CPY Document

Law Offces of CHAMAN AN CUTLER LLP

Theodore S. Chapman 111 West Monroe Street, Chicago, Ilinois 60603-4080 San Francisco 1877-1943 Henry E. Cutler Telephone (312) 845-3000 595 Market Street 1879-1959 Facsimile (312) 701-2361 San Francisco, CA 94105 chapman.com (415) 541-0500

Salt Lake City February 8, 2007 201 South Main Street Salt Lake City, UT 84111 (801) 533-0066 We hereby certify that we have examined certified copy of the proceedings of the Board of Education of Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District"), passed preliminary to the issue by the District of its fully registered General Obligation Limited Bonds, Series 2007 (the "Bonds"), to the amount of $625,000, dated February 1, 2007, due serially on February 1 of the years and in the amounts and bearing interest as follows:

2021 $100,000 4.35% 2022 225,000 4.40% 2023 200,000 4.45% 2024 100,000 4.50%

and subject to redemption prior to maturity at the option of the District as a whole or in part in any order of their maturity as determined by the District (less than all of the Bonds of a single maturity to be selected by the Bond Registrar), on February 1,2015, or on any date thereafter, at the redemption price of par plus accrued interest to the redemption date, as provided in such proceedings, and we are of the opinion that such proceedings show lawful authority for said issue under the laws of the State of Ilinois now in force. .-

We further certify that we have examined the form of bond prescribed for said issue and find the same in due form of law, and in our opinion said issue, to the amount named, is valid and legally binding upon the District, and all taxable property in the District is subject to the levy

;;.., of taxes to pay the same without limitation as to rate, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. The amount of said taxes that may be extended to pay the Bonds is, however, limited as provided by the Property Tax Extension Limitation Law of the State of Ilinois, as amended (the "Law"). The Law provides that the annual amount of said taxes to be extended to pay the Bonds and all other limited bonds (as defined in the Local Government Debt Reform Act of the State of Ilinois, as amended) heretofore and hereafter issued by the District shall not exceed the debt service extension base (as defined in the Law) of the District, as more fully described in said proceedings.

2172760.01.04.doc 2144558/ETB/2/707 Law Offices of CHAPMAN AND CUTLER LLP determining the federal alternative minimum tax for certain corporations. Failure to comply with certain of such District covenants could cause interest on the Bonds to be includable in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Ownership of the Bonds may result in other federal tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.

It is also our opinion that the Bonds are "qualified tax-exempt obligations" pursuant to Section 265(b )(3) of the Code.

We express no opinion herein as to the accuracy, adequacy or completeness of any information furnished to any person in connection with any offer or sale of the Bonds.

In rendering this opinion, we have relied upon certifications of the District with respect to certain material facts within the District's knowledge. Our opinion represents our legal judgment based upon our review of the law and the facts that we deem relevant to render such opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

LKGIVEN/ETBASTEDO:kd ~\~~~ff

-2- STATE OF ILLINOIS ) ) SS COUNY OF WINNEBAGO )

ORGANIZATION CERTIFICATE

We, the undersigned, do hereby certify that we are the duly qualified and acting President and Secretary, respectively, of the Board of Education (the "Board") of Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District"), and as such offcials we do further certify as follows:

1. That the District was organized in the year 1918, has continuously since its

organization operated under the general laws of the State of Ilinois providing for the establishment, operation and maintenance of public schools, is now operating under the provisions of the School Code of the State of Ilinois, as amended (105 ILCS 5/1-1 et seq.), and is not now operating under the provisions of any special Act or charter.

2. That the present duly qualified and acting offcials of the District are as follows:

David Kurlinkus , President, Board of Education

Kerwood Watts , Vice-President, Board of Education

Sandy Fordell , Member, Board of Education

Diane LaForge , Member, Board of Education

Scott Moyer , Member, Board of Education

Bob Zoeller , Member, Board of Education

Tana Vet tore , Member, Board of Education

Tana Vettore , Secretary, Board of Education

Kris Molencupp , School Treasurer

and that said members of the Board have been the duly qualified and acting Board since April ,20m, and provided there are no vacancies created by resignation or otherwise, wil constitute the Board until the election for members of the Board to be held on April 17,2007, is canvassed and a new Board duly constituted.

2178160.01.04.doc 2144558. LKG. 1/18/07 3. That the changes in the boundaries of the District since April 24, 2006, were as follows: none

(Attach copy of the orders providing for all such changes. If no changes have occurred, please so indicate with the word "none".)

4. That the only cities, vilages or incorporated towns located wholly or partly within the District are as follows: Rockton, Shirland, Roscoe and Harrison, and that none of said cities, vilages or incorporated towns have adopted and are now operating under the provisions of Articles 6, 14 and 18 of the Election Code of the State of Ilinois, as amended (10 ILCS 5/6, 5/14 and 5/18), said articles being known as the City Election Law.

5. That The Counties of Winnebago and Boone, Ilinois, are the only counties within which the District is wholly or partly located, and that none of said counties have adopted and are now operating under the provisions of Article 6A of the Election Code of the State of Ilinois, as amended (10 ILCS 5/6A), said article providing for a county board of election commissioners.

6. That on November 5, 1996, The Counties of Winnebago and Boone, Ilinois, each passed a referendum on the applicability of the Property Tax Extension Limitation Law of the State of Ilinois, as amended (35 ILCS 200/18-185 et seq.).

7. That The Herald is a local, community newspaper published in and with a general circulation in the District.

8. That all of the news media that have filed a request for notice of the meetings of the Board pursuant to the Open Meetings Act of the State of Ilinois, as amended (5 ILCS 120/1 et seq.), are as follows: Rockford Register Star

(If no requests have been made, please so indicate with the word "none".)

9. That the regular meetings of the Board are held on the third Wednesday of each month at 7:00 o'clock P.M., at the Hononegah High School Building within the District, that the Board has given public notice of said schedule of regular meetings stating the regular dates, times and places of said meetings at the beginning of each calendar or fiscal year by posting a copy of said public notice at the principal office of the Board and by supplying copies of said public notice to all of the newspapers, radio or television stations and other news media that have filed a request for such notice, and that the Board has made said schedule available to the public.

10. That the District is now maintaining and operating a school system composed of grades 9 to 12, inclusive, such school system meeting and complying in all

-2- respects with all of the standards established for recognition by the State Board of Education of the State of Ilinois.

11. That the District does not have an official corporate seaL.

12. That the District has an estimated population of., 0 OOD, and that there are approximately ;1/, Y23 legal voters in the District. '

13. That no petition has been filed or is now pending affecting in any manner whatsoever the boundaries or the corporate existence of the District.

14. That the majority of children attending school in the District attend a school within Winnebago County, Ilinois, and that the District is subject to the supervision and control of the Regional Superintendent of Schools for the Regional Office of Education serving Educational Service Region Number 04, including therein all of Winnebago County, Ilinois.

15. That there is no litigation or controversy pending or threatened and there are no tax objections pending or threatened questioning or affecting in any manner whatsoever the corporate existence of the District, the boundaries thereof, the right of the District to levy taxes for school purposes or the title of any of its present officials to their respective offices.

IN WITNESS WHEREOF, we hereunto affix our official signatures, this 17th day of January, 2007.

o . ~-~ ~. Q, ~ President, Board f Education

-3- STATE OF ILLINOIS ) ) SS COUNTY OF WINNEBAGO )

INDEBTEDNESS CERTIFICATE

We, the undersigned, do hereby certify that we are the duly qualified and acting Secretary of the Board of Education of Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District"), and School Treasurer of the District, respectively, and as such officials we do further certify that the total aggregate indebtedness of the District, of every kind and nature and howsoever evidenced or incurred, excluding the proposed $625,000 General Obligation Limited Bonds, Series 2007, does not exceed the total sum of $/~ & t J l' ¿Ji¡q , which said indebtedness is itemized as follows:

Bonds issued by the District (not including alternate bonds) ...... $ /~ 33~ i S~1

Alternate bonds issued pursuant to Section 15 of the Local Government Debt Reform Act of the State of Ilinois, as amended ...... $ --

Contracts (including all payments on installment purchase contracts, debt certificates and public utility contracts)...... $ :JfiO) (JOO

Indebtedness resulting from annexations of territory ...... $ --

Judgments...... $

Leases (including leases with the School Building Commission and public building commissions) ...... $

Miscellaneous floating indebtedness...... $

Special assessments levied against District property...... $

Other forms of debt (not including warrants issued in anticipation of the collection of taxes levied) ...... $

all of which appears from the books and records in our respective care and custody.

IN WITNESS WHEREOF, we hereunto affx our official signatures, this 17th day of January, 2007.

~. Sch~ol t- reasurer(!u fP- STATE OF ILLINOIS ) ) SS COUNTY OF WINNEBAGO )

2005 VALUATION CERTIFICATE

I, the undersigned, do hereby certify that I am the duly qualified and acting County Clerk

of The County of Winnebago, Ilinois (the "County "), and as such official I do further certify

that the equalized assessed value of all taxable real property located in the County included

within the boundaries of Community High School District Number 207, Winnebago and Boone

Counties, Ilinois, as of the date of this certificate, is the sum of $5Ylo. ~L-nllR;2 9 as last

equalized or assessed by the Department of Revenue of the State of Ilinois, for State and County

taxes for the year 2005, all as appears from the books of assessment of the County now in my

possession.

IN WITNESS WHEREOF, I hereunto affix my official signature and the seal of the County, this \fö'tday of-:CJu fA '/ ,2007.

"1a1$ dJ 'i m L(.Q ~, CountyIlinois erk of The County of-b Winnebago, " XSeAL) STATE OF ILLINOIS ) ) SS COUNTY OF WINNEBAGO )

2006 NON-AvAILABILITY CERTIFICATE

I, the undersigned, do hereby certify that I am the duly qualified and acting County Clerk of The County of Winnebago, Ilinois (the "County"), and as such official I do further certify that the equalized assessed value of all taxable real property located in the County included within the boundaries of Community High School District Number 207, Winnebago and Boone

Counties, Ilinois, as last equalized or assessed by the Department of Revenue of the State of Ilinois, for State and County taxes for the year 2006, is not now available and wil not be available until at least on or after March 1,2007.

IN WITNESS WHEREOF, I hereunto affix my official signature and the seal of the County, this..~day of .(a.o., i ,2007.

-y a. 't I~ lY. TY u.~ CountyIlinois erk of The County of lotWinneb,o, p~~ (SEAL) STATE OF ILLINOIS ) ) SS COUNTY OF BOONE )

2005 VALUATION CERTIFICATE

I, the undersigned, do hereby certify that I am the duly qualified and acting County Clerk of The County of Boone, Ilinois (the "County"), and as such official I do further certify that the equalized assessed value of all taxable real pròperty located in the County included within the boundaries of Community High School District Number 207, Winnebago and Boone Counties,

Ilinois, as of the date of this certificate, is the sum of $d(l ò! lX l) 3 , as last equalized or assessed by the Department of Revenue of the State of Ilinois, for State and County taxes for the year 2005, all as appears from the books of assessment of the County now in my possession.

IN WITNESS WHEREOF, I hereunto affix my offcial signature and the seal of the County, this ~ daY~~Q~ h-. 200.

(SEAL) STATE OF ILLINOIS ) ) SS COUNTY OF BOONE )

2006 NON-A v AILABIUTY CERTIFICATE

I, the undersigned, do hereby certify that I am the duly qualified and acting County Clerk of The County of Boone, Ilinois (the "County"), and as such official I do further certify that the equalized assessed value of all taxable real property located in the County included within the boundaries of Community High School District Number 207, Winnebago and Boone Counties,

Ilinois, as last equalized or assessed by the Department of Revenue of the State of Ilinois, for

State and County taxes for the year 2006, is not now available and wil not be available until at least on or after March 1,2007.

IN WITNESS WHEREOF, I hereunto affix my offcial signature and the seal of the County, this 30 day of ra, 2007.

J~ Jf ~ County Clerk of The County of Boon (SEAL) STATE OF ILLINOIS ) ) SS COUNY OF WINNEBAGO )

WORKNG CASH FUND CERTIFICATE

I, the undersigned, do hereby certify that I am the duly qualified and acting County Clerk of The County of Winnebago, Ilinois (the "County "), and as such official I do further certify as follows:

1. That pursuant to Section 20-3 of the School Code of the State of Ilinois, as amended, a tax for working cash fund purposes for Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District"), was extended in the County for the years 2002 to 2006, inclusive, and in the amounts as follows:

YEAR AMOUN

2002 $ ':;l; a O~ 'l 2003 tv(;i ,:r~O 'JC-C ~ '.- i-s 2004 (POi bCod- .- 2005 (çc.fl &f7 ~ 2006 ¡~(A 2. That the District is authorized to levy a tax annually for educational purposes at the maximum rate of 3.50% upon all the taxable property of the District at the value, as equalized or assessed by the Department of Revenue of the State of Ilinois.

IN WITNESS WHEREOF, I hereunto affix my official signature and the seal of the County, this -30~ay of.. ~' 2007. '. ~ %1,&1 ./-, il/;/!" 11 _ '. i" !J./' / / ¡ /71 ali; ¡ c ¡¿ lØful~vLl. hijj, - / iJ;~ I~(j¡ ,u,~ Count Clerk of The County.f Winnebago, Ilinois (SEAL)

2178163.01.05.doc 2144558. LKG. 1/18/07 STATE OF ILLINOIS ) ) SS COUNTY OF BOONE )

WORKING CASH FUND CERTIFICATE

I, the undersigned, do hereby certify that I am the duly qualified and acting County Clerk of The County of Boone, Ilinois (the "County"), and as such official I do further certify as follows:

YEAR AMOUN

2002 $ q 3,35 2003 98,78 2004 qC;,o¡r¡ 2005 I() 5' i I () 2006

2. That the District is authorized to levy a tax annually for educational purposes at the maximum rate of 3.50% upon all the taxable property of the District at the value, as equalized or assessed by the Department of Revenue of the State of Ilinois.

IN WITNESS WHEREOF, I hereunto affix my official signature and the seal of the County, this.3 0 day of h ,2007. Ll)L County Clerk of The County of Boo , Ilinois (SEAL) STATE OF ILLINOIS ) ) SS COUNY OF WINNEBAGO )

WORKING CASH FUND CERTIFICATE

We, the undersigned, do hereby certify that we are the duly qualified and acting President and Secretary of the Board of Education (the "Board") of Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District"), and School Treasurer of the District, respectively, and as such offcials we do further certify as follows:

1. That the District is presently maintaining, administering and operating a Working Cash Fund in and for the District (the "Fund") in the manner prescribed in Article 20 of the School Code of the State of Ilinois, as amended, for the purpose of enabling the District to have in its treasury at all time suffcient money to meet demands thereon for ordinary and necessary expenditures for corporate purposes, and that the amount now to the credit of the Fund is $ î/, 1?i'6¡S1fsA, including the amount of any cash on hand in the Fund and the amount of any transfers from the Fund to any other funds of the District.

2. That on the ì f.. day of 6 ~ ,~, the Board adopted a resolution abolishing or abating the working cash fund of the District, and that attached hereto as Exhibit 1 is a true, correct and complete copy of (i) said resolution, (ii) minutes showing the adoption thereof, and (iii) the agenda for the meeting at which said resolution was adopted.

3. That except for $1,500,000 General Obligation School Bonds, Series 1996, dated

April 30, 1996, $1,255,000 General Obligation Limited Bonds, Series 2005A, dated March 15, 2005, $1,945,000 Taxable General Obligation Limited Bonds, Series 2005B, dated March 15, 2005, and $1,375,000 Taxable General Obligation Limited Bonds, Series 2005C, dated March 22, 2005, the District has never issued bonds for working cash fund purposes, and that $3,200,000 of said bonds are presently outstanding and unpaid.

4. That on the 13th day of November, 2006, the Board adopted a resolution (the "Resolution") declaring the intention to issue $625,000 Working Cash Fund Bonds of the District (the "Bonds").

5. That notice of intention to issue the Bonds was published on the 7th day of December, 2006, in The Herald, the same being a newspaper of general circulation in the District (the "Notice"), and was not posted electronically on the District's World Wide Web pages.

6. That no petition has ever been fied in the office of the Secretary of the Board (the "Secretary") or has ever been presented to the Secretary requesting that the proposition to issue the Bonds be submitted to the voters of the District, but that the Secretary provided a petition form regarding the same to every individual requesting one. 7. That except for the Resolution and the Notice, no resolution has been adopted by the Board declaring the intention to issue working cash fund- bonds and no notice of intention to issue working cash fund bonds of the District has been published during the last twelve months.

8. That at the time of publication of the Notice, 10% of the number of voters registered in the District on the date registration closed before the regular election next preceding the day on which a petition could have been filed objecting to the issuance of the Bonds was equal to 2,131 voters.

9. That attached hereto as Exhibit 2 is a true, correct and complete copy of the last known entitlement of the District to taxes as by law now imposed by the General Assembly of the State of Ilinois to replace revenue lost by units of local government and school districts as a result of the abolition of ad valorem personal property taxes, pursuant to Article ix, Section 5( c) of the Constitution of the State of Ilinois, as set forth on the website of the Ilinois Department of Revenue.

10. That the District is authorized to levy a tax annually for educational purposes at the maximum rate of 3.50% upon all the taxable property of the District at the value, as equalized or assessed by the Department of Revenue of the State of Ilinois.

11. That there is no litigation or controversy pending or threatened questioning or affecting in any manner whatsoever the right of the District to levy taxes for educational purposes at said maximum annual rate, to levy taxes for working cash fund purposes, to maintain, administer or operate the Fund, to increase the Fund or to issue the Bonds.

IN WITNESS WHEREOF, we hereunto affix our official signatures, this 17th day of January, 2007. o '~'Y~ ~President, Board f Education ~e(!~fP ' Sch~ol Treasurer 1 EXHI:ßIT..

RESOLUTION October 18, 2006 Member ~~ moved and Member ,~v seconded to approve permanent transfer from Working Cash to the Operational and Maintenance Fund in the amount of $700,000. After a full discussion thereof, the President directed that the roll be called for a vote upon the motion to adopt said resolution as read. Upon the roil being called, the following members voted:

AYE: (ç

NAY: o

Whereupon the President declared the motion carried and said resolution adopted, approved and signed the same in open meeting and directed the Secretary to record the same in the records of the Board of Education of Community High School District No. 207, Winnebago and Boone Counties, Illinois, which was done. ~~U- Secretary, Board 'Ed~cation Per$()nn~l: '...... '

.....Re... s.. i.g..".. a...t.... fo..ns...... :... M....Q.. tt....M..ow...... e...n,.',-, A. "-,:"':' ss...t...... W..r.. ,',' .',....e. st.li.n.....9...C... -',.' .,,' 00... . c.. h.. ;.W...... o.y...n.e.Pi..k..e.. an. d..C... rys. tcil..Ma...rtin, C. u. stodi.o..n.. ;.....B.tu.ce.. . firl.LIs. ,.Secu. r...i.t.y... ; .5...ue...... H..tl¥.s..'.:.V....Q. r.s...i....T'...... '.B.. o.y. ...Sl....S..w.. .itn. C. 0.0. c.. h:....M.. .art..i.'n

Booth, Asst. Girls' SoccerCooçh;.. Deidr.eLogon, .ProgramAsst.. Employment: Cheryl I Hil J,Int~rnationaICfubAdvI:Sor;Domi ni ck. Johnson and MarySwezey,Custodians; /)aleMèlquist,Seturity No"~AtldetÎcVølunt~ers: . Tinq .-0rvey ,i'eave of ....Ab$eni:~:.i.Apprcved.requ~stfrom...c:ertified staff. member. .for leave from 12/11/06 to3/19/0~Non~~rtifi~d.§t~pChQ~e:Approved.stepcharige .from .steP.2to :st~p'4for.ronçertifjeclstaffAddition$to.substifuteTeocher.Ust: As. '.p.re$~nt~d in dosedsession . Cç,.resP9~d~nce:...... ,...... :...... :.. ...'...... , ... Thankyou~otefrQmLucy.Yaubelforflor(ll(Jrrangement..... Thank.yol1from ~enee:

Connitfforth: :.plant..... Thank yQ.qfr'ornJ?an~epLJ.nzel.fcim.i Iy for gift. Thank..you

froI1SueKeUe.r-f9l. th~MobHe' gas.car.d.:Thank yout rom. Cathy Aubrecht for.the

. giftb(Iskef.Anotefromt.oriVVhItman, ROE,recógnjzingBr'~ce Carlson and his ..' .1UPCommitteea$exemplary,fortheir\'0rk .onhow tQdefend AlJPpolicyand nandpooksfordiscipHnarysituations. .

Public Comment: ...... '

Mrs. Prosser read a preparedstatem~ntregardìngher disappoIntment with the

handHngof06-07;,04expulsion. .. Mr. Prosser requested that the board reconsider 'allowing.06.07-04 to participate in extra:-and co~curriclJIClractivities.

Reports:

..StudentCouncilR~port-Kaori Sofa - Clubs and QCfivitîeshavebe.en bljsy with ...... r(t~cllngpr9j~~t¡ ..pl.~npÎn9'.'Cot1inunity~~ry¡fr-pr9J~çt$'iBe(:c:aJ$l,lo$~t,... Trjck:'or~

...... -pr~atforliNrCEF'(f~ndawUI...gø:towc:rq8;i\.lAIt)Sp~tof.. , , . ,~' . _: ' :':, ':: ::; _L,.-. .. ,:.:': ' ,': ;:,:' :' ,': :: -' _,' _,.:; " ',: " ,: " ',:' ,,::, -., :: .:' _ - ',_ ' 1:' : . ,-' ":.: :.' ",d; , . ". , ,;', ',' : _ _ " : :' "'-:' __ ,~. ,::: .. :, " -: KeITa);..'._" _ :', _ :_,' '_ ' ,: _',','.Students. ::" , " ;,: ," " ',:',,' .-, '_ ' ,_ _.- _ _; " , :. ":,' :.;, : ;,' ': . ,,':. ,..: ': "_~ pgr'tiçipcit~ai ntheC,.apWalk~(tr~jC)nc:d,t"I1Jn¡rlgc()nference:.and (la iVl~jan.l1r

'p...'..Hø.J.....e...ct...... 5.... ~..p.p..... o. r.f.i.ng:,.t.he. '. O...... Ut...... 9f...... K.'.tn. y. óp".. .o.J.:e.....c. t.' ...... Ms.... .5.' .... a.'.to.t. hci. nk.d.e...... d...... t.he...... Ö,. ....'io.dr. '.d... lor .allowi ng studentpartici:pationintheStrategic.Plal1ning. ....Students~redsfÎU...... co~cernedwith .thecafeteriaçrowdingandpi~zqSe:lèction,.After' att.~ndjngth e RotaryandChamb~r meetinss~pr. Grps$. pas~ed cilong. cOi1plimentsJrotnthe two ol"gani~at¡ohs.regardjngstudenfS' ..communi ty ..service. . , Prindpal~SReport-~s..Ri99Y- Fire and torna~odríJs.have. been heJdthis . year.

Also,açodeyellowlreddrínWàsh~ld..Homecomingwasabí9 .. suc cess thanks to

advisors Sue Hays (lndMikeLawyer, Athletic Director's report updated the board

ont he fall sports seciSon.

,. AssodatePrihdpiil!sReport"" .Mr. Jarrett.. Vpdate onPSAE results was given.

Waiting for the Qay#2 results.

Supt. Report-Dr.Gross-iMr. ,J arren i~i ",orkingwith çustodiaJ/tnaíntena~cestaff

tåskplans. The.threeh~useson Koçher Streetwillbe demolished as soon as the

asbesIoShås been removed.

gir'PI(1nning.g(~tants..Mrs.G.bson~.strategicplanning.WentwelL A. wealth of - ld~sc(1tne..fromthisprocess..',..There .aresome minor ..reyiSjons~ntwo()f the strategieswhidishould takeaboutanhoursoin~morning before schooL. Hopefully

-the plan will be ready for bOClrdapprovål in November. Dr. Gross thanked Mrs.

Gibsqnforthe fine job she didi.nt~isprocess.

Finance-Kerwood Vv'attS""TheaudifÓrrevje~edtheaLJdítor with us tonight at the Financemeeting.Wearepleiisedtheschooldistrfctiswhere we thought it should . b~.,M~.KLlrIJnkusalidi'~s. Vettoreshould beconimendeø for alltheirJime and ~ffort. JI1.preparingfor...... ' the landhearîng. .

Enrollment, Growth, and Development- . Mrs. Vettore"" Thankyou to Mr. Kurlinkus

for all his workon Hononegah's behalf. Last night weheld a c~ndidatesforum

regardi ngeducation and school funding reform... i-heevent went smoothly with

about75p~opleattend.¡ng. The media was contacted; but they neglected to get

'the word our. Disappointed with the attendance from area school districts.

Policy/Personnel -Diane Laforge - A meeting date wil beset this evening for sgme.timein the next week or so. i . --":',': r ' " _: ______' _",;,:: ~,~ ' _' d -, . " _' " ''''" "_ ':_: _ _ d _ _. _ :,.: _' : _- _ _.. _ _ _ _ _ . Co-Cür,ricular:-S(l~dy Fordell -Wil be !i~ttinguPQ;Co~Curricular meetingin the next two weeks..' .'. .

Edl.çatioh- BohZoeller -Committeemet on October 11 wìthdi~cussion onbuHding êachdepartment.trades houseploriand budget, Proposed curriculLltlchanges,andcourseofferings . in

C'Pop-Mr..kurlînklJs.attendedthequarterlymeetil'g atJheCoop. Their auditor pr~sentedh¡sreport. ApresentdtÎonpnth~. ¿(m~trucfiono,frhenew.pui Idingwas alsQ,presel1ted: ,., Approved donations from Kathryn Linnenberg, Thomas Bartlett , James and

Christine Powers;Jumpback flooring, and Beth Summers

Approved second reading of numerous policies.

Approved Investment... Policy;

Approvei:the expdnsion of th~ weight room.

Approve,dqthlefievesfibuleentrancepi:oject. !, ',' ' ',' , ". ~'. -, ",",,' , . .' '. . , Apprøved the bidsforrepaìr ofthesoftbålldugouts. and reshaping. diatrondarea.

Approvedsecondreåding ofsecretar'al job descriptions.

Approved. Aüdit('r's Report.

)\ppr()vedDe~ember20,2006at 7:00p.m. fórthe Tax Levy and Tl"uthandLending Hearing.

Approved curriculum changes as recommended by the Education Committee.

. Approved a Resolution forrep~ymentfromO&Mto Working Cash for $1;200,000.

Approved a Resolution for repayment from Education Fundto Working Cash for $3,270,000. ".,', . -, - :-.". .:,,::'"":', .,', ,-',. .'... . .' - . - . ...._'. :'" ' .. - -::...... Approved . cpermanent transfer of $700,000 from Working Cash to 0 & M: . \" ...,...... ' ...... Tlienext regular meetìng of the ßóard ofBduc.cition wil be Wednesday, November 15, 2006 1l()~()~~t7ÁIl l:(),","U~I-n 1l1t71l §l:Il()()L UI§TI2Il:T :lfFI

Dr. Randy Gross, Superintendent rgrossl§hononegah.org

Board of Education Office, 307 Salem Street-Rockton, Illinois 61072-2630 Telephone (815)-624-5010; Fax (815) 624-5029

12~l3UIAI2 U(),AI2() ,"~~TI~l3

DATE: VVednesday, October 18, 2006 PLACE: Hononegah High School, 307 Salem St. Rockton, Illinois 61072, High School Library TIME: 6:00 p.m.

,Al3~~(),A

FINANCE COMMITTEE MEETNG-6:00 p.m. 1. Review Financials on Regular Agenda 2. Review Auditor's Report

1. CALL TO ORDER - President Kurlinkus (Approx. 6:30 p.m.) 1.1 Roll Call 1.2 Approval of Agenda

2. CLOSED SESSION 2.1 Go into Closed Session to Review Closed Session Minutes and to discuss land sale/purchase, appointment, employment, compensation, discipline, performance, or dismissal of specific employees of the public body or legal counsel for the public body, including hearing testimony on a complaint lodged against an employee of the public body or against legal counsel for the public body to determine its validity.

3. RETURN TO OPEN SESSION (Approx. 7:00 p.m.)

4. PLEDGE OF ALLEGIANCE 5. ACTION ON CLOSED SESSION (Approx. 7:00 p.m.)

6. RECOGNITION OF VISITORS (5 Minutes) This is the time in which we invite the public to address the school board with issues and concerns. In the interest of giving everyone time, we ask you to limit your comments to five minutes. Also, we will not tolerate personal attacks or inappro- priate language. If you are interested in making a comment, please stand and state your name and address. Thank you. CORRESPONDENCE/PUBLIC COMMENT 5.1 Written Correspondence 5.2 Public Comment

7. PRESENTATIONS 7.1 Eagle Scout Project Presentation-Mike Paradiso 7.2 TAC Energy Audit-Sonia Bilentschuk

8. CONSENT AGENDA 8.1 Approve minutes: 9/20/06 Finance Meeting 9/20/06 Regular Closed Board Meeting 9/20/06 Regular Board Meeting 9/27/06 Enrollment, Growth, Development Closed Meeting 9/28/06 Building and Grounds Meeting 8.2 Accept Health Insurance Fund Report and Activity Fund Report 8.3 Approve Payment of Bills 8.4 Accept Monthly Investment Schedule and Treasurer's Report

9. DISTRICT REPORTS 9.1 Student Council Representative Report - Kaori Sato 9.2 Principal's Report - Mrs. Rigby 9.3 Associate Principal's Report - Mr. Jarrett 9.4 Superintendent's Report - Dr. Gross 9.5 Director of Planning and Grants - Mrs. Gibson 9.6 Committee Chair Reports 9.7 Items to be Sent to Committee 9.8 Reports - Other

10. UNFINISHED BUSINESS

11. NEW BUSINESS 11.1 Yearbook Presentation 11.2 Donations 11.3 Second Reading of Policies 2:120 Board Member Development; 2:120-E Guidelines for Serving as a Mentor to a New School Board Member; 2:250 Access to District's Public Records; 2:250-AP Administrative Procedure-Access to and Copying of District Public Records; 2:260 Uniform Grievance Procedure; 4:170-AP6 Administrative Procedure-Plan for Responding to a Medical Emergency at an Indoor Physical Fitness Facility; 4:90 Activity Funds; 4:160 Hazardous and Infectious Materials; 4:160-AP Administration Procedure-Hazardous and Infectious Materials; 5:40 Communicable and Chronic Infectious Disease; 5:60-E Exhibit-Employee Travel Expense Voucher; 5:150 Personnel Records; 5:170 Copyright; 5:170-AP1 Administrative Procedure-Copyright Compliance; 5:170-AP2 Administrative Procedure-Seeking Permission to Copy or Use Copyrighted Works; 5:170-AP3 Administrative Procedure-Instructional Materials and Computer Programs Developed within the Scope of Employment; 5:300 Schedules and Employment Year; 5:320 Evaluation; 6:30 Organization of Instruction; 6:70 Teaching About Religions; 6:80 Teaching About Controversial Issues; 6:150 Home and Hospital Instruction; 6:210 Instructional Materials; 6:230 Library Resource Center; 6:280 Grading and Promotion; 6:290 Homework; 6:330 Achievement and Awards; 7:80 Release Time for Religious Instruction/Observance; 7:90 Release During School Hours; 7:190-AP3 Administrative Procedure-Guidelines for Reciprocal Reporting of Criminal Offenses Committed by Students; 7:220 Bus Conduct; 7:310 Restrictions on Publications and Written or Electronic Material; 7:310- AP Administrative Procedure-Guidelines for Student Distribution of Non- School Sponsored written Material on School Grounds; 7:340 Student Records; 8:40 Spectator Conduct at School Events~ 11.4 Approve Investment Policy 11.5 Approve Lettering Signage for Entrances 11.6 Approve Weight Room Expansion 11.7 Approve Athletic Vestibule Entrance Improvements 11.8 Approve Bid to Repair Softball Dugouts 11.9 Approve Letter of Intent for 2006 Building Trades House 11.10 Approve Letter Building Trades House Plan and Budget 11.11 Second Reading of Secretarial Job Descriptions 11.12 Approve Auditor's Report 11.13 Set Date/Time for Tax Levy Hearing for December 20, 2006 at 7:00 p.m. 11.14 Approve Curriculum Changes 11.15 Items to Be Sent to Committee 11.16 Resolutions

12. MISCELLANEOUS

13. CLOSED SESSION 13.1 Go into Closed Session to Review Closed Session Minutes and to discuss land sale/purchase, appointment, employment, compensation, discipline, performance, or dismissal of specific employees of the public body or legal counsel for the public body, including hearing testimony on a complaint lodged against an employee of the public body or against legal counsel for the public body to determine its validity.

