 Top Ten Taxpayers ................................................................................................. 15 Historic Assessed Valuation ......................................................... " ......................... 16 Tax Rates ............................................................................................................... 16

DISTRICT FINANCIAL INFORMATION .......................................................................... 17 District Budget ...................................................................................................... 17 Accounting Practices ............................................................................................... 18

STATE OF CALIFORNIA FINANCES ................................................................................ 19 General. ................................................................................................................. 19 State Funding of Education ..................................................................................... 19 Proposition 98 and Proposition 111 .......................................................................... 20

LIMITATIONS ON TAX REVENUES ................................................................................. 22 Property Tax Rate Limitations - Article XIIIA ........................................................ 22 Legislation Implementing Article XIIIA ................................................................. 22 Appropriation Limitation - Article XIIIB ............................................................... 23 Proposition 62 ........................................................................................................ 23

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TAX EXEMPTION .............................................................................................................. 24

CERTAIN LEGAL MA TIERS .............................................................................................. 24 Legality for lnvestment .......................................................................................... 24 Interest Deduction for Financial Institutions ............................................................ 25 Absence of Litigation .............................................................................................. 25

RATINGS .................................................................... -...................................................... 25

MISCELLANEOUS ............................................................................................................ 26

APPENDIX A - EXCERPTS OF AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR FISCAL YEAR 1993-94

APPENDIX B - FORM OF OPINION OF CO-BOND COUNSEL

APPENDIX C- COUNTY OF ALAMEDA

APPENDIX D- FORM OF BOND INSURANCE POLICY

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OFFICIAL STATEMENT

$ 9,000,000 PERALTA COMMUNITY COLLEGE DISTRICT

(ALAMEDA COUNTY, CALIFORNIA) GENERAL OBLIGATION BONDS,

ELECTION OF 1992, SERIES B

INTRODUCTION

The $9,000,000 principal amount of Peralta Community College District (the "District") General Obligation Bonds, Election of 1992, Series B (the "Bonds") represents the sale of a portion of the bonds approved by more than two-thirds of the voters casting ballots at an election held in the Peralta Community College District on November 3, 1992. The Bonds represent general obligations of the District to be issued under provisions of the State of California Education Code, and pursuant to a resolution of the Board of Supervisors of Alameda County adopted on December 13, 1994 (the "County Resolution"). Proceeds from the sale of the Bonds will be used to finance the acquisition, construction and rehabilitation of school facilities.

THE BONDS

Authority for Issuance

The $9,000,000 principal amount of bonds of the District are general obligation bonds to be issued under provisions of Title 1, Division 1, Part 10, Chapter 2 of the State of California Education Code, commencing with Section 15100, and pursuant to the County Resolution. The Bonds represent the second series of bonds authorized from $50,000,000 approved by District voters on November 3, 1992. In June, 1993, the District issued $9,000,000.

Terms of Sale

Bids for purchase of the Bonds were received at or before 9:00 a.m. (Pacific Time}, January 19, 1995 at the office of Dale Scott & Co., Inc., 400 Montgomery Street, Suite 805, San Francisco, CA 94104. The Bonds will be sold pursuant to the terms of sale contained in the Official Notice of Sale adopted by the Board of Supervisors of Alameda County on December 13, 1994.

Description of the Bonds

The Bonds will be dated February 1, 1995 and will be issued in registered form in denominations of $5,000 or any integral multiple thereof, provided that no Bond shall have principal maturing on more than one maturity date. The Bonds will be delivered in fully registered form only and, when executed and delivered, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"). Beneficial Owners (as defined herein) of the Bonds will not receive physical certificates representing their interests in the Bonds, but will receive a credit balance on the books of the nominees for such beneficial owners. The principal and interest with respect to the Bonds will be paid by Bank of America National Trust and Savings Association, Los Angeles, California as Paying Agent to DTC, which will in turn remit such principal and interest to its participants for subsequent disbursement to the Beneficial Owners of the Bonds as described herein. As long as Cede & Co. is the registered owner of the Bonds, principal and interest on the Bonds are payable by wire transfer with same-day funds transferred by the Paying Agent to Cede & Co., as nominee for

DTC, which will in turn remit such amounts to DTC Participants (as defined herein) for subsequent distribution to the Beneficial Owners.

As long as Cede & Co. is the registered owner of the :Bonds, as nominee of DTC, references herein to the registered owners shall mean Cede & Co. as aforesaid and shall not mean the Beneficial Owners of the Bonds. See "THE BONDS - Book - Entry Only System." The Bonds will mature on August 1, in the years and amounts as set forth on the cover.

Book-Entry Only System

The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered Bonds in the name of Cede & Co., DTC's partnership nominee. One fully-registered bond will be issued for each maturity in the aggregate principal amount of the Bonds, and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participant accounts, thereby eliminating the need for physical movem4mt of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers Inc. Access to the OTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants.") The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recordedl on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from OTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposit,a?d by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. Th,e deposit of Bonds with DTC and their registration in the name of Cede & Co. effect no change in ben~ficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will

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be governed by arrangements among them, subject to any statutory requirements as may be in effect from time to time.

Neither DTC nor Cede & Co. will consent or vote with respect to Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer of the securities as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments on the Bonds will be made to DTC. DTC's practice is to credit Direct Participant's accounts on the payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the District or the Paying Agent, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the District or the Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, physical certificates are required to be printed and delivered.

The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered.

The foregoing description of DTC, the procedures and record keeping with respect to ownership of the Bonds, payment of principal of and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of ownership interest in such Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made by the District concerning these matters.

Interest

Interest on the Bonds at the rates specified in the schedule of maturities set forth above is payable on February 1, 1996 and semiannually thereafter on each August 1 and February 1.

Each Bond shall bear interest from the interest payment date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the fifteenth (15th) day of the month next preceding the month of any interest payment date to the interest payment date, inclusive, in which event it shall bear interest from such interest payment date, or unless it is authenticated on or before January 15, 1996 in which event it shall bear interest from February 1, 1995.

Redemption

Optional Redemption. The Bonds maturing on or after August 1, 2004 are subject to redemption prior to their respective stated maturity dates at the option of the District, from any source of available funds, as a whole on any date, or in part on any interest payment date, on or after August 1, 2003, of such maturities as may be specified by the District, by lot within any one maturity if less than all of the

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Bonds of such maturity are redeemed at the following prices, expressed as a percentage of the principal amount to be redeemed, plus accrued interest thereon to the redemption date:

Redemption Dates

August 1, 2003 to July 31, 2004 August 1, 2004 to July 31, 2005 August 1, 2005 and thereafter

Redemption Price

102.0% 101.0 100.0

Notice of Redemption. Notice of redemption of the Bonds shall be mailed, postage prepaid, not less than thirty (30) or more than sixty (60) days prior to the redemption date (i) to the respective registered owners thereof at their address appearing on the bond registration books, (ii) to the Securities Depositories set forth in the County Resolution, and (iii) to one or more of the Information Services set forth in the County Resolution. Notice of redemption to the Securities Depositories and the Information Services shall be given by registered mail. Each notice of redemption shall, (a) state the date of such notice; (b) state the name of the Bond~: and the date of issue of the Bonds; (c) state the redemption date; (d) state the redemption price; (e) state the dates of maturity of the Bonds to be redeemed, and, if less than all of the Bonds of any such maturity are to be redeemed, the distinctive numbers of the Bonds of such maturity to be redeemed, and in the case of Bonds redeemed in part only, the respective portions of the principal amount thereof to be redeemed; (f) state the CUSIP number, if any, of each maturity of Bonds to be redeemed; (g) require that such Bonds be surrendered by the owners at the principal corporate trust office of the Paying Agent in Los Angeles, California, or at any other place or places designated by the Paying Agent; and (h) give notice that further interest on such Bonds will not accrue after the designated redemption date.

Neither the failure to receive such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of such Bonds or the cessation of accrual of interest represented thereby from and after the redemption date.

Payment

Principal (or redemption price) is payable upon surrender of the Bonds in lawful money of the United States of America at the corporate trust office of Bank of America National Trust and Savings Association in Los Angeles, California. Interest on the Bonds shall be payable in like lawful money to the person whose name appears on the bond registration books of the Paying Agent as the registered owner thereof as of the close of business on the fifteenth (15th) day of the month immediately preceding an interest payment date, whether or not such day is a business day. Such interest shall be paid by check or draft mailed to such owner at such address as appears on such registration books of the Paying Agent, or upon written request of the owner of Bonds aggregating not less than $1,000,000 in principal amount, such request having been made before the fifteenth (15th) day of the month immediately preceding an interest payment date, by wire transfer in immediately available funds at an account maintained in the United States at such wire address as such owner shall specify in its written notice. However, as long as Bonds are held in book entry form only, principal and interest payments shall be made by the Paying Agent in immediately payable funds to DTC. The Bonds shall no longer be deemed to be outstanding and unpaid if the District shall have made adequate provision for the payment, in accordance with the Bonds and the County Resolution, of the principal and interest to become due thereon at maturity.

Legal Opinion

The legal opinion of Orrick Herrington & Sutcliffe and Lofton, De Lande & Nelson, both of San Francisco, California, Co-Bond Counsel to the District, approving the validity of the Bonds, will be

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supplied to the original purchasers of the Bonds without cost. A copy of the legal opinion, certified by the official in whose office the original is filed, will accompany each Bond, without charge to the successful bidder.

Co-Bond Counsel has undertaken no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering materials relating to the Bonds and expresses no opinion relating thereto.

Security

The Bonds are general obligations of the District, and the Board of Supervisors of Alameda County, California (the "County") has the power and is obligated to levy ad valorem taxes for payment of both principal and interest of the Bonds upon all property within the District subject to taxation by the District (except certain personal property which is taxable at limited rates), without limitation of rate or amount.

Bond Insurance

AMBAC Indemnity Corporation (" AMBAC Indemnity") has made a commitment to issue a municipal bond insurance policy (the "Municipal Bond Insurance Policy") relating to the Bonds effective as of the date of issuance of the Bonds. Under the terms of the Municipal Bond Insurance Policy, AMBAC Indemnity will pay to the United States Trust Company of New York, New York, New York or any successor thereto (the "Insurance Trustee") that portion of the principal of and interest on the Bonds which shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer (as such terms are defined in the Municipal Bond Insurance Policy). AMBAC Indemnity will make such payments to the Insurance Trustee on the later of the date on which such principal and interest becomes Due for Payment or within one business day following the date on which AMBAC Indemnity shall have received notice of Nonpayment from the Paying Agent. The insurance will extend for the term of the Bonds and, once issued, cannot be cancelled by AMBAC Indemnity.

The Municipal Bond Insurance Policy will insure payment only on stated maturity dates and on mandatory sinking fund installment dates, in the case of principal, and on stated dates for payment, in the case of interest. If the Bonds become subject to mandatory redemption and insufficient funds are available for redemption of all outstanding Bonds, AMBAC Indemnity will remain obligated to pay principal of and interest on outstanding Bonds on the originally scheduled interest and principal payment dates including mandatory sinking fund redemption dates. In the event of any acceleration of the principal of the Bonds, the insured payments will be made at such times and in such amounts as would have been made had there not been an acceleration.

In the event the Paying Agent has notice that any payment of principal of or interest on a Bond which has become Due for Payment and which is made to a Bondholder by or on behalf of the District has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court of competent jurisdiction, such registered owner will be entitled to payment from AMBAC Indemnity to the extent of such recovery if sufficient funds are not otherwise available.

The Municipal Bond Insurance Policy does not insure any risk other than Nonpayment, as defined in the Policy. Specifically, the Municipal Bond Insurance Policy does not cover:

1. payment on acceleration, as a result of a call for redemption (other than mandatory sinking fund redemption) or as a result of any other advancement of maturity.

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2. payment of any redemption, prepayment or acceleration premium.

3. nonpayment of principal or interest caused by the insolvency or negligence of any Trustee or Paying Agent, if any.

If it becomes necessary to call upon the Municipal Bond Insurance Policy, payment of principal requires surrender of Bonds to the Insurance Trustee together with an appropriate instrument of assignment so as to permit ownership of such Bonds to be registered in the name of AMBAC Indemnity to the extent of the payment under the Municipal Bond Insurance Policy. Payment of interest pursuant to the Municipal Bond Insurance Policy requires proof of Bondholder entitlement to interest payments and an appropriate assignment of the Bondholder's right to payment to AMBAC Indemnity.

Upon payment of the insurance benefits, AMBAC Indemnity will become the owner of the Bond, appurtenant coupon, if any, or right to payment of principal or interest on such Bond and will be fully subrogated to the surrendering Bondholder's rights to payment.

In the event that AMBAC Indemnity were to become insolvent, any claims arising under the Policy would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California.

AMBAC Indemnity is a Wisconsin-domiciled stock insurance corporation regulated by the Office of the Commissioner of Insurance of the State of Wisconsin and licensed to do business in 50 states, the District of Columbia, and the Commonwealth of Puerto Rico, with admitted assets of approximately $2,150,000,000 (unaudited) and statutory capital o:f approximately $1,204,000,000 (unaudited) as of September 30, 1994. Statutory capital consists of AMBAC Indemnity's policyholders' surplus and statutory contingency reserve. AMBAC Indemnity is a wholly-owned subsidiary of AMBAC Inc., a 100% publicly-held company. Moody's Investor's Service, Inc., Standard & Poor's Corporation, and Fitch Investors Service, Inc. have each assigned a triple-A claims-paying ability rating to AMBAC Indemnity.