14. ACTION ON CLOSED SESSION

15. OTHER

16. PUBLIC COMMENTS

17. ADJOURNMENT . . ,.~ ". E:mi:iU:~..b~~

PERSONAL PROPERTY REPLACEMENT TAX (PPRT) STATE FISCAL YEARS BEGIN JULY 1 AND END JUNE 30 OF EACH YEAR

PECATONICA FPD 1015100541 $13,836 $13,443.63 010150541 ROCKTON FPD 1015100585 $43,698 $42,458.14 010150585 WEST SUBURBAN FPD 1015100713 $8,726 $8,478.94 010150713 WIN-BUR-SEW FPD 1015100722 $15,268 $14,834.91 010150722 GREATER ROCKFORD AIRPORT AUTH 1015150008 $555,221 $539,472.45 010150008 NORTH SUBURBAN PUB LIBRY DIST 1015160062 $134,547 $130,730.41 010150062 PECATONICA PUB LIBRAY OIST 1015160064 $5,402 $5,248.60 010150064 TALCOTT FREE PUB LIBRAY DIST 1015160082 $21,396 $20,789.33 010150082 WINNEBAGO CO FOREST PRES OIST 1015200010 $614,089 $596,670.05 010150010 LINCOLN ACRES ST LIGHT DIST 1015210012 $15 $20.96 010150012 WASHINGTON PARK ST LIGHT DIST 1015210021 $382 $371.38 010150021 ROCK VALLEY COMM COLL 511 1016060511 $1,498,651 $1,456,141.72 010160511 KINNIKINNICK CC ELEM SD 131 1017041310 $584,993 $568,400.13 010171310 PRAIRIE HILL CC ELEM SO 133 1017041330 $44,907 $43,633.26 010171330 SHIRLAND CC ELEM SD 134 1017041340 $23,146 $22,489.80 010171340 ROCKTON CC ELEM SD 140 1017041400 $267,280 $259,698.78 010171400 HONONEGAH COMM HS 207 1017162070 $629,990 $612,120.23 010172070 HARLEM UNIT SCH 122 1017221220 $2,859,324 $2,778,219.20 010171220 ROCKFORD UNIT SCH 205 1017252050 $21,766,289 $21,148,889.78 010172050 SOUTH BELOIT CUSO 320 1017263200 $700,659 $680,784.46 010173200 PECATONICA CUSD 321 1017263210 $308,305 $299,559.72 010173210 DURAD CUSD 322 1017263220 $67,177 $65,271.30 010173220 WINNEBAGO CUSD 323 1017263230 $340,507 $330,848.11 010173230 BURRITT TWP ROAD & BRIDGE 1019020011 $12,939 $12,571.52 010190011 CHERRY VALLEY TWP RD & BRIDGE 1019020016 $108,302 $105,230.16 010190016 DURAD TWP ROAD & BRIDGE 1019020024 $4,155 $4,037.16 010190024 HARLEM TWP ROAD & BRIDGE 1019020035 $67,003 $65,102.53 010190035 HARRISON TWP ROAD & BRIDGE 1019020037 $694 $674.39 010190037 LAONA TWP ROAD & BRIDGE 1019020042 $2,020 $1,962.22 010190042 OWEN TWP ROAD & BRIDGE 1019020062 $23,409 $22,745.39 010190062 PECATONICA TWP ROAD & BRIDGE 1019020064 $18,167 $17,652.00 010190064 ~~KFORD TWP ROAD & BRIDGE 1019020072 -- ._~--$755,938 $734,496.12 010190072 ROCKTON TWP ROAD & BRIDGE 1019020074 $76,756 $74,579.22 010190074 ROSCOE TWP ROAD & BRIDGE 1019020076 $51, 613 $50,149.37 010190076 SEWARD TWP ROAD & BRIDGE 1019020078 $7,028 $6,828.36 010190078 SHIRLAN TWP ROAD & BRIDGE 1019020080 $972 $944.77 010190080 WINNEBAGO TWP ROAD & BRIDGE 1019020094 $19,012 $18,472.35 010190094 WOODFORD COUNTY 1021010102 $176,581 $171,572.47 010210102 BAY VIEW GARDENS VILLAGE 1022400001 $240 $233.42 010220001 BENSON VILLAGE 1022400007 $749 $727.98 010220007 CONGERVILLE VILLAGE 1022400015 $4,490 $4,362.95 010220015 EL PASO CITY 1022400025 $29,323 $28,491.63 010220025 EUREKA CITY 1022400027 $34,838 $33,849.86 010220027 GERMTOWN HILLS VILLAGE 1022400032 $564 $548.14 010220032 GOODFIELD VILLAGE 1022400036 $955 $927.54 010220036 KAPPA VILLAGE 1022400040 $133 $129.34 010220040 METAMORA VILLAGE 1022400051 $20,233 $19,659.17 010220051 MINONK CITY 1022400052 $31,638 $30,740.86 010220052

Illinois Department of Revenue Page 136 Minutes of a a:al p.lic meeting of the Board of Education of Community High School District Number 207, Winnebago and Boone Counties, Ilinois, held at the Hononegah High School Building, 307 Salem Street, Rockton, Ilinois, in said School

Distrct at 7:00 o'clock P.M., on the 13th day of November, 2006.

* * *

The President called the meeting to order and directed the Secretar to call the rolL.

Upon the roll being called, David Kurlinkus, the President, and the following members at said~~/~ location answered present: ~~ ~I 7l~1 .¿tn.d.( V~

The following members were absent:

The President announced that in view of the current financial condition of the District, the

Board of Education would consider the adoption of a resolution declaring its intention to issue working cash fund bonds pursuant to Aricle 20 of the School Code and directing that notice of such intention be published. Whereupon Member ~hk~ presented and the Secretary read by title a resolution as follows, a copy of which was provided to each member of the Board of Education prior to said meeting and to everyone in attendance at said meeting who requested a copy:

2141828(3U 2144558 Resolution declaring the intention to avail of the provisions of Aricle 20 of the School Code of the State of Ilinois, as amended, and to issue Working Cash Fund Bonds of Communty High School Distrct Number 207, Winnebago and Boone Counties, Ilinois, and directing that notice of such intention be published in the manner provided by law.

* * *

Whereas, pursuant to the provisions of Aricle 20 of the School Code of the State of

Ilinois, and all laws amendatory thereof and supplementary thereto (the "Code "), a fund to be known as a Working Cash Fund (the "Fund") may be created, maintained, administered and operated in and for Community High School District Number 207, Winnebago and Boone

Counties, Ilinois (the "District "), in the manner prescribed in the Code, for the purpose of enabling the District to have in its treasury at all time sufficient money to meet demands thereon for ordinary and necessary expenditures for corporate purposes; and

Whereas, the District has heretofore created, maintained, administered and operated such

Fund in the manner prescribed by the Code; and

Whereas, under the provisions of the Code, the Board of Education of the Distrct (the "Board") is authorized to incur an indebtedness and issue bonds as evidence thereof (the

"Bonds") for the purpose of increasing the Fund; and

Whereas, the Board has determined and does hereby determine that it is advisable, necessary and in the best interests of the District that the Fund be increased and that the District incur an indebtedness and issue Bonds as evidence thereof in the amount of $625,000 for said purpose; and

Whereas, before such Bonds may be issued for said purpose, the Board must adopt a resolution declaring its intention to issue such Bonds for said purpose and direct that notice of such intention be published as provided by law: Now, Therefore, Be It and It Is Hereby Resolved by the Board of Education of

Community High School District Number 207, Winnebago and Boone Counties, Ilinois, as follows:

Section 1. Incorporation of Preambles. The Board hereby finds that all of the recitals contained in the preambles to this Resolution are full, true and correct and does incorporate them into this Resolution by this reference.

Section 2. Declaration of Intent. The Board hereby declares its intention to avail of the provisions of the Code, and to issue Bonds in the amount of $625,000 for the purpose of increasing the Fund and enabling the District to have in its treasur at all time suffcient money to meet demands thereon for ordinary and necessary expenditures for corporate purposes.

Section 3. Notice of Intent. In accordance with the provisions of Section 5 of the Local

Governent Debt Reform Act of the State of Ilinois, as amended, notice of said intention to avail of the provisions of Aricle 20 of the Code and to issue Bonds for the purpose of increasing the Fund shall be given by publication of such notice at least once in The Herald, the same being a newspaper of general circulation in the District. Section 4. Form of Notice. The notice of intention to issue the Bonds shall be in substantially the following form:

-3- Section 5. Further Proceedings. Ifno petition signed by the requisite number of voters is filed with the Secretary of the Board within thirty (30) days after the date of the publication of such notice of intention to issue the Bonds, the Board shall, by appropriate proceedings to be hereafter taken, fix the details concerning the issue of the Bonds and provide for the levy of a direct annual tax to pay the principal and interest on the same.

Section 6. Severability. If any section, paragraph, clause or provision of this

Resolution shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions ofthis Resolution. Section 7. Repealer and Effective Date. All resolutions and parts of resolutions in conflict herewith be and the same are hereby repealed and that this Resolution be in full force and effect forthwith upon its adoption. Adopted November 13,2006. o.~~~ ,~lXtJPresident, Board ~f Education Secretary, Board of Education

-6- State of Ilinois ) ) SS County of Winnebago )

Certification of Minutes and Resolution

I, the undersigned, do hereby certify that I am the duly qualified and acting Secretary of the Board of Education of Community High School Distrct Number 207, Winnebago and Boone

Counties, Ilinois (the "Board"), and that as such offcial I am the keeper of the records and files of the Board.

I do further certify that the foregoing constitutes a full, tre and complete transcript of the minutes of the meeting of the Board held on the 13th day of November, 2006, insofar as same relates to the adoption of a resolution entitled:

Resolution declarng the intention to avail of the provisions of Aricle 20 of the School Code of the State of Ilinois, as amended, and to issue Working Cash Fund Bonds of Community High School District Number 207, Winnebago and Boone Counties, Ilinois, and directing that notice of such intention be published in the manner provided by law. a true, correct and complete copy of which said resolution as adopted at said meeting appears in the foregoing transcript of the minutes of said meeting.

I do further certify that the deliberations of the Board on the adoption of said resolution were conducted openly, that the vote on the adoption of said resolution was taken openly, that said meeting was held at a specified time and place convenient to the public, that notice of said meeting was duly given to all of the news media requesting such notice, that an agenda for said meeting was posted at the location where said meeting was held and at the principal office of the Board at least 72 hours in advance of the holding of said meeting, that a true, correct and complete copy of said agenda as so posted is attached hereto as Exhibit A, that said meeting was called and held in strict compliance with the provisions of the Open Meetings Act of the State of Ilinois, as amended, and with the provisions of the School Code of the State of Ilinois, as amended, and that the Board has complied with all of the provisions of said Act and said Code and with all of the procedural rules of the Board in the conduct of said meeting and in the adoption of said resolution.

In Witness Whereof, I hereunto affix my offcial signature, this 13th day of November, 2006. 1l()~()~~~ÁIl lI:rl~ i C()MMU~I-n 1l1~1l SCIl()()L ()I~T(¿ICT :l£J7

Dr. Randy Gross, Superintendent rgross~hononegah.org

Board of Education Office, 307 Salem Street-Rockton, Illinois 61072-2630 Telephone (815)-624-5010; Fax (815) 624-5029

l2ll3UlA12 Ijf)ÁI2() ,"~~TI~(7

DATE: Monday, November 13, 2006 PLACE: Hononegah High School, 307 Salem St. Rockton, Illinois 61072, High School Library TIME: 6:00 p.m. Á(7~~()Á

FINANCE COMMITTEE MEETING-6:00 p.m. 1. Review Financials on Regular Agenda 2. Review Tentative Tax Levy 3. Discuss Issuance of Bonds

1. CALL TO ORDER - President Kurlinkus (Approx. 6:30 p.m.) 1.1 Roll Call 1.2 Approval of Agenda

3. RETURN TO OPEN SESSION (Approx. 7:00 p.m.)

4. PLEDGE OF ALLEGIANCE 5. ACTION ON CLOSED SESSION (Approx. 7:00 p.m.)

7. PRESENTATIONS 7.1 Strategic Plan Presentation

8. CONSENT AGENDA 8.1 Approve minutes: 10/11/06 Education Committee 10/18/06 Finance Committee 10/18/06 Regular Board Meeting 10/18/06 Regular Closed Board Meeting 10/23/06 Policy/Personnel Committee 10/23/06 Enrollment, Growth, and Development Committee 10/30/06 Policy/Personnel Committee 10/30/06 Enrollment, Growth, and Development Committee 11/6/06 Special Board Meeting with Closed Session 8.2 Accept Health Insurance Fund Report and Activity Fund Report 8.3 Approve Payment of Bills 8.4 Accept Monthly Investment Schedule and Treasurer's Report

10. UNFINISHED BUSINESS 11. NEW BUSINESS 11.1 Donations 11.2 Approve 2007 School Library Grant Application 11.3 Approve Collection Agency 11.4 Approve Representative Designation for Accepting Nominating Papers 11.5 Approve Custodial Supply Bid 11.6 Approve EAP Service Agreement 11.7 Resolution of Intent to Issue Working Cash Bonds 11.8 First Reading of Revised School Board Policies 2:10 School District Governance; 2:20 Powers and Duties of the School Board; 2:110 renumbered to 2:20-E; 2:50 Board Member Term of Office; 2:80 Board Member Oath and Conduct; 2:110 Qualifications, Term, and Duties of Board Officers; 2:130 Board-Superintendent Relationship; 2:140 Communication s To and From the Board; 2:150 Committees; 2:200 Types of School Board Meetings; 2:210 Organizational School Board Meeting; 2:220 School Board Meeting Procedure; 2:240 Board Policy Development; 2:250-E1, E2, E3 Rewritten; 3:10 Goals and Objectives; 3:40 Superintendent; 3:60 Administrative Responsibility of the Building Principal; 4:10 Fiscal and Business Management; 4:40 Incurring Debt; 4:170 Safety; 4:170-AP2 Administrative Procedure-Criminal Offender Notification Laws; 5:30 Hiring Process and Criteria; 5:30-AP2 Administrative Procedure-Investigations; 5:90 Abused and Neglected Child Reporting; 5:250 Leaves of Absence; 5:330 Sick Days, Vacation, Holidays, and Leaves; 6:60 Curriculum Content; 6:60-AP Administrative Procedure-Comprehensive Health Education Program; 6:235- E4 Exhibit-Keeping Yourself and Your Kids Safe on Social Networks; 6:250 Community Resource Persons and Volunteers; 6:250-AP Administrative Procedure-Securing and Screening Resource Persons and Volunteers; 6:340 Student Testing and Assessment Program; 7:270 Administering Medicines to Students; 7:270-AP Administrative Procedure-Dispensing Medication; 7:270- E Exhibit-School Medication Authorization Form; 8:30 Visitors to and Conduct on School Property; 8:60 Meetings with Staff Members (deleted) 11.9 Resolutions 11.10 First Reading of Curriculum Changes 11.11 First Reading of Job Description 11.12 Early Graduate Approval

12. MISCELLANEOUS

14. ACTION ON CLOSED SESSION

15. OTHER

16. PUBLIC COMMENTS

17. ADJOURNMENT The Herald, Certificate of Publication State of Illinois

NOTICE OF INENTION County of Winnebago OF COMMUNITY HIGH SCHOOL DISTRICT Vilage/City of Rockton NuBER 207 'WIBAGO AN BOONE COUNffS, ILLINOIS Rock Valley Publishing, LLC, certifies that it is the publisher of The Herald; that such paper is a TO ISSUE $625,00Ò WORKING CASH secular newspaper of general circulation in said county; that it is printed and published in the FUD BONDS Public Notice is hereby given that on ,the 13th day 'of village/city, county and state aforesaid. It hereby further certifies that a notice, of which the ", November, 2006, the Board of Education (the "Board") of attached notice is a true copy, has been legally published in said newspaper itime(s) for Community. High Scllool Distrct Numbèr 207, Winnebago and Boone Counties, Ilinois (the -iconsecutive weekes); That the first publication was on the i day of "District"), adopted a resolution

declarng its intention and deter- T) v-oflb). ,20.0).; The last publication was the -l day mination to issue bonds in the of \: o~-L20 ok; aggregate amount of $625,000 It further certifies that said newspaper has been regularly published for one-year prior on the first for the purose of increasing the Working Cash Fund of the Distrct, and it is the intention of publication of said notice. In witness whereof the said Rock Valley Publishing, LLC, publisher the Board to. avail of the provisions of Aricle 20 of the School aforesaid, has hereunto caused its corporate name to be hereunto signed on this 7 day of , Code of the State of Ilinois, and all laws amendatory thereof and supplementary thereto, and'to ~~ , AD 2000 by any of its following duly authorized officers or agents: issue" said bonds for the purpose of increa.singsaidWorking Cash Rockjalley i:UbliShing;l.; L~C. Fund. Said Working Cash Fund is to be maintained, adminisfered and operated in accordance with By ~'f~ R- Ufjl~,: the provisions of said Aricle and shall be used for the purpose of enabling the Distrct to" have in " its treasury at all time suffiêient money to meèt demands thereon for ordinary and necessary " expenditures for corporate pur- poseS. Said Working Cash Fund is to be used to provide moneys with which tomeetordinar and \-o N Com - S '26 necessary "disbursements for . salares and other school puroses in anticipation of the collec- _ tion of taxes lawfully levied for any and all '"puroses and 'said Working Cash Fund is to be "reiiibursed to the extent of funds so advanced when such taxes shall have been'collected. " A petition may be filed with the Secretar of the Board (the

"Secretary") within thir (30) days after the date of publication of this notice, signed by not less than 2,131 'voters of the Distrct, said number Of voters being equal to,ten percent (10%) of the registered voters of the Distrct, requesting that the proposition to

_~'i~___~~..-:,,_..___,:_.~,,~~,-:-;_,.:~C.:~¿~_:¿_~~~~:~;~-;'=-:",:.:.¿",~-~-:'-';"-;"-';'__~-:"~:'-::"-":-:"-~-':'-:.-_,,,-_~;'~~~..--..-,,,~'--...:'~_-_;'-w.,!-_;"-_-_-_"'."_-_- ~- -, -:-. ~ -:--- -' _-¥.~-_ ~-_..~£ .~ -..-_- -_"..- -..~ _ _-_..~.""~~¿~~~~:.: - ~ . .. - ~ ~_==~~~..~::~_:':.-__ -~-_~-~- ..__ - _ _ ~ ~ ~ _ _ _._ _ _ v._ _~ ~ ~ - - .~_._.~- ...-~-~------.~-----..:----....--..._--~-~-~.~~:...~~.:~~~.:;~~~- Order calling a public hearng concerning the intent of the Board of Education of Community High School District Number 207, Winnebago and Boone Counties, Ilinois, to sell $625,000 Working Cash Fund Bonds.

* * *

Whereas, Community High School District Number 207, Winnebago and Boone

Counties, Ilinois (the "District"), is a duly organized and existing school district created under the provisions of the laws of the State of Ilinois, and is now operating under the provisions of the School Code of the State of Ilinois, and all laws amendatory thereof and supplementar thereto, including the Local Governent Debt Reform Act of the State of Ilinois, as amended; and

Whereas, the Board of Education of the District (the "Board") intends to sell bonds in the amount of $625,000 for the purose of increasing the working cash fund of the Distrct (the

"Bonds "); and

Whereas, the Bond Issue Notification Act of the State of Ilinois, as amended, requires the

Board to hold a public hearing concerning the Board's intent to sell the Bonds before adopting a resolution providing for the sale of the Bonds:

Now, Therefore, Be It and It Is Hereby Ordered by the undersigned President of the Board of Education of Community High School District Number 207, Winnebago and Boone Counties,

Ilinois, as follows:

1. I hereby call a public hearing to be held at 7:00 o'clock P.M. on the 20th day of

December, 2006, at the Hononegah High School Building, 307 Salem Street, Rockton, Ilinois, in the Distrct, concerning the Board's intent to sell the Bonds and to receive public comments regarding the proposal to sell the Bonds (the "Hearing").

2142986(3U 2144558. RFP . 11/8/06 2. I hereby direct that the Secretar of the Board (the "Secretary") shall (i) publish notice of the Hearing at least once in The Herald, the same being a newspaper of general circulation in the District, not less than 7 nor more than 30 days before the date of the Hearing and (ii) post at least 48 hours before the Hearing a copy of said notice at the principal office of the Board.

3. Notice of the Hearing shall appear above the name of the Secretary and shall be in substantially the following form:

-2- Notice of Public Hearing Concerning the Intent of the Board of Education of Community High School District Number 207, Winnebago and Boone Counties, Illnois to Sell $625,000 Working Cash Fund Bonds

Public Notice is Hereby Given that Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District"), wil hold a public hearng on the 20th day of December, 2006, at 7:00 o'clock P.M. The hearing wil be held at the Hononegah High School Building, 307 Salem Street, Rockton, Ilinois. The purose of the hearing will be to receive public comments on the proposal to sell bonds of the District in the amount of $625,000 for the purpose of increasing the working cash fud of the Distrct.

By order of the President of the Board of Education of Community High School District Number 207, Winnebago and Boone Counties, Ilinois. Dated the 13th day of December, 2006. ~1L Tana Vettore

Secretar, Board of Education, Community High School District Number 207, Winnebago and Boone Counties, Ilinois

-3- 4. At the Hearing, the Board shall explain the reasons for the proposed bond issue and permit persons desiring to be heard an opportunity to present written or oral testimony within reasonable time limits. The Board shall not adopt a resolution selling the Bonds for a period of seven (7) days after the final adjournent ofthe Hearng.

Ordered this 13th day of December, 2006. o '~~\.~ President, Board of Education, Community High School District Number 207, Winnebago and Boone Counties, Ilinois

-4- The Herald Certificate of Publication State of Illinois NOTICE OF PUBLIC HEARIG CONCERNG THE INENT OF THE County of Winnebago BOAR OF EDUCATION OF COMMUNITY HIGH Village/City of Rockton SCHOOL DISTRICT NUBER 207, WINEBAGO AND BOONE COUNTffS, Rock Valley Publishing, LLC, certifies that it is the publisher of The Herald; that such paper is a ILLINOIS, TO SELL $625,000 WORKING CASH FUND BONDS secular newspaper of general circulation in said county; that it is printed and published in the PUBLIC NOTICE IS HERE- BY GIVEN that Community vilage/city, county and state aforesaid. It hereby fuiiher certifies that a notice, of which the High School District Number 207, Winnebago and' Boone Cnunties, Ilinois (the attached notice is a true COpy, has been legally published in said newspaper itime(s) for "District"), wil hold a public' hearirig on the 20th day of 'consecutive weekes); That the first publication was on the \ "t day of December, 2006, at 7:00 o'clock p.m. The hearing wil be held at the Hononegah High School U 9JQ.~ , 20 Öf; The last publication was the \ ~ day of~200,b ; Building, 307 Salem Street; Rockton, Ilinois. The purose of tae hearng wil It further certifies that said newspaper has been regularly published for one-year prior on the first be to receive public comments on the proposal to sell bonds of publication of said notice. In witness whereof the said Rock Valley Publishing, LLC, publisher the :Qistrict in the amount of $625,000 for the purpose of increasing the working cash fund aforesaid, has hereunto caused its corporate name to be hereunto signed on this \. lL day of of the Distrct. By order of the President of the Board of Education- of ~~~ , AD 20"\(o by any of its following duly authorized officers or agents: COmIunity High School Distrct Number 207 Winnebago and. Boone Countie,s,Illiioi~. I Dated the' 13th day of December, 2006. Tana Vettore Secretary, Board,of Education, Community High School Its Publisher/General Manager District Number 207, Winnebago aiid Boone Countiei;, Ilinois I . (Published in The Herald December 14,2006) . 200817 ~Of\ ~7Y -ß1j Minutes of a regular public meeting of the Board of Education of Community High School District Number 207, Winnebago and Boone Counties, Ilinois, held at the Hononegah High School Building, 307 Salem Street, Rockton, Ilinois, in said School District at 7:00 o'clock

P.M., on the 20th day of December, 2006.

* * *

The meeting was called to order by the President, and upon the roll being called, David Kurlinkus,:1.J14if~ the President, and the following members~ at ~said location ~V~V~ answered present: ~ at '1 ?J rd The following members were absent:

B At V:OO o'clock P.M., the President announced that the next agenda item for the Board of

Education was a public hearng (the "Hearing") to receive public comments on the proposal to sell $625,000 Working Cash Fund Bonds (the "Bonds") for the purpose of increasing the working cash fund of the District and explained that all persons desiring to be heard would have an opportunity to present written or oral testimony with respect thereto.

The President opened the discussion and explained that the reasons for the proposed issuance of the Bonds were as follows:

Whereupon the President asked for additional comments from the members of the Board of Education. Additional comments were made by the following: ~

(If no additional comments were made, please so indicate with the word "none.")

Written testimony concerning the proposed issuance of the Bonds was read into the record by the Secretary and is attached hereto as Exhibit I. ~

(Ifno written testimony was received, please so indicate with the word "none.")

Whereupon the President asked for oral testimony or any public comments concerning the proposed issuance ofthe Bonds. Statements were made by the following: ~

(If no additional statements were made, please so indicate with the word "none.")

The President then announced that all persons desiring to be heard had been given an opportunity to present oral and written testimony with respect to the proposed issuance of the

Bonds.

Member moved and Member ()M1;v I1l-Lh / seconded the motion that the Hearing be finally adjoured.

After a full discussion thereof, the President directed that the roll be called for a vote upon the motion. ¿f~Upon the roll ~1~ being called, the~I following ~/ members 1~J:t¡\L1 voted Aye: ~

The following members voted Nay: ~ Whereupon the President declared the motion carred and the Hearing was finally adjourned.

-6- State of Ilinois ) ) SS County of Winnebago )

Certifcation of Minutes

I, the undersigned, do hereby certify that I am the duly qualified and acting Secretar of the Board of Education of Community High School Distrct Number 207, Winnebago and Boone Counties, Ilinois (the "Board"), and as such offcial I am the keeper of the records and fies of the Board.

I do further certify that the foregoing constitutes a full, tre and complete transcript of the minutes of the meeting of the Board held on the 20th day of December, 2006, insofar as the same relates to a public hearng concernng the intent of the Board to sell $625,000 Working Cash Fund Bonds.

I do further certify that the deliberations of the Board at said meeting were conducted openly, that said meeting was called and held at a specified time and place convenient to the public, that notice of said meeting was duly given to all of the news media requesting such notice, that an agenda for said meeting was posted at the location where said meeting was held and at the principal office of the Board at least 48 hours in advance of the holding of said meeting, that a true, correct and complete copy of said agenda as so posted is attached hereto as Exhibit A, that said meeting was called and held in strict compliance with the provisions of the Open Meetings Act of the State of Ilinois, as amended, the School Code of the State of Ilinois, as amended, and the Bond Issue Notification Act of the State of Ilinois, as amended, and that the Board has complied with all of the provisions of said Acts and said Code and with all of the procedural rules of the Board in the conduct of said meeting.

I do further certify that notice of said public hearing was posted at least 48 hours before said public hearing at the principal offce of the Board and that attached hereto as Exhibit B is a true, correct and complete copy of said notice as so posted.

In Witness Whereof, I hereunto affix my official signature, this 20th day of December, 2006. ~ HONONEGAH EXHIE I.ï .4 COMMUNITY HIGH SCHOOL DISTRICT 207

Dr. Randy Grossi Superintendent rgross€? hononegah.org

Board of Education Office, 307 Salem Street-Rockton, Illinois 61072-2630 Telephone (815)-624-5010; Fax (815) 624-5029

REGULAR BOARD MEETING

DATE: Wednesday, December 20, 2006 PLACE: Hononegah High School, 307 Salem St. Rockton, Illinois 61072, High School Library TIME: 6:00 p.m.

AGENDA

FINANCE COMMITTEE MEETNG-6:00 p.m. 1. Review Financials on Regular Agenda 2. Review Tentative Tax Levy

1. CALL TO ORDER - President Kurlinkus (Approx. 6:30 p.m.) 1.1 Roll Call 1.2 Approval of Agenda

3. RETURN TO OPEN SESSION (Approx. 7:00 p.m.)

4. PLEDGE OF ALLEGIANCE 5. PUBLIC HEARING a. Open Hearing on Proposed Tax Levy b. Public Comment c. Close Hearing on Proposed Tax Levy d. Action on Proposed Tax Levy

6. PUBLIC HEARING a. Open Hearing on Issuance of Bonds b. Public Comment c. Close Hearing on Issuance of Bonds

d. Action on Proposed Issuance of Bonds

7. ACTION ON CLOSED SESSION (Approx. 7:00 p.m.)

8. RECOGNITION OF VISITORS (5 Minutes) This is the time in which we invite the public to address the school board with issues and concerns. In the interest of giving everyone time, we ask you to limit your comments to five minutes. Also, we will not tolerate personal attacks or inappro- priate language. If you are interested in making a comment, please stand and state your name and address. Thank you. CORRESPONDENCE/PUBLIC COMMENT 8.1 Written Correspondence 8.2 Public Comment

9. PRESENTATIONS 8.1 Honeywell Energy Audit Presentation

10. CONSENT AGENDA 10.1 Approve minutes: 11/13/06 Finance Meeting 11/13/06 Regular Board Closed Meeting 11/13/06 Regular Board Meeting 11/29/06 Special Board Meeting 12/5/06 Education Committee 12/7/06 Building and Grounds Committee 10.2 Accept Health Insurance Fund Report and Activity Fund Report 10.3 Approve Payment of Bills lOA Accept Monthly Investment Schedule and Treasurer's Report

11. DISTRICT REPORTS 11.1 Student Council Representative Report - Kaori Sato 11.2 Principal's Report - Mrs. Rigby 11.3 Associate Principal's Report - Mr. Jarrett 11.4 Superintendent's Report - Dr. Gross 11.5 Director of Planning and Grants - Mrs. Gibson 11.6 Committee Chair Reports 11.7 Items to be Sent to Committee 11.8 Reports - Other

12. UNFINISHED BUSINESS

13. NEW BUSINESS 13.1 Donations 13.2 Approve Academic Handbook 11.3 Approve Weight Room Bids 11.4 Second Reading of Revised School Board Policies 2:10 School District Governance; 2:20 Powers and Duties of the School Board; 2:110 renumbered to 2:20-E; 2:50 Board Member Term of Office; 2:80 Board Member Oath and Conduct; 2:110 Qualifications, Term, and Duties of Board Officers; 2:130 Board-Superintendent Relationship; 2:140 Communication s To and From the Board; 2:150 Committees; 2:200 Types of School Board Meetings; 2:210 Organizational School Board Meeting; 2:220 School Board Meeting Procedure; 2:240 Board Policy Development; 2:250-E1, E2, E3 Rewritten; 3:10 Goals and Objectives; 3:40 Superintendent; 3:60 Administrative Responsibility of the Building Principal; 4:10 Fiscal and Business Management; 4:40 Incurring Debt; 4:170 Safety; 4:170-AP2 Administrative Procedure-Criminal Offender Notification Laws; 5:30 Hiring Process and Criteria; 5:30-AP2 Administrative Procedure-Investigations; 5:90 Abused and Neglected Child Reporting; 5:250 Leaves of Absence; 5:330 Sick Days, Vacation, Holidays, and Leaves; 6:60 Curriculum Content; 6:60-AP Administrative Procedure-Comprehensive Health Education Program; 6:235- E4 Exhibit-Keeping Yourself and Your Kids Safe on Social Networks; 6:250 Community Resource Persons and Volunteers; 6:250-AP Administrative Procedure-Securing and Screening Resource Persons and Volunteers; 6:340 Student Testing and Assessment Program; 7:270 Administering Medicines to Students; 7:270-AP Administrative Procedure-Dispensing Medication; 7:270- E Exhibit-School Medication Authorization Form; 8:30 Visitors to and Conduct on School Property; 8:60 Meetings with Staff Members (deleted) 11.5 Second Reading of Curriculum Changes 11.6 Second Reading of Job Description 11.7 Approve Signage for Entrances 11.8 Approve Memorandum of Understanding with HEA for Certified Sick Leave 11.9 Resolutions?