Copies of AMBAC Indemnity's financial statements prepared in accordance with statutory accounting standards are available from AMBAC Indemnity. The address of AMBAC Indemnity's administrative offices and its telephone number are One State Street Plaza, 17th Floor, New York, New York, 10004 and (212) 668-0340.

AMBAC Indemnity has entered into pro rata reinsurance agreements under which a percentage of the insurance underwritten pursuant to certain municipal bond insurance programs of AMBAC Indemnity has been and will be assumed by a number of foreign and domestic unaffiliated reinsurers.

AMBAC Indemnity has obtained a ruling from the Internal Revenue Service to the effect that the insuring of an obligation by AMBAC Indemnity will not affect the treatment for federal income tax purposes of interest on such obligation and that insurance proceeds representing maturing interest paid by AMBAC Indemnity under policy provisions substantially identical to those contained in its municipal bond insurance policy shall be treated for federal income tax purposes in the same manner as if such payments were made by the issuer of the Bonds.

AMBAC Indemnity makes no representation regarding the Bonds or the advisability of investing in the Bonds and makes no representation regarding, nor has it participated in the preparation of, the Official Statement other than the information suppli1:?d by AMBAC Indemnity and presented under the heading "The Bonds - Bond Insurance."

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Purpose of the Issue

The District will use the proceeds of the Bonds in the following manner:

• Approximately $2.18 million will be used to rebuild exposed decks which also serve as roofs and to replace paving as necessary to mitigate safety hazards and comply with the American Disability Act (ADA).

• Approximately $1.0 million to provide and improve data and communication cable ways; provide conduit, pullboxes and control points for the wiring of all instructional spaces for voice, data and video.

• Approximately $5.2 million for the improvement of the general classroom, laboratory prototypes, library space and the children's center roof.

• Approximately $440,000 to provide minor real property improvements throughout the District, as prioritized within the campus proposals.

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Annual Debt Service

Exhibit 1 below presents a schedule of the annual debt service for the Bonds which are the second series of general obligation bonds issued by the District. In June 1993, the District issued Series A in the amount of $9,000,000.

EXHIBIT1 ANNUAL DEBT SERVICE, SERIES B BONDS PERALTA COMMUNm· COLLEGE DISTRICT

Fiscal Year Ending Annual Debt Uune30) Principal Interest Service

1996 $ 0.00 $574,647.50 $574,647.50 1997 190,000.00 568,591.25 758,591.25 1998 205,000.00 556,000.63 761,000.63 1999 215,000.00 542,613.13 757,613.13 2000 230,000.00 528,428.75 758,428.75 2001 240,000.00 513,447.50 753,447.50 2002 255,000.00 497,669.37 752,669.37 2003 270,000.00 480,935.00 750,935.00 2004 290,000.00 463,085.00 753,085.00 2005 305,000.00 444,119.37 749,119.37 2006 325,000.00 424,038.13 749,038.13 2007 345,000.00 402,681.88 747,681.88 2008 365,000.00 380,050.63 745,050.63 2009 385,000.00 356,144.37 741,144.37 2010 410,000.00 330,803.75 740,803.75 2011 435,000.00 303,869.37 738,869.37 2012 460,000.00 275,341.25 735,341.25 2013 485,000.00 245,219.37 730,219.37 2014 515,000.00 213,280.00 728,280.00 2015 545,000.00 179,360.00 724,360.00 2016 580,000.00 143,360.00 723,360.00 2017 615,000.00 105,120.00 720,120.00 2018 650,000.00 64,640.00 714,640.00 2019 685,000.00 21,920.00 706,920.00

Total $9,000,000.00 $8,615,366.25 $17,615,366.25

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Exhibit 2 presents the combined debt service schedules for the previously issued Series A Bonds and for Series B Bonds.

EXHIBIT 2 COMBINED DEBT SERVICE SCHEDULES

PERALTA COMMUNITY COLLEGE DISTRICT

Fiscal Year Series A Series B Combined

Ending Debt Debt Debt (June30) Service Service Service

1994 $ 437,762.88 $ 0.00 $ 437,762.88 1995 672,168.75 0.00 672,168.75 1996 677,313.75 574,647.50 1,251,961.25 1997 676,783.75 758,591.25 1,435,375.00 1998 675,713.75 761,000.63 1,436,714.38 1999 678,968.75 757,613.13 1,436,581.88 2000 676,548.75 758,428.75 1,434,977.50 2001 678,328.75 753,447.50 1,431,776.25 2002 679,166.25 752,669.37 1,431,835.62 2003 679,178.75 750,935.00 1,430,113.75 2004 683,228.75 753,085.00 1,436,313.75 2005 681,316.25 749,119.37 1,430,435.62 2006 683,441.25 749,038.13 1,432,479.38 2007 684,466.25 747,681.88 1,432,148.13 2008 689,253.75 745,050.63 1,434,304.38 2009 687,803.75 741,144.37 1,428,948.12 2010 690,116.25 740,803.75 1,430,920.00 2011 691,053.75 738,869.37 1,429,923.12 2012 690,378.75 735,341.25 1,425,720.00 2013 692,875.63 730,219.37 1,423,095.00 2014 693,425.00 728,280.00 1,421,705.00 2015 696,932.50 724,360.00 1,421,292.50 2016 693,437.50 723,360.00 1,416,797.50 2017 702,643.75 720,120.00 1,422,763.75 2018 699,550.0.0 714,640.00 1,414,190.00 2019 Q.00 706.920.00 706920.00

Total $16,891,857.26 $17,615,366.25 $34,507,223.51

THE DISTRICT General Information

The Peralta Community College District was formed by vote of the electorate in the cities of Alameda, Albany, Berkeley, Emeryville, Oakland, and Piedmont, California, to operate a junior college system of education, commencing July 1, 1964. As of that date the junior college program operated by the Oakland Unified School District was transferred to the Peralta Community College District. The District, including all colleges, is a non-profit public education system. It is supported principally by

.,.. local property taxes and state basic equalization aid.

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The District covers approximately 78 square miles, and is traversed by Interstate Highways 80, 580 and 880. The District contains an international airport and a deep water port.

The District plants consist of four colleges and the District Administrative Center (DAC). With the exception of the DAC, all of the buildings were built in the early 1970s. The DAC was constructed in 1980. The District is comprised of approximately 30 structures.

The District maintains the College of Alameda, Laney College, Merritt College and Vista Community College. Total full-time equivalent students (FTES) for the 1994-95 academic year is estimated to be 15,710. The District expects attendance to remain stable over the next five to seven years.

The District is governed by a Board of Trustees consisting of seven members and one student. Members are elected to four-year terms in alternating slots. Elections are held every two years. The student trustee is elected yearly by the student body at large.

EXHrnIT 3 FULL-TIME EQUIV A.LENT STUDENTS

PERALTA COMMUNm( COLLEGE DISTRICT

Fiscal Year

1986-87 1987-88 1988-89 1989-90 1990-91 (1)

1991-92 1992-93 1993-94 1994-95 (2)

1995-96 (2)

1996-97 <2>

Full-Time Equivalent Students

14,201 13,786 14,143 14,361 16,682 17,081 16,449 15,710 '15,710 15,867 16,025

(1) In 1990-91 the system was converted from ADA to FfES (Full-Time Equivalent Student). (2) Projection.

Employee Relations

Peralta Community College District employees are represented by three unions. The Peralta Federation of Teachers represents teachers, and the AFL/CIO Local 790 & International Union of Operating Engineers and Local 39 represent classifo!d employees. All three unions are under contracts that expired June 30, 1994. The provisions of the a~~reements that expired will remain in full force and effect until amended by negotiation. In the opinion of management, employee relations are amicable.

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Pension Plans

The District participates in the State of California Teacher's Retirement System ("STRS"). This plan covers basically all full-time certificated employees. The District's contribution to STRS for fiscal year 1993-94 was $1,955,344 and for fiscal year 1994-95 $1,767,160 is budgeted.

The District also participates in the State of California Public Employees' Retirement System ("PERS"). This plan covers all classified personnel who are employed four or more hours per day. The District's contribution to PERS for fiscal year 1993-94 was $876,101 and for fiscal year 1994-95 $1,116,210 is budgeted. Both STRS and PERS are operated on a statewide basis.

DISTRICT DEBT STRUCTURE

Short-Term Borrowing

The District has no outstanding short-term debt.

Lease Obligations

The District currently has leases outstanding for a variety of educational equipment including a telephone system and duplicating equipment.

Lease payments through the end of these leases are shown in Exhibit 4.

Long-Term Borrowing

EXHIBIT4 PERALTA COMMUNTIY COLLEGE DISTRICT

OUTSTANDING LEASE OBLIGATIONS

Xe.il Payment

1994-95 $902,301 1995-96 756,221 1996-97 597,731 1997-98 430,266 1998-99 263,710 1999-00 100,364

The District has never defaulted on the payment of principal or interest on any of its indebtedness.

The District will have $32,000,000 of authorized but unissued long-term debt after the issuance of the Bonds. Series A in the amount of $9,000,000 was issued in June 1993.

Contained within the District's boundaries are numerous overlapping local agencies providing public services. These local agencies have outstanding bonds issued in the form of general obligation, lease revenue and special assessment. The direct and overlapping debt of the District is shown in Exhibit 5. Self-supporting revenue bonds, tax allocation bonds and non-bonded capital lease obligations are excluded from the debt statement.

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EXHIBIT 5 STATEMENT OF DIRECT AND OVERLAPPING DEBT


1994-95 Assessed Valuation:$ 28,072,848,338 (before deduction of redevelopment tax allocation increment) (1)

DIRECT AND OVERLAPPING BONDED DEBT: San Francisco Bay Area Rapid Transit District San Francisco Bay Area Rapid Transit District, Spedal Services

District #1 Alameda-Contra Costa Transit District Certificates of Participation Oakland-Alameda County Coliseum Alameda County Building Authorities Alameda County Superintendent of Schools Certificates of

Participation Peralta Community College District Alameda Unified School District Berkeley Unified School District and Certificates of Participation Oakland Unified School District and Certificates of Participation Albany and Piedmont Unified School Districts City of Alameda Certificates of Participation City of Albany Authorities City of Berkeley Authorities City of Oakland and Authorities East Bay Municipal Utility District East Bay Municipal Utility District, Special District #1 East Bay Regional Park District City of Alameda Community Facilities Districts #1 ck 2 City 1915 Act Bonds

TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBT Less: Oakland-Alameda County Coliseum (100% self-supporting)

% Applicable(2) 13.421%

100. 37.944 64.992 34.355

34.355 100. 100. 100. 100. 100. 100. 100. 100. 95.629 36.025 91.713 19.180

100. 100.

City of Alameda Certificates of Participation (100% self-supporting from state gas tax revenues)

East Bay Municipal Utility District (100% self-supporting) East Bay Municipal Utility District, Special District #1 (100% self-supporting)

TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT

(1) Excludes Plumas County portion. (2) Based on 1993-94 ratios.

(3) Excludes general obligation bonds to be sold.

Debt 12/1/94 $27,731,141

2,630,000

10,172,786 7,480,579

111,988,368 2,581,778

8,825,000 (3)

43,410,000 48,774,300 20,015,000 21,275,000

9,342,730 4,775,000

65,273,670 410,700,759

8,550,534 45,131,967 22,384,978 18,540,000 85.599.081

$975,182,671 (4)

8,328,841

3,630,000 8,550,534

45.131.967 $910,489,591

(4) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non bonded capital lease obligations.

Ratios to Assessed Valuation: Direct Debt... .................... . Total Gross Debt ................ . Total Net Debt.. ............... ..

0.03% 3.47% 3.24%

STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/94: $18,566,197

Source: California Municipal Statistics, Inc.

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Property Tax Collection Procedures

In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." The "secured roll" is that part of the assessment roll containing state-assessed public utilities' property and property, the taxes on which are a lien on real property sufficient, in the opinion of the county assessor, to secure payment of the taxes. A tax levied on unsecured property does not become a lien against such unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on such secured property, regardless of the time of the creation of the other liens. Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property.

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 after December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. In addition property on the secured roll with respect to which taxes are delinquent is sent to collections on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1-1 /2% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax collector.

Historically, property taxes are levied for each fiscal year on taxable real and personal property situated in the taxing jurisdiction as of the preceding March 1. A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498), however, provided for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Thus, this legislation eliminated delays in the realization of increased property taxes from new assessments. As amended, SB 813 provided increased revenue to taxing jurisdictions to the extent that supplemental assessments of new construction or changes of ownership occur subsequent to the March 1 lien date.

Property taxes on the unsecured roll are due on the March 1 lien date and become delinquent, if unpaid on the following August 31. A ten percent (10%) penalty is also attached to delinquent taxes in respect of property on the unsecured roll, and further, an additional penalty of 1-1/2% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. The taxing authority has four ways of collecting unsecured personal property taxes: (1) 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 judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes in respect of property on the secured roll is the sale of the property securing the taxes to the State for the amount of taxes which are delinquent.

Unitary Taxation of Utility Property

Historically, property of regulated public utilities has been assessed for local tax purposes by the State Board of Equalization on a geographical basis in basically the same manner as other taxable property in any taxing jurisdiction.

In 1987, the State Legislature enacted Chapter 921 amending Section 98.9 and various other sections of the Revenue and Taxation Code. The changes call for the establishment in each county of one countywide tax rate area with the assessed value of all unitary and operating non-unitary utility property being assigned to this tax rate area.

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The result is a single assessed valuation figure for all utility property owned by each utility within the county without any breakdown for individual taxing jurisdictions.

All of this property is then subjected to a tax at a rate equal to the sum of the following two rates:

1. A rate determined by dividing the county's total ad valorem tax levies for the secured roll for the prior year, exclusive of levies for debt serv:ice, by the county's total ad valorem secured roll assessed value for the prior year.

2. A rate determined by dividing the county's total ad valorem tax levies for the secured roll for the prior year for debt service only by the county's total ad valorem secured roll assessed value for the prior year.

The foregoing process results in the creation of two pools of money, pool 1 being available for general tax purposes and pool 2 for debt service purposes, each pool being then allocated to the various taxing jurisdictions in the county by a statutory formula.

Tax Levies and Delinquencies

Beginning in 1978-79, Article XIIIA and its implementing legislation shifted the function of property taxation primarily to the counties, except for levies to support prior-voted debt, and prescribed how levies on county-wide property values are to be shared with local taxing entities within each county. Exhibit 6 displays tax levy and delinquency data over a nine year period.

Fiscal Year

1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94

EXHIE:IT6 SECURED TAX LEVIES AND DELINQUENCIES

PERALTA COMMUNm( COLLEGE DISTRICT

Secured Tax Charge <1>

$174,861,816.99 191,473,629.31 206,220,923.25 208,737,159.16 229,714,199.61 246,804,856.43 262,225,339.12 276,596,275.59 292,717,039.19

Amount Delinquent ~

$ 8,986,231.27 10,127,683.95 9,650,481.21 9,491,613.63

11,780,257.50 13,789 ,918.42 15,098,050.29 15,529,343.91 15 ,267 ,250.80

(1) All taxes collected by the County within the District. Source: California Municipal Statistics, Inc.

The Teeter Plan

% Delinquent ~

5.14% 5.29 4.68 4.55 5.13 5.59 5.76 5.61 5.22

Alameda County, as of the 93/94 fiscal year, operates under provision of Revenue and Taxation Code Section 4701-4716 (commonly referred to as the "Teeter Plan") pursuant to which public agencies in the county may receive their total secured tax levies and special assessments irrespective of actual

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collections and delinquencies. Pursuant to said provisions, the county establishes a delinquency reserve and assumes responsibility for all secured delinquencies.

Because of the method of tax collection, the District is assured of 100 percent collection of its total secured tax levies. This method of tax collection and distribution is, however, subject to future discontinuance if demanded by the participating entities.

CotUtty Pooled Inveshnent

As required by state law, the District deposits all of its general fund revenues with the County of Alameda's Pooled Investment Fund. Regarding the Pooled Investment Fund, the County's investment policy states that "The investments of the County shall be diversified and undertaken in a manner which seeks to ensure preservation of capital in the overall portfolio. The investment portfolio shall be designed to attain a market-average rate of return, taking into account investment risk constraints and cash-flow characteristics and requirements of the County's operations."

The County Pooled Investment Fund has an average maturity life of approximately 21 months, as of December 1994. The District has no reason to believe that the general fund revenues or any other District funds on deposit with Alameda County are at risk.

Top Ten Taxpayers

Exhibit 7 lists the top ten property taxpayers within the District for fiscal year 1994-95.

EXHIBIT7 1993-94 TOP TEN TAXPAYERS

PERALTA COMMUNITY COLLEGE DIS1RICT

Alameda Real Estate Investments Kaiser Foundation Health Plan Cutter Laboratories Inc. 1111 Associates Clorox Company Lake Merritt Plaza Kaiser Center Inc. Webster Street Partners, Ltd. Ordway Associates Owens Illinois Glass Container

Property Description

Commercial Office Buildings Commercial Office Buildings Pharmaceutical Manufacturer Commercial Office Buildings Commercial Office Buildings Commercial Office Buildings Commercial Office Buildings Commercial Office Buildings Commercial Office Buildings Heavy Industrial

(1) Total 1994-95 Local Secured Assessed Valuation: $25,821,676,169. Source: California Municipal Statistics, Inc.

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1994-95 Assessed Valuation

$171,523,630 140,842,797 126,628,784 117,300,000 85,540,797 84,789,495 79,289,427 61,119,142 60,705,300 59,343,935

%of Total

0.66% 0.55 0.49 0.45 0.33 0.33 0.31 0.24 0.24 0.23

Historic Assessed Valuation

The District has a 1994-95 gross assessed valuation of $28,072,848,338 (full cash value), accounting for approximately 36.55 percent of the total assessed valuation of the County. Shown in the following exhibit are the assessed valuation historical trends for the District and the County.

EXHIBIT 8 HISTORIC ASSESSED VALUATIONS (1)

PERALTA COMMUNm' COLLEGE DISTRICT

Fiscal Year 1985-86 <2>

1986-87 (2)

1987-88 (2)

1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95

{l) Including redevelopment increment.

District Assessed Valuations

$16,538,846,528 18,039 ,943,628 19,456,679,504 19,557,288,541 21,543,327,394 23,334,145,319 24,816,574,843 25,908,226,475 27,210,080,562 28,072,848,338

(2) Including unitary utility valuation. Source: California Municipal Statistics, Inc.

Tax Rates

County Assessed Valuations

$39,730,396,458 44,588,254, l 90 49 ,484,732,036 51,526,212,004 56,881,385,302 62,886,380,095 67,501,944,369 71,050,750,183 74,426,159,027 76,805,759,114

Prior to Article XIIIA of the State Constitution taking effect in the 1978-79 fiscal year, the total tax rate for the District was established by the Alameda County Board of Supervisors. Beginning with 1978-79 fiscal year the County Board of Supervif;ors established a tax rate to meet debt service (including repayment revenues derived from the maximum rate permitted under Article XIIIA for purposes other than paying debt service).

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-Contained within the District's boundaries are numerous overlapping local agencies. Exhibit 9 presents the total tax rate for typical property owners within the District.

EXHIBIT9 TYPICAL TOTAL TAX RATE (1)

TAX RATE AREA 17-001 PERALTA COMMUNITY COLLEGE DISTRICT

Fiscal Year

1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95

Tax Rate

1.2725 1.2617 1.2563 1.2434 1.2397 1.2260 1.2376 1.2438 1.2469 1.2409

(1) Per $100 of Assessed Valuation. Source: California Municipal Statistics, Inc.

DISTRICT FINANCIAL INFORMATION

District Budget

The District is required by provisions of the State Education Code to maintain a balanced budget each year, where the sum of expenditures plus the ending fund balance cannot exceed revenues plus the carryover fund balance from the previous year. The State Department of Education imposes a uniform budgeting format for all California school districts.

Under current law, the District Board of Trustees approves a tentative budget by July 1 and an adopted budget by the first week in September of each fiscal year. The following table shows t:li.e District's audited actuals for fiscal year 1993-94 and the adopted budget for fiscal year 1994-95.

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Beginning Balance

Revenues Federal Revenue Other State Revenue Other Local Revenue Transfers In Other Sources

Total Revenue

Total Resources

Expenditures Certificated Salaries Classified Salaries Employee Benefits Books & Supplies

EXHIBITlO GENERAL FUND BUDGET

FISCAL YEARS 1993-94 AND 1994-95 PERALTA COMMUNITk' COLLEGE DISTRICT

1993-94 Audited Actual!?

$ 4,080,253

$ 1,951,821 34,331,456 23,419,320

252,983

$59,955,580

$64,035,833

$24,528,920 15,608,638 11,461,923 1,332,085

Services & Other Operating Expenses 6,891,993 Student Financial Aid Capital Outlay Transfer Out

Total Expenditures

Ending Balance

(1) Adopted budget ch~ged to reflect increase in beginning balance. Source: Peralta Community College District.

Accounting Practices

279,681 1,100,312

381,454 $61,585,006

$ 2,450,827

1994-95 Adopted Budget

$ 2,450,827 (1)

$ 1,964,490 31,259,540 25,708,153

292,828

$59,225,011

$61,650,218

$24,312,366 14,906,291 10,723,717 1,003,973 7,233,586

135,650 802,691 776,639

$59 ,894,913

$ 1,780,925

The accounting practices of the District conform to generally accepted accounting principles in accordance with policies and procedures of the California School Accounting Manual. This manual, according to Section 41010 of the State of California Education Code, is to be followed by all California school districts.

District revenues are recognized during the period in which they become both measurable and available to finance operations of the current fiscal period. District expenditures are reflected in the fiscal period in which the liability occurred.

District accounting is organized on the basis of governmental fund types, with each fund consisting of a separate set of self-balancing accounts containing assets, liabilities and fund balances, including revenues and expenditures. The major fund classification is the General Fund, which accounts for the general operations of the District. The District's fiscal year begins on July 1 and ends on June 30.

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The District's independent auditors are currently Deloitte & Touche and Clarence White of California. Excerpts from the audited financial statements for the year ended June 30, 1994 are included as Appendix A hereto.

STATE OF CALIFORNIA FINANCES

General

The State of California (the "State") requires that from all State revenues there shall first be set apart the moneys to be applied for support of the public school system and public institutions of higher education. California school districts receive a significant portion of their funding from State appropriations. As a result, decreases in State revenues may significantly affect appropriations made by the legislature to school districts.

The 1994-95 State budget totals $57 billion. The budget includes $40.9 billion in general fund spending.

State Funding of Education

Annual State apportionments of basic and equalization aid to school districts for general purposes are computed up to a revenue limit per unit of average daily attendance ("ADA"). Such apportionments will, in general, amount to the difference between the District's revenue limit and the District's local property tax allocation. Revenue limit calculations are adjusted annually in accordance with a number of factors designed primarily to provide cost of living increases and to equalize revenues among all of the same type of California school districts. In November 1988, California voters approved an amendment to the California Constitution which guarantees primary and secondary education and the community college system a certain percentage of the state general fund budget for the 1988-89 budget year and subsequent budget years.

Exhibit 11 shows the District's program-based funding per unit of full-time equivalent students for 1994-95 and the past nine years. In the 1991-92 fiscal year the community college workload measure was changed from average daily attendance (ADA) to full-time equivalent students (FIBS), pursuant to program-based funding regulations. Program-based funding (PBF) is a formula which applies funding standards to several variables common to all educational institutions. PBF replaces the revenue limit approach that uses a single rate per ADA.

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Fiscal Year

1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 (1)

(1) Projected

EXHIBITll PROGRAM-BASED FUNDING

FISCAL YEARS 1985-86 THROUGH 1994-95(1) PERALTA COMMUNID' COLLEGE DISTIUCT

Program-based Funding per unit

ofFfES

Full-Time Equivalent

Students Total

Program-based Funding

$2,440 2,611 2,806 2,900 3,046 3,273 2,919 2,919 3,036 3,070

14,730 14,201 13,786 14,143 14,361 14,213 17,081 16,449 15,710 15,710

$38,829 ,566 40,424,887 40,894,580 40,720,311 43,508,274 46,833,729 48,243,436 48,542,994 47,697,212 48,236,996

Source: Peralta Community College District

Proposition 98 and Proposition 111

At the November 8, 1988 general election, California voters approved Proposition 98, an initiative Constitutional amendment and statute named the "Classroom Instructional and Accountability Act" (the "Classroom Act"). Proposition 111, enacted on June 5, 1990, modified the Classroom Act. The Classroom Act changes State funding of public education, below the university level, and the operation of the State's Appropriations Limit. The Classroom Act, as modified by Proposition 111, guarantees State funding for K-14 school districts at a level equal to the greater of (1) 40.9% of general fund revenues, (2) the amount appropriated to K-14 school districts in the prior year, adjusted for changes in the cost of living (measured by reference to California per capita personal income) and enrollment, or (3) a third test, which would replace the second test in any year when the percentage growth per capita general fund revenues from the prior year plus 1/2% is less than the percentage growth in California per capita personal income. Under the third test, schools would receive the amount appropriated in the prior year, adjusted for changes it1 enrollment and per capita general fund revenues, plus an additional small adjustment factor. If this third test is used in any year, the difference between the third test and the second test would become a "credit" to schools that would be the basis of payments in future years when per capita general Jfund revenue growth exceeds per capita personal income growth. The Classroom Act permits the Legislature by two-thirds vote of both houses, with the Governor's concurrence, to suspend the minimum funding formula for a one year period.

The 1990-91 Budget Act began by applying the second test with an allocation of $17.1 billion. However, due to a revenue emergency, the third test was applied allowing for an allocation of $15.4 billion with the remaining $1.7 billion becoming a credit to schools to be paid back in the next year that per capita general fund revenue growth exceeded per capita personal income growth.

The 1991-92 Budget Act, applying the second test, allocated $16.7 billion plus the restoration maintenance factor from 1990-91 of $1.7 billion, bringing the total to $18.4 billion. The 1992-93 Budget Act, by applying the second test, resulted in $21.573 billion being allocated for public education. This

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includes a 1991-92 over-appropriation of $1.83 billion that was applied against the 1992-93 guarantee and, a loan of $766 million for K-12 that was to be paid back in installments in the first years that the current years K-12 funding is greater than the prior years K-12 funding, not to exceed 50% of the funded revenue limit cost of living adjustment and, a loan of $241 million for community college districts that was to be paid back in two equal installments over the next two years. The result was a per pupil allocation of $4,185.00, the same as 1991-92.

The third test, with an additional clause prohibiting schools from receiving cuts deeper than any other state agencies, was used for 1993-94. The allocation to K-12 public education in the 1993-94 budget was $13.87 billion. The budget allowed for per-pupil funding to remain the same as the previous year and, as in past years, included a loan of approximately $609 million for K-12 schools to be paid back in the same manner as described above. The allocation to community colleges was $1.05 billion and included a loan of $178 million to be paid back in future years.