12. MISCELLANEOUS 13. CLOSED SESSION 13.1 Go into Closed Session to Review Closed Session Minutes and to discuss land sale/purchase, appointment, employment, compensation, discipline, performance, or dismissal of specific employees of the public body or legal counsel for the public body, including hearing testimony on a complaint lodged against an employee of the public body or against legal counsel for the public body to determine its validity.

14. ACTION ON CLOSED SESSION

15. OTHER

16. PUBUC COMMENTS

17. ADJOURNMENT Subject to compliance by Community High School District Number 207. Winnebago and Boone Coul1ies. Illnois (the "District"j. with certain covenants, in the opinion of Bond Counsel, under present lavl.', interest on the Bond\" is excludable ii-om gross Încome of the OHmers thereof/or federal income lox purposes. and is not included as 0/1 ¡/em of lax preference in computing the federal alternative minimum lax for individuals and corporations, bul slich interest is taken into account in computing an actius/ment used in determining thefedera! alternative minimum taxforcertaIl1 curporations. The interest ol11he Bond, is nol exemptfi'om presenl State aj1/linois income taxes. See "Tax ExemptIon" herein/or a more complete discussion.

The Bonds are "qualijied tax-exempt obligations" under Section 265(b)(3) oIthe Internal Revenue Code 0/1986. as amended.

New Issue Non-Rated PRELIMINARY OFFICIAL STATEMENT DATED JANUARY 8,2007

COMMUNITY HIGH SCHOOL DISTRICT NUMBER 207 WINNEBAGO AND BOONE COUNTIES, ILLINOIS

$625,000* GENERAL OBLIGATION LIMITED BONDS, SERIES 2007

BID OPENING: January 17,2007, I I :00 A.M., c.T. CONSIDERATION: January 17,2007,7:00 P.M., CT

PURPOSE/AUTHORITY/SECURITY: The $625,000* General Obligation Limited Bonds, Series 2007 (the "Bonds" or

"Obligations") are issued by the District pursuant to the School Code of the State of Ilinois, as amended (the "School Code"), the Local Government Debt Reform Act of the State ofIllinois, as amended (the "Debt Reform Act"), and the Property Tax Extension Limitation Law of the State of Ilinois, as amended (the "PTELL"). Proceeds of the Bonds will be used to provide funds to increase the District's working cash fund (see "Working Cash Fund" herein). The Bonds are limited obligations of the District payable from the District's debt service extension base, and all taxable property in the District is subject to the separate property tax levy that is unlimited as to rate, but the amount of taxes that will be extended to pay the Bonds is limited by the PTELL Delivery is subject to receipt oran approving legal opinion of Chapman and Cutler LLP, Chicago, Ilinois.

* Preliminary, subject to change. DATE OF BONDS: February i, 2007 MATURITY: February i as follows: Year Amount* Year Amount* 2021 $ 100,000 2023 $200,000 ~022 225,000 2024 100,000 MATURITY ADJUSTMENTS: * The District reserves the right to increase or decrease the amount of any individual maturity orthe Bonds in increments of $5,000 on the day of sale. If individual maturities are increased or decreased, the purchase price proposed will be adjusted to maintain the same gross spread per $ i ,000. TERM BONDS: See "Term Bond Option" herein. INTEREST: August I, 2007 and semiannually thereafter. OPTIONAL REDEMPTION: The Bonds are subject to call for prior redemption on February 1,20 J 5 and any date thereafter, at par. MINIMUM BID: S620,000. MAXIMUM BID: 5625,000. GOOD FAITH DEPOSIT: $ I 2,500. PAYING AGENT: Bond Trust Services Corporation, Roseville, Minnesota. BOOK-ENTRY-ONL Y: See "Book-Entry-Only System" herein.

This Preliminary Offcial Statement will be further supplemented by an addendum specifying the otlering prices, interest rates, principal amount per maturity, anticipated delivery date, and Syndicate Manager and Syndicate Members, together with any other information required by law, and, as supplemented, shall constitute a "Final Offcial Statement" of the District with respect to the Bonds, as defined in S.E.C. Rule 15c2- i 2.

3060 Centre Pointe Drive, Roseville, MN 55113 EHLERS 651.697.8500 fax 651.697.8555 www.ehlers-inc.com & ASSOCIATES INC Offices in Roseville. MN Brookfield, Wi and Lisle, IL ~i-ti~Æj(~l:t~i~E~t7?$MYi~_~~~~7~M~t¿t~~Jik~tb~","i;-*t,'t1j~~~~W~'1t;ki::f~g~i~~~g-Mft~i1#¡'§k"'\tlMiL';~t;;¡t1:;tq;1kJ~~,1~~~11;f(t~~~)Zt.f~~fr~1(".~15ø:~l.~\.~~'~'W;t1it~~~il~~~¡t1l~i4Hr.~~Hf,.\;ti:~\;'tW~~i;~~~¥r¡fß~~a~"ß~~ß;~e REPRESENTATIONS

No dealer, broker, salesperson or other person has been authorized by the District to give any information or to make any representation other than those contained in this Preliminary Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the District. This Preliminary Official Statement does not constitute an offer to sell or a solicitation of an offer to buy any of these Obligations in any jurisdiction to any person to whom it is unlawfiil to make such an offer or solicitation in siicli jurisdiction.

This Preliminary Official Statement is not to be construed as a contract with the Syndicate Manager or Syndicate Members. Statements contained herein which involve estimates or matters of opinion are intended solely as such and are not to be construed as representations of fact. Ehlers & Associates, Inc. prepared this Preliminary Oftcial Statement and any addenda thereto relying on information of the District and other sources for which there is reasonable basis for believing the infomiation is accurate and complete. Bond Counsel has not participated in the preparation of this Preliminary Official Statement except as described herein and is not expressing any opinion as to the completeness or accuracy of the information contained therein. Compensation of Ehlers & Associates, Inc., payable entirely by the District, is contingent upon the sale of the issue.

COMPLIANCE WITH S.EC. RULE 15c2-12

Certain municipal obligations (issued in an aggregate amount over $1,000,000) are subject to General Rules and Regulations, Securities Exchange Act of 1934, Rule i 5c2- i 2 Municipal Securities Disclosure (the "Rule").

Preliminary Official Statement: This Preliminary Oftcial Statement was prepared for the District fordissemination to potential customers.

Its primary purpose is to disclose information regarding these Obligations to prospective underwriters in the interest of receiving competitive proposals in accordance with the sale notice contained herein. Unless an addendum is posted prior to the sale, this document shall be deemed the "Preliminary Official Statement".

Review Period: This Preliminary Official Statement has been distributed to members of the legislative body and other public officials of the District as well as to prospective bidders for an objective review of its disclosure. Comments or requests for the correction of omissions or inaccuracies must be submitted to Ehlers & Associates at least two business days prior to the sale. Requests for additional inforination or corrections in the Preliminary Official Statement received on or before this date will not be considered a qualification of a proposal received from an underwriter. If there are any changes. corrections or additions to the Preliminary Oftcial Statement, interested bidders will be informed by an addendum at least one business day prior to the sale.

Final Official Statement: Upon award ofsak of these Obligations, the Preliminary Official Statement together with any previous addendum of corrections or additions will be further supplemented by an addendum specifying the offering prices, interest rates. aggregate principal amount, principal amount per maturity, anticipated delivery date, and Syndicate Manager and Syndicate Members, together with any other information required by law, and, as supplemented, shall constitute a "Final Oftcial Statement" of the District with respect to the Obligations, as defined in S.E.C. Rule i 5c2-12. Copies of the Final Official Statement will be delivered to the underwriter (Syndicate Manager) within seven business days following the proposal acceptance.

Continuing Disclosure: Subject to certain exemptions, issues in an aggregate amount over $1,000,000 may be required to comply with provisions of the Rule which require that underwriters obtain from the issuers of municipal securities (or other obligated party) an agreement for the benefit of the owners of the securities to provide continuing disclosure with respect to those securities. This Preliminary Oftcial Statement describes the conditions under which these Obligations are exempt or required to comply with the Rule.

CLOSING CERTIFICATES

Upon delivery of these Obligations, the purchaser (underwriter) will be furnished with the following items: (l) a certificate of the appropriate

offcials to the effect that at the time of the sale olthese Obligations and all times subsequent thereto up to and including the time of the delivery of these Obligations, this Preliminary Official Statement did not and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (2) a receipt signed by the appropriate offcer evidencing payment for these Obligations; (3) a certificate evidencing the due execution of these Obligations, including statements that (a) no litigation of any nature is pending, or to the knowledge of signers, threatened, restraining or enjoining the issuance and delivery of these Obligations, (b) neither the corporate existence or boundaries of the District nor the title of the signers to their respective offices is being contested, and (c) no authority or proceedings for the issuance of these Obligations have been repealed, revoked or rescinded; and (4) a certificate setting forth facts and expectations of the District which indicates that the District does

not expect to use the proceeds otthese Obligations in a manner that would cause them to be arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or within the meaning of applicable Treasury Regulations.

II TABLE OF CONTENTS

INTRODUCTORY STATEMENT

THE BONDS ...... GENERAL...... I OPTIONAL REDEMPTION ...... _ ...... 2 AUTHORITY; PURPOSE...... 2 ESTIMATED SOURCES AND USES ...... _ ...... 2 SECURlTY ...... 3 RATING...... _ ...... 4 CONTINUING DISCLOSURE ...... 5 CERTAIN LEGAL MATTERS...... 5 LEGAL OPINION ...... _ ...... 5 TAX EXEMPTION ...... 5 QUALIFIED TAX-EXEMPT OBLIGATIONS...... 7 FINANCIAL ADVISOR ...... 7 RISK FACTORS...... 8

ILLINOIS PROPERTY V ALUA TIONS ...... _ ...... 9 ASSESSMENTS AND TAX LEVIES...... " ...... " . . . 9 PROPERTY TAX EXTENSION LIMITATION LA W ...... : ...... 9 CURRNT PROPERTY V ALUA TIONS ...... 10 2005 EQUALIZED ASSESSED VALUE BY CLASSIFICATION ...... i 0 TREND OF VALUATIONS...... - _ _..... _..... _...... _ _...... _' 10 LARGER TAXPAyERS...... i 1 DEBT...... 12 DIRECT BONDED DEBT...... " ...... 12 OTHER OBLIGATIONS...... 12 GENERAL OBLIGATION DEBT LIMIT...... 12 SCHEDULE OF BONDED INDEBTEDNESS ...... 13 DEBTRATIOSOVERLAPPING BONDED DEBT...... 14 .. 14 FUTUREDEBT PAYMENT HISTORYFINANCING...... 14. .. 14 WORKING CASH FUND ...... 15

TAX LEVIES, COLLECTIONS. AND TAX RATES. 16 TAX LEVIES AND COLLECTIONS ...... ' ...... 16 DISTRICT TAX RATES ...... 16 TYPICAL TAX BILL ...... 17

THE DISTRICT...... - ...... _ ...... 18 DISTRICT INFORMATION ...... _ ...... _ ...... 18 STUDENT BODY ...... 19 SCHOOL BUILDINGS ...... 19 PENSIONS AND UNIONS ...... _ ...... 19 FUNDS ON HAND ...... - ...... ' 20 LITIGATION ...... 20 SUMMARY FUND INFORMATION...... 20

GENERAL INFORMATION...... 25 LARGER EMPLOYERS ...... 25 U.S. CENSUS DATA...... _...... _...... 26 EMPLOYMENTIUEMPLOYMENT DATA...... 27 BUILDING PERMITS...... 27 FINANCIAL INSTITUTIONS ...... _ ...... 27 EXCERPTS FROM FINANCIAL STATEMENTS...... A-I FORM OF LEGAL OPINION ...... B-1 BOOK-ENTRY-ONL Y SYSTEM...... " ...... _...... C-I NOTICE OF SALE ...... D-I

II BOARD OF EDUCATION

David Kurlinkus President Kerwood Watts Vice President Tana Vettore Secretary Sandy Fordell Member Diane LaForge Member Scott Moyer Member Bob Zoeller Member

ADMINISTRA TION

Dr. Randy Gross, SuperintencientiBusiness Manager Judy Rigby, Principal

PROFESSIONAL SERVICES

Chapman and Cutler LLP, Bond Counsel, Chicago, Ilinois

Ehlers & Associates, Inc., Financial Advisors, Lisle, Ilinois (Other offces located in Rosevile, Minnesola and Brookfìelcf, Wisconsin) ..

IV INTRODUCTORY STATEMENT

This Preliminary Official Statement contains certain information regarding Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District" or "Issuer") and the issuance of its $625,000* General Obligation Limited Bonds, Series 2007 (the "Bonds" or "Obligations")_ Any descriptions or summaries of the Bonds, statutes, or documents included herein are not intended to be complete and are qualified in their entirety by reference to such statutes and documents and the form of the Bonds to be included in the resolution awarding the sale of the Bonds to be adopted by the Board of Education on January i 7,2007.

Inquiries may be directed to Ehlers & Associates, Inc. ("Ehlers" or the "Financial Advisor"), Lisle, Ilinois, (630) 271- 3330, the District's Financial Advisor. A copy of this Preliminary Official Statement may be downloaded from Ehlers' web site at w'vvw.ehlers-inc.com by connecting to the link to the Bond Sales and following the directions at the top of the site.

* Preliminary, subject to change.

THE BONDS

GENERAL

The Bonds will be issued in fully registered form as to both principal and interest in denominations of $5,000 each or any integral multiple thereof, and will be dated, as originally issued, as of February 1,2007. The Bonds will mature on February i in the years and amounts set foi1h on the cover of this Preliminary Official Statement. Interest will be payable on February I and August I of each year, commencing August 1,2007, to the registered owners of the Bonds appearing of record in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360-day year of twelve 30-day months and will be rounded pursuant to rules of the MSRB. All Bonds of the same maturity will bear interest from date of issue until paid at a single, uniform rate.

The Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). (See "Book-En try-Only System" herein.) As long as the Bonds are held under the book-entry system, beneficial ownership interests in the Bonds may be acquired in book-entry form only, and all payments of principal of and interest on the Bonds shall be made through the facilities of DTC and its Participants. If the book- entry system is terminated, principal of and interest on the Bonds shall be payable as provided in the resolution awarding the sale of the Bonds.

The District has selected Bond Trust Services Corporation, Roseville, Minnesota, to act as paying agent (the "Paying Agent"). The District will pay the charges for Paying Agent services. The District reserves the right to remove the Paying Agent and to appoint a successor. OPTIONAL REDEMPTION

At the option of the District, the Bonds shall be subject to prior payment on February i, 2015 or any date thereafter, at a price of par plus accrued interest.

Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in part, the selection of the amounts and maturities of the Bonds to be prepaid shall be at the discretion of the District. If only part of the Bonds having a common maturi ty date are called for prepayment, the District or Paying Agent, if any, will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each pai1icipant will then select by lot the beneficial ownership interest in such maturity to be redeemed.

Notice of such call shall be given by mailing a notice not more than 60 days and not less than 30 days prior to the date fixed for redemption to the registered owner of each Bond to be redeemed at the address shown on the registration books.

AUTHORITY; PURPOSE

The Bonds are issued by the District as provided in the School Code of the State of Ilinois, as amended (the "School Code"), and the Local Government Debt Refonn Act of the State of Ilinois, as amended (the "Debt Reform Act"), and the Property Tax Extension Limitation Law of the State of Ilinois, as amended (the "PTELL"). Proceeds of the Bonds will be used to provide funds to increase the District's working cash fund (see "Working Cash Fund" herein).

ESTIMATED SOURCES AND USES1

Sources Par Amount of Bonds $625,000 Total Sources2 $625,000 Uses Working Cash Fund $595,300 Discount Allowance 5,000 Finance Related Expenses 12,000 Capitalized Interest 12,700 Total Uses $625,000

Preliminary, subject to change.

Does not include interest earnings.

2 SECURITY

The Bonds are limited bonds and are issued pursuant to the authority provided in the School Code, as supplemented by the Debt Refonn Act. Although the obligation of the District to pay the Bonds is a general obligation under the School Code and all taxable property in the District is subject to the levy of taxes to pay the Bonds without limitation as to rate, the amount of taxes that will be extended to pay the Bonds is limited by the Property Tax Extension Limitation Law ofthe State of Ilinois, as amended (the "Extension Limitation Law").

The Debt Reform Act provides that the Bonds are payable from the debt service extension base of the District (the "Base"), which is an amount equal to that portion of the extension for the District for the i 996 levy year constituting an extension for payment of principal and interest on bonds issued by the District without referendum, but not including alternate bonds issued under Section 15 of the Debt Reform Act or refunding obligations issued to refund or to continue to refund obligations of the District initially issued pursuant to referendum. The Extension Limitation Law further provides that the annual amount of taxes to be extended to pay the Bonds and all other limited bonds heretofore and hereafter issued by the District shall not exceed the Base.

The Bonds constitute one of six series of limited bonds of the District which are payable from the Base. Payments on the Bonds from the Base will be made on a parity with the payments on the District's outstanding General Obligation Limited School Bonds, Series i 998, dated October i, i 998; General Obligation Limited School Bonds, Series 2004A, dated June 15,2004; General Obligation Limited Bonds, Series 2005A, dated March 15,2005; Taxable General Obligation Limited Bonds, Series 2005B, dated March 15, 2005; and General Obligation Limited Tax Refunding Bonds, Seris 2005D, dated March i 5, 2005. The District is authorized to issue from time to time additional limited bonds payable from the Base, as permitted by law, and to determine the lien priority of payments to be made from the Base to pay the District's limited bonds.

3 1996 Debt Service Extension Base ofthe District - $828,508

Table of Estimated Limited Bond Debt Service Levies and Extensions

Existing Non- Plus Ese. Levy referendum Series 2007 Projected Margin Year Bond Levies Bond Levies2 Under $828,508

2006 $805,800 $22,708 $0 2007 811,113 17,395 0 2008 780,443 26,400 21,665 2009 716,318 26,400 85,790 2010 721,980 26,400 80,128 2011 726,505 26,400 75,603 2012 729,893 26,400 72,215 2013 734,318 26,400 67,790 2014 737,693 26,400 64,415 2015 739,968 26,400 62,140 2016 740,768 26,400 6 I ,340 2017 738,293 26,400 63,815 2018 689,443 26,400 1 12,665 2019 480,750 126,400 221,358 2020 359,500 247,200 22 I ,808 2021 383,250 212,750 232,508 2022 104,250 724,258

RATING

None of the outstanding indebtedness of the District, with the exception of any outstanding credit enhanced issues, is currently rated, and the District has not requested a rating on this issue.

Preliminary, subject to change.

The first two bond levies for the 2007 Bonds have been reduced by capitalized interest from the proceeds of the issue.

4 CONTINUING DISCLOSURE

Participating underwriters need not comply with paragraph (b )(5) of Rule i 5c2- i 2 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of i 934, because the aggregate principal amount of the Bonds and any other bond issues of the District required to be integrated with the Bonds is less than $1,000,000. Consequently, the District will not enter into any undertaking to provide continuing disclosure of any kind with respect to the Bonds.

CERTAIN LEGAL MATTERS

Certain legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approving legal opinion of Chapman and Cutler LLP, Chicago, Ilinois, as Bond Counsel (the "Bond Counsel") who has been retained by, and acts as, Bond Counsel to the District. Bond Counsel has not been retained or consulted on disclosure matters, and has not undertaken to review or verify the accuracy, completeness or sufficiency of this Preliminary Official Statement or other offering material relating to the Bonds, and assumes no responsibility for the statements or information contained in or incorporated by reference in this Preliminary Official Statement, except that in its capacity as Bond Counsel, Chapman and Cutler LLP has, at the request of the District, supplied the infonnation under the headings" Tax Exemption" and "Qualified Tax-Exempt Obligations".

LEGAL OPINION

An opinion as to the validity of the Bonds and the exemption from federal taxation of the interest thereon will be furnished by Chapman and Cutler LLP, bond counsel to the District, and will accompany the Bonds.

TAX EXEMPTION

Federal tax law contains a number of requirements and restrictions which apply to the Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and the tàcilities financed therewith, and certain other matters. The District has covenanted to comply with all requirements that must be satisfied in order for the interest on the Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Bonds to become includable in gross income for federal income tax purposes retroactively to the Date of Issue of the Bonds.

Subject to the District's compliance with the above-referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Bonds is excludable from the gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations. Interest on the Bonds is taken into account, however, in computing an adjustment used in determining the federal altemative minimum tax for certain corporations. The Intemal Revenue Code of i 986, as amended (the Code), includes provisions for an alternative minimum tax ("AMT") for corporations in addition to the corporate regular tax in certain cases. The AMT, if any, depends upon the corporation's alternative minimum taxable income ("AMTl"), which is the corporation's taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation's "adjusted current earnings" over an amount equal to its AMTl (before such adjustment item and the alternative tax net operating loss deduction). "Adjusted current earnings" would include all tax exempt interest, including interest on the Bonds.

5 In rendering its opinion, Bond Counsel will rely upon ceiiifications of the District with respect to certain material facts within the District's knowledge. Bond Counsel's opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result.

Ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Bonds should consult their tax advisors as to the applicability of any such collateral consequences.

The issue price (the "Issue Price") for each maturity of the Bonds is the price at which a substantial amount of such maturity of the Bonds is first sold to the public. The Issue Price of a maturity of the Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the cover page hereof.

If the Issue Price of a maturity of the Bonds is less than the principal amount payable at maturity, the difference between the Issue Price of each such maturity, if any, of the Bonds (the "OlD Bonds") and the principal amount payable at maturity is original issue discount.

For an investor who purchases an OlD Bond in the initial public offering at the Issue Price for such maturity and who holds such OlD Bond to its stated maturity, subject to the condition that the District complies with the covenants discussed above, (a) the full amount of original issue discount with respect to such OlD Bond constitutes interest which is excludable from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such OlD Bond at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in an alternative minimum tax liability for corporations or certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Based upon the stated position of the Ilinois Department of Revenue under Ilinois income tax law, accreted original issue discount on such OlD Bonds is subject to taxation as it accretes, even though there may not be a corresponding cash payment until a later year. Owners of OlD Bonds should consult their own tax advisors with respect to the state and local tax consequences of original issue discount on such OlD Bonds.

Owners of the Bonds who dispose of Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase Bonds in the initial public offering, but at a price different from the Issue Price or purchase Bonds subsequent to the initial offering should consult their own tax advisors.

If a Bond is purchased at any time for a price that is less than the Bond's stated redemption price at maturity or, in the case of an OlD Bond, its Issue Price plus accreted original issue discount (the "Revised Issue Price"), the purchaser will be treated as having purchased a Bond with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a Bond is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser's election, as it accrues. Such treatment would apply to any purchaser who purchases an OlD Bond for a price that is less than its Revised Issue Price. The applicability ofthe market discount rules may adversely affect the liquidity or secondary market price of such Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the Bonds.

6 An investor may purchase a Bond at a price in excess of its stated principal amount. Such excess is characterized for federal income tax purposes as "bond premium" and must be amortized by an investor on a constant yield basis over the remaining tenn of the Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amoi1ized bond premium relating to a tax-exempt bond. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor's basis in the Bond. Investors who purchase a Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the Bond's basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the Bonds.

There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or adversely affect the market value of the Bonds. It cannot be predicted whether or in what fonn any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation.

The Intemal Revenue Service (the "Service") has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Bonds. If an audit is commenced, under current procedures the Service will treat the District as the taxpayer and the Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless of the ultimate outcome.

QUALIFIED TAX-EXEMPT OBLIGATIONS

Subject to the District's compliance with cei1ain covenants, in the opinion of Bond Counsel, the Bonds are "qualified tax-exempt obligations" under the small issuer exception provided under Section 265(b )(3) of the Code, which affords banks and other financial institutions more favorable treatment of their deduction for interest expense than would otherwise be allowed under Section 265(b)(2) of the Code.

FINANCIAL ADVISOR

Ehlers has served as Financial Advisor to the District in connection with the issuance of the Bonds. The Financial Advisor will not participate in the underwriting of the Bonds. The financial information included in this Preliminary Official Statement has been compiled by the Financial Advisor. Such infoimation does not purport to be a review, audit or cei1ified forecast of future events and may not conform with accounting principles applicable to compi lations of financial information. Ehlers is not a firm of certified public accountants.

7 RISK FACTORS

Following is a description of possible risks to holders of these Bonds without weighting as to probability. This description of risks is not intended to be all-inclusive, and there may be other risks not now perceived or listed here.

Taxes: The Bonds ofthis offering are general obligations of the District, the ultimate payment of which rests in the District's ability to levy and collect sufficient taxes to pay debt service should other revenue be insufficient.

State Actions: Many elements of local government finance, including the issuance of debt and the levy of property taxes, are controlled by state government. Past and future actions of the State may affect the overall financial condition of the District, the taxable value of propei1y within the District, and the ability of the District to levy property taxes.

State Economy; School District Aids: State cash flow problems could delay or reduce the level of school aids anticipated by the District for operation expense and reimbursement for debt payments made. State revenue shortages could cause the legislature to reduce or delay already appropriated state-aids. This could reduce District fund balances and adversely affect the value of the Bonds.

Interest Rates: In the future, interest rates for this type of obligation may rise generally, possibly resulting in a reduction in the value of the Obligations for resale prior to maturity.

Tax Exemption: Ifthe federal government taxes the interest on municipal bonds or notes or if the state government increases its tax on interest on bonds and notes, directly or indirectly, or if there is a change in federal or state tax policy, the value of these Bonds may fall for purposes of resale. Noncompliance by the Issuer with the covenants in the sale resolution relating to certain continuing requirements of the Code may result in inclusion of interest to be paid on the Bonds in gross income of the recipient for United States income tax purposes, retroactive to the date of issuance.

State Economy; Local Government Aids: State cash flow problems could affect local governments and possibly increase property taxes.

Book-Entry-Only System: The timely credit of payments for principal and interest on the Bonds to the accounts of the Beneficial Owners of the Bonds may be delayed due to the customary practices, standing instructions or for other unknown reasons by DTC pai1icipants or indirect participants. Since the notice of redemption or other notices to holders of these obligations wiII be delivered by the District to DTC only, there may be a delay or failure by DTC, DTC pai1icipants or indirect participants to notify the Beneficial Owners of the Bonds.

Economy: A combination of economic, climatic, political or civil disruptions or terrorist actions could affect the local economy and result in reduced tax collections and/or increased demands upon local government.

8 ILLINOIS PROPERTY VALUATIONS

ASSESSMENTS AND TAX LEVIES

Property tax levies are extended against the equalized assessed value of properties in the District. The level of assessment is set at 33 1/3% offair market value by Ilinois statute. State law requires local assessors to set this value for all real property and railroad property not used for transportation purposes. Railroad property used for transpoiiation purposes is assessed by the Ilinois Department of Revenue. The Ilinois Department of Revenue reviews local assessments (after any appeal and review at the county level) to ensure compliance with the 33 1/3% assessment leveL. A state multiplier is applied to any county if needed so that all counties are equally applying the 33 1/3% standard~ State law provides some relief to certain taxpayers in the form of partial exemptions and some limitations on increases in assessed valuation.

Property taxes of the District are levied and filed with the Winnebago and Boone County Clerks. The County Clerks determine the maximum tax extension allowing for statutory limitations, such as the Extension Limitation Law and any rate limitations. The tax rates and taxes payable for each parcel of property, subject to the levies filed and any limitations determined, are computed and given to the billing and collecting officials of the county. Taxes are due and payable in two installments following the year in which the levy was made. Those installments are usually payable on June i and September i.

PROPERTY TAX EXTENSION LIMITATION LAW

The Extension Limitation Law limits the annual increase in the amount oftaxes to be extended for certain Ilinois non- home rule units of government, including the District. In general, the Extension Limitation Law restricts the amount of such increases to the lesser of 5% or the percentage increase in the Consumer Price Index during the calendar year preceding the levy year. In addition, general obligation bonds, notes and installment contracts payable from ad valorem taxes unlimited as to rate and amount cannot be issued by the affecteß, taxing bodies unless the obligations first are approved at a direct referendum, are alternate bonds or are for certain refunding purposes.

The County Boards of Winnebago County and Boone County each submitted the question of whether the Extension Limitation Law should apply to taxing districts within their boundaries and voters approved the question on November 5, i 996. As a result, the District became subject to the requirements of the Extension Limitation Law as of January i, 1997.

9 CURRENT PROPERTY VALUATIONS

Total Valuation

2005 Estimated Market Value $ 1 ,635,285,597

2005 Equalized Assessed Value $545,095,199

2005 EQUALIZED ASSESSED VALUE BY CLASSIFICATION1

2005 Equalized Percent of Assessed Value Total Value Residential $466,213,037 85.53% Commercial 42, I 60,540 7.73% Industrial 18,252,425 3.35% Agricultural 18,357,125 3.37% Railroad i 12,072 0.02%

Total $ 545,095, i 99 100.00%

TREND OF VALUATIONS

Estimated Equalized Percent Increase/Decrease Year Market Value Assessed Value In Equalized Value

2001 $1,202,795,205 $400,931,735 6.39% 2002 1,286,820,909 428,940,303 6.99% 2003 1,387,068,768 462,356,256 7.79% 2004 1,490,294,931 496,764,977 7.44 % 2005 1,635,285,594 545,095,198 9.73%

Local assessors set the fair market value for all real property and railroad property not used for transportation purposes. Railroad property used for transportation purposes is assessed by the Ilinois Department of Revenue.

10 LARGER TAXPAYERS i

2005 Equalized 2005 Est. Taxpayer Type of Property Assessed Value Market Value

Petry Family Trust Holdings $3,267,469 $9,802,407 Meadow Run Estates Funding Commercial 3,209,079 9,627,237 Kroger LTD. Pai1. Retail 2,448,881 7,346,643 CFJ Properties Conuercial 2,347,480 7,042,440 Woodward Governor Co. Aircraft Controls/Service Center 1,836,876 5,510,628 Lensing Wayne Holdings 1,355,028 4,065,084 Specialty Equipment Mfg. Corp. Ice Cream, Shake Machines, Grills 1,252,577 3,757,731 for Fast Food Industry Giuffre II LLC Industrial 1,246,929 3,740,787 Kasey Investments LLC Commercial 1,238,312 3,714,936 Highview Retirement Home Retirement Home 1,119,390 3,358,170

Source: Propei1y Valuations and Larger Taxpaying Parcels provided by Winnebago County.

Some of the taxpayers listed above may own multiple parcels. The valuations stated above for some of the taxpayers may not include all parcels or all classifications of property.

11 DEBT

DIRECT BONDED DEBT (see schedules following)

Total general obligation bonded debt outstanding as of February 1,2007 will be $19,957,5491 (includes the Bonds of this offering)

OTHER OBLIGATIONS (as of February 1,2007) Issue Final Amount Issue Date Maturity Outstanding Installment Payment Contract Ceiiificates May 1, 2000 2010 $ 350,000 (Limited Tax), Series 2000 (Energy Management Project Financing)

GENERAL OBLIGATION DEBT LIMIT (includes the Bonds of this offering)

The debt limit for the District is 6.90% of the District's latest equalized assessed valuation.

2005 Equalized Assessed Value $545,095, i 99 Multiply by 6.9% 0.069 Cunent Statutory General Obligation Debt Limit $37,611,569 i Less: Direct General Obligation Debt Applied to Debt Limit (19,957,549) Less: Other Obligations (350.000) i Unused General Obligation Debt Limit S 1 7,304,020

Preliminary, subject to change.