The 1994-95 budget provides $24.9 billion ($14.4 billion General Fund) in Proposition 98 funding for K-14 programs. This exceeds the amount provided in 1993-94 by $532 million. On a cash basis, the funding level for K-12 schools was $4,225 per pupil in 1993-94, slightly more than the $4,217 level provided in the 1993 budget package. (This resulted from a lower than expected number of K-12 students statewide.) The 1994-95 funding level for K-12 schools is $4,199 per pupil and represents a reduction in overall level of funding from 1993-94. The 1994-95 budget, however, effectively provides the same budgeted level of funding for classroom needs of $4,217 per pupil due to a $100 million reduction in contributions to the Public Employees Retirement System (PERS). The 1994 Budget Act also provides the community colleges $115 million more from Proposition 98 sources than colleges received during 1993-94.

Changes made during the 1992-93 State Budget adoption process require county auditors to increase the amount of property taxes transferred from local governments to school and community college districts. Increasing the amount of property taxes allocated to schools and community colleges reduces the amount that must be provided from the state General Fund under Proposition 98. As a result , the first test for 1992-93 was calculated at 37.391 % of general fund revenues instead of 40.9%. Due to the $2.6 billion transfer from cities, counties, and special districts to K-12 schools, the first test was calculated at approximately 33% for the 1993-94 budget year. Technical problems in the 1993 legislation that increased the property tax shifts had resulted in a smaller than expected transfer to schools and community colleges, and consequently required the state to provide additional funds in order to achieve the desired level of K-14 appropriations.

Since the Classroom Act is unclear in some details, there can be no assurance that the Legislature or a court might not interpret the Classroom Act to require a different percentage of general fm1d revenues to be allocated to K-14 districts, or to apply the relevant percentage to the State's budgets in a different way than is proposed in the Governor's Budget. In any event, the Governor and other fiscal observers expect the Classroom Act to place increasing pressure on the State's budget over future years, potentially reducing resources available for other State programs, especially to the extent the Article XIIIB spending limit would restrain the State's ability to fund such other programs by raising taxes.

The Classroom Act also changes how tax revenues in excess of the State Appropriations Limit are distributed. Any excess State tax revenues up to a specified amount would, instead of being returned to taxpayers, be transferred to K-14 districts. Any such transfer to K-14 districts would be excluded from the State Appropriations Limit for K-14 districts and the K-14 districts' State Appropriations Limit for the next year would automatically be increased by the amount of such transfer. These additional moneys would enter the base funding calculation for K-14 districts for subsequent years, creating further pressure on other portions of the State budget, particularly if revenues decline in a year following an Article XIIIB surplus.

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Under the Classroom Act as amended by Proposition 111, any excess of the aggregate tax revenues received over the consecutive two year period in which the State Appropriations Limit is tested above the combined Appropriations Limits for those two years is divided equally between transfers to districts and refunds to taxpayers.

LIMITATIONS ONT AX REVENUES

Property Tax Rate Limitations - Article XIIIA

On June 6, 1978, the California voters added Article XIIIA to the California Constitution which limits the amount of any ad valorem taxes on real property to one percent (1%) of its full cash value. Additional ad valorem property taxes may be levied to pay debt service on indebtedness approved prior to July 1, 1978. On June 3, 1986, an amendment to Article XIIIA was approved by California voters. This amendment allows for additional ad valorem p:roperty taxes to be levied on bonded indebtedness, for the acquisition or improvement of real property, which has been approved on or after July 1, 1978, by two-thirds of the voters voting on such indebtedness. Article XIIIA defines full cash value to mean "the county assessor's valuation of real property as shown on the 1975-76 tax bill under full cash value, or thereafter, the appraised value of real property when purchased, newly constructed or a change in ownership has occurred after the 1975 assessment period." This cash value may be increased at a rate not to exceed two percent (2%) per year to account for inflation. The California Supreme Court upheld the validity of Article XIIIA, in general, in the case of Amador Valley Joint Union High School District v. State Board of Equalization (1978), 22 Cal 3rd 208. Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by damage, destruction or the other factors, to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in various other minor or technical ways.

The California Supreme Court and U.S. Supreme Court have upheld the constitutionality of Article XIIIA to the California Constitution.

Legislation Implementing Article XIIIA

Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer pem1itted to levy directly any ad valorem property tax. The 1 % property tax is automatically levied annually by the county and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1978. Any special tax to pay voter-approved indebtedness is levied in addition to the basic 1 % property tax.

Increases of assessed valuation resulting from reapprnisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the "taxing area" based upon their respective "situs." Any such allocation made to a local agency continues as part of its allocation in future years.

Beginning in the 1981-82 Fiscal Year, assessors in California no longer record property values on tax rolls at the assessed value of 25% of market value which was expressed as $4.00 per $100 of assessed value. All taxable property is now shown at full market value on the tax rolls. Consequently, the basic tax rate is expressed as $1.00 per $100 of taxable value.

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Appropriation Limitation - Article XIIIB

On November 6, 1979, the voters of the State approved Proposition 4, known as the Gann Initiative, which added Article XIIIB to the California Constitution. On June 5, 1990, the voters approved Proposition 111, which amended Article XIIIB in certain respects. Under Article XIIIB, as amended, state and local government entities have an annual "appropriations limit" which limits the ability to spend certain moneys which are called "appropriations subject to limitation" (consisting of most tax revenues and certain state subventions together called "proceeds of taxes" and certain other funds) in an amount higher than the "appropriations limit." Article XIIIB does not affect the appropriation of moneys which are excluded from the definition of "appropriations limit," including debt service on indebtedness existing or authorized as of January l, 1979, or bonded indebtedness subsequently approved by two-thirds of the voters.

Proposition 62

On November 4, 1986, California voters approved an initiative statute known as Proposition 62, which added Section 53720 et seq. to the Government Code. This initiative (i) requires that any tax for general governmental purposes imposed by local governments, be approved by resolution or ordinance which has been adopted by a two-thirds vote of the governmental entity's legislative body and by a majority of the electorate of the governmental entity, (ii) requires that any special tax (defined as a tax levied for other than general government purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters within that jurisdiction, (iii) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax is imposed, (iv) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA, (v) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governments, (vi) requires that any tax imposed by a local government on or after October 15, 1985 be ratified by a majority vote of the electorate within two years of the adoption of the initiative or be terminated by November 15, 1988, (vii) requires that, in the event a local government fails to comply with the provisions of this measure, a reduction in the amount of property tax revenues allocated to such local government must occur in an amount equal to the revenues received by such entity attributable to the tax levied in violation of the initiative, and (viii) permits these provisions to be amended exclusively by the voters of the State of California.

A recent decision of the State Court of Appeal (City of Westminster v. County of Orange) held that the provisions of Proposition 62 insofar as they purported to apply to a city's utility user tax enacted after October 15, 1985 and prior to November 15, 1988, being the so-called "window period," was unconstitutional. At the same time, as a matter of dictum, the court indicated that the requirement of an election to approve any general tax was also invalid. A petition for review of the decision was filed with the State Supreme Court on October 21, 1988. The petition was denied by the Court on November 15, 1988, making the Court of Appeals decision final.

Proposition 62 was again at issue in the case of Rider v. County of San Diego, wherein the plaintiffs challenged the validity of the San Diego County Regional Justice Facility Financing Act authorizing a county-wide sales tax to finance criminal justice facilities by majority vote of the electorate. The State Supreme Court has held that the tax is invalid as a special tax. The Court did not decide the Proposition 62 issue in this case.

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TAX EXEMPTION

In the opinion of Orrick Herrington & Sutcliffe and Lofton, De Lancie & Nelson, Co-Bond Counsel, based on an analysis of existing laws, regulations, rulings and court decisions and on certain certificates, opinions and other matters, interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes. A complete form of the Opinion of Co-Bond Counsel is set forth in APPENDIX Band will accompany the Bonds.

The Internal Revenue Code of 1986 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 Bonds. The District has covenanted to comply with certain restrictions designed to assure that interest on the Bonds will not be included in federal gross income. Failure to comply with these covenants may result in such interest being included in federal gros~. income, possibly from the date of issuance of the Bonds. The opinion of Co-Bond Counsel assumes compliance with these covenants. Co-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 the date of issuance of the Bonds may affect the tax status of interest on the Bonds.

Co-Bond Counsel is further of the opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes. However, Co-Bond Counsel observes that interest on the Bonds is included in adjusted current earnings when calculating corporate alternative minimum taxable income.

Certain requirements and procedures contained or referred to in the County Resolution and other relevant documents may be changed and certain actions may be taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with an approving opinion of nationally recognized Co-Bond Counsel. Orrick Herrington & Sutcliffe and Lofton, De Lande & Nelson express no opinion as to any Bond or the interest thereon received by Bondowners if any such change occurs or action is taken upon advice or approval of bond counsel other than Orrick Herrington & Sutcliffe and Lofton, De Lande & Nelson.

The District and the County on behalf of the District have designated the Bonds as qualified taxexempt obligations for purpose of Section 265(b)(3)(B} of the Internal Revenue Code of 1986.

Although Co-Bond Counsel has rendered an opinion that interest on the Bonds is excluded from federal gross income and exempt from California personal income taxes, the ownership or disposition of the Bonds or the accrual or receipt of such interest may otherwise affect the recipient's federal or state tax liability. The nature and extent of these other tax consequences may depend upon the recipient's particular tax status and other items of income or deduction. Co-Bond Counsel expresses no opinion regarding any such other tax consequences.

CERTAIN LEGAL MATTERS

Legality for Investment

Under provisions of the California Financial Code, the Bonds are legal investments for commercial banks in California to the extent that the Bonds, in the informed opinion of the bank, are prudent for the investment of funds of depositors, and under provisions of the California Government Code, the Bonds are eligible to secure deposits of public moneys in California.

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Interest Deduction for Financial Institutions

The Internal Revenue Code of 1986 generally prohibits the deduction of interest on indebtedness incurred or continued by a bank or other financial institution to purchase or carry tax-exempt obligations, such as the Bonds. The Code, however, contains an exception to this provision which permits an 80% deduction for interest expense of banks and other financial institutions allocable to their investments in tax-exempt obligations to the extent they purchase obligations of certain small governmental units (i) that together with all subordinate entities thereof do not reasonably expect to issue in the aggregate more than $10,000,000 of tax-exempt obligations (not counting private activity bonds other than qualified SOl(c) (3) bonds) in a calendar year, and (ii) that designate such obligations as qualifying for such exception. By resolution the District has (i) represented that it expects that it and all subordinate entities thereof will not issue in the aggregate more than $10,000,000 of tax-exempt obligations during calendar year 1995, and (ii) designated the Bonds as qualifying for such exception.

Absence of Litigation

At the time of payment for and delivery of the Bonds, the Underwriter will be furnished with a certificate of the District stating that to the best knowledge of the officer of the District executing the same there is no litigation pending, affecting the validity of the Bonds.

RATINGS

Standard & Poor's Corporation and Moody's Investors Service, Inc. and Fitch Investor Service, Inc. have assigned their municipal bond ratings of "AAA", "Aaa" and "AAA", respectively, to this issue of Bonds with the understanding that upon delivery of the Bonds, a policy insuring the payment when due of the principal of and interest on the Bonds will be insured by AMBAC Indemnity Corporation. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agencies, if in the judgment of such rating agencies, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds.

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MISCELLANEOUS

Additional information may be obtained from the District by contacting the Peralta Community College District, Oakland, California, Attention: Vice Chancellor, Financial Services.

At the time of delivery and payment for the Bonds,- an authorized representative of the District will deliver a certificate stating that to the best of his knowledge this Official Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein, in light of the circumstances under which they were made, not misleading. Such certificate will also certify that to the best of his knowledge from the date of this Official Statement to the date of such delivery and payment there was no material adverse change in the information set forth herein.

Dale Scott & Company Inc. has acted as financial advisor to the District in conjunction with this offering. The delivery of this Official Statement has been authorized by the District.


By: /s/ A T. Harrison A. J. Harrison, II Vice Chancellor, Financial Services

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APPENDIX A- EXCERPTS OF AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR FISCAL YEAR 1993-94

[THIS PAGE INTENTIONALLY LEFf BLANK]

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Deloitte & Touche LLP

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INDEPENDENT AUDITORS' REPORT

Members of the Board of Trustees, Peralta Community College District:

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CLARENCE WHITE, CERTIFIED PUBLIC ACCOUNTANT

We have audited the accompanying general purpose financial statements of the Peralta Community College District (the "District") as of June 30, 1994, and for the year then ended, listed in the foregoing table of contents. These general purpose financial statements are the responsibility of the management of the District. · Our responsibility is to express an opinion on these general purpose financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plc:µ1 and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The general purpose financial statements referred to above do not include the general fixed assets account group, which, in our opinion, should be included to conform with generally accepted accounting principles. The amounts that should be recorded in the general fixed assets account group are not known.

In our opinion, except for the effects on the general purpose financial statements of the omission discussed in the preceding paragraph, such general purpose financial statements present fairly, in all material respects, the financial position of the District as of June 30, 1994, and the results of its operations and the cash flows of its enterprise funds for the year then ended in conformity with generally accepted accounting principles.

a eloltte Touche Tohmatsu International

Deloitte & Touche LLP Clarence White, CPA

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2101 'Webster Street 312 9th Street, Suite 200

Oakland. CA 94612 Richmond, CA 94801

(510) 287-2700 (510) 234-8983

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Our audi.t was made for tl)e purpose of forming an opinion on t~e genera! purpose finan.cial statements ta.'-:en as a \Vhcle. The combining arid individual fund financial statements listed in the foregoing table of contents, and supplemental combining information on the combined statement of revenues, expenditures and changes in fund balances are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the District. This additional infonnation is also the responsibility of the District. Such additional information has been subjected to the auditing procedures applied in our audit of the general purpose financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the general purpose financial statements taken as a whole.

j)~~-r~ LLP u~ October 21, 1994

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FINANCIAL SECTION

GENERAL PURPOSE FINANCIAL STATEMENTS

PERAL TA COMMUNITY COLLEGE DISTRICT

COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUP JUNE 30, 1994

Account Fiduciary Groue

Governmental Fund Tyees Proprietary Fund Type· General Total Capital Debt Fund Type Trust and Long-term (Memorandum

General Projects Service ASSETS

Enterprise Agency Obllgatlons Only)

CASH AND INVESTMENTS: In County treasury S8,042,026 S 1,111,250 S 9,153,276 In bankl Md on hand S 34S,151 S 40,393 S 861,657 1,247,201

RECEIVABLES: Federal Md State governments 1,923,446 954,392 2,877,838 Local governments 1,286,227 1,286,227 Interest 4,163 8,000 12,163 Other 21,41S 14,849 75,173 111,437

DUE FROM OTHER FUNDS 1,308,280 1,388 89,393 1,399,061

NOTES RECEIVABLE • NET 101,621 101,621

INVENTORIES 227,677 227,677

PREP AID EXPENDITURES AND DEPOSITS 784,SlS 784,SlS

FIXED ASSETS • NET 18,278 18,278

A.MUUN 1~ AVAlt..AHl.1:.11'1 Ul:.lif ~l:..K. Vll;;I:. l'UNU S i,i i9,1SO i,i i9,lSO

AMOUNTS TO BE PROVIDED IN FUrtJRE YEARS FOR RETIREMENT OF GENERAL LONG-TERM OBLIGATIONS 9,6SS,121 9,6SS,121 ---

TOTAL SS,900,874 $8,997,806 Sl,119,2SO $162,913 S 1,038,451 S 10,774,371 $27,993,665

LIABILITIES AND EQUITY

LIABILITIES: Ca.sh overdraft in County Trea.sug Sl,431,467 S 1,431,467 Accounts payable and acCT1Jed Iia ilities 860,715 s 21,557 s 3,881 s 30,190 916,343 V cstc:d compensated absences 287,000 S 1,774,371 2,061,371 Deferred revenue 781,472 149,279 930,751 Due to other funds 89,393 653,125 656,543 1,399,061 Deposits 212,564 212,564 General obligation bonds --- 9,000,000 9,000,000

Tot.al liabilities 3,450,047 823,961 0 ---2:!!.! 899,297 10,774,371 1S,9S 1,SS7

EQUITY: Retained earnings 159,032 159,032 Fund balances: Reserved 1,673,166 8,173,845 S 1,119,250 139,154 l l, 105,41 S Unreserved· Designated 777,661 --- 777,661

Tot.al equity 2,450,827 8,173,845 l,119,2SO ~ 139,154 12,042,108

TOTAL $5,900,81~ $8,997,806 S 1,119,2SO Sl62,913 S 1,038,451 !_10,774,31_1 $27,993,665 = See notes to general purpose financial statements.

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PERALTA COM.MUNITY COLLEGE DISTRICT

COMBINED STATEMENT OF REVENUES, EXPENDITURES ANO CHANGES IN FUND BALANCES· ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS YEAR ENDED JUNE 30, 1994

Governmental Fund T~ees Ceneral Fiduciary

Supplemental Combining Fund T'i~es Total Information Capital Debt Eipenaa le (Memorandum

U nresfricied Resfrlc:led Total Projects Service Trusts Only) REVENUES: Federal: s Student financial aid s 36,632 36,632 S 6,587,199 S 6,623,831 Vocational education 1,038,767 1,031,767 1,038,767 Won:•Study Program SIS,12S Sl5,12S 515,125 Other s 1,845 359,452 361,297 S 410,860 n2.1s1

St&tc: Buie and Equalization Aid 27,046,619 21,046,619 27,046,619 School constlUaion 917,484 917,484 Lottciy apportionment 1,616,826 1,676,826 ),676,826 Extended Opportunity Program 1,339,243 1,339,243 174,548 1,513,791 Disabled SNdent Prozr= and Services 999,104 999,104 999,104 Children's Center Program 932,305 932,305 932,305 Matriculation 1,013,000 1,013,000 1,013,000 Boud Financial Assistance Program 117,310 117,310 117,310 TIX relief 165,290 165,290 165,290 East Bay Small Business Development 149,971 149,971 149,971 Other 95,307 796,411 191,788 891,788

Loe&!: Property taxes ta,476,121 18,476,128 Sl,259,186 19,736,014 Enrollment fees 2,355,727 2,355,727 2,355,727 Nonresident tuition 461,047 468,047 468,047 Interest 28,431 IS,769 44,250 566,062 38,SS1 17,031 665,900 Paoong 399,101 399,101 22,144 421,245 Other 1,251,466 423,901 1,675,367 1,675,367

Tout revenues Sl,566,436 311361161 S917021S97 11894.406 112971743 61800,922 _69~,668 EXPENDITURES: Current: Ccrtifiutcd salaries 22,US,113 1,643,737 24,528,920 24,528,920 Classified ialaries 12.os1.m 3,SS6,161 15,608,631 21,660 15,630,298 Employee benefits 10,117,199 l,274,,024 11,461,923 l,91S 11,463,838 Contract services and othe:r operating expenditures S,923,302 961,691 6,191,993 66S,47S 1,551,468 Student financial aid 279,611 279,6!1 6,761,747 7,041,421 Boolcs and supplies 1,070,703 261,382 1,332,015 1.332,0IS Administrative &lid colleaion costs 41,326 41,326 Assignments and eaneellation.s 4S,99S 45,995 Rep~ent IO Fcdenl Government and other 23,538 23,538 Cati outlay 592,995 507,317 1,100,312 1,992,271 3,092,583

De l service: Princip&l retirement 650,000 6SO,OOO Interest 4521388 452,3U

Tout c,q,enditures 52,7111859 8,491,693 61,203,552 2,681,321 l,102,38S 6,872,606 7J,SS9,867 EXCESS OF REVENUES OVER (UNDER) EXPENDITIJRES (l,145,423) (355,532) (1 ,S00,955) (786,91S) 19S,3SS (71,684) (2, 164, l 99) On!ER. FINANCING SOURCES (USES):

Openting trans{etJ in 252,983 252,983 252,983 Operating transfcn out (381,454) (311:454) (10,22~ (391,680)

Tot&! other rinancinz wurees (wes) (3111454) 2S~933 EXCESS OF REVENUES AND OIBER SOURCES OVER

(121:471) (10,226) (138,692)

(UNDER.) EXPENDITIJRES AND OIBER. USES (l,526,177) (102,549) (l,629,426) (797,141) 195,355 (71,684) (2,302,896) FUND BALANCES, JULY I, 1993 2,707,280 644,912 3.352.262 8,970,986 923,895 210,838 13,457,981

R.esidw.l Equity Transfer 727,991 7271991 727,991

FUND BALANCES, 1UNE. 30, 1994 S 1,901,394 S 542,433 S 2,450,827 $8,173,845 $1,119,250 s 139,154 S 11,883,076

Sec notes to general purpolC financial statements.

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COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES· BUDGET (GAAP BASIS) AND ACTUAL· GENERAL FUND A,ND DEBT SERVICE FUND YEAR ENDED JUNE 30, 1994

General Debt Service Totals {Memorandum Ontz:t Variance. Variance· Variance· Favorable Favorable Favorable

Budget Actual (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unfavorable REVENUES: Federal:

Vocational education S 1,073,241 S l,03&,767 s (34,474) S 1,073,241 S 1,038,767 s (34,474) Work-Study Program 508,707 Sl5,l2S 6,41& S08,707 515,125 6,418 Other 444,371 397,929 (46,442) 444,371 397,929 (46,442)

State: 0 Basic and Equalization Aid 26,620,698 27,046,619 425,921 26,620,698 27,046,619 42S,921 Lone:JeJ'8ortionment 1,676,878 1,676,&26 (52~ 1,676,&78 1,676,826 (52~ Exten pportunity Program 1,353,219 1,339,243 (13,976 1,353,219 1,339,243 (13,976 Disabled Stui!ent Programs and Services 995,083 999,104 4,021 995,083 999,104 4,021 Oiildren's Center Program 933,675 932,305

f'370~ 933,675 932,305

r-3701 Matriculation 1,021,819 1,013,000 &,&19 l,021,819 1,013,000 8,819 Board Financial Assistance Program 118,725 117,310 1,415 118,725 117,310 1,415 Tu relief 159,830 165,290 5,460 159,830 165,290 5,460 Ea.st Bay Small Business Development 150,000 149,971

(l5oJ5~l 150,000 149,971

(15oJm Other 1,042,090 891,788 1,042,090 891,788 Local: Property taxes 18,392,729 18,476,828 84,Q99 S 861,500 Sl,259,186 S 397,686 19,254,229 19,736,014 481,785 Enrollment fees 2,399,630 2,355,727 (43,903~ 2,399,630 2,355,727 (43,903~ Nonresident tuition 630,500 468,047 (162,453 630,.500 468,047 (162,453 Interest 13,&00 44,250 30,4.50 36,000 38,5.57 2,551 49,800 82,807 33,007 Parking 3.59,100 399,101 40,001 3.59,100 399,101 40,001 Other 1,6301777 1167.51367 44,.590 1,630,777 1,67.51367 44,.590

Total revenues 59,524,872 .l1,702._5n _ 171,72.5 897,50J) _l,21'7__1743 400,24:} 60,4:Z'Z,~1~ _ 6i_,_000,340 577,968

EXPENDITURES: Current: Certificated salaries 24,300,248 24,528,920 !222,672l 24,300,248 24,528,920 r··672i Classified salaries 15,325,644 15,608,638 282,994 15,325,644 15,608,638 282,994 Employee benefits 11,301,120 11,461,923 160,803 11,301,120 11,461,923 160,803 Contract services and other operating expenditures 6,700,292 6,891,993 191,701 6,700,292 6,891,993 191,701 Student financial aid 280,127 279,681 446 280,127 279,6&1 446 Books and supplies 1,438,676 1,332,085 106,.591 1,438,676 1,332,085 106,591

C!bital outlay 1,282,277 1,100,312 181,96.5 l,2&2,277 1,100,312 181,965 De l service: Principal retirement 650,000 650,000 0 6.50,000 650,000 Interest 452,425 452,388 37 452,425 452,388 37

Tot.al expenditures 60,628,384 61 12031552 (.57.5,16&) 1,102,42S 1,102,388 37 61,730,809 62,305,940 {S7S, 13 l 2

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (1,103,512) (l,.500,955) (397,443) (204,925). 195,355 400,206 (l,308,437) (1,305,600) 2,837

OTIIER FINANCING SOURCES (USES): Operating tran.sf= in 5&,213 252,983 194,770 252,9&3 252,983 Operating transfers out Q811454) !)81,454) !]81,4S4} !)81,4542

Total other financing sources 58,213 !128,471) {186,684) 0 0 0 0 (128,4711 (128,47ll

EXCESS OF REVENUES AND OTIIER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES S ~l,045,299) (1,629,426) S !584,127)' S {204,925) 19.5,355 S 400,206 S(l,308,437) (1,434,071) s m5,634)

FUND BALANCES, JULY l, 1993 Residual Equity Transfer

3,352,262 727,991

923,895 4,276,157 727,991

FUND BALANCES, JUNE 30, 1994 S 2,450,827 Sl,119,250 S 3,570,077

See notes to general purpose financial statements.

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' l \ t ' ' PERALTA COMMUNITY COLLEGE DISTRICT

COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS· ALL ENTERPRISE FUNDS YEAR ENDED JUNE 30, 1994

REVENUES: Sales and commissions Other

Total revenues

EXPENSES - Operating and administrative

OPERATING LOSS

OPERATING TRANSFERS IN

OPERA TING TRANSFERS OUT

NET INCOME

RETAINED EARNINGS, JULY 1, 1993 RESIDUAL EQUI1Y TRANSFERS

RETAINED EARNINGS, JUNE 30, 1994


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t t .. '

$ 48,621 17,680

66,301

128,131

(61,830)

157,597

(18,900)

76,867

810,156 (727,991)

$159,032

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1

,-..,._...,..•I ... a ~~·•••• l&.w1-.....1 .,......,.._,,, I .,_,.,...... ... ..._,....._ ........ ,.....-._ ...

t"" t:K.AL I A vUIVIIVIUNI I y vULLt:\:Jt= Ul~ I i'"(ll, I

COMBINED STATEMENT OF CASH FLOWS -ALL ENTERPRISE FUNDS YEAR ENDED JUNE 30, 1994

OPERA TING ACTMTIES: Operating loss Adjustments to reconcile operating income

to net cash provided by operating activities: Depreciation Changes in assets and liabilities:

Receivables Accounts payable and accrued liabilities

Cash used by operating activities

NONCAPITAL FINANCING ACTIVITIES: Changes in due from other funds r\ ____ .&.• ___ ,. ____ ,.t:!.' __ ·-

v J)Cl ct~mg LI cl.ll:SJ.CI :s m Operating transfers out

Cash provided by noncapital financing activities

CAP IT AL AND RELATED FINANCING ACTMTIESAcquisition of fixed assets

NET DECREASE IN CASH AND EQUIVALENTS

CASH AND EQUIVALENTS, JULY 1, 1993

CASH AND EQUIVALENTS, JUNE 30, 1994


t • t ' • 10 •

•

$ (61,830)

6,540

9,206 (8,338)

(54,422)

(89,393) , I:,,., I:""" 1.J I ,.J 7 I

(18,900)

49,304

(7,673)

(12,791)

_21184

$ 40,393

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NOTES TO GENERAL PURPOSE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 1994

1. SIGNIFICANT ACCOUNTING POLICIES

Description of Reporting Entity - The Peralta Community College District (the "District") is composed of four colleges (College of Alameda, Laney College, Merritt College, and Vista College).