12 SCHEDULE OF BONDED INDEBTEDNESS ~ $1,09~6Ô $625,000* ~ 5D 2007 ,~ 15/2005 2/1/2007 Cumulative* FYE 6/30 Du, 2/1 L bue 2/1 Due 2/1 rDue 2/1 ¡:e 2/1 -, ", -Due 2/1 Due 2/1 -Total* Amount -P ercen t 2008 $1,570,000 $25,000 $470,000 $2,065,000 2009 1,645,000. $305,595 $2,065,000 10.35% 20,000 1,970,595 4,035,595 20.22% 2010 1,720,000 211,955 125,000 2,056,955 6,092,549 30.53% 2011 1,195,000 $900,000 $425,000 2,520,000 8,612,549 43.15% 2012 2,300,000 450,000 2,750,000 11,362,549 56.93% 2013 2,400,000 475,000 2,875,000 14,237,549 71.4% 2014 $325,000 i 75,000 500,000 14,737,549 73.84% 2015 325,000 200,000 525,000 15,262,549 76.48% 2016 325,000 225,000 550,000 15,812,549 79.23% 2017 325,000 250,000 575,000 16,387,549 82.11% 2018 325,000 100,000 175,000 600,000 16,987,549 85.12% 2019 325,000 c, i 45,000 155,000 625,000 17,612,549 88.25% 2020 325,000 115,000 165,000 605,000 18,217,549 91.8% 2021 325,000 100,000 $100,000 525,000 18,742,549 93,91% 2022 325,000 225,000 550,000 19,292,549 96,67% 2023 365,000 200,000 565,000 19,857,549 99,50% 2024 100,000 100,000 19,957,549 100.00% $6,130,000 $517,549 $5,600,000 $3,290,000 ~~oo $595,000 $625,000 $19,957,549

* Preliminary, subject to change.

1 ¡'f,i~~~~to, êl._~n~.. .. llif~i~ .in LUU _ 11 OVERLAPPING BONDED DEBT1

2005 Equalized EAV Outstanding Assessed within Bonds District District Taxing Body Valuation District as of 12/2006 Percent $ Share

Winnebago County Forest Preserve $3,965,169,383 $544,884,996 $4,733,135 13.74% $650,417 Greater Rockford Airport Authonty 3,122,359,227 40,293,277 5,350,000 1.29% 69,040 Village of Roscoe 147,669,704 102,311,982 180,000 69.28% 124,712 Northwest Fire District 57,279,271 644,240 10,000 1.2% 112 North Suburban Librai District 1,049,296,067 301,505,820 4,070,000 28.73% 1,169,478 Community Cons. School Dist. No. 131 258,305,315 258,305,315 10,039,040 100.00% 10,039,040 Community Cons. School Dist. No. 133 79,992,005 79,992,005 2,610,000 100.00% 2,610,000 Community Cons. School Dist. No. 140 179,315,832 179,226,545 4,864,970 99.95% 4,862,548 Cornllnity College No. 511 5,621,212,221 545,095,199 48,693,595 9.70% 4.721.872

Total Overlapping G.O. Bonded Indebtedness $24,247,220

DEBT RA TIOS2 Debt/Estimated Market Value Debt/ Per Capita G.O. Debt $1,635,285,597 30,000

Total general obligation debt $20,307,549 1.24% $677

District's Share of Total Overlapping Debt $24.247.220 1 .48% £808 Total $44,554,769 2.72% $1,485

DEBT PAYMENT HISTORY

The District has never defaulted in the payment of principal and interest on its debt.

FUTURE FINANCING

The District has no plans to issue debt in the next three months.

Only those taxing junsdictions with general obligation bonded debt outstanding are included in this section.

2 Preliminary, subject to change.

14 WORKING CASH FUND

The District is authorized to issue (subject to the provisions of the Extension Limitation Law) general obligation bonds to create or increase a Working Cash Fund. Such fund can also be created or increased by the levy of an annual tax not to exceed $.05 per hundred dollars of equalized assessed valuation. The purpose of the fund is to enable the District to have sufficient money to meet demands for ordinary and necessary expenditures for school operating purposes. In order to achieve this purpose, the money in the Working Cash Fund may be loaned, in whole or in part, as authorized and directed by the Board, to any fund of the District in anticipation of ad valorem property taxes levied by the District for such funds, or in anticipation of corporate personal property replacement taxes to be received by the District. The Working Cash Fund is reimbursed when the anticipated taxes or moneys are received by the District. When money is available in the Working Cash Fund, such money must be used to the extent possible to avoid the issuance of tax anticipation warrants. The money in the Working Cash Fund may not be appropriated by the Board in the annual budget.

______u_____ I)~~ TAX LEVIES, COLLECTIONS, AND TAX RATES

TAX LEVIES AND COLLECTIONS

Percent of Current Collections to Date and Back Taxes Tax Year Tax Extension and Back Taxes Collected to Date

2001/02 $9,487,207 $9,474,207 99.86% 2002/03 10,034,627 10,005,742 99.71 % 2003/04 10,245,418 10,226,976 99.82% 2004/05 1 1,702,293 11,664,845 99.68% 2005/06 12,718,706 12,042,011 r------,94.68% 1--______J: In Process :

DISTRICT TAX RATES

Property tax rates are expressed in dollars per $ 100 of Equalized Assessed Value. Maximum Authorized Fund 2001 2002 2003 2004 2005 Rate Education 1.3800 1.3667 1.3730 1.3744 1.800 1.3800 Operations & Maintenance 0.2500 0.2476 0.2488 0.2490 0.2500 .2500 Transportation 0.0901 0.0638 0.0995 0.0927 0.lO14 .1200 Working Cash 0.0500 0.0496 0.0498 0.0498 0.0500 .0500 IMRF 0.0300 0.0397 0.0398 0.0498 0.0355 none Social Security 0.0300 0.0397 0.0398 0.0498 0.0355 none Liability Insurance 0.0250 0.0248 0.0249 0.0249 0.0000 none Special Education 0.0200 0.0199 0.OL99 0.0200 0.0200 .0200 Bond & Interest 0.3910 0.3884 0.3884 0.3955 0.4109 none Building Safety 0.0500 0.0496 0.0000 0.0000 0.0000 .0500 Facility Lease 0.0500 0.0496 0.0454 0.0498 0.0500 none Total 2.3661 2.3394 2.3293 2.3557 2.3333

Public Act 94-0976, effective June 30, 2006 for levy years beginning with levy year 2006, provides that the only ceiling on a particular tax rate is the ceiling set by statute above which the rate is not permitted to be further increased by referendum or otherwise.

16 TYPICAL TAX BILL

Following is a typical tax bill for various jurisdictions within the District. Property tax rates are expressed in dollars per $100 of Equalized Assessed Value.

200) 2002 2003 2004 2005 Winnebago County $0.7981 $0.7932 $0.7923 $0.7973 $0.7900 Winnebago County Forest Preserve 0.l026 0.1022 0.1018 0.1031 0.0994 Roscoe Township 0.2765 0.1208 0.2702 O. i 202 0.l203 Harlem Roscoe Fire Department 0.6126 0.612 0.6032 0.6081 0.608 North Suburban Library District 0.2447 0.2436 0.2408 0.2409 0.23 72 Community Cons.. School Dist. No. 131 2.727 2.7109 2.7688 2.8155 2.8072 Community College District No. 511 0.4086 0.4351 0.4528 0.4530 0.4471 High School District Number 207 2.3661 2.3394 2.3293 2.3557 2.3333 Total $7.5362 $7.3572 $7.5592 $7.4938 $7.4425 Source: Tax Collections and Tax Rates have been furnished by Winnebago County

L l

I 17 i

- - -, -_. --._-."," ",' ,~ THE DISTRICT

DISTRICT INFORMATION

The District is governed by a seven-member Board of Education, who are elected to four-year terms. The appointed Superintendent is responsible for overall daily administration of the District and financial records.

The District, comprised of 108 square miles, is located in northern Winnebago County and includes the communities of Rockton, Roscoe, Shirland and Harrison. Total population of the District is about 30,000.

The District employs 237 people, which includes teachers, counselors and administrators.

Transportation

Interstate 90 passes through the District. Other major highways are U.S. 251 and Ilinois Highways 2 and 75. The Greater Rockford Airp0l1 is less than 30 minutes away.

Business and Commerce

The District has a fine balance of agnculture and industry, with employment oppoi1unities available to residents either within the District or in the highly industrial cities of Rockford, Ilinois, which is 13 miles to the south, and Beloit, Wisconsin, which is 3 miles to the north. Most residents are employed within a 25-mile radius. Retail areas are centered in downtown Rockton and in Roscoe along Hononegah Road and Highway 251. Regional shopping centers are located in Rockford, Beloit and Machesny Park.

Recreation

The District has an abundance of recreational opportunities for residents. This includes five public golf courses, two swimming facilities, a three-mile bike/walking path and four forest preserves. Other sports areas for various athletic activities are available throughout the District.

Health Care

The area has many health care facilities including the Rockford Memorial Hospital, St Anthony Hospital and the Swedish American Hospital in Rockford; the Beloit Memorial Hospital in Beloit; the Rockford Clinic in Rockton and the Rockton Area Community Health Center.

Education

Four elementary districts send their students to District Number 207. They include Kinnikinnick Community Consolidated School District Number 13l, Rockton Community Consolidated School District Number l40, Prairie Hill Community Consolidated School District Number 133 and Shirland Community Consolidated School District Number 134. The District operates one high schooL. Higher education opportunities are available at nearby Beloit College, Rockford College and Rock Valley Community College Number 51 L

18 STUDENT BODY

The number of students enrolled for the past four years and for the current year is as follows:

Current: Year Grades 9-12 2002/03 1,783 2003/04 1,855 2004/05 1,862 2005/06 1,95l 2006/07 2,005

Enrollments for the next three years are projected to be as follows:

Projected: Year Grades 9-12 2007/08 2,117 2008/09 2,170 2009/10 2,287

SCHOOL BUILDINGS

School Building Year Constructed Years of Additions Capacity

High School 1922 1956,1966,1969,1971,1975, 2,350 1981. 1987, 1996,2003

PENSIONS AND UNIONS

The District is a participant in two retirement systems: the Teachers' Retirement System ofthe State of Ilinois (TRS) and the Ilinois Municipal Retirement Fund (IMRF). Members of TRS consist of all full-time teachers and teachers employed on a par-time basis in positions where services are expected to be rendered for a full and complete school tenn. Employees, other than teachers, who meet prescribed annual hourly standards are members ofIMRF. See the Notes to Financial Statements in Appendix A for a detailed description of the plans.

~ Other recognized and certified bargaining units include: ¡ , ~ Bargaining Unit Current Contract Expires

Hononegah Education Association 2009 Hononegah Education Support Staff Association I 2009 f

L ~ i l

i 19

l',i -_._-----_.~-~---~_. -~. FUNDS ON HAND (As of November 30, 2006)

Fund Amount

Education $6l3,945 Operations & Maintenance 655,645 lnsurance Reserve 0 Transportation 992,858 Site & Construction (27,827) Working Cash 4, i 20,699 Bond & Interest 2,296,760 IMRF/Social Security 393,240 Fire Prevention & Safety 149,563

Total Cash and Investments $9,194,883

LITIGATION

There is no litigation threatened or pending questioning the organization or boundaries of the District or the right of any of its officers to their respective offices or in any manner questioning their rights and power to execute and deliver the Bonds or otherwise questioning the validity of the Bonds. ' The District's Attorney reports that any litigation and claims currently pending against the District are being handled by the District's insurance carrier or outside counsel and will not affect the issuance of the Bonds.

SUMMARY FUND INFORMATION

The Educational Fund of the School District is the main operating fund. The District lIses the cash basis of accounting in separately balanced fund groups.

The payment of interest and principal on General Obligation Bonds is accounted for in a separate group of accounts known as the Bond and Interest Fund. The revenue to make these payments is derived from a separate tax on all taxable property in the District.

The following schedules illustrate the financial performance of the District's Educational, Operations and Maintenance, Transportation, and Working Cash Funds. The annual reports from years 2002 to 2006 were the source for these figures. These schedules do not purport to be the complete audit, copies of which are available from the Financial Advisor.

20 Summary of Revenues. Expenses and Fund Balances (Fiscal Year Ending June 30) Educational Fund

Revenues 2002 2003 2004 2005 2006 Local Sources $9,138,571 $4,675,469 (1) $8,l70,412 $9,037,344 $9,842,266 State Sources 3,779,164 3,655,070 3,950,894 4,241,090 4,720,027 Federal Sources 175,302 310,590 155,492 78,816 135,676 On Behalf Payments 905,778 1,055,298 1,148,580 872,212 564,271 Total Revenue $13,998,815 $9,696,427 $13,425,378 $14,229,462 $15,262,240

Expenses Instruction $7,947,215 $9,132,959 $9,421,757 $8,993,308 $9,672,797 Support Services 3,452,907 3,563,707 3,691,450 3,564,580 4,185,086 Nonprogrammed Charges 230,003 162,959 142,838 158,000 190,137 Debt Services 0 84,097 68,959 69,153 5,525

On Behalf Payments 905,778 1,055,298 1,148,580 872,212 564,271 Total Expense S 12,535,903 $13,999,020 $l4,473,584 $13,657,253 S14,617,816 Excess 1,462.912 (4,302,593 ) (l,048,206) 572,209 644,424 Reven ues/ (Expenses)

Other Financial (22,000) 358,000 (1,168,500P) 0 0 Sources/Uses

Net Excess/(Deficiency) 1,440,912 (3,944,593) (2,216,706) 572,209 644,424 Fund Balance Beginning ($273.090) $1,167,822 ($2,776,77l) ($4,993,477) ($4,421,268) Other Changes in Fund 0 0 0 0 0 Balance

Fund Balance End $l,167,822 ($2,776,77l) ($4,993,477) ($4,421,268) ($3,776,844)

(I) June/July Propert Tax Receipts - The District is on the cash basis of accounting and receives the first installment of propei1y taxes in June or July. 1f these taxes are received in July, they are recognized in the fiscal year beginning July i. This vaiied timing of propert taxes creates major reporting fluctuations in the local sources from year to year.

(2) In FY 2004, the Distrct reduced fìind balances by $ i, 1 00,000 to write off health insurance fund losses.

- -_.- --- -. ._-:.-,_._--,_._.....-~~.-:. ~.. Operations and Maintenance Fund (Fiscal Year Ending June 30)

2002 2003 2004 2005 2006 Revenues Local Sources $1,658,634 $682,92 1 (I) $l,396,125 $ 1 ,466,004 $1,683,761 State Sources 0 0 0 0 0 Federal Sources 761 49,239 0 0 0 Total Revenue $l,659,395 $732,160 $1,396,125 $1,466,004 $1,683,761 Expenses Salaries $460,981 $562,302 $686,554 $0 $0 Benefits 66,949 l06,848 157,283 0 0 Contracted Services 214,329 197,758 125,884 0 0 Supplies 371 ,439 558,508 559,732 0 0 Capital Expenses 350,319 367,415 133,142 0 0 Support Services 0 0 0 1,926,508 2,060,465 Other 48,330 1,191 1,830 0 0 Debt Service 0 43,725 l29,220 137,326 l29,415 Total Expense $1,512,347 SI,837,747 $1,793,645 $2,063,834 $2,189,880 Excess Revenues/(Expenses) 147,048 (1,105,587) (397,520) (597,830) (506,ll9) Other Financial Sources/Uses 35,656 223,000 944,611 230,000 550,000 Net Excess/(Deficiency) $182,704 ($882,587) $547,091 ($367,830) $43,881 Fund Balance Beginning ($335,693) ($ 152,989) ($ i ,035,576) ($488,485) ($856,315) Other Changes in Fund SO $0 $0 $0 SO Balance Fund Balance End ($152,989) ($1,035,576) ($488,485) ($856,315) ($812,434)

(I) June/Julv Propert Tax Receipts - The Distiict is on the cash basis of accounting and receives the first installment of property taxes in June or July. If these taxes are received in July, they are recognized in the fiscal year beginning July i. This varied timing of propert taes creates major repolting fluctuations in the local sources from year to year.

22 Transportation Fund (Fiscal Year Ending June 30)

2002 2003 2004 2005 2006 Revenues Local Sources $477,296 $190,352(1) $274,874 $468,245 $482,996 State Aid 219,049 256,762 454,80 I 412,994 328,191 Total Revenues $696,345 $447,1 l4 $729,675 $881,239 $811,187 Expenses Contracted Services $663,298 $832,050 $799,759 $829,702 $746,120 Total Expenses $663,298 $832,050 $799,759 $829,702 $746,120 Excess Revenues/(Expenses) $33,047 - ($384,936) ($70,084) $51,537 $65,067 Other Financial Sources/Uses ($2l,922) $0 $134,122 $0 $0 Net Excess/(Deficiency) $11,125 ($384,936) $64,038 $51,537 $65,067 Fund Balance Beginning $661,960 $673,085 $288,149 $352,187 $403,724 Other Changes in Fund Balance $0 $0 $0 $0 $0 Fund Balance End $673,085 $288,149 $352,187 $403,724 $468,791 (Ii June/Julv Propert Tax Receipts - The District is on the cash basis of accounting and receives the first installment of propert taxes in June or July. If these taxes are received in July, they are recognized in the fiscal year beginning July i. This varied timing of propert taxes creates major reporting flucniations in the local sources fi'01l year to year.

Working Cash Fund (Fiscal Year Ending June 30th)

2002 2003 2004 2005 2006 Revenues Local Sources $281,000 5) 107,686 $214,649 $242.224 $296,038 Total Revenues $281,000 $107,686 $214,649 $242,224 $296,038 Expenses Transfers (out) ($115,656) ($358,000) ($851,122) $4,305,860 ($550,000) Beginning Fund Balance 937,277 1,102,621 852,307 215,834 4,763,918 Changes in Fund Balance 0 0 0 0 0 I ì Ending Fund Balance $1,102,621 $852,307 $215,834 $4,763,918 $4,509,956

23 I

i ~ ~t' Summary of Combined Fund Balances (Fiscal Year Ending June 30th)

2002 2003 2004 2005 2006 Funds Educational $1,167,822 ($2,771,776) ($4,993,477) ($4,421,268) ($3,776,844) Operations & Maintenance (152,989) (1,035,576) (488,485) (856,315) (812,434) Transportation 673,085 288,149 352,187 403,724 468,791 Working Cash 1,102,621 852,307 215,834 4,763,918 4,509,956 Total $2,790,539 ($2,666,896) ($4,913,941) ($109,941 ) $389,469

Source: Audited Einancial Statements of the District.

24 GENERAL INFORMATION

LARGER EMPLOYERS

Larger employers within the District include the following:

No. of Firm Type of Business/Product Employeesl Taylor Company (Rockton) Ice Cream, Shake Machines, Grills for Fast 500 (div. of Carrier Commercial Refrigeration, Inc.) Food Industry Eco-Lab Dairy Equipment 350 Warner Electric Industrial Products Wholesale Motion Control Products 300 Community High School District Number 207 High School 237 Regal-Beloit Cutting Tools, Gauges, Power Trans. Equip. 225 Woodward Governor (Rockton) Aircraft Controls and Service Center 200 (980 in Rockford)

Larger employers in the area include the following:

No. of Firm Tvpe of Business/Product Employees! I

CAMCAR (Rockford) Fasteners 3,650 Textron Fastening Systems, Inc. (Rockford) Fasteners 3,000 I General Motors (Janesville) Automobiles 2,939 I, Swedish American Health System (Rockford) Health Care 2,600 Hamilton Sundstrand Corporation (Rockford) A viation Products 2,500 It Rockford Memorial Hospital Health Care 2,500 St. Anthony Medical Center (Rockford) Health Care 1,970 Winnebago County County Government & Services l,607 Beloit Memorial Hospital Health Care 1,076 Frito-Lay (Beloit) Snack Foods 785 Amerock Corp. (Rockford) Hardware 700 Rockford Products Corp. (Rockford) Fasteners 550 Ingersoll Miling Machine Co. (Rockford) Special Machine Tools 250

Source: 2006 Ilinois Manufacturers Register, 2006 Ilinois Service Directory.

~. ~'

Includes full-time, part-time and seasonaL. I r ~ 25 , i~','"

I W,: u.s. CENSUS DATA

Estimated Population Trend:

Vilage of Vilage of Rockton Roscoe Winnebago Rockton Roscoe Township Township County 1990 U.S. Census 2,926 2,078 10,470 9,230 252,913

2000 U.S. Census 5,296 6,244 13,534 13,578 278,4 18 Percent of Change 1990-2000 81.00% 200.48% 29.26% 47.11% 10.08%

Source: U.S. Census Bureau

Income and Age Statistics (2000) Vilage of Vilage of Rockton Roscoe Winnebago State of Rockton Roscoe Township Township County Ilinois

1999 per capita income $24,078 $25,324 $21,320 $26,337 $2 U 94 $23,104 1999 median household income $57,292 $59,267 $47,568 $64,428 $43,886 $46,590 1999 median family income $62,863 $6l,515 $54,663 $69,355 $52,456 $55,545 Median contract rent S504 $621 n/a n/a $436 $525 Median value owner occupied 5120,500 $119,600 $106,700 $132,700 591,900 S 13 1 ,800 housing

Median age 35.3 yrs. 32.9 yrs. 36.5 yrs. 36.lyrs. 35.9 yrs. 34.7 yrs.

Housing Statistics

All Housing Units Vilage of Rockton Vilage of Roscoe

1990 1,231 749 2000 2,047 2,284 Percent of Change 66.29% 204.94%

Source: 1990 and 2000 Census of Population and Housing

26 EMPLOYMENTIUNEMPLOYMENT DATA

Rates are not compiled for individual communities within counties.

Avera!!e Emplovment Avera!!e Unemployment Year Winnebago County Winnebago County State of Ilinois 2002 130,879 7.4% 6.5% 2003 129,025 8.2% 6.7% 2004 130,115 7.5% 6.2% 2005 133,714 6.4% 5.7% 2006, Nov. 140,435 4.4% 3.7% Source: Employmentlnemployment data was fumished by the Ilinois Department of Labor.

BUILDING PERMITS

New Homes by School District 2004 2005 2006* School District 131 197 167 85 School District 133 95 140 96 School District 134 2 4 0 School District 140 139 139 177 High School District 207 0 0 19 Single-FamiJy Homes Total 433 450 377

Multi-Family Homes in District 140 42 46 0 (4 units each)

Note: School Districts l31, 133, 134 and 140 feed into High School District 207.

* through November

Source: Winnebago County Regional Planning & Economic Development Department

FINANCIAL INSTITUTIONS LOCATED WITHIN THE DISTRICT

The First National Bank and Trust Company First American Credit Union AMCORE Bank, National Association JPMorgan Chase, National Association Gateway Community Bank

Source: American Financial DirectOlY, 2006.

27 APPENDIX A

EXCERPTS FROM FINANCIAL STATEMENTS

Reproduced on the following pages are excerpts from the District's audited Financial Statements for the fiscal year ending June 30,2006. The Financial Statements have been prepared by the District and audited by a certified public accountant. The Management's Discussion and Analysis and the Notes to Financial Statements are an integral part of the audit and any judgment of the Financial Statements should be based on the Financial Statements as a whole.

Copies of the complete audited financial statements for the past three years and the current budget are available upon request from Ehlers.

A-1 Scatcmcot 1 HONONEGAHCOMMHS DlSTRClNO, 207 WIBAOO COUN,lllS STATEMENT OF ASSETS, IlS. AN FU BALæs ARING FRM CAHTRACONS . REGUL TORYBASIS IU 30 200

Muipal Fir Tnit Opons Bood &:timenr Prteaåon an an Gonera Genera Tota an Social Wori and MiielW ~ Tr.pormon A¡eii Fixed Long Teim (Mmoradum &= ~ ~~ S'¡eiy Fun Asts Debt Oih and Oih Equivants ~ 291,916 1,630 88,678 37111 Inve:cnts 80,05 16,100 104,528 1,065,407 1,240 385,936 370,389 1.685,975 Lo to Educationa FWld 431,080 109,568 23,856 52,575 Lo to Op...úons an M.inc:ce Fwi 3;i,OO 1,374,644 3,270,00 Lad 1,200,00 Buidi 1,200,00 1,370,457 1,370,45t lmprove~nts Otr 1l Buidi 31.99,905 Equipment Othu rh TDOportn or 34,599,905 1,514,338 Foo $OlVce 1,514,338 Traporion Equi= 2,684,183 Foo Serve, Equi~Dt 2.684,183 15,46 15,462 Amunts AY21e in Debt Serve Fun 55,162 Amounts to be Provid ror P2)nt or Boad 55,162 45,067, 459.067, AmWlts to b. lrovú ror P2)Dt or Ot.r Long Ter Debt 20,193,482 20,193,482 ~, N Tota Asets 293,156 511,852 511,852 387,,66 ,459,067 468,79 i 189,573 4,509,956 157,103 1,065,407 ' 40,29,507 21,164,401 68,934,527 Liibilcie( :ind Piind 'R::hi:~1 Liailúe" Tox Anù:ip:uon Womts l.)'1e 800.0 Lo from Worlg Oih 3,270,00 Due to Or2Jons 1,200,òo 800,00 4,470,00 Bond l.yale 80,558 Odr Long Term Liailå:, 80,558 20,652,49 20,652,549 Tota LiailtÎe' 4,070,OC 1,200,00 511,852 511,852 0 0 0 0 0 80,558 0 21,164,401 FWld Balces: 26,514,959 &:,erv.d 11,443 53,139 Unr,.rv.d 984,849 (3188,287) (865,573) 459,067 1,049,431 Investments in G.nera rixd As.ts 468,791 189,57. 4,509,956 157,103 0 1,130,630 Tota Fwi Balanc., 40,29,507 (3,6,844) 40,29,507 (812,4:) 459,067 468191 189,573 4,509,956 - 157,103 40,29,507 a 42,419,5 Tota Liailuoi an - FWld Bal... ~ 293,156 387,566 459,067 468,71 189,573 , 4,509.956 157,103 1,065,407 40,239,507 21,164,401 68,934,527

:1 'i ;j 'I ..':"~~-r"r'!''~~':''~;;~..__...;1 Scircmuu2 l'ONONEGAHQ:TI HS OIS1crNO. 207 W1NNAGO OOli, IllNOIS STA 'YMENI OF REVENU RECEVED, EXPENDrItRES OlSURED, OTIR FINANONG SOURCE (UES) AN OiGES IN FU BAUCE. Al FUS i:O'R 11 RS("AI VF AR ENnFO TUNE)O 200~ MUo F.. R.a'QI/ lrccacloa Opntici Bond Tob. .. wi SoQJ Worki . ",d (Meinr.WD Mlttinc ~t T nJpOrtúon Seun --Cub ~ety 0i0 Rtenw: Facived: ~ Lo So"".. 48,9% 5l7,665 9,142, .1,6IL161 2,16,~l 296,OL8 5,4l6 14,864,205 S"teSo l28,191 5,048,218 Fed"" 50=.. 4liD,OV 1l.676 1)5,676 Tow Dii lIcets 811,187 H,697,%9 1,68)161 2,16,~) 5)7,665 296,0l8 5,436 20,048,099 Reeits for OoB.l fa,."" 564,21 564,2~ Tow Reei 81,187 5l7,665 296,0l8 5,436 15,26240 1,68)161 2,016,~) 20,612,70 E')ii P¡'bUl..d: rnsQ - 145,68 9,672197 9,818,475 Su¡P9rt s."" 4,185,086 746,120 29,715 i~.sn 7,400,959 Nolll""Snm Oi.. 2,06,465 Deb, .s 190,1l 190,Il7 5,525 129,415 2,021,)68 2,151,)08 Tow 0"= Disb""""" 746,120 440,)9l ° 154,5n HP5),55 2,189,880 2,021,18 19,607,879 DisbW"em.i for OnBehi Pa)ml: 564,21 564,21 ~i W 'Toci D¡'bun"",, 746,120 44,)93 154,5n 14,617,816 2,189,880 ~02J,18 ° 20,172,150 E,", (Defi&lI of Receia Over Disbuncnøu 644,424 65,067 97,272 296,0)8 400,20 (506,119) (7,)25) (149,137) Otr Fii 50=' P=,Tr.ferofWoilc"hFwid, Ah.,,""nt Od Fli (1..). 550,00 550,00 p,,,,, Trafer of Woil c"h Fun . Abie""a, (550,00) (550,00)

Tota Ot FiiÏi So"".. :u (U..) ° ° ° 550,0 ° (550,00) Ei". (Defic of Reè¡ Over OisbunDU:u Ot Fi= SOlli. (Us,,) 65,067 97,272 (25),962) 440,20 64,424 4l,881 (7,)2S (H9,Il7)

B~ Fun BaI.. Jui I, 2005 40l,724 92,01 4163,918 l06240 754,992 (4,421,261) (856,)15) 46,l92 Ch.. ùi Fiu BaI. y u ....- Eadi FUld BaL, J.. LO, 200 461191 119,57) : 4,509,956 157,10) ,(J,76,844) (812,434) 459,067 1,195,212

... -,~----,~._..,';,';:,-" ---- ~..-~ -'. '...." - --- - "--- Sci~ment J HONONEGAH COMM li D1SmrCTNO, 207 WINNBAGO COUN. IUlIS STATEMENT OFlEVENU REæIVED. Al FUS FOR TH FlSC-Al YEAR ENDED 1U 10 2006

Mwupa Fir J!ni Prcc.otÎOQ Tow OpiilU Boo So Worl ...... d (Menonndwn Educiin. Miteice. T t2porcn Sal.", On ReeQue Reeied: ~ ~ R.ei Fro., i... So"".., ~ Ad V.l., T"" i.¿, Gon",¡ u.vy 462,656 248,149 248,440 l1.o10~21 To It I rncy Lo 6,856,509 1..42,195 1,972,572 S8,655 124,2 i.ic u.vy 6S~65 248,12 248J12 Spc Educn Lo 99172 ,1;77 So Sec/Me. Lo i4,149 248,149 P:i)U in UN or Tixes Mobil Ho"" I'vileg. Tar 8 8 4 198 124 21 11 l. Howin Aioro 24 26 ii 607 Co'l'''''''' Pen"" Prpc 178 '6- 102 j\ph"'""T=s lQ, 612,120 517,120 45,00 Tuitioii R. Tuion: Fro.. Puil or i' 7J40 Fro.. Oter LE 7,140 71 715 Suner Sebl Tui", 12,15 Fro.. Puih or P.n,"~ 12,15 , SpeciEdllòon Tuin: 606,472 Fro., Otr J:As 606,m ~ IDtlre: 0.0 IDvcst: 20J08 IlJ1j '47,581 5,416 211,889 65,677 .h Foo Servku: 20~18 l1J16 S.i to Pup . J. 577,675 Sol.. to Pupil. Al Ci. 577,675 4,4)2 4,4)2 Sol" to Adw~ 1$i5 1,885 Otr Foo SClVic~ 10~99 10,299 Pupil Aa,,, Adsions.. Atb 195$47 F.. 195,847 2l,082 Ol Pu Aoir llei 171.27 41,855 &4,122 84,112 T exoo¡', j\w; ii T..ola 287,127 287,127 20~11 RcoWs Cca.uuos (rom Prce Soures 20~li 2,18 219,617 Sal or Vocdona Prjec 2,518 219,617 48.996 517,665 216,018 5,416 14,864~05 Tow I\.ip ¡romlo So"".. 9,842,66 1,681161 2,016,O.¡

wr~-~~~"f~T-l~~~,..y,..,.._..,,,:..~~rr~,~ "!",,~,~~~~---"". ,_. _, ~ !".. .,-~~~..__'- vc.... StaternJ HONONEGAHOOMMUNllYai OIScrNO. 207 'MAGO t:, IIIS STA'IMENT Of REVE RECED. lJ FlS ' .E ni FISC-AI YEAR ENDED IU 30 2006 M\1 Pu. Opconi Bond ~i/ Pl'entÎon Tola ",d "" So WoMd ",d (MninMun EdUOoi ÑÚnac: ~ Trapon:n ~ ~ ____Snl''' On I\.ipts Prom S"" Soes, UlUciuic:led Gn.ts.inAi: G.n... S"''' Ai. Se" 18.8.05 3,967,iM 31967,64 R.tred Gr:u;.iDAid= Spec:ia Edi.aúoo: Private Faciltis Tuin 40,503 4Q~03 E""ord 100,939 100,939 PCl'otlcl 199,917 199,917 OipiW..loc!yiduo 121~75 121~75 Orlw. . S=r 7,110 7,110 VOCUO=L Edw:aôo.o s.oiW P_lmroY.""Ot 52,039 '52,039 Stare Fre. Lui an B.. 2,m 2,93 Sèhol Br. I",..ti. 191 194 Drier EducuioD 42,06 "2,068 T=iporutÎ. Ai, 81,27 81,27 I\ I VoccorW 246,934 246,934 Speia Ed",nti 1If)2 School,Sa.tyan EduaorW linroy,,,,,.ilock Gnat IIp92 Sta" Li'br. G""i 1~99. 1~99 124~¡4 ;p Other S.... Fuo 124~54 I n n 32B,191 0 0 0 5,048,218 Vi Tota Receipts (rom ~~C SoUtCS 4,720,017