As required by generally accepted accounting principles, the District includes all funds, account groups, agencies, and authorities for which the government is considered to be financially accountable. As a result, the general purpose financial statements of the District include the financial activities of the District, including its four community colleges and the combined totals of the associated student organization funds which represent the various student clubs.

The District participates in two joint venture activities through fonnally organized and separate legal entries. The Alameda County School Insurance Group ("ACSIG") and the School Excess Liability Fund ("SELF'1 are associated with but are not included in these general purpose financial statements because they are entities for which the District is not considered to be financially accountable. ACSIG and SELF are administrated by governing boards separate from the District (see Note 10).

Description of Funds and Account Group -The accounts of the District are organized on the basis of funds and an account group, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts which comprise the fund's assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. District resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped into categories as follows:

Governmental Fund Types:

• • General Fund accounts for all financial resources applicable to _the general operations of the District which are not required to be accounted for in another fund. Restricted general funds represent resources restricted by the categorical source of the income. The only restriction on use of unrestricted general funds is that the unrestricted funds be used for carrying out the instructional purpose of the District.

•• Capital Projects Fund accounts for resources designated for the acquisition, construction and deferred maintenance of major capital facilities which, by their nature, may require more than one budgetary cycle for completion.

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Debt Ser1ice l•und accounts for the accumulation of resources for, and repayment cf, District bonds, interest, QJ.id related costs recorded in the General Long-Tenn Obligations Account Group.

Proprietary Fund Types account for operations that are financed and operated in a manner similar to business enterprises where the intent of the District is that the costs of providing goods or services on a continuing basis be financed or recovered primarily through user charges.

Student Activities - These funds consist of various student-operated activities including food service operations. Facilities have been provided without cost to student organizations by the District.

Fiduciary Fund Types account for assets held by the District as a trustee or agent for individuals, private organizations, other governments and/or other funds. These include Expendable Trust and Agency Funds which are accounted for in essentially the same manner as Governmental Fund Types. Agency Funds are custodial in nature and do not involve measurement of results of operations. The Fiduciary Fund Types are comprised of two Expendable Trust Funds and one Agency Fund as follows:

•• Student Loans Fund consists of loans to students and of resources available for that purpose. The principal source of such funds is the federally funded Perkins Loan Program. The District provides for estimated uncollectible student loans.

•• Financial Aid Fund consists of grants and scholarships to students, and resources available for such purposes. The principal c:nnrcec: nf c:nch fimnc: ~rP. thP. fP-nP-rn lly fimnP-n PP.II l1r~nt ~nrt ~npplP.mP.nt~ 1 Prtn..-~tinnl'll flppnrtnnity nr~nt progr~rn.,. J:;"U'ldS a,.,. also provided through the State-funded Extended Opportunity Programs and Services program.

Agency Fund consists of assets held by the District as an agent for student organizations.

General Long-Term Obligations Account Group is used to account for the outstanding principal balances oflong-tenn debt, and the long-tenn portion of vested compensated absences expected to be financed from Governmental Fund Types.

Basis of accounting refers to when revenues and expenditures or expenses, as applicable, are recognized in the accounts and reported in the general purpose financial statements and relates to the timing of measurements made, regardless of the measurement focus applied.

Governmental and Fiduciary Fund Types are accounted for using the modified accrual basis of accounting. Revenues are recognized in the accounting period in which they become both measurable and available as net current assets to finance expenditures of the current fiscal period. Substantially all revenues are susceptible to accrual. Expenditures are recognized in the accounting period in which the related fund liability is incurred, except for interest on long-term debt, which is recognized when due.

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Proprietary Fund Types are accounted for using the accrual basis of accounting wherein revenues are recognized in the accounting period in which they are earned and expenses are recognized in the period incurred. In accordance with Governmental Accounting Standards Board Statement No. 20, "Accounting and Financial Reporting for Proprietary _Funds and Other Governmental Entities that Use

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Proprietary Fund Accounting", the District has not implemented Financial Accounting Standards Board Statements issued after November 30, 1989. ·

Budgets and Budgetary Accounting • By State law, the District's Board of Trustees must approve a tentative budget no later than July I and adopt a final budget no later than September 15 of each year. A hearing must be conducted to hear public comments prior to adoption. The District's Board of Trustees satisfied these requirements.

The level of budgetary control within all governmental fund types is at the fund object code level. These budgets are revised by the Board of Trustees and the Vice Chancellor on a monthly basis during the year to give consideration to unanticipated revenues and expenditures. The final, revised budgets are presented in the general purpose financial statements.

The General and Debt Service Fund budgets are reviewed and revised by the District's Board of Trustees and Chancellor during the year to give consideration to unanticipated changes in revenues and expenditures. The final revised budgets are presented in the accompanying general purpose financial statements.

The Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (GAAP Basis) and Actual - General Fund and Debt Service Fund has been prepared on the basis of generally accepted accounting principles (11 GAAP").

The District also adopts a budget for its Capital Projects Funds. Such budget is based on a project time frame, rather than a fiscal year "operating" time frame, reappropriating unused appropriations from year to year until project completion, and is therefore not included in the accompanying general purpose financial statements.

State Revenues (Principally Apportionment and Grant Revenues) - State principal apportiorunent revenues are based on full-time equivalent student attendance and are recognized when earned. Grant revenues of Governmental Fund Types are recorded as revenues in the year they become measurable and available.

Local Revenues (Principally Property Taxes) - The State of California Constitution Article XIII A provides that the combined maximum property tax rate on any given property may not exceed one percent of its assessed value unless an additional amount for general obligation debt has been approved by voters. Assessed value is calculated at 100% of market value as defined by Article XIII A and may be adjusted by no more than two percent per year unless the property is sold or transferred. The State Legislature has determined the method of distribution of receipts from a one percent tax levy among the counties, cities, school districts and other districts.

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The Countv assesses. bills for and collects nronertv taxes as follows: ---- ,-------# ---------;;, ----- --- - - - - • - • .,

Valuation dates Lien/levy dates Due dates

Delinquent as of

March 1 July 1

Secured

50% on November 1 50% on February 1 December IO (for November) April 10 (for February)

Unsecured

March 1 July 1 Upon receipt

August 31

The term "unsecured" refers to taxes on personal property other than land and buildings. These taxes are secured by liens on the property being taxed.

Property taxes levied are recorded as revenues and receivables. Property tax receivables are recorded net of estimated uncollectibles of $297,140 for the General Fund and $59,913 for the Debt Service Fund for delinquent property taxes receivable, in the fiscal year oflevy. Property taxes which cannot be recorded as current year revenues, in accordance with the modified accrual basis of accounting, are not recorded.

Cash and investments in County treasury reflect participation in the common investment pool of the County and are stated at cost. The County is restricted by the State code as to the types of investments it can make.

Cash Equivalents - For purposes of the statement of cash flows, the Enterprise Funds consider all highly liquid assets (including restricted assets) with a maturity of three months or less when purchased to be cash equivalents. The cash and investments in County treasury are, in substance, demand deposits and are therefore considered to be cash equivalents.

Inventories are stated at a moving average cost.

Fixed Assets - Governmental fund type fixed assets are recorded as expenditures. The District has not maintained complete historical cost records with respect to its investment in land, buildings and improvements, and equipment. Accordingly, the District has not included a General Fixed Assets Account Group in its general purpose financial statements. This practice is not in accordance with generally accepted accounting principles. ·

The Enterprise Funds capitalize equipment at the time the asset is purchased. Depreciation of fixed assets in the Enterprise Funds is computed using the straight-line method over their estimated useful lives of five years

Vested compensated absences are charged to expenditures or operating expenses when paid. Vacation fully vests as earned and is paid in full upon termination. Vested vacation obligations are recorded in the General Long-Term Obligations Account Group as accrued compensated absences until paid, except for the current portion which is accounted for in the General Fund.

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' ' t l ' • ' ' l ' Pension costs are funded currently by the District and District employees as dictated by PERS and STRS.

Total (memorandum only) columns in the general purpose financial statements are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. This data is not comparable to a consolidation and does not present financial position or results of operations in confonnity with generally accepted accounting principles.

2. FUND BALANCES

Reserved and designated fund balance - Fund balances consist of reserved and unreserved amounts. Reserved fund balances represent that portion of a fund balance which may not be appropriated for expenditure or is legally segregated for a specific future use. The remaining portion is unreserved fund balance.

Portions of unreserved fund balance may be designated to indicate tentative plans for financial resource utilization in a future period, such as for general contingencies or capital projects. Such plans or intent are subject to change and may never be legally authorized or result in expenditures.

The District's June 30, 1994 General Fund balance is reserved for specific purposes as follows:

Prepaid expenditures and deposits Self-insurance Inventories Parking improvements and maintenance Contract education Other

Total reserved

$ 784,515 41,110

227,677 281,700 66,393

271,771

$1,673,166

The unreserved general fund balance includes amounts which are designated by the Board of Trustees which consists of Bookstore future liability of $777, 661.

The District's June 30, 1994 Capital Projects Fund balances are reserved for repair and replacement of district buildings, properties and student centers as follows:

Building and properties Special reserve

Total

$7,748,273 425,572

$8,173,845

The Debt Service Fund balance of $1,119,250 is reserved for payment of principal and interest on general obligation bonds. Override taxes for this purpose which are included in District ta.xes are recorded in this fund.

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The District's June 30, 1994 Expendable Tn.1st Fund balani;es are reserved as follows:

Perkins Loans Other student loans funds

Total

$113,394 25,760

$139,154

Residual equity transfer- Fiscal year 1994 represented the first full year that bookstore operations were contracted out to a third party in entirety. Based on this operational change, a residual equity transfer was recorded to reclassify the bookstore operations from an Enterprise Fund to the General fund.

1994 fund balance - Expenditures and other financing uses in the General Fund exceeded revenues by $1,629,426. This operating deficit resulted primarily from a decline in funding received from the State. The General Fund balance of $2,450,827 at June 30, 1994, consists of a reserved balance of $1,673,166 and unreserved, designated balance of $777,661.

1995 fund balance (unaudited) - The District's fiscal 1995 General fund. budget includes expenditures and other financing uses in excess of revenues and other financing sources of$468,539. the projected operating deficit is a result of an unanticipated reduction in State revenues. As a result, the budgeted General Fund balance at June 30, 1995 is projected to be $1,236,653 consisting of a reserved balance of $1,012,000 and an unreserved balance of $224,653. The state recommends and unreserved fund balance designated for contingencies of3% of projected General Fund expenditures and other financing uses. For fiscal year 1995, this would be approximately $1,570,000.

3. CASH AND INVESTMENTS

The District, under Board resolution, maintains cash deposits with the County of Alameda Treasurer and in commercial banks. Cash deposited with the County Treasurer is part of the common investment pool of the County. The County is restricted by California Government Code Section 53635 and Section 53601 to invest in bonds, notes or warrants issued by local agencies; U.S. Treasuries; registered California State warrants or treasury notes or bonds; obligations guaranteed by the U.S. government; bankers' acceptances; commercial paper; negotiable certificates of deposits; investments in repurchase agreements or reverse repurchase agreements; and corporate notes issued by U.S. companies.

Cash and investments at June 30, 1994 follow:

Cash and investments in County treasury Cash in banks Cash on hand

Total

$ 9, 153,276. 1,241,381

5,820

$10,400,477

At June 30, 1994, the carrying amount of the District's bank deposits was $1,241,381 and the bank balance was $1,318,033. Of the bank balance, $329,408 was insured by federal depository insurance or collateralized by securities held by the District's agent in the District's name

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' '- ' .. ' t ' ' ' ' and $988,625 was collateralized 110% in accordance with Section 53652 of the California Government Code with securities held by the pledging financial institutions in the District's name.

4. LONG-TERM OBLIGATIONS

Changes in long-term obligations of the District during 1994 were as follows:

Balance Balance July 1, Payments/ June 30, 1993 Net Decrease 1994

General obligation bonds $ 9,650,000 $ (650,000) $ 9,000,000 Vested compensated absences 2,046,385 (272,014) _1,774,371

Total $11,§96,385 $ (922,014) $10,774,371

General Obligation Bonds - In June 1993, the District issued $9,000,000 of Series A bonds with interest rates ranging from 5.40-5.75%, maturing from October 15, 1994 through October 15, 2017. Proceeds were recorded in the Capital Projects Funds, and are to be used for the acquisition, construction and rehabilitation of school facilities. The Series A bonds, maturing on or after October 15, 2003, may be redeemed at the option of the District prior to their respective maturity dates at any date on or after October 15, 2002. The Series A bonds carry interest rates ranging from 5.4% to 5.15%, and are due in annual installments through 2018.