Rcc;pu From F.d.ri $0=.., R.uid Gråa.ínAi Reeiyed Dicty lrom th Fed.. Go.."" Thugb th S"'O:, 6,879 6,879 Tni. V. IMO",tiO. &:Fbu'biJtyFoim 59,903 NuirW Scbool l. Pio 59,9QJ 3,578 ,5cooIBr=tPr"l"' 3,578 rnJ IV ,'Sa. &: On F.. Scholi: 6~00 Formul 6,l 40,163 rnJ U ; T..,her Qi 40,163 12, Mec:dMard. Ad. O=di 12,79 6,24 Med Ma,/u' Fee lor Servi.. Pro 6,274 ° 0 ° 0 1l,676 Totol\ipu lrom Fed...~.. 13,676 ° 0 Sl,187 537,665 296,038 5,436 20,048,099 To~ Dir Receipts 14,697,969 1,683161 2,016,043 .- Statent 4 OONONEGAH ilMMTY HS DISTCfNO. 207 WiNNBAGO ilUN, IllOIS STA TEMENf OF EXENDllUS DISBURED (AN ilMPARONwirn BUDE1) EDUCTIONAL RJ FOR TH FISCA YEAR ENDED ~ 30 2() Unexnded Ar Budget Budci Expndi DisblUed: I llouOn: Re Prog: Sales 4.140,28 3,928,810 (211 ,448) Employee Benefirs 1.296,614 1,373,043 76,429 Purhaed Servces 104,098 81,00 (13,098) Suplies and Mareri 320,869 366100 45,83 1 Gpira Outly 1101 3,5 1,799 Oder ObjeCT 2,484 4,200 1116 T oul Reg Prora 5,866,024 5157,23 (108,71) Spe EductÏon Pro: Sals 1,479,841 1,579.100 99,259 Employee Benefits 514164 598,800 84,036 Purhaed Servces 1118 1,100 (618) Supplies an Materi 7,565 8,00 435 Gpïul Outly 0 1.00 1,00 OIer ObjeCT 120 245 125 T uIn 338176 213,00 (115,76) T oul Speia Educrion Progr 2,342184 1,401,245 58,461

VocatÏona Progra: Sales 622,507 707,00 84,493 Employee Benefits 187,986 183,550 (4,436) Purased Servces 751 23,200 22,449 Supplies and Materi 128,810 158,800 19,990 GpitaOucly 0 300 300 Oder ObjeCT 143 200 57 T oul Vocciona Pror. 940,197 1,073,050 132,853 Interschobs Pro: Sales 315166 323,100 7,334 Employee Benefit 39,20 50,00 10,780 Purhaed Serves 37,242 85,5 48,28 Supp.lies and Mateñ 29.020 37,29 8,219 OterObject. 12,797 31,910 3,113 Toul Interschotic Prora 450,045 517,749 77104 Sumr ScoolProi:: Sa! 69,24 81,00 11,766 Employee Benefits 2,653 4,00 1,37 Supplies and Maæô 1,860 26,750 24.89 Tow Swnr Scool Progra 73,747 111150 38,003

T oul I DStnåon 9;67297 9,871,047 198,20

A-6 uu__1 Srattt 4 HONONEGAH COMMTY HS DIS1O" NO. 207 WIBAGO COUN,IIlOIS STATEME OF EXPENDITUS DISBURED (AN ffMPARSONWITIBUDGEl) EDUCTIONAL FO FOR 1H FrSCA YEAR ENDED JU 30 200 Unended Acl Buder Budget

Supit Serves: Support Servces - Pupil: Atenda and Soia Work Servces: Sales 1 18,640 1 16,00 (2,64) Emplo~ Benefi£s 28,217 36,90 8,683 Supplies an'Miri 0 150 150 Oier ObjeCt 791 900 109 Tou! Atdace and Socia Work Servces 147,648 153,950 ' 6,302

Guidace Servic: Sales 452,671 459,00 6,329 Employee Benefits 114,138 158,100 43,962 Pwced Servces 6,184 450 (5134) Suppli. an Materi 25,928 32100 6172 Oter Objeas 0 40 400 T ou! Guidace Services 598,92 1 650,650 51,79 He Servces:

Sales 82,851 81,400 (1,451) Employe Benefits 14,519 16,150 1,631 Puned Saces 15 50 35 Supplies an Mater 1,301 1,500 199 Oier Objeas 30 50 20 T ora Hedi Servces 98116 99,150 434

Psyhologic Serves:

Salcs 70,443 67747 (2,696) Employe Benefir D,043 25,40 2,357 Suplies and Materi 179 800 621 OierObjea 100 250 150 T or Psyhologici Serves 93165 94,197 432

T ora S iin: Servs- Pupi 939,050 997,947 58,897

Support Serices-Insuuctna Staf: Improvement of lnona Servces: Saes 102483 110,943 8,460 Employe BenefIt 7,657 9,859 2;i2 Puied Serves 90,695 116,410 25115 Suppli and Materi 29 ,497 25734 C.pira Ouy (3163) 8,461 5,00 (3,461) T ora Improvemet àfl!1çina Seres ...... D8193 267,946 29,153

A-7 Statement 4

HONONEGAH COMMTYHS DISTRCf NO. 207 WIBAGOCOUN, IllNOIS ST AlEMENT OF. EXPENDllUS DISBURED

(AN COMPARSON WIlH BUDEl) EDUCTIONAL FU FOR TI FISCA YEAR ENDED Jl 30 200 Unexped Ac Buclet Bu~( Educrina Medi Servces: Sal 92,477 95,700 3,223 Employee Benefits 24,805 23,050 (1/55) PlIhaed Serves I,m 2,00 278 Supples and Materi 18,592 25,899 7 ;37 Gipita Oucly o 500 500 Oter Object a 200 200 T oi Educauonal Medi Seces 137,596 147,349 9753

'Tota Support ServÏces-Inscrna Si:f 376,389 415,295 38,906

Suprt Servces.Geneci Adrrtion: Board of Eduction Services: Sales 3,650 6,650 3,00 PlIhased Servces 203,911 216,100 22,189 Supplies an Mai: 954 1,00 46 Oter Object 1,750 12,00 10,450 Tota Board of Eduction Serves 210,265 245,950 35,685

Execui:e AdaalÎon Serces Salars 267,338 198,00 (69,338) Employee Benefit 45,439 50,500 5,061 Pucased Servces 19,129 9,40 (9729) Supplies and Mareri 1,073 1,325 252 Oter Object 4,190 8,200 4,010 Tota Execui:e AdaalÎon Serces 337,169 267,425 (69,744)

Tota Support Serce.Gener Admmition ' 547,434 513,375 (34,059) Suprt Servce.Scool Adñon: Office of the Priipa Servces: Salanes 522,898 450,500 (72,398) Employe BenefIt 272,640 239,600 (33,040) Puned Serves 3,494 3,150 (344) Supplies and Mareri 5,949 6,500 551 Oter Objct 977 1,200 213

Tota Supprt Servces-Schol

AdrrlÎon 805,958 700,950 (105,008)

l ~

~ A-8 I 'l, Staiem 4

HONONEGAH CD'MTYHS DlSlRcr-NO. 207 WIBAGO CD, IlOIS STATEMENT OF EXPENDITS DISBURED (AN CDMPARSONWlTIBUDE1) EDUCATIONAL FU FOR 1H FI~. YEAR ENDED JU 30. 200 Unexpeded Ac Buder Budgi

Suprt Servces- B usÏnes: Fisca Services: Sales 94,015 120,900 16,855 Employee Benefits 32,419 28,050 (4,369) Purchased Serves 9;727 10,150 413 Supples "ld Materi 721 2,900 - 2,179 Oder ObjeCt no 150 40 Tota Fisca Services 137,022 162,150 15,128

Opration :id Matenace of PIa Serves: Purhased Servces 3;750 0 (3,750) Tot Opraúon and Matenace of Plam Serviccs 3,750 0 (3;750)

Food'Services: Salries 134,481 240,00 5,519 Employee Benefit 99,206 83,400 (15,806) Purhaed Servces 8,848 10,950 2,102 Supplies and Materia 394,332 342,700 (5-1,632) Capit Ourlay 2,963 13,000 10,037 Oter ObjeCt 1,072 2,Q."Q 928

Tota Food Services 7 40,902 692,050 (48,852)

Imernal Services:

Purhased Serves 49,441 37,300 (12,14 1) Supplies and Mate ria 37,222 48,700 11,478

Tota Imern Servces 86,663 86,00 (663)

T oul Support Servces- BusÎness 968,337 940,200 - (28,13)

Suppn Services-Centr Infonntion Service Puned Services 35;715 17,00 (8115) Supplies an Materi 13126 20,00 6;04

Tota Infonntion Servces 49,441 47,00 (2,441)

Data Proessin Services: Sales 202,651 185100 (16,951) Employee Benefit ó4,5 10 56,300 (8,210) Pwcased Servcs 16192 18,800 2,008 Supplis and Materi 72,5r: 76,00 3,491 Capital Ouùay 3137 5,500 1163 Oter Objec 0 60 600

Tota Data Processin Serves 360,199 , 342,900 (17,299)

T oul Support Serve-Centra 4r:,640 389,90 (19140)

A-9 Srawnenr 4 HONONEGAH CDMMlYHS DISTCT NO. 207 WINNBAGO CDUN, IllIS STATEMENT OF EXPENDllUS DISBURED (AN CDMPARSONWlll BUDE1) EDUCATIONAL RJ FOR TI FIS('.. YEAR ENDED JU 30 200 Unexde Acrul B uQer Bucler Orer Suppon Serv Purhaed Sees 138,278 140,00 1122 Tow Orer Supponi Servces 138,278 140,00 --1122 Tow Supponi Sees 4,185,086 4,CI7,667 (87,419) Nonprogred Cles: Paymenrs to OderGovemmenw Unirs (In-State): Pa)'enrs for Regu Prora: Oder Objecrs 176 0 (176) T UÌon 1130 0 (1130) T ot: Payrnrs for Re Progr. 1,90 0 (1,906)

Paymnrs for Speci Educrin Progr.: Otr Obje 0 15,00 15,00 T uiñon 188,231 190,290 2,059

Tow Nonprograed Oies 190,137 205,290 15,153

Debt Servce: Debt Sere. Intere Tax Aniicipacion Warrs: Oter Object 5,525 o (5,525)

Tot: Debt Servce 5,525 o (5,525)

Tota Dir DisbUIemenrs 14,053,55 14,174,,00 120,459

A-IO I ~ __.. _-: _~.:'._,__,__;-.-.:_. i~.. Statement 5

HONONEGAH COMM HS DISTRCT NO. 207 WINNBAGO COUN, IllNOIS STATEMENT OF EXPNDff DISBURED (AN COMPARSON WIll BUDE1) OPERTIONS AN MANTNANCE FU FOR TH FISCA YEAR ENDED JU 30.200 Unexpnded Acru Budiet BUQger

ExpdiNrs Disbured: Supportg Servces: Suppon Servces-Business: Opr.uion and Matenance of Plant Services: Sales 822,603 898,800 76,197 Employee Benefits 209,936 210,300 364 Piihased Services 189,977 538,195 348,218 Supplis and Material 692,879 696,200 3,321 Capita Outlay 120,096 6,300 (113796) Oter Objects 0 730 730 Tota OperatÏon and Maimenae of Plant Servces 2,035,491 2,350,525 315,034

Tora Suppon Serves-Business 2,035,491 2,350,525 315,034

Oter Support Services: Purchased Servces 24,974 .0 (24,974) Tota Oter Support Services 24,974 0 (24,974)

Tora Suppon Servces 2,060,465 2,350,525 290,06

Debt Servce: Debr Servce- Imerest: Oter Debt Servce-Interest: Oter ObjeCt 29,415 0 (29,415) Lee/Purchae Pricipa Retied Oter ObjeCt 100,00 0 (100,00) Tota Debt Servce-Interest 129,415 0 (129,415)

Tora Debt Servce 129,415 0 (129,415)

Tora Dír Disburements 2,189,880 2,350,525 160,645

A-ll Statement 6 HONONEGAH COMMTY HS DIS1RCf NO. 207 WINNBAGO COUN,IllNOIS STATENT OF EXPENDIlUS DISBURED (AN C01\ARSON WIll BUDE1) BOND AN INIREST RJD FOR 1H FISCA YEAR ENDED TU 30 2006 Unexrnd Actu Budget Budget Expndtues Disbured: Debt Servce: Debt Servce-Interest: Bonds 930,726 2,148,599 1,217,873 Debt Service-Bond Priipa 1,090,00 0 Debt Serve-Oter (1,090,00) Punhased Serves 2,642 0 (2,62) Total Debt Servce 2,023,368 2,148.599 125,231 Tota Dirct DiburementS 2,023,368 2,148,599 125,231

A-12 Staent 7

HONONEGAH COMMTY HS DISTRCf NO. 207 WINNBAGO COUN, ILliNOIS STATEMENT OF EXPENDTIS DISBURED (AN COMPARSON WIll BUDE1) TRSPORTATION FU FOR TI HSCA YEAR ENDED JU 30.2006 Unexpnded Acn Budlet Budget

Expnditures Disbmsèd: Supportin Services: Support Servces- Business: Pupil Tr:poritÏon Serces: Purchased Services 746,120 892,495 146,375

Tota Supportin Services 746,120 892,495 146,375

Tota Dirct Disbmsemems 746,120 892,495 146,375

A-13 Staement 8 HONONEGAH CDTY HS DISTRcr NO. 207 WINNBAGO ffUN, IllOis ST AlEMENf OF EXPENDITUS DISBURED (AN ffMPARSON WI1HBUDE1) MUOP AL RETIREMENfJSOOAL SECU FU FOR 1H FISCA YEAR ENDED JU 30. 200 Unexpnded Actu Budget, Budget Expndtu DisbUled: Instrion: 'Reguar Progr.:

Employee Benefits 55,957 58,500 2,543 Specia Educaúon Prog: 'Employee Benefits 65~99 65,900 50.1 Vocnal Pro: Employe Benefits 8,014 5,780 Intersoolauc Pro: (2,234) Employee Benefit 12,484 11,250 (1,24) Swnr School Progr: Employee Benefits 3,824 3,560 (264) Tota Inscton 145,678 144,990 (688) Supponi Sernces: Supprt Sernces-Pupil: Atndae and Sodal Work Servces: Employee Benefits 12,619 11,790 GtUdae Seivces: (829) Employee Benefits 8,604 3,610 Heth Servce: (4,994) Employee Benefits 3,929 4,00 71 Psychologica Sernces: Employee Benefits 1,060 1,100 40 Tota Support Sernces-Pupil 26,212 20,500 (5112)

Support Servces- Instrctnå Staf: Improvement of Instron Se.rces Employee J,fit 74 o (74) Educauonal Meda Seivces: I Employee Benefits f 6,268 6,855 587 I Tota Suprt Serves-Instrtional Staf 6,342 6,855 513

Support Servces-Genera Admtrúon: ¡ Execute AdrrOD Servces ì ~: Employee Benefits 11,477 81,600 70,123 i. ¡ Tota Support Sece-Genera ¡ "¡ Adon 11,477 81,60 70,123 ~ , f ~: l l ~. A-14 it *i( ~:, :"~ Statement 8

HONONGAH COMMUNlIY HS DISTClNo. 207 WIBAGO CDUN, llNOIS STATEMENT OF EXPENDITUS DISBURED (AN COMPARSON WI1HBUDEl) MUOP AL RETIREMENT/SCXAL SECUTY FU FOR 1H FISCA YEAR ENDED JU 30. 2006 Unexpnded Actu Budiet Budget

Suport Servces-School Admitrtion: Office ofrhe Pnncipal Servces: Employee Benefits 30,883 26,700 (4,183) Tota Support Services-School

Admitratin 30,883 26,700 (4,183)

Support Services-Business: Fiscal Servces: Employee Benefits 24,987 20,00 (4,987) Opr.ion an Maimeffce of Plat Servces: Employee Benefits 135,275 107,600 (27,675) Foo Services: Employee Benefits 36,909 36,200 (709) Total Support Services-Business 197,171 163,800 (33,371)

Support Services-Cenua: Data Processing Servces: Employee Benefits 22,630 15,500 (7,130)

Toi: Support Serve-Centra 22,630 15,500 (7,130)

Tota Support Services 294715 314,955 10,240

Toi: Dirct Disburements 440,393 459,945 19,552

A-IS Sia¡emeni 9

HONONEGAH COMMTY HS DISTRCT ND- 207 WINNBAGO COUN, ILNOIS STATEMENT OF EXPENDITUS DISBURED

(AN COMPARSON WITI BUDEl) ARE PREVENTON & SAFTY FU FOR TI ASCA YEAR ENDED JU 30. 2006

Unexpnded Ac Budget Budget

Expnditues Disbured: Support Servces: Support Servces-Business: Opei-ion and Maimenace of Plat Servces: Purhased Servces 3,856 250,00 246,144 Capital Ouday 150,717 o (150717)

Tmal Support Serves 154,573 250,00 95,427

Tota Direct Disburements 154,573 250,00 95,427

A-16 HONONEGAH COMMTY UNT HIGH smOOL DlSTRCl NO, 207 WIBAGO mUN, llOI5 HONONEGAH COMMTY UN HIGH smOOL DISTRCl NO. 207 NOTES TO FIANGALSTATEMENT WIBAGO COlJ,llI.OI5 TUNE 30. 200 NOTES TO FIANGAL STATENT ru 30. 200

Note # I . Sum qf Signifcant A.couriin~ Poucies No,e # i - Summaof Signiican A.coun~ Policies (com'd.) The D~tricts :icowiin poliie confom! to th cash bas~ of ;icountin as cleined by the iuino~ Sr",e Boar of Educion Aud Guide, B. Bas~ of Preemarion. Fund A.counÚD (com'd.)

A Priipal USed to Deerme the Scope of the Repo~ Enti Govemrrn",1 Fiinds . (cont'd.)

Th Dis,rict's repo~ entrc inlud the D~trcÙ govern bo and al rel:d orgons for whch the D~trct The Work Gih Fund accounts for finia reounes held by the D~c1 to be used for tempra interfd loan '0 exeii~.. overigh, reponsibil~ . other fuds, Qicnnem Ui The Fir Preenton and S:iery Fund ~ used to ""count for finc1 reoun '0 be used for the;iquiition or const:on of rijor c:ir fati (other i: those finced by Tru Fun). Th D~tri ha developed cri to determe whether outide agencie with :iic, whch beef. the ciiuns of th D~tr, inludi joint agreemenr, whch selY pupil from numrous ditr, should be inludd wi it rinia Pmpriei: Funds M repo~ enciry, The cmerion inudes, bUt is not!id to, whether the Ditr exerces oversight.repons(bil(whch irlude finia interdpendncy, selecton of govern autori, deignan of riemenr abilry to sigcaùy The unudgted Imer Servce Fund acCOUntS for the finci of serv provided by one depanm to other inuence operaions, and accounabil for f~ca maers), scope of publi servce, and specia finin rel:onsrups, deparats of the Distr. The Self.Funde He Insur ~ acowied for as an Intern Se Fund. Th fud ha ben includd in the reguory finc1 stemem as an Agency Fud, whch is a Fiducia Fund TlP The Agenc Fund mOS acurely classifie the Imern Servces Fun as there ~ no sepae Proprier. Fud T¡p in the reguory Joint agreemems have been determed not to be par of the report entii afr applyi the maesÚD of oversight, scope of pubuc serve an specia fincin relaionships cmeri and m, therefore excludd from the accompanyi fin.i sraements. fincia stotements beause the D~trict does not control the assets, oprncions Or maement of the joint ;ieinonts, In addion, the District is no¡ awa of any entrc rha ,"ould exeiiise such oversight as to reuh in the Distrer bein Fidiici: Funds . considered a compnem W1 of the entity, ;p Fidll.Î fuds ar used to acount for assets heldthe by Distr in a trutee caacrc or as an ageor for indidua" prie I orgJ.tions, omer governts or other fuds. --- B. Bas~ of Presentation, Fund Accountin The ;icounts of the D~trict ar org on the bas~ of fuds and acount groups, eah of whch is considered a separe The Agncy Funds includ Studet Acvrc Funds and the Intern Servce Fund; see the Proprir. Fund T¡p diclosur acoumin entity, The ~raions of eah fund ar accounted for wi a separre set of self.baci ;icounts tht abve. They ;iCOUD for assets held by the Dis as an agent for the srueot, teahers, an oter entIes, These fuds comprie it assets and liiles (arin frm cih tracons), fud bace, revenue received, and expndi ar cutod in na and do aot involve th measurment of the reul of opeons. The amounts due to the acivty dibured. The D~tri mata individua funds requi by me Scae of Ilino~, Th vaous funds ar sumd by fu orgons ar equa to me assets, Th Intern Servce Fund ~ repone as an Agency Fun due to the lak of a ty in the finia Staements. These funds ar groupd as requi for report filed wi me Ill~ Stare Boa of Proprir.Fund T¡p in the reguory report form Educon. D~trct reoi.es ar aIoced to an accounted for in indidu funds baed upon me pures for whch thy ar to be spent an the rn bywlch spendi ac ar coorrolld. The D~tr uses the followi fuds and Governntal and Expndale Tnist Funds. MeW'nt Foc :ucoiinr grups: The fi Strnnts of al Go""mmntal Funds an Eiqle Ttu Funds foc on th aim:t of spendi Goverrncal Funds . Or "ficia flw" and th dereimon of ches in finc1 poicon rner ih upn oet income deriion. Th me ch onl curt assets an cu liil ar gener.y inludd on thir bace ,hæ. Their reported fund Governnta fu ar those thugh wlh mot governt fuions of the D~uict ar f inced. Th acquiiiion, ba (net CUm assets) ~ considred a meur of "availe sPedale reounes: Govental fud opera use and balces of me Districts exple finia reoues and me reed liil (arin from cah ,ra:iions) ar Stme preeai ines (=h reip and othr finci sounes) and dees (cah diburemets :id other :icowied for though govenunt fuds, fio uses) in net CUnt assets, Ain:ly, thy ar said to preent a sum of sour and uses of "av.le S pe iile re ounes" dur a pe ri od The Educona Fund an me Opr.iÓons and Marice Funds ar th genera oper.g funds of th D~trct. lheyar used to account for al fircia reoures oxept those requi~d to be acoured for Ul :iomer fu Ton rrnnun and Gene",! Fixd Assei and Genera Lone-Term Deht Acount Group Speci Educcion ta levies ar inluded in these fuds. Al fixd asset are vaued at hiori Cos or esi.ed hitorica cost if ac hiori COSt ~ not av.le, Don:ed The Bond and Imeret Fund ;icount: for the accumulooo of æsounes for, and me payincni of, geæra long"erii, debt fixd assets ar valued at thir esed fai vaue on the dae dona The D~tr record pures of propeny and pricipa ÎnelÖt, and relaed costs, equiment as eicdi of vaous fuds wha pad. Th D~uict maam a dec:d lit of propeny and equpment . The Traportion Fun and me Illo~ Muripa Reciment/SocW Secu Fud ar used to accowi for cah reeived puret for inure purses, from specifc sour (omer clia those accountet for in th Debt Servce Fun CairProjeci Fun or Fiducia Funds) No depreiatin ha ben provided 00 fixd assets in these tùwia't:ements. The Illis Srae Board 01 Educaton's tht ar legy retred to cash diburemet: for speified pures, Anua Fincial RepOrt (lBE Form SDSC-35/JA50-60) includes depreciion of $1,041,646 whch ha been urlizd for the caon 01 the per capir tuion cbae, and accumuled depreon tota $9,786,614, Deprecition ba been computed over ,he estimted usefullies of the assets usin the "..ht-Üne memod HONONEGAH OOMM1Y UNT HIGH SCHOOL DISTICl NO, 207 WIBAGO OJUN, IIIS HONONEGAH OOMM1Y UNIT HIGHSæOOL DlSTICT NO. 207 NarS TO FlOAL STATEMENT WIBAGO OOUN, ILLlNO¡S TU 30 2006 NOTES TO FIANQASTAITNT JU 30 200 Note U 1. SUJof Sieniicni Accownin. Policies (com'd) Note # 1 ' Sllof SiEnific~ni AccountÏn Policies (COnt'd.) B. Basis of Preemaion - Fund Aiouming (contd) D, Budget and Budgetar Accountin (COnt'd.) ~era Fixed Asset and Gener.! Lone-Tenn Debt Accoiim Group (com'd) 2. A publi hea is conduced to obta taxa¡er comints. The estied usefu lives or as folio,,: ), Prir to Ocober 1, th budget is legalyadopted throu¡h pasage of a reolUIon Buidis 50 ¡em Improvements 20 ¡em 4. Forr budgeta inegion is emplo¡ed as a management control device dur the )'or. Trapotttion Equipment 5)= Other Equipment 5, The Boar of Educion may ma tr.feo beeen th varous irem in any fu not exee in the agaie lO¡.m 10% of the tot: of suc fud as set fort in the budet Long.tenn liiles expcted to be finced from Debt Serice Fun or ",counted for in the Genera Long' Term Debt Aiaunt Group, not in the goveinnt fuds, Proeeds from sal of bonds or included as receipts in the appropiia 6, The Boa of Educaon iny annd the budget (in other w:ys) by the s:i produ requid of its o~ia fud on the dae received &laed pni payale in the fu is recordd at the s:i tim in the Gener Long-Tenn adoption Debt Aceount Group. E. Cah and Cah Equients The tw account groups or not "funds: They or concerned only with the rnurement of finia poition They arc Cah inud :iunls in demad ckpoits and inierest.bc demad deposit, and ti deposir (savi) accounts. not involved wi the measurmeni of resul of oper.ons, Cah equlr.nt includ :iunts in ttm ckposit. and other invest""nts, wi ori in of les th 90 da)',

C Basis of Accounti F. Invcsiu ;iI Basis of accountin ,deo to wln revenue received and expndi dibured or recognIud in the account and how Investmms ar stat at cost Gai or losses on the sal of investmnts ar recogd upn ren. The inions 00 they ar reported in the finia sweme, Th Distr majm~in i. accountin record for al funds an account grup in wlch invemi:ats ar m:e must be approved by the Board of EdUCion. on the coh basis of accounti Under gud.es precrid by the Illois Sta Boar of Education. Accordiy, ",Venllr~ ar recognd and recordd in the accounts n,en cash is received. Inthe sam maer, expndit ar recognized and G. Inventoris recordd upa th dibure""nt of cah. Assets of a fund ar only recorded wln a rit to receive cah ex wh ares from a previous cih tr.:ion. Liailes of a fund, simy, reult from previus cih tr:iions, Inveioiy consists of exnd:le supplies held for consumtion. The COst is reorded as an exndi dibured ai th ti th indidual invenioiy irems ar purhaed. Cish.bais fincÍ; staement omi recognion of receivales and payales and oter accrud and deferrd irem th do nOt are from previous cah trons. H Tota Memoradwn On

Proeed from sales of bonds ar includd as other fii soures in the appropiie fund on me dae received. Relad The "Tot: Memor:dui Only' colum repreents the agon (by adion) of the fuium.tTun reportd for pricip payale in the fut is reordd at the sam ti ii the Genera Long. TennDebt Account Group, ""h fu l: and acown group, No consolidaons or other diminaolJ were ma in arvi at the tor.als; thus, they do not preeni consolied inomin. D. Budget an Budgeta Accounti These tota ar preented onl to faile financial anysis and ar not intendd to reflct the fir positon or reul Th budget for al Govemm Funds and for th E,qnd:lc Trut Fund is prepard on the cah bas~ of accour of operaions of th Dis as a whole, wl is th san basis th is usd in fin reportin, TIii alo,, for comparil be""en bude! and ;i amunts. TIii is an accepi.Je meod in accordce wi Oier 105, Sectn 5, P=grah 17.1 of the Ilois Compiled Note #2, l.nyTaxes Sia. The ori bude! wa passed on Septembr21, 2005, and ;unde on Jun 21,200. Th Distr's propert ¡. is levid each ¡e on al t=hle real propert located in the Dis'on or before the lat Tueday in For ei fund, tot: fud cxndi dibured may not legy exceed th budgeted :iun, The budge! lases at th Deem. Th boar pased th 2005 levy on Decembr 21, 2005, Propert = =h.as an enfon:le lin on propert as end of eah fiscal ¡=, of Janua i an ar payale ia TV" intacs on Jun 1 and Septemr i. The Distn rees sigict diuions of t: reipts approly one moni afr these dUf daes, Tax reived as reecid ia th report ar from th 200 and piir ta The Disct follo,, the proedur in esæb1iiU th budget. da refkcied on the finc",1 stareiiern; levi.

i. Prior to Jui 1, th Supesde submi to the Board of EdUCon a propoed opera budCl for the flS,,.ye Propert T2X Exrension Lion Law of th Stae of Illois, as amnde (!U), li rl amunt of anual incree in commoc on th da. Th operain budget iacludes propoed expnd dibured an the me of propert r: to be extnded for cert Illois not1home ru un of governnt, inud th dict. fa genera the fm:in them PTU re.mÍC the amum of a propert t. exension inci=e to the leer of 5% or the percerie ine ia the Oinsumr Prie Index for Urban Oinsumr. dur the preedi cienda)", Tax lees may alo be increed due to.assessed valuaion incres from newcollll referendu approva and consolian of loc govenint un. HONONEGAH CDMM UNT HIGH smOOL DISTRCl NO, 207 HONONEGAH CDMMTI UN HIGH sæOOL DISTRCl NO. 207 WINNBAGO CDUN, rumois WIBAGO CDUN, IllOiS NOlE TO FIANCI STATEMENT NOTES TO FIANCI STATEMENT JU 30 200 TU 30 2006

Note # 2. PropertTaxes (contd.) Note # 3 . Spcc¡'1 Tax levies an Retriccd Equi(com'd.)