These bonds mature as follows:

Principal Interest Total Year ending June 30:

1995 $ 175,000 $ 497,169 $ 672,169 1996 190,000 487,314 677,314 1997 200,000 476,784 676,784 1998 210,000 465,714 675,714 1999 225,000 453,969 678,969 2000-2018 8,000,000 5,061,400 13,073,155

Total $9,000,000 $7,454,095 S 16A54,095

Repayment of general obligation bonds, as well as related interest. is mainly provided from property tax levies.

Vested Compensated Absences represents vested vacation for salaried employees. The District has a policy of allowing employees to accumulate unlimited sick leave. Upon normal retirement. unused sick leave may be converted into additional retirement benefits. Sick leave amounts are not payable to employees who tem;iinate for any reason.

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F11 ll-time ni«rict employees are entitled to IO - 22 vacation rlar: a year, depending upon length of service and employee classification

Managers may carry over a maximum of 44 days indefinitely. Other employees' carry over of vacation days is unlimited. Additional days may be carried over by managers subject to approval by the Chancellor. The District's policy is to record the liability as a general long-term obligation, with the current portion reflected in the General Fund.

6. EMPLOYEE RETIREMENT SYSTEMS

All full-time employees are eligible to participate in defined benefit retirement plans maintained by agencies of the State of California. Certificated employees are eligible to participate in the cost-sharing multiple-employer State Teachers' Retirement System ("STRS"). Classified employees are eligible to participate in the agent multiple-employer Public Employees' Retirement System ("PERS"), which acts as a common investment administrator and administrative agent for participating public entities within the State of California. The District's covered payroll for certificated employees participating in STRS and classified employees participating in PERS for the year ended June 30, 1994 was $18,262,814 and $12,404,452, respectively. For the year then ended, the District's total payroll for all certificated and classified employees was $24,528,920 and $15,630,298, respectively.

PERS

For most local governments participating in the Fund, separate actuarial valuations are performed. However, due to the comparability of most school districts within the State of California, substantially all districts, including the District, are combined into one cost-sharing group, the school employer subfund (the "Fund"). All full-time classified District employees participate in the Fund. The Fund provides retirement, disability, and death benefits based on the employee's years of service, age and final compensation. Employees vest after five years of service and may receive retirement benefits at age 50. These benefit provisions and all other requirements are established by State statute and District ordinance.

Participating employees are required to contribute 7% of their salary to the Fund less $133 a month for those employees covered by Social Security. Based on a valuation by the Fund's actuaries, all employers, including the District, are required to contribute 7.376% for the period July 1, 1993 through June 30, 1994 of covered payroll to the Fund for its classified employees. The funding policy of the Fund provides for actuarially determined periodic contributions by the District at rates such that sufficient assets will be available to the Funri to pay benefits when due. The District's contribution to the Fund for the year ended June 30, 1994 was made in accordance with the actuarially determined requirements computed as of June 30, 1993. The Fund uses the level percentage of payroll modification of the Entry Age Normal Actuarial Cost Method to determine the contribution rate for normal cost and to amortize unfunded actuarial liabilities. Significant actuarial assumptions used in the 1993 evaluation to compute the actuarially determined contribution requirement are the same as those used to compute the pension benefit obligation as described below. Unfunded actuarial liabilities are amortized through 2011.

The actuarially determined contribution requirement, which was met by the District, for the year ended June 30, 1994, was $1, 743,029, which consisted of $914,952 from the District and $828,077 from the employees. The District's contribution consisted of$814,476 normal cost (6.566% of current covered payroll) and $100,476 amortization of the unfunded actuarial liability (.810% of current covered payroll). The credit taken is recorded in the General Fund as a reduction of employee benefits expenditures. The District's 1994 contribution represented

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kss than 1 % of total contributions required of all participating districts. There were no significant changes in benefit provisi0ns, actuarial funding method or other factors.

The "pension benefit obligation" is a standardized disclosure measure that results from applying actuarial assumptions to estimate the present value of pension benefits, adjusted for the effects of projected salary increases and step rate benefits, to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of the subfund to which contributions are made on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among PERS and employers. The measure is the actuarial present value of credited projected benefits and is independent of the funding method used. The subfund does not make separate measurements of assets and pension benefit obligation for individual districts.

The pension benefit obligation of the Fund was computed as part of an actuarial valuation performed as of June 30, 1993, but i-l!flects all plan amendments adopted through June 30, 1994. The significant actuarial assumptions used in the 1993 valuation to compute the pension benefit obligation were an assumed rate ofretum on investment assets of 8. 75 %, annual payroll increases of 7% consisting of 4.50% attributable to inflation and 2.50% attributable to merit or seniority, and no postretirement benefit increases.

Funding status information of the Fund as of June 30, 1993 follows (in millions):

Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits

Current employees: Accumulated employee contributions and allocated investment earnings Employer-financed, vested Employer-financed, nonvested

Total pension benefit obligation

Net assets available for benefits, at cost (total market value, $14,958)

Unfunded pension benefit obligation

$ 5,529

3,026 3,652

226

12,433

.Jb.581

$ {148)

The pension benefit obligation decreased by $102,049, 794 during 1993. The increase in the pension benefit obligation was due to normal changes in the age, length of service and salary of covered employees. There were no changes in actuarial assumptions.

The Districts 1994 contribution represented less than 1 % of total contributions required of all participating districts.

Historical trend information shows the Fund's progress in accumulating sufficient assets to pay benefits when due. Ten-year trend information for the Fund is not yet available.

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For the Fund, trend infonnation for the years ended June 30, 1987 through 1993 follows:

Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 1993 1992 1991 1990 1989 1988 1987

Net assets available for benefits as a percentage of the pension benefit obligation 101.189% 96.895% 94.996% 92.636% 92.406% 85.871% 83.236%

Unfunded pension benefit obligation (in millions) $ (148) $368 $553 $759 $696 $1,213 $1,315 Employer contribution made in accordance wi~

actuarially determined requirements, as a percentage of annual covered payroll 7.376% 7.272% 8.498% 7.646% 8.583% 8.762% 10.064%

Unfunded pension benefit obligation as a percentage of annual covered payroll (3.7%) 9.0% 12.95% 21.2% 20.9% 39.4% 45.0%

STRS

STRS operates under the State Education Code sections commonly known as the State Teachers' Retirement Law. Membership is mandatory for all certificated employees of California public schools meeting the eligibility requirements·. STRS provides retirement, disability, and death benefits based on the employee's years of service, age and final compensation. Employees vest after five years of service and may receive retirement benefits at age 55.

Certificated employees are required to contribute 8% of their salary to STRS. The District, based on a valuation by STRS' actuaries, is required to contribute 8.25% of covered payroll for its certificated employees to STRS. The contribution requirement which was met by the District, for the year ended June 30, 1994, was $3,416,369 which consisted of $1,955,344 from the District and $1,461,025 from the employees.

The pension benefit obligation for STRS was computed as part of the actuarial valuation performed June 30, 1993. STRS does not make separate measurements of pension benefit obligations and the related net assets available for benefits for individual districts.

The significant actuarial assumptions used by STRS to compute the June 30, 1993 actuarial valuation are as follows. The assumed long-term investment yield is 8.5%, and the assumed long-term salary increase assumption for inflation is 6.5%. The normal cost rate of covered payroll is 17.46% and the 38-year amortization rate for the unfunded actuarial obligation is 2.95%. Member and employer contribution rates are set by law and are not affected by the assumptions. The District's employer contributions to STRS met the required contribution rate established by law.

Under current law, the pension benefit obligation for STRS is not the responsibility of the District. Although the actuarially determined contribution rate exceeds the employer rate set in law, the District has no obligation for the unfunded pension benefit obligation. The State of California makes annual contributions to STRS toward the unfunded obligation.

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The District's 1994 contribution represented less than 1 % of total contributions required of all participating districts. Ten-y~.u historical trend infonnation showing STRS' progress in accumulating sufficient assets to pay benefits when due is being accumulated prospectively, commencing in the STRS' June 30, 1989 comprehensive annual financial report.

7. POST-RETIREMENT HEALTH CARE

The District provides certain health care benefits for retired employees. The District's employees become eligible for these benefits if they reach retirement age while working for the District. Such benefits for retired and for active employees are provided by a Health Maintenance Organization ("HMO") or the District's Self-Retention program administrated by Blue Cross of Northern California. Annual costs are based on annual premiums set by the HMO and the composite costs rate based on usage of the Blue Cross program. The District recognizes the c·Jst of providing those benefits and related administrative costs when paid. Active plan participants at June 30, 1994 totaleC! 5-44 Such payments for retired employees totaled approximately $1,530,000 for the year ended June 30, 1994 and were recorded as expenditures in the General Fund.

8. COMMITMENTS AND CONTINGENCIES

Grant Programs - The District participates in a number of State and federally assisted programs. These programs are subject to program compliance audits by the grantors or their representatives. The audits of these programs for or including fiscal year 1994 have not yet been conducted. Accordingly, the District's compliance with applicable program. requirements is yet to be established. The amount, if any, of expenditures which may be disallowed by the program agencies cannot be determined, although the District does not expect such amounts, if any, to be material.

Commitments -At June 30, 1994, the District had commitments under several construction contracts totaling approximately $1,579,213.

Litigation -At June 30, 1994, the District is involved in various claims and litigation, none of which the District expects to have a material adverse effect on the District's operations or financial condition.

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9.

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TNTl<Rl<TTNn Rl<rl<.TVA'RT H'(;: .iNn P.iVATH 1<<;: .r, •. 6 .Jl>,,J:.a.,.a. -.lo,,...., ... """"""''-'"'-JA I' .. JIJJI.J.,l,,J ...... ,I .a,4 ,~ .... ,I .. .&. ,i .a,,'-'~~...,

Due to and due from other funds by individual fund at June 30, 1994 are as follows:

Due from Due to Other Funds Other Funds

General Fund $1,308,280 $ 89,393 Capital Projects Fund 1,388 653,125 Expendable Trust Funds:

Financial Aid Fund: College of Alameda 104,500 Laney College 100,636 Merritt College 115,000 Vista College 55,500

Agency funds 280,907 Enterprise Funds:

College of Alameda 28,442 Laney College 35,328 Merritt College 25,623

Total $1,399,061 $1,399,061

JOINT POWERS AGREEMENTS

The District participates in the workers' compensation insurance programs organized by the Alameda County School Insurance Group ("ACSIG"). The ACSIG is a Joint Powers Authority created to provide self-insurance programs to Alameda County school districts. Each of the eighteen member school districts, which are all located in Alameda County, has a representative on the ACSIG Board which governs the management and financing of ACSIG activities. The District paid premiums to the ACSIG of $469,020 during fiscal 1994.

The District also participates in the School Excess Liability Fund ("SELF"), which is a Joint Powers Authority established to ;wovide excess insurance of$14 million for general liability to California member schools. The SELF Board is totally independent of any single school agency. Representatives are elected by member districts. The District paid premiums of $46, 194 to SELF during fiscal 1994.

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Condensed unaudited financial information of the ACSIG and SELF as of and for the year ended June 30, 1994 is as follows:

Total assets Total liabilities Fund balance Retained earnings Total revenues Total expenditures Net increase in fund balance Net increase in retained earnings

Complete financial statements for the above joint ventures can be obtained from:

ACSIG P.O. Box 2487 Dublin, California 94568

10. IN SURAN CE

SELF 1531 I Street, Suite 300 Sacramento, California 95814

ACSIG

$ 9,015,227 5,730,516

3,284,711 14,555,891 14,186,385

369,509

\

SELF

$89,689,873 65,763,233 23,926,640

21,115,666 16,283,286 4,832,380

The District purchases insurance from various sources. These policies however, have deductibles or retentions and coverage limits above which the policy will not cover. Insurance retention and coverage limits, per occurrence, are as follows:

The Oakland Association of Insurance Agents, Inc.

General Liability and automobile

Property

Schools Excess Liability Fund {see Note 9)

General Liability and Automobile

Property

Retention

$50,000

$50,000

Retention

$1,000,000

$1,000,000

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Maximum coverage

$1,000,000

$196,515,400

Maximum coverage

$14,000,000

$14,000,000

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The District is directly liable for any losses experienced under the $50:0000 retention or greater than $14,000,000 maximurr. coverage for general liability and automobile losses and $196,515,400 for property losses.

For worker's compensation coverage the District belongs to a joint powers agreement, the Alameda County Self Insurance Group (see Note 9). There is no retention, deductible, or maximum coverage, and the coverage is only limited by the funds available.

* * * * * *

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APPENDIX B - FORM OF OPINION OF CO-BOND COUNSEL

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[THIS PAGE INTEN110NALLY LEFf BLANK]

--------------------------·--- ___________ ,_,_"'"'""""'"'""'""-~-·-M-,

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111illl#

ORRICK, HERRINGTON & SUTCLIFFE OLD FEDERAL RESERVE BANK BUILDING

400 SANSOME STREET SAN FRANCISCO, CAUFORNIA 94111

LOFTON, DE LANCIE & NELSON ATI'ORNEYS AT 1.AW

SOS MONTGOMERY STREET, SUITE 1550 SAN FRANCISCO, CALIFORNIA 94111

February 2, 1995

Peralta Community College District Oakland, California 94606

Peralta Community College District General Obligation Bonds, Election of 1992. Series B

(Final Opinion)

Ladies and Gentlemen:

We have acted as co-bond counsel in connection with the issuance by Alameda County, California (the "County"), on behalf of the Peralta Community College District (the "District"), which is located in the County, of $9,000,000 principal amount of bonds designated as "Peralta Community College District General Obligation Bonds, Election of 1992, Series B" (the "Bonds"), representing part of an issue in the aggregate principal amount of $50,000,000 authorized at an election held in the District on November 3, 1992, and issued pursuant to a resolution (the "Resolution") of the Board of Supervisors of the County duly passed and adopted on December 13, 1994 under and by authority of the Education Code of the state of California and at the request of the District pursuant to a resolution of the Board of Trustees of the District duly passed and adopted on October 25, 1994 (the "District Resolution").