Th effea of the PTEll ~ to !i the grwt of th wiun of propert imes rI ca be exended for a tax body. TIie Proeeds from fedra and Stae gra and flo..thoug mi.gra and relad exad have been inuded in the revenut PTll wa effecte for Winbago Coun for propeux levid afr i 996, .reeived and exdI diblmed of th Educona Fund. AI Jun 30, 200, revenue received from stae an federa vatS Iu exeede the relad exri diblmed, resul in a reed fud bale in the Educona Fund of $11,443,

Th followi ar th ta ram appliable to th vuous Ievi_, per $100 of assessed valuaion:. Inure, in th amunt of $948,849. M:um Am Am Am AI of Jun 30, 200, the Disct ha an intern retriction on the Self Funded He ~ ~ 1.)700 Note # 4 - Depos it and Invesments 1.744 ~ 1J8oo 1.800 ~ Edi.ona 02500 02500 024900 024880 Opr;ions & Maimena The D~uict is alowed to invest in secW' as' aurorid by th DisUÍs invesnt poli, Secns 2 an 6 of th Publi Tra porton 0,1200 0,10140 0.0270 0.09950 None 0.41090 039550 0.37890 Fuds lnvestIem Ao (30 ncs 235), an Secton 8-7 of the School Co of Illois, These inlude th foUoWÍ it: Bond ald Imeret 0.0980 Muncip Recimcm None 0.03550 0,04980 . None 0.03550 0,04980 0.03980 (1) bonds, note, cerócacs of inbtedns, trur bil or othr secW' now or hereafer issued. whch ar guaranteed by Socia Secur the fu fai and credi of the Unied Staes of Amrica as to priipal and inre Tore Immun None O,CO 0.02490 0.02490 0.0500 0,0500 0.04980 0.04540 Lein 0,020 0.01990 (2) in bonds, note, debetu, or other sim oblions of the Unied Staes of Atri or it ag; Specia Educon 0.0200 0,0200 o,oc Fir Prevencon and Safety 0,0500 O.CO o,oc (3) in inerest-be savi accoun, inret-be cerccaes of deposit or ireret-be ti deposítS or any oter Work Cah 0,0500 ~ QQ QQ inestmni consci di oblions of any ban as defind by the Ilois Ban Ac; ToæJ ~ ~ ui (4) in shor¡ terrIl obliions of corporaons orgd in the Unied Sta wi assers exceedi $500,00,00 if: (0 suc Nord 3. Spec¡'1 Tax Levies and Restct Equit oblions ar med at the ti of pure at one of the 3 hiest clasificons estalihe by at let 2 swid: r. ;p serWes and rI ma oot laer th '180 ci" from th d.e of puilue, (ii such punes do not.exce 10"1 of the -I Proeeds from the Tor¡ Immuni: levy and relacd exndI have ben included in th revenue received an exndis corpooon's outdi oblions, and (ii) no more th one-thd of ci D~trí's fuds roy be investcd in shore term \0 diblmed of the Educ;iona Fund. The foUowU repreem the di",ncts curnt ye inome and expnse rdative to tOr: levy oblions of'corpornions; receiprs and expncles. OpraiOns & Maintence (5) in money ~t mui fuds regitered under the Invesunnt Company An of 1940, provided rI the portoli of any Educona suc mone mat mui fud is !ied to obUgons descrid in (1) or (2) abve an to agerrno to repuihae suc -- Fund oblins¡ Tort &.eiptS: 65,565 Tax Collctd 58,655 (6) in short term dicoll oblins of th Federa Naona Morie Associan or in sba or other form of secues Intere on Bales Held ~ .. leg ~sule by sa\' ba or savi and loa associaions incorprned unr ci law. of th Sta or any othr stae 65884 ToæJ Tor Receipts ~ or unde th law. of the Unied Staes. Invesmencs may be ma onl in uuse savis ba or sa\' and loa assocons, the sha, or invesui cercif= rI ar isued by the Fed Depoit Inure Corpi:oO: Anysuch Tore Expditues: secu may be pwihaed at th offeri or ~t price thereof at the ti of suc pune, Al suc secie so Insurce o 19,312 puned sha rn or be redeemle on a d.e or da prir to th ti when in the judi:ot of ch Oif Invesm 24974 Workn's CornnsatÍon ..m Office, the publi fuds so invesed wil be requid for exndi by th D~uict or it govern auromy 44.286 T ota Tor¡ E "Penditues 58 655 o 21,598 (1) in didend-be sha ==, sha certICe acoun, or cls of sh: acoun of a credi unonsuc crdi chered union uner must Tort Receíp'" Over/Under Expndiurès th la of th Sta or the law. of the Unid Staes; provid, hower, th priiple offce of an be loc wi th Sta of Ill~, lnvesinar may be ma onl in those crdi unns the acum of whch ar Retrctd Balce at JulY 1, 2005 -- ~ inurd by applile law; Retrctd Bale at June 30,200 ~ ~ Proeds from the Specia Educon ta levy and reed exnd have ben inluded in the revenue rrived and (8) in a Publi Treurrs' Invesnt Pool creed under Secon 17 of the Sca Trer Ac, Th Disoi may alo invet any publi funds in a fud maed oper;ed, and adered by a ba subidi of a ba or a subidi of a ba exndI dibured of th Eduona Fun At Jun 30, 200, exdi diblmcd from the Specia Educan tax levy exedd the revenue reeived for the relaed puies in th Educona Fun reulti În 00 re,d bak. holdng compy or use the serWes of such an ent to hold and invest or:ie re th investrri of any publi fuds; Pro from th UaÎn Facies ta levy an reed expndi bave be iniud in the revenue received and exri diburd of th Opooons and Materç, F¡i AI Jun 30, 200, th revcnue received ex""ded the (9) in the Illo~ School DIs LiquAsset Fund Plus; e.dI dibured for the reed purses in the Oprans and Manae Fun reul in a rectd fun bace in the Opooons and Matenace Fiui of $31,54 1. . HONONEGAH COMM UN HIGHSæOOL DIS1RClNO, 207 WIBAGO COUN, !lIS HONONEGAH COMMNITY UNT HIGH sæOOL DrSTCl NO. 207 NOnS TO FIANCI STATENT WIBAGO COUN, UlOIS Tl 30, 200 Nons TO FlQAL STAnMENT TU 30 200 Not( # 4 - Deoosit and Investments (cont'tl) Note # 4 . J&it and rnvestrnts (cont'tl) (10) in repure agreements of governnt secues havi th me Set Out in the Goverrnt Secumie Aa of 1986 subject to the provisions of said Aa and th reguons issue there under, Th govcrnt secur, uness reistered or Cutodil CrditRik of Inveslmnts incribed in the na of the Distric, sha be pured thug bmk or trt compan autorid to do busins in the Swe of Illois; Clod ae rik is the rik th in the evem of th faiu. of th counterp, th DIsttÍ wi not be able to recover the vaue of it invents or collra secues th ar in ,he possession of an Otlid part, Ai ¡e end, none of the Distrct's (11) in any invesunnt as autorid by the Public Funds rnvescmnt Ac an Am amndaory threto. Parraph 11 invesunnc være subjec to cutod credi rik due to one of the follo~ suprsedes par_phs 1,10 and contrls in the evem of confct. o Invesnt være pa of an inurd pol Oitoial Crdit Risk Related to Deposits with Finncial Instituons o UiVcsJl we bok-eor onl in the n= of the Disct and we ful inurd o Irstm ""re pan of a ro fud Cuod credi rik Is the rik tha in the event of a ban faiur, the governnt's deposits may not be renud to;e. The o Inl'trnts were held by Distrct's genera invesunnt poli requ al amur depos~ed or invesd wi finci instins in elOess of an an agm in th DistrCt's na inurce li sha be collamlizd by secties elible for Disct invest or an other hifrqu:, ineret,bear Inrest Rate Rik sec cad at least AN Aa by one or more stda rn serce, The ir value of the pledged secuie sha equa or eiæeed the porton of tl deposit requig'coIier.inn. Ineret rae rik is the rik ih ii vaue of investtTnts wi decrease as a result of a rie in interest mes. The DistrCt's The Distrct's investmnt poli swes the prefem:d meod for safekpin of co~ra is to have secUIies regitere in the invesmint policy do nOt li investmnt maes as a mean of rnin its exposur to fai vaue losses arin from Disri's na aod held by a thpa cutod SafekLcpin pr. should qua for the GovementaJ Accounti increin ioerest rues. Stada Board's Staement m, Caegory r, the hit reogned safekpin p=dur, As of Jun 30, 200, the d,str ha the foUowi invesunnts aii. rnruues, II June 30, 200, the carg amount of the Distr's deposit wi finiici int.ons, whch inlud demand deposit, ~nt Mammies (in Year) :t savi accounts, and certicies of deposit, wa $1,685,574 (e.cludi pecah of $4), Th ba bahce w. $2,019,458. As Bok Fai Les More N of JW1 30, 200, the foUowi Distrcts ban b:ces (cenii=es of depoit chki a.nd min ;iOWT) v.re expsed to Investment r)' Th .J ..:: CUtod credi rik as foUows (carg amunts ar preened as addiona inormon onl: Ulis FiUI Moce Ma ~1,617 ~1,617 o 1,617 ISDLA+ (!nves PooO 1 373 028 Tota .i ------Carrying B:i ~ ~ ~.l ~ -d -- B:i'l Crcüt Rik Caegory# 1 ..100,00 100,00 Caegory # 2 1,585,574 1;31,623 & of June 30, 200, al investmnt np of ii Distrct ar OOt ratetl Caegory # 3 o o Caegory# 4 J.-- ..~ Concentrtion of Crdi Rik Caegory # 1 includ deposit th ar inurd or ar coIierd wi secu held by an independent ruiaci Conciia of cre rik is the rik of loss aruted to the ma of an invesnt in a sinle issuer. Disclsur ar inrin. requid for an Issuer th repreent 5% or more of tota invesunOts, exclusive of mu fuds, eXlern investmnt po~ an invests issue or guted by the U.s, govem=m, The Distrct plaes no li on the amount the Disct may inv", in Caegory# 2 includes deposit th ar unurd and collr.d wi secuies held by th pledg finci intIion. anyone Issuer, Th followi perwu:iges rell the breakown of invesunnts thefor Distr as of JW1 30, 200: Caegory # 3 include depoits whh ar unurd and coUater.d wi secu held by th pledgin ruicia 99,9% . rSDLA+ (Ive.nt PooO intIton's trt depmmnt or agem, but noi in the ditrs na, ISDLA + (!nve.m PooO . Caegory # 4 include deposit whh ar unurd and uncolltl Dur cle l"ar ended Jun 30, 200, the Distr mane an accou. wi ii Illois Schol Disct liquid &SCt Fund Plus(alo lmm¡ as rSDLA+). rSDLA+ is ao exern invesnt pol creed in cooraon byil Illois Associaon of Dur the ye ended Jun 30, 2CX, the depo~ory ba used by the Disct pledgd $1731,62 federa sectie to secur th DIstr, depoit in excess of the amoun inurd by the FDIC The pleded sec ar held by th pledg ruicia Scool Boa. the Illiois Asocon of School. Busins Ofici and the TIols Assocon of Scool AdOt5, r" intin in th diricts na, pri pwpe is to provi School Dis, Coo:unty College Distr and Educona Serice Reions wi an alerne investmm vehcl wf wi enale thm to eam a compe rne of retu on fu coUaera.ed inVes. whe maai ire acs to inves ted fuds. HONONEGAH CDMMTY UNT HIGH Sa-L DlSTRCl NO. 207 HONONEGAH COMMTY UN HIGH SmooL DISTRICl NO. 207 WIBAGO CDUN, TIOIS WIBAGO COUN, JlOIS NOTES TO FlANaA STATEMENT NOTES TO F1ANOAL STATEMENT JUN 30 2006 TU 30.200

Noi. # 4 - DepositS and !.wesmentS (com'd.) Noi. # 5 - Oianges in Genera Fixd Assets

Concentrtion of Crdit Risk (com'eL) A sur of chaes in genera rixd assei follows: Balce Bale ISDLA + (Invesuneni Poon - (com'eL) ~. ) on 30. 200 1.70,457 ti-0- .0- 1,370,457 Lad ~ The Muli.Cls Seris inveses in money mat inuunes luvin a maum remag maturty of one J= (exccpt mat Buis 34.589,905 10,00 ,0- 34,599,905 u.s, governnt oblitions m3Y luve rem: m:urcies of up (Q tWO yem),lt h. eared an AMra from Si.a Improvement Otr ti Bui 1,400,59 113,789 .0- 1,514,338 & Poor's ("S&P"). Th MuJti-Oas Senes consisis of cw classes of shars: the Liquid Cbs ;id the MA Cbs. The Liquid Equiment Oierth TrnportionlFood 2,684,183 Cbs offers check wrti priileges, whe the MA Cbs does not. Servce 2,523,260 160,923 .!) ,!) 15,462 T raporton Equiment 15,462 .!) ISDLA + alo provides a Fixd Income Investment Progra that alows investors to purhase investnt ininntS Food Serv Equmet .. UQ ~ includ cen:ifi""tes of deposit of ban ond thr inciniions ("CDs"), comnæia paper ond banr.' accep=es. CDs ~ mg Zd Tot; FDIC inured ond have been clasified as deposio; for rircia staement puroses. ~ punhased underthi progr.m ar fuly ~ . To remove fudepreiad equiment and equiment sold or tr.d. At June 30, 200, the Distr ha $1,373,028 invested with the lSLA+ MuJOas Senes of invesnr. Note # 6 . R.úrme Fund Co~ Du th J= ended Jun 30, iOO, the DistrCt .alo maimained an ""cown wi the Illois Funds Money Mi (fornrlyin 1975. known as IP). Illis Fun MoneyMat is on exern ÙlVesnt pol created by the Ill~ Genera Assembly Its ,iri puise is to provide Public Treasurrs and other custoci of puli fuds wi an alerne Ùlesun vehi A Te:r.'Ranint Sysremof the Sca ofIllis wheh wi enale them to ea a compee rae of reru on fuly collenld. invesno;, we m:tU iicf :iess Th school ditr pancipai in th Te:hers' Rament System of the Stae of Illois (I), TR is a cost,sha to invested fuds. mule-employe derind berlt peion pla th wa creed by the Illois Jegisbr for the benerlt of IlloLs public ~ scl rer. employ Outid the ci of Oùcao, Ni Th moni invested by the indidua p:cipa are poled toet her and inveSted in US, Treur bil and nOt bac by the fu fai and crewt of the U S, Treur, In adion, moni = inVlred in fuycoller: tm depoit in Ilis ri=ci Th Ilois Penion Oxe oii the benerlt proviions of TR, an amnclnL to the pla ca be ma oal by intins, in coller repurh.e agreements, and in trasur mun fuds th invest in U.s. Treasur oblions and reponsibil for the fundi of the colld repui,e agnL, legilae acon wi the Govemots approva Th Stae of Illois mata pri pla but contbutons froro paiicip;u employers and members ar alo requi The TR Boar of Trutees ~ reponsible for the Sysem's adtro," Th tim deposit ar collted 110'% over FDIC or FSUC$I00,OO inurce with U.s. Treasurob!ins and rrd to m;t on a weekly basis to mata sufficinc, The repurlie agrementS ar coUaerai.d at 102% wi U.s, Treasur 1RS membr. ìnclu. al acve nonauÎtS who ar employed bya TRcovered employer to rrovíde serves for whh oblions and collera is checkd d:ytû determe suficienc. Indivídua paricipats matain sepae Ùlesni ""COunLS =her cenn ~ requd. Aae TR membrs ar requid to contnbuie 9.4 peicem 0 theirthe cred.le cmployer, ea. repreenu a proportonae sha of th pol assees and ilS repecte coUaer: threfore no coUaera is idP.tied wi ea 11e conrbutons, whch maybepaid on beluf of employees byth employer, ar subin to TR by paips account. In addion, vi al me pay a conrbuton to tiie Teahers' He Insurce StC (1S) Fund, a sopa.e AtJune 30, 200 the DisirCt ha $1,617 invesed wi the Illois Funds. fud in th SL1f. Treasurt. ~ not. pm of th rement pla The emplo)"r THS Fund coniruton wa 0,6 perient dur the ¡e ende Jun 30, 200, ond the membr THS Fun health inurce comriuton wa 0,80 peiinr, Foreig Oimncy Rik The S""e of Illois in conrriucons dircty to TR on behal of the dirrci's TR.coveredemployees, Foreig CUncy rik is the iik th an invesnt denomied in the cwnncy of a foreign country could reduce ii U.s, doll vaue, as a reul of chaes in foreign cwnncy exchae raes, The DistrCt had no foreig cwnnc rik",Jun of 30, 200. On.berulf contbutons. The Stae of Illois mas employer pension coninbinons on behal of the ditriCt. For th year end June 30, 200, Stae of illo~ contnbutons were based on 7,06 peicenr of c:d.le eors, an the RccOQciJtiOQ diCt recognid revenue and expncl of $564,271 Ui pension contnbutions tlu the Stle of Illois paid di to TR, For the yea. ended June 30, 2005, and Jwie 30, 200, the Stae of Illois contnburion rates as A reconciíon of cah ond investmnt as shown on the combined bace sheei follows: percnrages of crd.le e: were 1176 peicenr ($872,212) and 13.98 peæenr ($1,148,580), respectely, Pet Oih 40 Ou Amouot of Depo it 1,685,574 Ou Amount of InVli:nlS ~.L Oi h and Oih Equnts 1,685,975 Investment .l~ HONONEGAH CDMMUNT HIGHSæOOL DISTRCT NO. 207 WTNNBAGO CDUN, IlOIS HONONEGAH CDMMTY UNT HIGHSæOOL DrSTRCTNO. 207 NOTES TO FlNANOALSTATEMENT WIBAGO CDUN, Il.OIS ruNE 30 200 NOTE TO FlANOAL STATEMENT ru 30. 2006 Note # 6 - Retirment Fund Commrns (çonr'd) Note # 6 - Retirment Fund Commnts (eont'd) A Teacrs' Retirment S)'em of the State of il1~ (eontd) B. Illis Muncipal Reurmet Fund The ditrct mas other C)s of employer contributons dictlyro TR. Th District'S defied benefit pension, Illo~ Munipa Reurment (I, :u ageru mulple employer 'we pJ: 2.2 formub çontrbutoos. Employers contribur 0.58 percnt of crditlc e:i for th 22 formul clue, provide mimem, diabil. anua COst of living adjusnts, and deat benef", to pJa membr; and benelici:. Contrurons for the ¡e ended June 30, 2006, were $4,357. Cornnburons for the ¡e ende Jun 30, 2005, ""re lM ac as a common investmnt and adtrtie agent for local govemrnr and school d.ci in Illois. The $43,017 and June 30, 200, "ere $47,652. ¡ llis Pension Code estalihes the benef" proviions of the pl: th ca onl be =ended by" the Ilois Genera Assembly. Feder.l and trt fud contrbutionS. When TR membrs ar pad from federa and trut funds admtered by the ditriCt there is a Statutory reqlument for the ditrct to pay an employer pension eontrbuiion from those IM issu a fi report th inlX finia =mni and re suplenr inornn for th pla as a ..ole funds. Under a policyadopted by the TR Boar of Trutees tht "" firt effece in the fisci year ended June 30, bll not for indidu emplo¡. Th report rm be obi: :i WW.I.orgpub/pu_homepae.l or bywr to th 2006, employer contnbutions:lor employees paid from federa and tr funds wi be the s= as th State Ilis Mun Rent Fun 2211 York contribuiion rae to TR. Ro Suie 50, Oa Brok, Illois 60523. Emplo)" pmcipo in lM ar requid to cOnubute 4.50 percent of their anua covered sala. The membr r. is For the year eoded June 30, 200, the employer pension comnbuton "" 7.Oó percent of sa1s paid from federa esi.lihed by S!ae sr.e. The Disti is requid to çontrblle at an acy deteiid rae. Th employer rae for and trut funds. For the tw year ended June 30, 2005, the employer pension contrburon "" 105 percenr of caih ¡e 2005 "" 8.94 percru of pa;rlL The employer conrnburon requnt ar esi.lihed and rry be siles pad from those funds. For the year ended June 30,2006, sa1s toeag $-0- were pad from federa ;uid amnded by the IM Boa of Trutees. lMs unded ac Otcrd liil is be arorcd as a level trut funds tht requid employer contnbutions of $-0-. For the year ended June 30. 2005, and June 30, 200, perreni:e of projeced pa;rUs on a closed basis (overfded liilry amrtd On open basis), The amn:on period requied ditrict contrbutions v.re $93 and $728, respectively. :i Decembr 3 I, 2005, "' 27year,

Eorly Retiment Option (ERO). The ditrict is a60 ""uied ro ma one-tie emplo,er comriburons to TR For Deçembr 31, 2005, the Distr's ann"-I pension cost of $168,928 "" equ to th Distrs requid and ac ;:i N for membm retirg under the Eary futiement Option (ERO). The paymnts v:idepending on the age ;ud saJ:i comruiions. Th requid contrllion "" determed as pm of the Dembr 31,2003, ac vauaon usin the N of the member and under whch ERO progr: the membr reir. emiy age ac COSt meod The acl assumtions included (a) 7.5O"k investmnt r. of reru (net of admte exnses), (b) projected sal increes of 4.00% a year, aiutle to inon, (c) addiona projeeed Under Pub lic Ac 94-0004, a "Pipelie ERa' progrn is provided for memb r; to reùr UDdc r the sam tenn as the """y increes =gg from 0.4% to 11.6% per ¡e dependi on age an servicò, aiutle to seniori/meri and (d) ERO progra th:i e"Pird June 30, 2005, provided they meet ceru conditons an retie on or before July I, 2007. posr-reùrmeru benefit increes of 3% anmialy. Th:ina vaue of lM aset "" dennid using technques th If membrs do not meet these condions, they can retire under the "Modiied ERa' progra whch requies hiher smooth the effect of s horr-teon volary in the mat value of iiwesirnts over a five-¡e period wi a 15% corrdor. The assumtions used for the 2005 :ina vaJuaion "Mre based on the 2002-200 exprince sruy. member and employer eonrnbuions to TR. Alo, under Modi",d ERa, Public An 94-00 elies the waver of member and employer ERO conrbutlons that had been in effect for mers wi 34 ;em of semce (uness the memer quaies for the Pipelie ERO). TRND INORMTION Ac Peneni:e Valuaion 'Anua Pension Under the ERO progrn th expired on June 30, ~005, and the Pipelie ERa, the maum emplo¡er concribuiion ofAP Net Pensioo is 100 pment of the membr's hiest sal used in the fin overae salcaçuhon. --12/31105 .Q 168,928 100% 12/31/04 ~ $0 162158 ~ 100% 12/31/03 ° Under the Modiied ERO, the maum employer contrbuton is 117.5 peiienc. 144,208 100% 12/31102 ° 129,993 100% 12/31101 ° Both the 100 perent and 117.5 peent mawn apply when the inmbr ~ ag 55:i reurmeL 126,962 100% 12/31/00 ° 118,819 100% 12/31199 ° For the year ended June 30, 200, the ditrct paid $-0- to TR for employer eoninburons under the Pipli ERO and ii 2,068 100% ° Modfied ERO progra. For th ¡e ended JUDe 30, 2005, and June 30, 200, the di pad $2894 and $-0-, 12/31198 i 15,120 100% 12/31/97 ° respectively, in employer ERO conirurioos. 101,001 100% 12/31/96 o 79,565 100% TR finci inonnon, an eilaoo of TR beiiflt, an decritions of mer, cmlo¡er an st fudi ° requiment ca be foun in th TR CaAm¡ FinRe for th ¡e endcdJun 30, 2005. Th reporr for the ye ended Jun 30, 200, ~ ""ed '0 be avale in bie 200_ The report may be obta by mi to the Teahers' Reùrm S)' of th Stae of nio~, P.O. Box 1925~2815 Wes Wasbion Scre~ Spridd, II 62794- 9253. Th mo ClInt report is alo avale on the TR Web sire:i ww.tr.seiLus. HONONEGAH CDMMTY UNT HlGHSæOOL DISTRCl NO. 207 WIBAGO CDUN, ITUNOIS HONONEGAH CDMMTI UN HIGH sæOOL DISTRCl NO. 207 NOTES TO F1ANOAL STATEMENTS \lBAGO CDUN, i:OLS TUNE 30 200 NOTES TO F!QAL STATEMENT TIJo. 2006

No¡e #7 - 1.11' Temi Debt Note #7 - I"ng' Temi Debt (coord) As of Jun 30, 200, the D~uict ha long.tenii debt ouc;¡andi in the amun of $21,164,401. Theterm long. debt consis or th followi: I ItS tallrent Agrements -

Bonded indebtedness - Instant paymm cono certicates rep""em proeeds to fun :u ene.-g maemni project Th coii requi anua paymnt of approxiely $129.500 thug 2010. Pnncip is due earh Febru 1 begi in 2001, Bonded inbtednss ~ relcctd in the Genom! ¡"ng-Tcmi Debt Acount Group. Olm requiments for pnnci:i and and Îoert is payale Febru 1 and Augt 1 at 520"/0 to 5.30"/.. On Jun 30, 200, there wa pnncipal outtan in interest expndis are payale solely from fu reventies of the Bond and Imere Fund whch cons~ts pnncipalyof the amunt of $455,tc. properr"'os colled bythc Diseri and intere ear. Bonded indebtedns consists of thc followi: Instam col1 in th oriin amunt of $40.509, w. for the lee of photocopier an relad equiment:id The School Buidi Bonds, in the ori amowt of $7,2oo,OC, ar daed Decembr 30, 1994, an provie seri require anua paym of $14,298 on Septembr 14, whch include prieipal and inte""t P"Ynt ar 4.50% thugh retÎrrnr of pnncipal on Decomber 30, begig in 200, and intere payale on June 30 and Decembr 30 of each 200. OnJun 30, 200, there w. pnncipal outs:indi in the amUOt of $13,649. ;= ar raes of 625% 10 7,75% thoug 2011. Six n'on doll ($h,OC,OC) of these boiids "'ere reird from the proeeds of the refundi bond isue dur th ;= eii Jun 30, 1998. Four hund rif thousand dol1 Inst comra in the ori amunt of $13,948, wa for th lease of a Toshia photocpier an requ month ($450,OC) of thc balce of these bonds ba ben defeoed du the )ear eoddJwi 30,2005. OnJun 30, 200, there payn of $1,198 on the 14J of eah month whch inludelricip and interet paymts at 5.50"/0 thug 2007. On wa pricipo o\llSandi in the amouo of $750,OC. Jun 30, 200, there wa priipal oti in the amount 0 $9,378.

The Refudi 'Bonds, in the oriin amunt of $h,685,OO, ar daed Mah 15, 1998, and provide seri reme of Insc:t COl1.in th oriin amoun of $11,78, wa for the ¡eas 01 a Tomcat Ri Burher and re pricipal on Febru I, begig in 1999, and im=e payk on Febru 1 and Augu" 1 of each)ear ar raes of 4.10% morrpaymnts of $290 at the end of ea month, whch inluds prieip an inret p:its :u 8.425% through to 4.70% thoug 2011. The proeeds of these bonds, used to provide for reiÏm""e of the School Buidi Bonds 20C. OnJuo 30, 200, thre w. priipal outtandi in the amoune of $8,292. abve, have been deposited wih an' escrowagem..o wi provide funds for scheduld pnncipal and im=t paymnt of th Bui Bonds. On June 30,200, there wa priip ottdi in th amunt of $6,2oo,OC. Ins conr in th ori amoune of $75,20, wa for the eompurer and requi atua paymnts of $26,763 ;pi 00 Jul22, vÆh inlud pnncipal:i interee paymnt at 11.545% thrug July 200. On Jun 30, 200, there w. tv piiipal outdi in the :iuo of $2.,993. W Th Lie Safet Bonds, in the ori amunt of $517,59, ar daed O:ber 1, 1998, and provide seri retiii of pnnèip on Decembr I, begi in 2008, an~ itt payle on Decmbr 1 of eoh ¡e ar the rae of 4.80"-" thoug 200. On June 3D, 200, there wa. priipal outtadi in the amune of $517,549. Inst:t col1 in th 0ii atunt of $6,108, wa for 000 repeers and requir a momby payrnc of $202 on the I" 01 each mooth thug Febru 2007. On June 30, 200, there wa prial outtadi in the amUnt of $1,540. The School Buidi Bonds, in the ori amount of $7,OC,OC, ar da Mah i, 2001, and provide seri rermee of pnncipal On Febru 1, begi in 2002, and imere payak on Aut i and Febru I of ea )= at rares of liist:e cootr in th ori amunt of $13,948, wa for th lease .of a Toshia phOtocpier an requi monthy 4.40"/. to 4.56% thoug 2013. OnJun 3D, 200, thre wa pnncipal Outi: in th arunt of $5,60,OC. paymnt of $1,198 on the 1 4~ of ea month, whh inlud priipal and interee paymts at 5.50% thug 2007. On June 30, 200, thre wa pnncipaloutiadi in the amoun of $9,378. The Gerim! Oblion LiedSclool Bonds, Senes 200A, in th ori:iunt $4,04,OC, ar dadJune 15,200, and provide seri reuremem of priipal on Febru I, be il 200, an inret payle on August 1 and AI Jun 30, 200, the excess of asset over liiles of the Bond an Imet Fund wa alocle to the indidua ~sue as Febru 1 of earh )'ar at raes of 4.5% to 5.0 though 2023. On June 30, 200, thre "''a priip ollLmndi in the foUows: amoun of $3,465,OC. Bond Issue D:ed Decembr30,1994 A= Th Geoer. Oblion Limed Bond, Seri 2oo5A (Work Cah Bonds), in th oriin amunt of $1,255,OC, ar (161) daed M.rch 15,2005, :ud provide seri rcemem of pnneipal on Febru 1, begirng in 2008, :ud ineret p,y;le on Mah 15, 1998 22121 Aug~t 1 and Febru I of each )t"" ar raes of 325% to 4.00% though 2020. On June 30, 200, there w. pnncipaJ Mi 1, 200 1 75,838 Outtadi in the amunt of $1,255,OC. June IS, 200A 48735 June 15, 200B 25,577 The Taile Gencr. Obliuon Lied Bonds, Series 2oo5B (Work Cah Bonds), in the ori amun of Febru1! 7, 2oo5A 5 $1,945,OC, ar daed Mah 15,2005, and provide seri reme of priip on Febru 1, being in 2011, and Febru 7, 2oo5B 10 interes payale on Augt I an Febru 1 of each )= :i ra of 4.55% to 5.00% thug 2021. On Jun 30, 200, Ma 22, 2oo5e 6756 there wa pricip ourdi in the amount of $1,945,OC. Mab IS, 2oo5D Toeal ~~ The Genem! Oblion Lited Tax Refundi Bonds, Seri 200D (Work Cah Refudi Bonds), in th oriin amUOt of $l,095,OC, ar dad M: 15,2005, an provide seri remem of prieipo On Febru I, be in 2005, and intere payale on Aug I and Febru 1 of ea)'ar at = of 2.65% to 330"/. thugh 20'10. OnJune 3D, 200, there wa priip outdi in th amunt of $920,OC. HONONEGAH COMM UNT HIGH SCHQOL DISlRCl NO. 207 WIBAGO COUN, llOIS HONONEGAH COMMTY UN HIGH SCHOOL D1STRCJ NO. 207 NOTE 10 FIOAL STATEMENT WIAGO COUN, ll01S ruE 30. 200 No.TE TO. FIANOAL STATEMENT ru 30. 2006

Note #7 - Long-Term Debt (contd.) No # 7 - Long-Term Debt (contd.) As of Jun 30,200, the Discict had gen.ralong-debt rot: $21,164,401. 11e requimems consist of the followi In 0 prior ye, th Disct defeaed genera obÜgion bonds by plain the proeeds of new bonds in an escrw acun to Babce Balce provi for al fu debt serv pantS on the old bonds. Accorcly, th escrow OCCOWl :ietS and the liili for th Tune 30 2006 defeaed bonds ar nor inlude in the Disri's fincia SUementS. The prii¡r amun of defeoed debt o=i at School Buidi Bonds. 1995 750,00 l2 ~ ~o o 750,cx Jun 30, 200, is $450,00, The mat vaue of th escrwaccOunt as of June 30, 200, wa $454,257. Refudi Bonds - 1998 6,265,00 o 65,00 6,200,00 Ufe Safety Bonds - 1998 517,59 o o 517,59 Under So:on 5/19.1 of th Illois School Co, the Disuict is alov.d to in qua debt up to 6.9% of it laest equid School Buiding Bonds.. 2001 5,600,00 o o 5,60,00 asessed vaue As of J\J 30,200, the Di.UÏ's lega debt li wa $37,611,569_ Qu oUtiacl debt as of June 30, G.O. Lited School Bonds, Series 2oo4A 3,790,00 o 325,00 3,465,00 200, totaed $21,164,401,levi a debt main of $16,447,168. G.O. Refuncl Bonds, Series 200B 525,00 o 525,00 o G.O. Worl Cah Bonds, Series 200SA 1,255,00 o o 1 ;25,00 Note # 8. Tax Ancicipacon Warr.mrs G.O. Worl Cah Bonds, Seri 200SB 1,945,00 o o 1,945,00 G.O. Worl Cah Refu Bonds, Series 20050 I,WS,OO o 175,cx 920.00 Du th ye end June 30, 200, the Disri issued $800,cx 2006 Edm Aa To: Ant W_ (W:itS), Inst:m Paymm Co= Certificates 555,00 o 100,00 455,00 da May 8,200. AL Jun 30, 200, the balce of the Warts wa $806,924. The Warcs ar to be repad wi prods . Inmilriim Comr. - Fitess Equipment 75,2 o 75,254 o from the 200 re esta ta le. InsIU Contr - Photo Copiers 13,649 o o 13,649 rnsralnrn Contr - Burher 10,953 o 2,661 8,292 Du th ye eoded June 30, 2005, th DisCt issued $1,200,00 2(0) Ed:ai l'ei To: Ant W_ (Wam), InsOl Contr. - Con;urer Lee 21,993 o o 23,993 dad May 25, 2005. The WamtS ar due July 3 I, 2005, wi an interest r. of 2.55%. AL J\J 30, 200, th bahce of the Inst:ie Con,,'ace - fuo Repeater 3,631 o 2,091 1,540 W:irn wa $-0-. The War "ore repaid wi proeeds from tho 2005 re ese = levy. Instalne Comr. - Toshiba Phoro Copier -- ll ~ -- Note #9 - IrrfdLoan and Trafer ;i Tora . ~ l,.. i ~ ~ .tN ALJun 30, 2006, the anu:6.h flo". requimetS of priip an irerer of Gener. Long- Tern. Debt""'" as foliows: Tho follwi interfd 1= "-re m; durng the)";i ended June 30, 200: Fiscal Ye;i Ended Bonds Leases & Bal:ice Bale June 30 &.in l2 )Jcx 2007 ~2,208,530 ~175,238 ..2,383,768 Opr:ons :i Work Cah Fund ~ ~ ~ 2008 2,904,180 132,033 3,036,213 Mi Clce Fund 200,00 1,200,00 WJ,cx l,200,cx 200 2,914,678 130,042 3,04,720 2010 2,865,474 lJ 1,625 2,997,09 Opr:ODS :id Educmona Fund 2011 3,117,481 .0- 3,117,481 Mir.n Fund 650,cx 300,00 950,cx -0- 2012 3,232,379 .0- 3,22,379 2013 3,235,704 .0- 3,25,704 Oprans and Traporuon Fund 2014 729,893 .0- 729,893 Marence Fund 100,00 .0- 100,00 .0- 2015 734,318 -0- 734,318 2016 737,693 -0- 737,693 Educona Fund Work Cah Fund 4,470,00 .0- 1,200,00 3,270.00 2017 739,968 .0- 739,968 2018 740,768 .0- 740,768 The loa v.re iide for genera oper: puroses. 2019 738,293 -0- 738,293 2020 689,443 -0- 689,443 Th folwi permern o-fer v.re approved and made dur the )";iendedJun 30, 200: 2021 480,750 -0- 480,750 2022 359,5 -0- 359,500 E= To hi 2023 -- Work Gih Fund õjrnions & Múmeiice Fund 550,00 Tota Pricipa and Imert --26,812,302 578,519 ~27,390,821 Les I mere 66 667 ..420 Th trfer (rom the Work Cah Fund w. to Cover genera opera needs. Liail as of June 30, 200 .. ~ il ~ Note # 10. Common Ban Accomm Se¡n ban acunts ar nor mad for al Distri fuds: Ïnicd, cert fu ma thir unveseed cah baes in a commn chec account, wi aaoum record bein ma",ed to show the portn of th commn ba ;icounr bahce aiutle to 00 paciin fud HONONEGAH COMMUNITY UNT HIGH SæOOL DIS1Cf NO. 207 HONONEGAH CDMMTY UNT H1GHSæOOL DISTRCf NO. 207 WIBAGO CDUN, l1NOIS WIBAGO CDUN, Ilois NOTES TO FIANOA STATEMENT NOTES TO FlANOA ST ATElvæNT TU 30,200 TU 3.Q.

Note # 11- Disbilfcrnems ""d Tldfel$ in Exccss of Biidr,et Nott # 16 - Toint fuements As of June 30, 2006, the Distrct had no diburementS ""dlor traf.. th exceeded theirbudeL The Dis is a ."mb of th Winbao Co Spei: Educn O:pee a10ii wi othr ara school diri. The Di's pupil bc.ndit from progr. ..""d under th join apee, an the Distr beneIt from jointl Not # 12 - Deficit Fund B,briecs :ier gr an pro. The DÍSct do COt have an equi inleret in the joim -.reemenL The joint agment is auded sepay and is DOt inludd in these finci st;ements. Fi. inormion may be obtaed from th As of June 30,200, the Distri ha a defici fun bace in the Edu=on: Fu of ($3776,844) an the Opruions and COper.ve's offi loced at 329 Scool Sue~ Rokion,Illois 61072 Matenace Fun of ($812,434). Not # 17 - RikMM.eeirnt - o. and Tucl",lfnt NOte # 13 - Self-Funed Health Insurice l'bn Sigica losses ar covered by coi:rci: inurce lor :i irjor pror.: prope~, Ü;il an work,,' compns:ion. the employee he pla The DisnU is, therelore, Ü;le lor;inyemployee Ii di Th DÍSct is prirryseU-inur for Du th )" ended Jun 30, 200, thre -.re no sigict reducons in inurce cover.e. Alo, th have been no th ar approved lor paymnt The Distrct alo ca specific stop-loss inurce coveri cla over $50,CX per pe"on setnt amun th have exeed inurce eover.e. covere The pbn alo ha an awegae stop- loss poli coveri amun in excess 01 $2,052,890 in tota pbn cla. Th Di is ind un a rerospeely =d poli for work,,' eomp~:ion covere, whre, the inci premiwn may .For the year ended Jun 30, 200, $1,664766 w. paid Out lor cla un the..elf-iniie pbn ne 01 c1 reimiiements be adjud baed on ac exrinc. AdjustmntS in premi ar recordd when paid or received. Du the l";i ende due to the Distrct lor cla pai thug June 30,200. The amun of und cla is nOt deerminle. June 30, 200, there m: no sigica adjustmnt in premium based on ac exprience. Note # 14 - ContÎrencil The DÍSct ha received fu from sia :id ledra grats in the cunt and prior ye th ar subjec to .udI by the grti agencies. The school bod beüeves anyadjusirnt th may aJefrom these aud wi be inignicant to Distr opernioiis , ;p Ni The District is curently in liigation regadi an emient doma proceedi to purchae neighbori propert for futur U, ex¡anion. The case is dii to a value dipUte ""d is scheuled to commnce on Ocober ¡o, 200.

Note # 15 - Cnmmtme nL' md Opr:ing l.eases

As o( Jun 30,2006, the District had the foUoWÏ Otnstdi coil5on commms: Amount Ql :î $3,350 MeDerrd Rolin &: I nsubion Replae HVACtemp. coooo! sy¡tem

Unoaid Te-he~' Cont=

month pay schedul ar reorded :i Te-hers' contta for services rendered dur th school)" for =hrs elect twlve. dibl1ernms in the fiscal ye when such checks ar drwc AiJune 30,200, the total amour of un:i te:.hl$' contr.i for serves performd dur the ye ended June 30, 200, anured to $'S4,4n, Vaction Pay _ Vacation pay is considered to be an expndi in the ye pai Eliible admÍlisruors and support mil n.'Ceive vaon pay. Ai June 30, 200, the estied unused vacion pay Ü;iJiiy is $17783.

Sick Pay _ Sick pay is considered to be ;u expndi in the ye paid. Aiuled sick pay benefit ar avalale to eliible eiiplo)"cs to use in fu ),ar. Sick pay doe not vest if not used dur the tenn of erloyrient wi the Distrct APPENDIX B

FORM OF LEGAL OPINION

PROPOSED FORM OF OPINION OF BOND COUNSEL

(LETTERHEAD OF CHAPMAN AND CUTLER LLP) (TO BE DATED CLOSING DATE)

We hereby certify that we have examined certified copy of the proceedings of the Board of Education of Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District "), passed preliminary to the issue by the District of its fully registered General Obligation Limited Bonds, Series 2007 (the "Bonds "), to the amount of $625,000, dated February i, 2007, due serially on February i of the years and in the amounts and bearing interest as follows:

2021 $ 1 00,000 % 2022 225,000 % 2023 200,000 % 2024 100,000 % the Bonds being subject to redemption prior to maturity at the option of the District as a whole or in part in any order of their maturity as determined by the District (less than all of the Bonds of a single maturity to be selected by the Bond Registrar), on February 1, 2015, or on any date thereafter, at the redemption price of par plus accrued interest to the redemption date, as provided in such proceedings, and we are of the opinion that such proceedings show lawful authority for said issue under the laws of the State of Ilinois now in force.

We further certify that we have examined the form of bond prescribed for said issue and find the same in due fOlm of law, and in our opinion said issue, to the amount named, is valid and legally binding upon the District, and all taxable property in the District is subject to the levy of taxes to pay the same without limitation as to rate, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. The amount of said taxes that may be extended to pay the Bonds is, however, limited as provided by the Property Tax Extension Limitation Law of the State of Ilinois, as amended (the "Law"). The Law provides that the annual amount of said taxes to be extended to pay the Bonds and all other limited bonds (as defined in the Local Govemment Debt Reform Act of the State of Ilinois, as amended) heretofore and hereafter issued by the District shall not exceed the debt service extension base (as defined in the Law) of the District less the amount extended to pay

B-1 certain other non-referendum bonds heretofore and hereafter issued by the District, as more fully described in said proceedings.

It is our opinion that, subject to the District's compliance with certain covenants, under present law, interest on the Bonds is excludable from gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Internal Revenue Code of 1986, as amended (the "Code "), but is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Failure to comply with certain of such District covenants could cause interest on the Bonds to be includable in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Ownership of the Bonds may result in other federal tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.

It is also our opinion that the Bonds are "qualified tax-exempt obligations" pursuant to

Section 265(b)(3) of the Code.

We express no opinion herein as to the accuracy, adequacy or completeness of any inforn1ation furnished to any person in connection with any offer or sale of the Bonds.

In rendering this opinion, we have relied upon certifications of the District with respect to certain material facts within the District's knowledge. Our opinion represents our legal judgment based upon our review of the law and the facts that we deem relevant to render such opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assiime no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

B-2 APPENDIX C

BOOK-ENTRY-ONL Y SYSTEM

1. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the securities (the "Securities 'j. The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative ofDTC One fully-registered Security certificate will be issued for each maturity of the Securities, in the aggregate principal amount of such maturity, and will be deposited with DTC

2. DTC, the world's largest depository, 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 and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC' s participants ("Direct Participants") deposit with DTC DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities cel1ificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, tnist companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants ofDTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, FlCC, and EMCC, also subsidiaries ofDTCq, as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, tnist companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More infoiination about DTC can be found at www.dtc.org.

3. Purchases of Securities under the DTC systel1llust be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation tì'om DTC of their purchase. Beneficial Owners are, however, 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 Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf ofBeneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name ofDTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records retlect only the identity of the Direct Participants to whose accounts such Securities are credited, which mayor may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

C-l 5. 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 be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficiai Owners of Securities may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments Securities may wish to ascertain that the nominee to the Security documents. For example, Beneficial Owners of holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficiai Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

6. Redemption notices shall be sent to DTC If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC DTC's practice is to credit Direct Participants' accounts upon DTC' s receipt of funds and corresponding detail information from the District or Agent, on payable date in accordance with their respective holdings shown on DTC's records. 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, n and will be the responsibility of such Participant and not of DTC (nor its nominee), Agent, or the District, subject to any statutory or reguiatory redemption proceeds, distributions, and dividend requirements as may be in effect from time to time. Payment of payments to Cede & Co. (or such other nominee as may be requested by an authorized representative ofDTC) is the responsibility of the District or the Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to Beneficial Owners will be the responsibility of Direct and Indirect Participants.

9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to (Tender/Remarketing) Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTCs records, to the (Tender/Remarketing) Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's

records and followed by a book-entry credit of tendered Securities to (Tender/Remarketing) Agent's DTC account.

10. DTC may discontinue providing its services as securities depository with respect to the Securities at any time by giving reasonabie notice to the District or the Agent. Uncler such circumstances, in the event that a successor securities depository is not obtained, Security certificates are required to be printed and deIivered.

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

i 2. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the District believes to be reIiable, but the District takes no responsibility for the accuracy thereof.

C-2 APPENDIX D NOTICE OF SALE

$625,000* GENERAL OBLIGATION LIMITED BONDS, SERIES 2007 COMMUNITY HIGH SCHOOL DISTRICT NUMBER 207 WINNEBAGO AND BOONE COUNTIES, ILLINOIS

Bids for the purchase of $625,000* General Obligation Limited Bonds, Series 2007 (the "Bonds") of Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District") will be received at the offices of Ehlers & Associates, Inc. ("Ehlers"), 3060 Centre Pointe Drive, Roseville, Minnesota 55 113-1105, Financial Advisors to the District, until i 1:00 A.M., Central Time, and ELECTRONIC PROPOSALS will be received via PARITY, in the manner described below, until 11:00 A.M. Central Time, on January 17,2007, at which time they will be opened, read and tabulated. The bids will be presented to the Board of Education for consideration for award at a meeting to be held at 7:00 P.M., Central Time, on the same date. The bid offering to purchase the Bonds upon the terms specified herein and most favorable to the District will be accepted unless all bids are rejected.

PURPOSE

Proceeds of the Bonds will be used to provide funds to increase the District's working cash fund.

DATES AND MATURITIES

The Bonds will be dated February 1, 2007, will be issued as fully registered Bonds in the denomination of $5,000 each, or any integral multiple thereof, and will mature on February i as follows:

Year Amount* Year Amount* 2021 $100,000 2023 5200,000 2022 225,000 2024 100,000

ADJUSTMENT OPTION

* The District reserves the right to increase or decrease the amount of any individual maturity of the Bonds in increments of 55,000 on the day of sale. If individual maturities are increased or decreased, the purchase price proposed will be adjusted to maintain the same gross spread per S i ,000.

TERM BOND OPTION

All dates are inclusive. Bids for the Bonds may contain a maturity schedule providing for any combination of serial bonds and tenn bonds, subject to mandatory redemption, so long as the amount of principal maturing or subject to mandatory redemption in each year confonns to the maturity schedule set faith above.

D-l INTEREST PAYMENT DATES AND RATES

Interest will be payable on February I and August 1 of each year, commencing August 1, 2007, to the registered owners of the Bonds appearing of record in the bond register as of the close of business on the 15th day (whether or not a business day) of the immediately preceding month. Interest will be computed upon the basis of a 360-day year of twelve 30-day months and will be rounded pursuant to rules of the MSRB. All Bonds of the same maturity must bear interest from date of issue until paid at a single, unifonn rate, not exceeding the rate specified for Bonds of any subsequent maturity. Each rate must be expressed in an integral multiple of 5/J 00 or 1/8 of 1 %.The rate or rates named shall not exceed the greater of9% per annum or 125% of the rate for the most recent date shown in the 20-Year G.O. Bond Index of average municipal bond yields as published in the most recent edition of the Bond Buyer at the time of the sale of the Bonds.

BOOK-ENTRY-ONLY FORMAT

The Bonds will be designated in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds, and will be responsible for maintaining a book-entry system for recording the interests of its participants and the transfers of interests between its participants. The participants will be responsible for maintaining records regarding the beneficial interests of the individual purchasers of the Bonds. So long as Cede & Co. is the registered owner of the Bonds, al i payments of principal and interest will be made to the depository which, in tum, will be obligated to remit such payments to its participants for subsequent disbursement to the beneficial owners of the Bonds.

PAYING AGENT

OPTIONAL REDEMPTION

At the option of the District, the Bonds shall be subject to prior payment on February i, 20 i 5 or any date thereafter, at a price of par plus accrued interest.

Redemption may be in whole or in part of the Bonds subject to prepayment. If redemption is in pai1, the selection of the amounts and maturities of the Bonds to be prepaid shall be at the discretion of the District. If only part of the Bonds having a common maturity date are called for prepayment, the District or Paying Agent, if any, will notify DTC of the pai1icular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interest in such maturity to be redeemed.

On or about February 8, 2007, the Bonds will be delivered without cost to the original purchaser at DTC On the day of closing, the District will furnish to the purchaser the opinion of bond counsel hereinafter described, an arbitrage certification and certificates verifying that no litigation in any manner questioning the validity of the Bonds is then pending or, to the best knowledge of officers of the District, threatened. Payment for the Bonds must be received by the District at its designated depository on the date of closing in immediately available funds.

D-2 LEGAL OPINION

SUBMISSION OF BIDS

Bids must not be for less than $620,000 and not more than $625,000 plus accnied interest on the principal sum of $625,000 from date of original issue of the Bonds to date of delivery. A signed bid foim must be submitted to Ehlers pnor to the time established above for the opening of bids as follows:

1) In a sealed envelope as described herein; or

2) A facsimile submission to Ehlers, Facsimile Number (651) 697-8555; or

3) Electronically via PARITY in accordance with this Notice of Sale until II :00 A.M. Central Time, but no bid will be received after the time for receiving bids specified above. To the extent any instructions or directions

set forth in PARITY conflict with this Notice of Sale, the terms of this Notice of Sale shall control. For further information about PARITY, potential bidders may contact Ehlers or i-Deal LLC at i 359 Broadway, 2nd Floor, New York, New York 10018, Telephone (212) 849-5021.

Bids must be submitted to Ehlers via one of the methods described above and must be received prior to the time established above for the opening of bids. Each bid must be unconditional except as to legality. Neither the District nor Ehlers shall be responsible for any failure to receive a facsimile submission.

A good faith deposit (the "Deposit") in the amount of $12,500, complying with the provisions below, must be submitted with each bid. The Deposit must be in the form of a certified or cashier's check, or a financial surety bond or a wire transfer of funds to U. S. Trust Company, N.A., Greenwich, Connecticut, ABA No. 02 i 0-0 i 3 i 8 for further credit to Ehlers, Bond Issue Escrow Account No. 850-788- i. The Deposit will be retained by the District as liquidated damages if the bid is accepted and the bidder f~iils to comply therewith. The Deposit will be returned to the Purchaser at the closing for the Bonds.

The Deposit, payable to the District, shall be retained in the offices of Ehlers with the same effect as if delivered to the District. Alternatively, bidders may wire the Deposit to U. S. Trust Company, N.A., Greenwich, Connecticut, ABA No. 0210-01318 for credit to Ehlers Bond Issue Escrow Account, No. 850-788- i- The District and any bidder who chooses to so wire the Deposit hereby agree irrevocably that Ehlers shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: I) All income earned thereon shall be retained by the escrow holder as payment for its expenses; 2) If the bid is not accepted, Ehlers shall, at its expense, promptly return the Deposit amount to the losing bidder; 3) If the bid is accepted, the Deposit shall be returned to the purchaser at the closing; 4) Ehlers shall bear all costs of maintaining the escrow account and returning the funds to the bidder; 5) Ehlers shall not be an insurer of the Deposit amount and shall have no liability hereunder except if it willfully fails to perfonn, or recklessly disregards, its duties specified herein; and 6) FDIC insurance on deposits within the escrow account shall be limited to S 1 00,000 per bidder.

D-3 If a financial surety bond is used, it must be from an insurance company licensed to issue such a bond in the State of Ilinois, and preapproved by the District. Such bond must be submitted to Ehlers prior to the opening of the bids. Such bond must identify each bidder whose Deposit is guaranteed by such financial surety bond, If the Bonds are awarded to a bidder using a financial surety bond, then that purchaser is required to submit its Deposit to Ehlers in the form of a certified or cashier's check or wire transfer as instructed by Ehlers not later than 3:00 P.M" Central Time, on the next business day following the award. If such Deposit is not received by that time, the financial surety bond may be drawn by the District to satisfy the Deposit requirement. The amount securing the successful bid will be retained as liquidated damages if the bid is accepted and the bidder fails to comply therewith. No bid can be withdrawn after the time set for receiving bids unless the meeting of the District scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made.

By submitting a bid, any bidder makes the representation that it understands Bond Counsel represents the Issuer in the Bond transaction and, if such bidder has retained Bond Counsel in an unrelated matter, such bidder consents to and waives any conflict of interest arising from any adverse position to the Issuer in this matter; such consent and waiver shall supersede any fonnaIities otherwise required in any separate understandings, guidelines or contractual alTangements between the bidder and Bond CounseL.

AWARD

The Bonds will be awarded to the bidder offering the lowest interest rate to be detennined on a True Interest Cost

(TIC) basis. The District's computation of the interest rate of each bid, in accordance with customary practice, will be controlling. In the event of a tie, the sale of the Bonds will be awarded by lot. The District reserves the right to reject any and all bids and to waive any informality in any bid.

BOND INSURANCE

If the Bonds are qualified for any bond insurance policy, the purchase of such policy shall be at the sole option and expense ofthe purchaser of the Bonds. Any cost for such insurance policy is to be paid by the purchaser, except that,

if the District requested and received a rating on the Bonds from a rating agency, the District will pay that rating fee. Any rating agency fees not requested by the District are the responsibility of the purchaser.

Failure of the municipal bond insurer to issue the policy after the Bonds are awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds.

CUSIP NUMBERS

The District will assume no obligation for the assignment or printing of CUSIP numbers on the Bonds or for the correctness of any numbers printed thereon, but will permit such numbers to be printed at the expense of the purchaser, if the purchaser waives any delay in delivery occasioned thereby.

QUALIFIED TAX-EXEMPT OBLIGATIONS

The District will designate the Bonds as qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Internal Revenue Code of i 986, as amended.

D-4 CONTINUING DISCLOSURE

Participating underwriters need not comply with paragraph (b)( 5) of Rule I5c2- I 2 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, because the aggregate principal amount of the Bonds and any other bond issues of the Issuer required to be integrated with the Bonds is less than $1,000,000. Consequently, the District will not enter into any undertaking to provide continuing disclosure of any kind with respect to the Bonds. The District has complied in all material respects with any undertaking previously entered into by it under the provisions of Rule lSC2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934.

INFORMATION FROM PURCHASER

The successful purchaser will be required to provide, in a timely manner, certain information relating to the initial

offering prices of the Bonds necessary to compute the yield on the Bonds pursuant to the provisions of the IntelTal Revenue Code of i 986, as amended.

PRELIMINARY OFFICIAL STATEMENT

Underwriters may obtain a copy of the Preliminary Official Statement relating to the Bonds prior to the bid opening by request from Ehlers at \vww.ehlers-inc.com by connecting to the link to the Bond Sales. The Syndicate Manager will be provided with 50 copies of the Final Official Statement within'seven pÍ:si,rss days of the bid acceptance. Additional copies of the Final Official Statement will be available at a cost of$lO.OO per copy.

Information for bidders and bid forms may be obtained from Ehlers at 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105, Telephone (651) 697-8500.

By Order of the Board of Education

T ana Vattore, Secretary, Board of Education Community High School District Number 207 Winnebago and Boone Counties, Ilinois

D-5 BID FORM

The Board of Education January 17,2007 Community High School District Number 207 Winnebago and Boone Counties, Ilinois

RE: $625,000* General Obligation Limited Bonds, Series 2007 DA TED: February 1,2007

For all or none of the above Bonds, in accordance with the Notice of Sale and terms of the Global Book-Entry System as stated in this Preliminary Official Statement, we will pay you $ (not less than $620,000 and not more than $625,000) plus accrued interest to date of delivery for fully registered Bonds bearing interest rates and maturing in the stated years as follows:

% due 2021 % due 2023

% due 2022 % due 2024

* The District reserves the right to increase or decrease the amount of any individual maturity of the Bonds in increments of $5,000 on the day of sale. If individual maturities are increased or decreased, the purchase price proposed will be adjusted to maintain the same gross spread per $ 1 ,000.

We enclose our good faith deposit in the amount of $12,500, to be held by you pending delivery and payment. Alternatively, we have provided a financial surety bond or have wired our good faith deposit to the U. S. Trust Company, N.A., Greenwich, CT, ABA No. 0210-01318, for further credit to Ehlers & Associates, Inc. Bond Issue Escrow Account No. 850-788-1. If our bid is not accepted, said deposit shall be promptly returned to us. If the good faith deposit is wired to such escrow account, we agree to the conditions and duties of Ehlers & Associates, Inc., as escrow holder of the good faith deposit, pursuant to this Preliminary Official Statement dated January 8, 2007. This bid is for prompt acceptance and is conditional upon deposit of said Bonds to The Depository Trust Company, New York, New York, in accordance with the Notice of Sale. Delivery is anticipated to be on or about February 8, 2007.

We have received and reviewed the Preliminary Official Statement and have submitted our requests for additional information or corrections to the Final Official Statement. As Syndicate Manager, we agree to provide the District with the reoffering price of the Bonds within 24 hours of the bid acceptance.

Account Manager: By:

Account Members:

Award wil be on a true interest cost basis. According to our computations (the correct computation being controlling in the award), the total dollar interest cost (including any discount or less any premium) computed from February 1,2007 of the above bid is $ and the true interest cost (TIC) is %. ------

The foregoing offer is hereby accepted by and on behalf of the Board of Education of the Community High School District Number 207, Winnebago and Boone Counties, Ilinois, on January 17,2007.

By: By:

Title: Title: ADDENDUM DATED JANUARY 18,2007 TO OFFICIAL STATEMENT DATED JANUARY 8, 2007

New Issue Non-Rated

$625,000 GENERAL OBLIGATION LIMITED BONDS, SERIES 2007 COMMUNITY HIGH SCHOOL DISTRICT NO. 207 (HONONEGAH), WINNEBAGO AND BOONE COUNTIES, ILLINOIS

Schedule of Maturity Dates, Principal Amounts, Interest Rates and Yields

Serial Bonds CUSIP Maturity Interest Base (February 1) Amount Rate Yield 974374

2021 $100,000 4.350% 4.350% ECO 2022 $225,000 4.400% 4.400% ED8 2023 $200,000 4.450% 4.450% EE6 2024 $100,000 4.500% 4.500% EF3

Baners' Ban has agreed to purchase the Bonds from the School District for an aggregate price of $620,937.50 plus accrued interest to the date of delivery. It is expected that the Bonds will be available for delivery on or about Februar 8, 2007.

Book-Entrv-Onlv. Ths offerig wil be issued as fuly registered Bonds and wil be registered in the name of Cede & Co., as nomiee of The Depository Trust Company, New York, New York, to which principal and interest payments on the Bonds wi be made.

Pavin2 A2ent Bond Trust Servces Corporation, Rosevie, Minnesota.

TIS ADDENDUM TOGETHR WITH TH OFFICIA STATEMENT DATED JANUARY 8, 2007, SHAL CONSTITUTE A "FINAL OFFICIAL STATEMENT" OF TH ISSUER WITH RESPECT TO TH BONDS AS THT TERM IS DEFINED IN RULE 15c2-l2 OF TH SECURITIES AND EXCHANGE COMMISSION.

BANKERS' BANK Madison, Wisconsin BID TABULATION

$625,000 General Obligation Limited Bonds, Series 2007

COMMUNITY HIGH SCHOOL DISTRICT NO. 207 (HONONEGAH), ILLINOIS

SALE: January 17, 2007

AVVARD: BANKERS' BANK

RATING: Non-Rated 881: 4.21 % NET TRUE NAME OF BIDDER MATURITY RATE REOFFERING PRICE INTEREST INTEREST (February 1) YIELD COST RATE

BANKERS' BANK 2021 4.350% 4.350% $620,937.50 $432,362.50 4.4847% Madison, Wisconsin 2022 4.400% 4.400% 2023 4.450% 4.450% 2024 4.500% 4.500%

BERNARDI SECURITIES, INC. 2021 4.500% $620,000.00 $440,375.00 4.5727% Chicago, Illinois 2022 4.500% 2023 4.500% 2024 4.500%

3060 Centre Pointe Drive, Roseville, MN 55113 EHLERS 651.697.8500 fax 651.697.8555 www.ehlers-inc.com & ASSOCIATES INC Offices in Roseviile, MN Brookfield, Wi and Lisle, IL 4l~~':r~'e ,'t: ~,' ": ; ',,\1 ~ ,;; ~.' :.;. '~. '""-,, ~ ,'..~,r ~¡, ';"::~A~-~~~t;/~Ai~: ;;;~r~:.~; 'A! ~~~-~;:-~\~'ff), :~"j~;ì:t~1J:"":':;f:~', l;J':~;;:i~,:i:~;:~\~;~'4':'~:~ll/:í~¿IJ~~::, ,~. , ,j ';~~~:-'~f.';t:~;~;:ó;: :'J~" :1~1.~~\li:ê _ ~ ~" : (' r:,_ - '~; 1;"', ~' ~ ~ ~ ,~;I;i_ ;;, ": MINUTES of a regular public meeting of the Board of Education of Community High School District Number 207, Winnebago and Boone Counties, Ilinois, held at the Hononegah High School Building in said School District at 7:00 o'clock P.M., on the 17th day of Januar, 2007.

* * *

The President called the meeting to order and directed the Secretar to call the rolL.

Upon the roll being called, ßAV:£ ku¡ I; -vKuJ , the President, and the following

members were physically present at said location: iUGL +l..i FcIt.JÆ 1 L ~ ttj~ .i ;1o~rA) Z~~

The following members were allowed by a majority of the members of the Board of Education in accordance with and to the extent allowed by rules adopted by the Board of

Education to attend the meeting by video or audio conference: lYe ,ve:

No member was not permitted to attend the meeting by video or audio conference.

The following members were absent and did not paricipate in the meeting in any manner

or to any extent whatsoever: l/l¿ If GU

The President announced that a proposal had been received from BhJke,i i 8M-K.

fI", J. i S d- lv. s' c~ ,JS''- ,J , for the purchase of

the District's general obligation working cash fund bonds to be issued by the District pursuant to

Aricle 20 of the School Code and that the Board of Education would consider the adoption of a resolution providing for the issue of said bonds and the levy of a direct annual tax to pay the principal and interest thereon.

2178165.01.03.B.doc 2144558' LKG' 1/17/07 Whereupon Member /( v it ¡,. ,,I ICus presented and the Secretar read by title a resolution as follows, a copy of which was provided to each member of the Board of Education prior to said meeting and to everyone in attendance at said meeting who requested a copy:

-2- RESOLUTION providing for the issue of $625,000 General Obligation Limited Bonds, Series 2007, of Community High School District Number 207, Winnebago and Boone Counties, Ilinois, and for the levy of a direct annual tax to pay the principal and interest on said bonds.

* * *

WHEREAS, pursuant to the provisions of Article 20 of the School Code of the State of

Ilinois (the "Act"), and all laws amendatory thereof and supplementary thereto, Community

High School Distrct Number 207, Winnebago and Boone Counties, Ilinois (the "District"), is

authorized to create, establish, maintain and operate a Working Cash Fund in and for the District; and WHEREAS, pursuant to authority of the provisions of said Article 20 the Board of

Education of the Distrct (the "Board") adopted a resolution declarng its intention to avail of the provisions of said Aricle and issue bonds of the District in the aggregate amount of $625,000 for working cash fund purposes as in and by said Aricle 20 provided; and

WHEREAS, pursuant to and in accordance with the Act and the provisions of Section 5 of the Local Government Debt Reform Act of the State of Ilinois, as amended, notice of intention to issue said bonds pursuant to the provisions of said Aricle 20 was published in The Herald, the same being a newspaper of general circulation in the District, and an affidavit evidencing the publication of such notice of intention, together with a newspaper clipping of such notice as published attached thereto, have heretofore been presented to the Board and made a par of the permanent records of the Board; and

WHEREAS, more than thirty (30) days have expired since the date of the publishing of such notice of intention to issue said bonds, and no petition with the requisite number of valid signatures thereon has been filed with the Secretar of the Board requesting that the proposition to issue said bonds as authorized by the provisions of said Aricle 20 be submitted to the legal

voters of the District; and

WHEREAS, pursuant to and in accordance with the provisions of the Bond Issue

Notification Act of the State of Ilinois, as amended, the President of the Board, on the 13th day of December, 2006, executed an Order callng a public hearing (the "Hearing") for the 20th day of December, 2006, concerning the intent of the Board to sell said bonds; and

WHEREAS, notice of the Hearng was given (i) by publication at least once not less than seven (7) nor more than thirty (30) days before the date of the Hearng in The Herald, the same being a newspaper of general circulation in the District, and (ii) by posting at least 48 hours before the Hearng a copy of said notice at the principal office of the Board; and

WHEREAS, the Hearng was held on the 20th day of December, 2006, and at the Hearing the Board explained the reasons for the proposed bond issue and permitted persons desiring to be heard an opportunity to present written or oral testimony within reasonable time limits; and

WHEREAS, the Hearing was finally adjourned on the 20th day of December, 2006; and

WHEREAS, the Board is now authorized to issue bonds to the amount of $625,000 as authorized by the provisions of said Aricle 20 for working cash fund purposes and to levy taxes to pay principal of and interest on such bonds; and

WHEREAS, the bonds so authorized shall be issued as limited bonds under the provisions of Section 15.01 of the Local Government Debt Reform Act of the State of Ilinois, as amended

(the "Debt Reform Act"), and as such it is not necessary to submit the proposition of the issuance of the bonds to the voters of the District for approval:

Now, ThEREFORE, Be It and It Is Hereby Resolved by the Board of Education of

Community High School District Number 207, Winnebago and Boone Counties, Ilinois, as follows:

-2- Section 1. Incorporation of Preambles. The Board hereby finds that all of the recitals

contained in the preambles to this Resolution are full, true and correct and does incorporate them

into this Resolution by this reference.