In such connection, we have reviewed the Resolution, the District Resolution, the Tax Certificate of the District, dated the date hereof (the "Tax Certificate"), certificates of the District and the County and others, and such other documents and matters to the extent we deemed necessary to render the opinions set forth herein.

Certain agreements, requirements and procedures contained or referred to in the Resolution, the Tax Certificate and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Bonds) may be

SF2-39444.l

Peralta Community College District February 2, 1995 Page 2

taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. No opinion is expressed herein as to any Bond o:r the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than ourselves.

The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions .are taken or omitted or events do occur. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents ,and signatures presented to us (whether as originals or copies} .and the due and legal execution and delivery thereof by and validity against any parties other than the District. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Resolution, the District Resolution and the Tax Certificate, including (without limitation} covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes. We call attention to the fact that the rights and obligations under the Bonds, the Resolution and the Tax Certificate may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against school districts in the State of California. We express no opinion with respect to any indemnification, contribution, choice of law, choice of forum or waiver provisions contained in the foregoing documents. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering materials relating to the Bonds and express no opinion with respect thereto.

Sf-2-39444.1

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-Peralta Community College District February 2, 1995 Page 3

Based on and subject to the foregoing and in reliance thereon, as of the date hereof, we are of the following opinions:

1. The Bonds constitute valid and binding obligations ,.., of the District.

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2. The Resolution has been duly and legally adopted and constitutes a valid and binding obligation of the county.

3. The Board of Supervisors of the County has power and is obligated to levy ad valorem taxes for the payment of the Bonds and the interest thereon upon all property within the District's boundaries subject to taxation by the District (except certain personal property which is taxable at limited rates), without limitation of rate or amount.

4. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although we observe that it is included in adjusted current earnings in calculating corporate alternative minimum taxable income. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds.

Faithfully yours,

ORRICK, HERRINGTON & SUTCLIFFE

per

LOFTON, DE LANCIE & NELSON

SF2-39444.1

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APPENDIX C - COUNTY OF ALAMEDA

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ALAMEDA COUNTY

Concra Cosca County

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O LIVERMORE

Santa Clara County

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San Joaquin County

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ALAMEDA COUNTY

General Information

Alameda County is comprised of 14 cities and encompasses 737.5 square miles of land area. It offers unparalleled air, sea, and ground transportation access to destinations throughout the United States and the Pacific Basin. The County is served by an extensive mass transit system, including the Bay Area Rapid Transit (BART) system. The Port of Oakland, located on the mainland side of San Francisco Bay, is one of the world's finest natural deep water harbors, and has the largest and most modem containerized cargo handling facility on the west coast.

Population

Alameda County's population grew by 173,800 between the 1980 and 1990 census counts, an increase of 15.7 percent over the ten-year period. Somewhat over half of that was caused by natural increase (births minus deaths) and the remainder by net migration. Population grew at a similar pace between 1990 and 1993 as in the eighties. All cities in the county gained population; Dublin, Livermore, Emeryville, and Pleasanton had the fastest growth rates in the county between 1990 and 1993.

A.rga

Total County (2)

Alameda City Albany Berkeley Dublin Emeryville Fremont Hayward Livermore Newark Oakland Piedmont Pleasanton San Leandro Union City

(1) Census of Population, April 1990.

EXHIBIT1 POPULATION

ALAMEDA COUNTY

122Q(l) ~

1,279,182 1,313,300

76,459 80,800 16,327 16,700

102,724 104,200 23,229 25,150 5,740 6,025

173,339 177,500 111,498 118,200 56,741 59,400 37,861 38,450

372,242 377,900 10,602 10,850 50,553 52,600 68,223 69,500 53,762 55,500

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1,337,100

78,300 17,300

104,900 25,850

6,200 183,300 121,100 61,800 39,050

382,700 11,050 54,300 71,300 56,800

(2) Totals mar not add due to independent roundin1 Source: Emp oyment Development Department, La or Market Information Division

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Iindustry

Alameda County will experience moderate job growth during the 1992-98 projections period. By 1998, th.ere should be approximately 47,100 more jobs in the county than in 1992. This represents an overall growth rate of 8.1 percent, or an average of 1.4 percent a year. The State economy is expected to significantly improve during late 1994 and 1995, and even more rapid growth is expected to be registered in subsequent years. As the State economy recovers, the pace of job growth in the county is expected to accelerate. About two-thirds of the projected growth is expected to be in the services and manufacturing industry divisions; the only industry group expected to decrease will be government which is expected to show a net loss of approximately 300 jobs.

EXHIBIT2 EXPECTED EMPLOYMENT BY NON-AGRICULTURAL

INDUSTRY CROUP ALAMEDA COUNTY

(Amount in Thousands)

Absolute Type of Employment .l2.2Z 122a Change

Non Agricultural 582,300 629,400 47,100

Goods producing Mining & Construction 24,500 25,800 1,300 Manufacturing 79,400 87,900 8,500 Nondurable goods 33,300 36,000 2,700 Durable goods 46,100 51,900 5,800

Service producing Transportation and public utilities 35,700 39,200 3,500 Wholesale Trade 40,900 45,900 5,000 Retail Trade 95,100 100,800 5,700 Finance, Insurance and Real Estate 30,600 31,200 600 Services 151,200 174,000 22,800 Government 124,900 124,900 -300

(1) Totals may not add due to independent rounding. Source: State of California, Employment Development Department.

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Percent Change

8.1%

5.3 10.7

8.1 12.6

9.8 12.2

6.0 2.0

15.1 -0.2

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Major Employers

The Exhibit below displays the major employers of Alameda County.

EXHIBIT3 MAJOR EMPLOYERS ALAMEDA COUNTY

Employer Industry Employees

US Navy Military 25,004 Alameda County County Govenunent 10,845 UC Berkeley University 10,498 Lawrence Laboratories Govenunent Laboratory 8,550 Pacific Bell Utility 5,299 Kaiser Foundation Health Insurance 5,140 Safeway Retail 5,059 City of Oakland City Govenunent 4,181 Everex Computers Computer 3,500 Mervyn's Retail 3,200 Fremont Union School District School District 2,900

Source: Cotmty of Alameda Economic Development Department, April 1993.

Agriculture

The following exhibit shows the value of Alameda County's agricultural production from 1990 through 1993.

EXHIBIT4 GROSS VALUE OF AGRICULTURAL PRODUCTION

ALAMEDA COUNTY

Y"Qp. 122.Q 1221 1m

Fruit & Nuts $ 3,171,000 $ 4,348,000 $ 4,547,000 Vegetable Crops 879,000 958,000 828,000 Nursery Products 23,596,000 20,060,000 18,974,000 Nursery Cut Flowers 14,558,000 13,590,000 14,751,000 Field Crops 4,527,000 4,658,000 3,876,000 Livestock and Poultry 8,725,000 7,031,000 7,925,000 Apiary 59.800 57.400 46.700

Total $55,515,800 $50,702,400 $50,947,700

Source: Alameda County Agricultural Commissioner

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$ 3,689,000 801,000

17,471,000 14,402,000

4,570,000 9,750,000

48.200

$50,731,200

Commercial Activity

The following table details taxable sales in Alameda County from 1989 though 1993.

Category

Apparel Stores General Merchandise All Food Stores Packaged Liquor Stores Eating and Drinking Group Home Furnishings and Appliances Building Material Group Farm Implements and Supplies Auto Dealers and Supplies :Service Stations Other Retail Outlets Retail Stores Total

Business and Personal Services All Other Outlets Total All Outlets

$

EXHIBIT 5 TAXABLE SALES (000) ALAMEDA COUNTY

1989 1990

359,664 $ 385,068 1,273,183 ]l,336,301

527,487 535,829 108,101 110,788 940,053 981,023 391,030 401,212 597,383 597,808 170,063 153,957

1,459,579 1,430,312 560,183 619,990

1,376.111 ],432,251 $ 7,762,787 $ :7,984,539

526,852 584,241 4,355,239 !l.52~.833

$12,644,878 $1:3,093,613

Source: State of California, Board of Equalization.

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1991 1992

$ 389,495 $ 392,250 1,362,551 1,393,222

624,685 652,932 115,184 113,520

1,002,716 1,012,036 403,374 409,060 580,701 594,297 139,922 120,849

1,235,523 1,250,557 607,410 654,171

l,427,157 1.457,62Q $ 7,888,718 $ 8,050,514

563,776 592,914 4,486,ZQS 4,764,404

$12,939,199 $13,407,832

• 1993

$ 391,319 1,377,275

543,159 102,708 •· 1,012,210 423,489 612,614 119,937

1,380,749 663,545

1,48S,34Q $ 8,112,351

554,090 ~.Z42,27Q

$13,414,411 ..

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APPENDIX D - FORM OF BOND INSURANCE POLICY

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Endorsement

Policy issued to:

AMBAC Indemnity Corporation c/o CT Corporation Systems 44 East Mifflin Street Madison, Wisconsin 53703 Administrative Office: One State Street Plaza New York, New York 10004

Attached to and forming part of

Effective Date of Endorsement:

In the event that AMBAC Indemnity Corporation were to become inso11rrw1n11,,. the Policy would be excluded from coverage by the California lnsur.lru!if established pursuant to the laws of the State of California. Payme ts u

ising under A~~r.t· tion,

olicy with respect obligoron,orany to the Bonds, as defined in the Policy, may not be accelerat

trustee or paying agent for, the Bonds.

Nothing herein contained shall be limitations of the above mentione

In Witness m ny has caused itS Corporate Seal to be hereto affixed and these present~ to be signed by its ro..~, •• r,, to become effecti\·e as it'> original seal and signatures and binding on the Company by

virtue of cou ly authorized agent.

AMBAC Indemnity Corporation

President

Authorized Representative

Form 11 S2B·OO 15 (8192)

AMBAC Municipal Bond Insurance Policy

Issuer·

Bonds:

AMBAC ln<lemniry Corporation

clo CT Corporation Systems

:11 East Mifflin Sr., Madison, Wisconsin 53703 Adm111isrrarivc Office:

One Start' Srreer Plaza, New York, NY 10004 Telephone: (212) 668-0.'>40

Policy Number:

Premium:

AMBAC Indemnity Corporation (AMBAC) A Wisconsin Srock Insurance Company

in considerac10n of the payment of the premium and subject to the rcrms of rhis Policy, hereby agrees to pay t h United Scates Trust Company of New York, as trustee, or irs successor (the "Insurance Trustee·'), for the benefit of Bon older cipal of and inreresr on the above-described debr obligations (rhe ··no:1ds") which shall become Due i ay reason of Nonpayment by the Issuer.

AMBAC will make such payments ro che Insurance Trustee within one (I) business da menr. Upon a Bondholder's presentation and surrender to rhe Insurance Truscee of sue canceled and in beuer form and free of any adverse claim, rhe lnsurnnce Trusree principal and interest which is then Due for Payment but is unpa:d. Upon sue surrendered Bonds and coupons and shall be fully subrogarcd ro a..l of t • Bom (

ab

AC of Nonpaycoupons, un-face amount of the owner of the

their assigns, the surrender to the Insurance Trustee

un r of assignment, in form satisfactory ro rhe

In the event rhc rrusree become Due for Paym transfer and rheret nonappealable or of such recovery

ed represenrarivc, so as ro permit ownership of

As used herein, rhe on h der means any person orher than the Issuer who. at rhe rime of Nonpayment, is rill· owner of a Bond or ofa coupon apperrai ond. As used herein. "Due for Payment .. , when rl-fl·rring ro the prinl'ipal of Bonds, 1s when rhe srareJ maturity dare or a ma edemprion dare for rhe applirnrion of ,1 rt·quired sinking fund insr,1llnwnt h,1s been real'hed and does nor refer ro any earlier date on which payment is due by reason of rail for redemption (other rhan by application of required sinking fund installments), acceleration or other advancement of maturity; and, when referring to interest on rhe Bonds. is wh<·n thl' srnred dart• for payment of interl·sr has been reached. As used herein, "Nonpaymu1t" means thl· failure of the Issuer ro have provided suffi(il·nr funds ro the paying agent for payment in full of all prinl'ipal of and inH·rcsr on thl· Bonds whid1 .lrl' Dul· for Payment.

This Policy is nonrnncelable. The premium on this Polity is nor rd,mdabk for any rea.,on, indudin.~ payment of the Bonds prior w maruriry. This Policy does nor insure against loss of ,111y pn.-payml'nr or other acn·k·rarion payment which at any time may hl·tom..- due in respect of any Bond, ocher than at rhe sole option of AMBAC. nor against any risk otlwr than Nonpayment

In witness whereof, AMBAC has caused this Polil'y to be affixed with a fal'simik of m corpowtl· sl·al and to be signl·d by m duly authorized offin,rs in facsimile to become effocrivc as its original st·:il am! signarur..-s and bindmg upon t\J\IBAC by virtue of rhe countl'r· signature of irs duly authorized representative.

Effective Date:

UNITED STATES TRUST COMPANY OF NEW YORK acknowledges that it has agreed to perform the duties of Insurance Tms1ee under this Policy.

form# 566-0003 (8/92)

Secretary

Authorized Represen1.3tive

~ Authorized Officer~

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AMBAC. - CA.gov

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