Section 2. Authorization. It is hereby found and determined that the working cash

fund of the District be increased and the Board has been authorized by law to borrow the sum of

$625,000 upon the credit of the District and as evidence of such indebtedness to issue bonds of the District in said amount, the proceeds of said bonds to be used for working cash fund

purposes.

Section 3. Bond Details. There be borrowed on the credit of and for and on behalf of

the District the sum of $625,000 for the purpose aforesaid; and that bonds of the District (the

"Bonds") shall be issued in said amount and shall be designated "General Obligation Limited

Bonds, Series 2007." The Bonds shall be dated Februar 1,2007, and shall also bear the date of

authentication, shall be in fully registered form, shall be in denominations of $5,000 each and

authorized integral multiples thereof (but no single Bond shall represent installments of principal

maturing on more than one date), shall be numbered 1 and upward, and the Bonds shall become due and payable serially (subject to option of prior redemption as hereinafter set forth) on

February 1 of each of the years, in the amounts and bearng interest per annum as follows:

YEAR OF PRINCIPAL RATE OF MATURITY AMOUNT INTEREST

2021 $100,000 4.35% 2022 225,000 4.40% 2023 200,000 4.45% 2024 100,000 4.50% The Bonds shall bear interest from their date or from the most recent interest payment

date to which interest has been paid or duly provided for, until the principal amount of the Bonds

is paid, such interest (computed upon the basis of a 360-day year of twelve 30-day months) being

-3- payable on Februar 1 and August 1 of each year, commencing on August 1, 2007. Interest on

each Bond shall be paid by check or draft of Bond Trust Services Corporation, Rosevile,

Minnesota (the "Bond Registrar"), payable upon presentation in lawful money of the United

States of America, to the person in whose name such Bond is registered at the close of business

on the 15th day of the month next preceding the interest payment date. The principal of the

Bonds shall be payable in lawful money of the United States of America at the principal

corporate trst office of the Bond Registrar.

The Bonds shall be signed by the President and Secretary of the Board, and shall be registered, numbered and countersigned by the School Treasurer who receives the taxes of the

District, and in case any officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery.

All Bonds shall have thereon a certificate of authentication substantially in the form hereinafter set forth duly executed by the Bond Registrar, as authenticating agent of the District and showing the date of authentication. No Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit under this Resolution unless and until such certificate of authentication shall have been duly executed by the Bond Registrar by manual signature, and such certificate of authentication upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Resolution. The certificate of authentication on any Bond shall be deemed to have been executed by the Bond Registrar if signed by an authorized officer of the Bond Registrar, but it shall not be necessar that the same officer sign the certificate of authentication on all of the Bonds issued hereunder.

Section 4. Registration of Bonds; Persons Treated as Owners. (a) General. The

District shall cause books (the "Bond Register") for the registration and for the transfer of the

-4- Bonds as provided in this Resolution to be kept at the principal corporate trust office of the Bond

Registrar, which is hereby constituted and appointed the registrar of the District. The District is

authorized to prepare, and the Bond Registrar shall keep custody of, multiple Bond blanks

executed by the Distrct for use in the transfer and exchange of Bonds.

Upon surrender for transfer of any Bond at the principal corporate trust office of the

Bond Registrar, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Bond Registrar and duly executed by, the registered owner or his attorney duly authorized in writing, the Distrct shall execute and the Bond Registrar shall authenticate, date and deliver in the name of the transferee or transferees a new fully registered

Bond or Bonds of the same maturity of authorized denominations, for a like aggregate principal amount. Any fully registered Bond or Bonds may be exchanged at said office of the Bond

Registrar for a like aggregate principal amount of Bond or Bonds of the same maturity of other authorized denominations. The execution by the District of any fully registered Bond shall constitute full and due authorization of such Bond and the Bond Registrar shall thereby be authorized to authenticate, date and deliver such Bond, provided, however, the principal amount of outstanding Bonds of each maturity authenticated by the Bond Registrar shall not exceed the authorized principal amount of Bonds for such maturity less previous retirements.

The Bond Registrar shall not be required to transfer or exchange any Bond during the period beginning at the close of business on the 15th day of the month next preceding any interest payment date on such Bond and ending at the opening of business on such interest payment date, nor to transfer or exchange any Bond after notice calling such Bond for redemption has been mailed, nor during a period of fifteen (15) days next preceding mailing of a notice of redemption of any Bonds.

-5- The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of or interest on any Bond shall be made only to or upon the order of the registered owner thereof or his legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid.

No service charge shall be made for any transfer or exchange of Bonds, but the District or the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds, except in the case of the issuance of a Bond or Bonds for the unredeemed portion of a Bond surrendered for redemption.

(b) Global Book-Entry System. The Bonds shall be initially issued in the form of a separate single fully registered Bond for each of the maturities of the Bonds determined as described in Section 3 hereof. Upon initial issuance, the ownership of each such Bond shall be registered in the Bond Register in the name of Cede & Co., or any successor thereto ("Cede "), as nominee of The Depository Trust Company, New York, New York, and its successors and assigns ("DTC"). All of the outstanding Bonds shall be registered in the Bond Register in the name of Cede, as nominee of DTC, except as hereinafter provided. The President and Secretar of the Board, the Superintendent and chief business official of the District and the Bond

Registrar are each authorized to execute and deliver, on behalf of the Distrct, such letters to or agreements with DTC as shall be necessary to effectuate such book-entry system (any such letter or agreement being referred to herein as the "Representation Letter"), which Representation

Letter may provide for the payment of principal of or interest on the Bonds by wire transfer.

With respect to Bonds registered in the Bond Register in the name of Cede, as nominee of DTC, the District and the Bond Registrar shall have no responsibility or obligation to any

-6- broker-dealer, bank or other financial institution for which DTC holds Bonds from time to time as securities depository (each such broker-dealer, bank or other financial institution being

referred to herein as a "DTC Participant") or to any person on behalf of whom such a DTC

Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence,

the District and the Bond Registrar shall have no responsibilty or obligation with respect to

(i) the accuracy of the records of DTC, Cede or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person,

other than a registered owner of a Bond as shown in the Bond Register, of any notice with

. respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC

Paricipant or any other person, other than a registered owner of a Bond as shown in the Bond

and the Bond Registrar may treat and consider the person in whose name each Bond is registered

in the Bond Register as the holder and absolute owner of such Bond for the purpose of payment

of principal and interest with respect to such Bond, for the purpose of g~ving notices of

redemption and other matters with respect to such Bond, for the purpose of registering transfers

with respect to such Bond, and for all other purposes whatsoever. The Bond Registrar shall pay

all principal of and interest on the Bonds only to or upon the order of the respective registered owners of the Bonds, as shown in the Bond Register, or their respective attorneys duly

authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Distrct's obligations with respect to payment of the principal of and interest on the

Bonds to the extent of the sum or sums so paid. No person other than a registered owner of a

Bond as shown in the Bond Register, shall receive a Bond evidencing the obligation of the

District to make payments of principal and interest with respect to any Bond. Upon delivery by

DTC to the Bond Registrar of written notice to the effect that DTC has determned to substitute a

-7- new nominee in place of Cede, and subject to the provisions in Section 3 hereof with respect to the payment of interest to the registered owners of Bonds at the close of business on the 15th day of the month next preceding the applicable interest payment date, the name "Cede" in this

Resolution shall refer to such new nominee of DTC.

In the event that (i) the District determines that DTC is incapable of discharging its responsibilities described herein and in the Representation Letter, (ii) the agreement among the

District, the Bond Registrar and DTC evidenced by the Representation Letter shall be termnated for any reason or (iii) the District determines that it is in the best interests of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the District shall notify DTC and DTC Participants of the availability through DTC of certificated Bonds and the Bonds shall no longer be restricted to being registered in the Bond Register in the name of Cede, as nominee of DTC. At that time, the District may determine that the Bonds shall be registered in the name of and deposited with such other depository operating a universal book-entry system, as may be acceptable to the District, or such depository's agent or designee, and if the District does not select such alternate universal book-entry system, then the Bonds may be registered in whatever name or names registered owners of Bonds transferrng or exchanging Bonds shall designate, in accordance with the provisions of Section 4(a) hereof.

Notwithstanding any other provisions of this Resolution to the contrary, so long as any Bond is registered in the name of Cede, as nominee of DTC, all payments with respect to principal of and interest on such Bond and all notices with respect to such Bond shall be made .' and given, respectively, in the name provided in the Representation Letter.

Section 5. Redemption. The Bonds shall be subject to redemption prior to maturity at the option of the District as a whole, or in part in integral multiples of $5,000 in any order of their maturity as determined by the District (less than all of the Bonds of a single maturity to be

-8- selected by the Bond Registrar), on February 1, 2015, and on any date thereafter, at the

redemption price of par plus accrued interest to the redemption date. The Bonds shall be redeemed only in the principal amount of $5,000 and integral

multiples thereof. The District shall, at least forty-five (45) days prior to the redemption date

(unless a shorter time period shall be satisfactory to the Bond Registrar) notify the Bond Registrar of such redemption date and of the principal amount and maturity or maturities of

Bonds to be redeemed. For purposes of any redemption of less than all of the outstanding Bonds

of a single maturity, the paricular Bonds or portions of Bonds to be redeemed shall be selected

by lot by the Bond Registrar from the Bonds of such maturity by such method of lottery as the

Bond Registrar shall deem fair and appropriate; provided that such lottery shall provide for the

selection for redemption of Bonds or portions thereof so that any $5,000 Bond or $5,000 portion

of a Bond shall be as likely to be called for redemption as any other such $5,000 Bond or $5,000

portion. The Bond Registrar shall make such selection upon the earlier of the irrevocable deposit of funds with an escrow agent sufficient to pay the redemption price of the Bonds to be

redeemed or the time of the giving of official notice of redemption.

The Bond Registrar shall promptly notify the District in writing of the Bonds or portions

of Bonds selected for redemption and, in the case of any Bond selected for partial redemption, the principal amount thereof to be redeemed. Section 6. Redemption Procedure. Unless waived by any holder of Bonds to be redeemed, notice of the call for any such redemption shall be given by the Bond Registrar on behalf of the District by mailing the redemption notice by first class mail at least thiry (30) days and not more than sixty (60) days prior to the date fixed for redemption to the registered owner of the Bond or Bonds to be redeemed at the address shown on the Bond Register or at such other address as is furnished in writing by such registered owner to the Bond Registrar.

-9- All notices of redemption shall state:

(1) the redemption date,

(2) the redemption price,

(3) if less than all outstanding Bonds are to be redeemed, the identification (and, in the case of parial redemption, the respective principal amounts) of the Bonds to be redeemed,

(4) that on the redemption date the redemption price wil become due and payable upon each such Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date,

(5) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the principal corporate trust office of the Bond Registrar, and

(6) such other information then required by custom, practice or industry standard. Prior to any redemption date, the District shall deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date.

Notice of redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the District shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to the redemption date shall be payable as herein provided for payment of interest. Upon surrender for any parial redemption of any Bond, there shall be prepared for the registered holder a new Bond or Bonds of the same maturity in the amount of the unpaid principaL.

-10- If any Bond or portion of Bond called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the redemption date at the rate borne by the Bond or portion of Bond so called for redemption. All Bonds which have been redeemed shall be cancelled and destroyed by the Bond Registrar and shall not be reissued.

Section 7. Form of Bond. The Bonds shall be in substantially the following form; provided, however, that if the text of the Bond is to be printed in its entirety on the front side of the Bond, then paragraph (2) and the legend, "See Reverse Side for Additional Provisions", shall be omitted and paragraphs (6) through (11) shall be inserted immediately after paragraph (1):

-11- (Form of Bond - Front Side) REGISTERED REGISTERED No. $ UNITED STATES OF AMERICA

STATE OF ILLINOIS

COUNTIES OF Wll''NEBAGO AND BOONE

COMMUNITY HIGH SCHOOL DISTRICT NUMER 207

GENERAL OBLIGATION LIMITED BOND, SERIES 2007

See Reverse Side for Additional Provisions

Interest Maturity Dated Rate: _ % Date: Februar 1,20_ Date: Februar 1, 2007 CUSIP

Registered Owner:

Principal Amount:

(1) KNOW ALL MEN BY THESE PRESENTS, that Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District"), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns as hereinafter provided, on the Maturity Date identified above, the Principal

Amount identified above and to pay interest (computed on the basis of a 360-day year of twelve

30-day months) on such Principal Amount from the date of this Bond or from the most recent interest payment date to which interest has been paid at the Interest Rate per annum set forth above on February 1 and August 1 of each year, commencing August 1, 2007, until said

Principal Amount is paid. Principal of this Bond is payable in lawful money of the United States of America upon presentation and surrender hereof at the principal corporate trust office of Bond

Trust Services Corporation, Rosevile, Minnesota, as bond registrar and paying agent (the "Bond

Registrar"). Payment of the installments of interest shall be made to the Registered Owner

-12- hereof as shown on the registration books of the Distrct maintained by the Bond Registrar, at the close of business on the 15th day of the month next preceding each interest payment date and shall be paid by check or draft of the Bond Registrar, payable upon presentation in lawful money of the United States of America, mailed to the address of such Registered Owner as it appears on such registration books or at such other address furnished in writing by such Registered Owner to the Bond Registrar.

(2) Reference is hereby made to the further provisions of this Bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as if set forth at this place.

(3) It is hereby certified and recited that all conditions, acts and things required by law to exist or to be done precedent to and in the issuance of this Bond did exist, have happened, been done and performed in regular and due form and time as required by law; that the indebtedness of the District, including the issue of bonds of which this is one, does not exceed any limitation imposed by law; and that provision has been made for the collection of a direct annual tax to pay the interest hereon as it falls due and also to pay and discharge the principal hereof at maturity. Although this Bond constitutes a general obligation of the District and no limit exists on the rate of said direct annual tax, the amount of said tax is limited by the provisions of the Property Tax Extension Limitation Law of the State of Ilinois, as amended (the

"Law"). The Law provides that the annual amount of the taxes to be extended to pay the issue of bonds of which this Bond is one and all other limited bonds (as defined in the Local

Government Debt Reform Act of the State of Ilinois, as amended) heretofóre and hereafter issued by the District shall not exceed the debt service extension base (as defined in the Law) of the District (the "Base"). The District is authorized to issue from time to time additional limited

-13- bonds payable from the Base, as permitted by law, and to determine the lien priority of payments to be made from the Base to pay the District's limited bonds.

(4) This Bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Bond Registrar.

-14- (5) IN WITNESS WHEREOF, said Community High School District Number 207, Winnebago and Boone Counties, Ilinois, by its Board of Education, has caused this Bond to be

signed by the President and Secretar of said Board of Education, and to be registered, numbered

and countersigned by the School Treasurer who receives the taxes of the District, all as of the

Dated Date identified above.

President, Board

Secretar, Board. ducation Registered, Numbered and Countersigned: ~ ~e1tJ?(~pp Schoo Treasurer ~

Date of Authentication: ,20_

CERTIFICATE Bond Registrar and Paying Agent: OF Bond Trust Services Corporation, AUTENTICATION Rosevile, Minnesota

This Bond is one of the Bonds described in the within mentioned resolution and is one of the General Obligation Limited Bonds, Series 2007, of Community High School District Number 207, Winnebago and Boone Counties, Ilinois.

BOND TRUST SERVICES CORPORATION, as Bond Registrar

By (Manual Signature) Authorized Officer

-15- (Form of Bond - Reverse Side)

COMMUNITY HIGH SCHOOL DISTRICT NUMBER 207

WINNEBAGO AND BOONE COUNTIES, ILLINOIS

GENERAL OBLIGATION LIMITED BOND, SERIS 2007

(6) This Bond is one of a series of bonds issued by the District for working cash fund purposes, in full compliance with the provisions of the School Code of the State of Ilinois, and the Local Government Debt Reform Act of the State of Ilinois, and all laws amendatory thereof and supplementary thereto, and is authorized by the Board of Education of the District by resolutions duly and properly adopted for that purpose, in all respects as provided by law.

(7) Bonds of the issue of which this Bond is one are subject to redemption prior to maturity at the option of the District as a whole, or in par in integral multiples of $5,000 in any order of their maturity as determined by the District (less than all the Bonds of a single maturity to be selected by lot by the Bond Registrar), on Februar 1,2015, and on any date thereafter, at the redemption price of par plus accrued interest to the redemption date.

(8) Notice of any such redemption shall be sent by first class mail not less than thirty

(30) days nor more than sixty (60) days prior to the date fixed for redemption to the registered owner of each Bond to be redeemed at the address shown on the registration books of the Distrct maintained by the Bond Registrar or at such other address as is furnished in writing by such registered owner to the Bond Registrar. When so called for redemption, this Bond wil cease to bear interest on the specified redemption date, provided funds for redemption are on deposit at the place of payment at that time, and shall not be deemed to be outstanding.

(9) This Bond is transferable by the registered holder hereof in person or by his attorney duly authorized in writing at the principal corporate trust office of the Bond Registrar in

Rosevile, Minnesota, but only in the manner, subject to the limitations and upon payment of the

-16- charges provided in the authorizing resolution, and upon surrender and cancellation of this Bond.

Upon such transfer a new Bond or Bonds of authorized denominations of the same maturity and

for the same aggregate principal amount wil be issued to the transferee in exchange therefor.

(10) The Bonds are issued in fully registered form in the denomination of $5,000 each or authorized integral multiples thereof. This Bond may be exchanged at the principal corporate trust office of the Bond Registrar for a like aggregate principal amount of Bonds of the same maturity of other authorized denominations, upon the terms set forth in the authorizing resolution. The Bond Registrar shall not be required to transfer or exchange any Bond during the period beginning at the close of business on the 15th day of the month next preceding any interest payment date on such Bond and ending at the opening of business on such interest payment date, nor to transfer or exchange any Bond after notice calling such Bond for redemption has been mailed, nor during a period of fifteen (15) days next preceding mailing of a notice of redemption of any Bonds.

(11) The District and the Bond Registrar may deem and treat the registered holder hereof as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof and interest due hereon and for all other purposes and neither the District nor the Bond

Registrar shall be affected by any notice to the contrary.

(ASSIGNMENT)

FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto

(N ame and Address of Assignee) the within Bond and does hereby irrevocably constitute and appoint

attorney to transfer the said Bond on the books kept for registration thereof with full power of substitution in the premises.

-17- Dated: ! 11'1 / D'l Q .~ C\~\ Cl ~ -L Signature guaranteed:

NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears upon the face of the withi Bond in every paricular, without alteration or enlargement or any change whatever.

Section 8. Sale of Bonds. The Bonds hereby authorized shall be executed as in this

Resolution provided as soon after the passage hereof as may be, and thereupon be deposited with the School Treasurer who receives the taxes of the District, and be by said Treasurer delivered to

Bankers' Bank, Madison, Wisconsin (the "Purchaser"), upon receipt of the purchase price therefor, the same being $620,937.50, plus accrued interest to date of delivery; the contract for the sale of the Bonds heretofore entered into (the "Purchase Contract") is in all respects ratifed, approved and confimed, it being hereby found and determied that the Bonds have been sold at such price and bear interest at such rates that neither the true interest cost (yield) nor the net interest rate received upon such sale exceed the maxium rate otherwise authorized by Illois law and that the Purchase Contract is in the best interests of the District and that no person holding any offce of the District, either by election or appointment, is in any manner financially interested directly in his own name or indirectly in the name of any other person, association, trust or corporation, in the Purchase Contract for the purchase of the Bonds; the surety bond executed by said Treasurer in connection with the issuance of the Bonds as required by Section 19-6 of the

Act is hereby approved and shall be fied with the Regional Superintendent of Schools having jurisdiction over the District; and the Bonds before being issued shall be registered, numbered and countersigned by said Treasurer, such registration being made in a book provided for that purpose, in which shall be entered the record of the resolution authorizing the Board to borrow said money and a description of the Bonds issued, including the number, date, to whom issued, amount, rate of interest and when due.

-18- The use by the Purchaser of any Preliminary Official Statement and any final Official

Statement relating to the Bonds (the "Offcial Statement") is hereby ratified, approved and authorized; the execution and delivery of the Official Statement is hereby authorized; and the officers of the Board are hereby authorized to take any action as may be required on the part of the District to consummate the transactions contemplated by the Purchase Contract, this

Resolution, said Preliminar Official Statement, the Official Statement and the Bonds.

Section 9. Tax Levy. In order to provide for the collection of a direct annual tax to pay the interest on the Bonds as it falls due, and also to pay and disèharge the principal thereof at maturity, there be and there is hereby levied upon all the taxable property within the District a direct annual tax for each of the years while the Bonds or any of them are outstanding, and that there be and there is hereby levied upon all of the taxable property in the District, the following direct annual tax, to-wit:

FOR THE YEAR A TAX TO PRODUCE TH SUM OF:

2006 $ 22,700.00 for interest up to and including Februar 1, 2008 2007 $ 17,390.00 for interest 2008 $ 27,650.00 for interest 2009 $ 27,650.00 for interest 2010 $ 27,650.00 for interest 2011 $ 27,650.00 for interest 2012 $ 27,650.00 for interest 2013 $ 27,650.00 for interest 2014 $ 27,650.00 for interest 2015 $ 27,650.00 for interest 2016 $ 27,650.00 for interest 2017 $ 27,650.00 for interest 2018 $ 27,650.00 for interest 2019 $ 127,650.00 for interest and principal 2020 $ 248,300.00 for interest and principal 2021 $ 213,400.00 for interest and principal 2022 $ 104,500.00 for interest and principal

-19- Principal or interest maturing at any time when there are not sufficient funds on hand

from the foregoing tax levy to pay the same shall be paid from the general funds of the District,

and the fund from which such payment was made shall be reimbursed out of the taxes hereby

levied when the same shall be collected.

The District covenants and agrees with the purchasers and the holders of the Bonds that

so long as any of the Bonds remain outstanding, the District wil take no action or fail to take any

action which in any way would adversely affect the ability of the District to levy and collect the foregoing tax levy and the District and its officers wil comply with all present and future

applicable laws in order to assure that the foregoing taxes wil be levied, extended and collected

as provided herein and deposited in the fund established to pay the principal of and interest on

the Bonds.

Section 10. Filng of Resolution. Forthwith upon the passage of this Resolution, the

Secretary of the Board is hereby directed to file a certified copy of this Resolution with the

County Clerks of Winnebago and Boone Counties, Ilinois (the "County Clerks"), and it shall be the duty of the County Clerks to annually in and for each of the years 2006 to 2022, inclusive, ascertain the rate necessary to produce the tax herein levied, and extend the same for collection on the tax books against all of the taxable property within the Distrct in connection with other taxes levied in each of said years for school purposes, in order to raise the respective amounts aforesaid and in each of said years such annual tax shall be computed, extended.and collected in the same manner as now or hereafter provided by law for the computation, extension and collection of taxes for general school purposes of the District, and when collected, the taxes hereby levied shall be placed to the credit of the special fund to be designated "School Bond and

Interest Fund of 2007" (the "Bond Fund"), which taxes are hereby irevocably pledged to and shall be used only for the purpose of paying the principal of and interest on the Bonds; and a

-20- certified copy of this Resolution shall also be filed with the School Treasurer who receives the

taxes of the District. Interest earings on the Bond Fund and the Working Cash Fund of the

District have not been eararked or restrcted by the Board for a designated purpose. Section 11. Limitation on Extension; General Obligation Pledge; Additional

Obligations. Notwithstanding any other provision of this Resolution, the annual amount of the

taxes to be extended by the County Clerks to pay the Bonds and all other limited bonds (as

defined in the Debt Reform Act) heretofore and hereafter issued by the Distrct shall not exceed

the debt service extension base (as defined in the Property Tax Extension Limitation Law of the

State of Ilinois, as amended) of the Distrct (the "Base").

No limit, however, exists on the rate of the direct annual tax levied herein, and the Bonds

shall constitute a general obligation of the District.

Payments on the Bonds from the Base will be made on a parity with the payments on the

District's outstanding General Obligation Limited School Bonds, Series 1998, dated October 1,

1998, General Obligation Limited School Bonds, Series 2004A, dated June 15, 2004, General

Obligation Limited Bonds, Series 2005A, dated March 15, 2005, Taxable General Obligation

Limited Bonds, Series 2005B, dated March 15, 2005, and General Obligation Limited Tax

Refunding Bonds, Series 2005D, dated March 15,2005. The District is authorized to issue from time to time additional limited bonds payable from the Base, as permitted by law, and to determine the lien priority of payments to be made from the Base to pay the District's limited bonds.

Section 12. Use of Bond Proceeds. All moneys derived from the issuance of the Bonds hereby authorized shall be used only for the purpose and in the manner provided by the Act.

Accrued interest received on the delivery of the Bonds is hereby appropriated for the purpose of paying first interest due on the Bonds and is hereby ordered deposited into the Bond Fund.

-21- Principal proceeds of the Bonds in the amount of $14,672.36 are hereby appropriated to pay a portion of the interest due on the Bonds on August 1, 2007, and on August 1, 2008. The remaining principal proceeds of the Bonds and any premium received on the delivery of the

Bonds are hereby appropriated to pay the costs of issuance of the Bonds and for working cash fund purposes, and that portion thereof not needed to pay such costs shall be set aside in a separate fund known and designated as the "Working Cash Fund of Community High School

District Number 207, Winnebago and Boone Counties, Ilinois," which said fund shall be held apart, maintained and administered as provided in Article 20 of the Act at least until all the

Bonds have been retired, and shall not be used for any other purpose whatsoever, it being the present intention and reasonable expectation of the Board that all of said proceeds of the Bonds wil be used to improve the sites of, build and equip additions to and alter, repair and equip the existing school buildings of the Distrct (the "Project") after transfer of funds to the appropriate operating fund of the Distrct in accordance with the applicable provisions of the Act.

Section 13. Non-Arbitrage and Tax-Exemption. One purpose of this Section is to set forth various facts regarding the Bonds and to establish the expectations of the Board and the

District as to future events regarding the Bonds and the use of Bond proceeds. The certifications, covenants and representations contained herein and at the time of the Closing are made on behalf of the District for the benefit of the owners from time to time of the Bonds. In addition to providing the certifications, covenants and representations contained herein, the District hereby covenants that it wil not take any action, omit to take any action or permt the taking or omission of any action within its control (including, without limitation, making or permitting any use of the proceeds of the Bonds) if taking, permitting or omitting to take such action would cause any of the Bonds to be an arbitrage bond or a private activity bond within the meaning of the hereinafter defined Code or would otherwise cause the interest on the Bonds to be included in the

-22- gross income of the recipients thereof for federal income tax purposes. The District acknowledges that, in the event of an examination by the Internal Revenue Service of the exemption from federal income taxation for interest paid on the Bonds, under present rules, the

District is treated as the "taxpayer" in such examination and agrees that it wil respond in a commercially reasonable manner to any inquiries from the Internal Revenue Service in connection with such an examination. The Board and the District certify, covenant and represent as follows:

1.1. Definitions. In addition to such other words and terms used and defined in this Resolution, the following words and terms used in this Section shall have the following meanings unless, in either case, the context or use clearly indicates another or different meaning is intended:

"Affliated Person" means any Person that (a) at any time during the six months prior to the execution and delivery of the Bonds, (i) has more than five percent of the voting power of the governing body of the District in the aggregate vested in its directors, officers, owners, and employees or, (ii) has more than five percent of the voting power of its governing body in the aggregate vested in directors, officers, board members or employees of the District or (b) during the one-year period beginning six months prior to the execution and delivery of the Bonds, (i) the composition of the governing body of which is modified or established to reflect (directly or indirectly) representation of the interests of the District (or for which an agreement, understanding, or arrangement relating to such a modification or establishment during that one-year period) or (ii) the composition of the governing body of the District is modified or established to reflect (directly or indirectly) representation of the interests of such Person (or for which an agreement, understanding, or arrangement relating to such a modification or establishment during that one-year period).

"Bond Counsel" means Chapman and Cutler LLP or any other nationally recognized firm of attorneys experienced in the field of municipal bonds whose opinions are generally accepted by purchasers of municipal bonds.

"Capital Expenditures" means costs of a type that would be properly chargeable to a capital account under the Code (or would be so chargeable with a proper election) under federal income tax principles if the Distrct were treated as a corporation subject to federal income taxation, taking into account the definition of Placed-in-Service set forth herein.

"Closing" means the first date on which the District is receiving the purchase price for the Bonds.

-23- "Code" means the Internal Revenue Code of 1986, as amended.

"Commingled Fund" means any fund or account containing both Gross Proceeds and an amount in excess of $25,000 that are not Gross Proceeds if the amounts in the fund or account are invested and accounted for, collectively, without regard to the source of funds deposited in the fund or account. An open-ended regulated investment company under Section 851 of the Code is not a Commingled Fund.

"Control" means the possession, directly or indirectly through others, of either of the following discretionar and non-ministerial rights or powers over another entity:

(a) to approve and to remove without cause a controlling portion of the governing body of a Controlled Entity; or

(b) to require the use of funds or assets of a Controlled Entity for any purpose.

"Controlled Entity" means any entity or one of a group of entities that is subject to Control by a Controlling Entity or group of Controllng Entities.

"Controlled Group" means a group of entities directly or indirectly subject to Control by the same entity or group of entities, including the entity that has Control of the other entities.

"Controllng Entity" means any entity or one of a group of entities directly or indirectly having Control of any entities or group of entities.

"Costs of Issuance" means the costs of issuing the Bonds, including underwriters' discount and legal fees.

"De minimis Amount of Original Issue Discount or Premium" means with respect to an obligation (a) any original issue discount or premium that does not exceed two percent of the stated redemption price at maturity of the Bonds plus (b) any original issue premium that is attributable exclusively to reasonable underwriter's compensation.

"External Commingled Fund" means a Commingled Fund in which the District and all members of the same Controlled Group as the Distrct own, in the aggregate, not more than ten percent of the beneficial interests.

"GIC" means (a) any investment that has specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate and (b) any agreement to supply investments on two or more future dates (e.g., a forward supply contract).

"Gross Proceeds" means amounts in the Bond Fund and the Project Fund.

-24- "Net Sale Proceeds" means amounts actually or constrctively received from the sale of the Bonds reduced by any such amounts that are deposited in a reasonably required reserve or replacement fund for the Bonds.

"Person" means any entity with standing to be sued or to sue, including any natural person, corporation, body politic, governmental unit, agency, authority, parnership, trst, estate, association, company, or group of any of the above.

"Placed-in-Service" means the date on which, based on all facts and circumstances (a) a facility has reached a degree of completion that would permit its operation at substantially its design level and (b) the facility is, in fact, in operation at such leveL.

"Private Business Use" means any use of the Project by any Person other than a state or local government unit, including as a result of (i) ownership, (ii) actual or beneficial use pursuant to a lease or a management, service, incentive payment, research or output contract or (iii) any other similar arrangement, agreement or understanding, whether written or oral, except for use of the Project on the same basis as the general public. Private Business Use includes any formal or informal arrangement with any person other than a state or local governmental unit that conveys special legal entitlements to any portion of the Project that is available for use by the general public or that conveys to any person other than a state or local governmental unit any special economic benefit with respect to any portion of the Project that is not available for use by the general public.

"Project Fund" means that portion of the fund or funds of the District from which the costs of the Project are being paid.

"Qualifed Administrative Costs of Investments" means (a) reasonable, direct administrative costs (other than caring costs) such as separately stated brokerage or selling commissions but not legal and accounting fees, recordkeeping, custody and similar costs; or (b) all reasonable administrative costs, direct or indirect, incurred by a publicly offered regulated investment company or an External Commingled Fund.

"Qualifed Tax Exempt Obligations" means (a) any obligation described in Section 103(a) of the Code, the interest on which is excludable from gross income of the owner thereof for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax imposed by Section 55 of the Code; (b) an interest in a regulated investment company to the extent that at least ninety-five percent of the income to the holder of the interest is interest which is excludable from gross income under Section 103 of the Code of any owner thereof for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax imposed by Section 55 of the Code; and (c) certificates of indebtedness issued by the United States Treasury pursuant to the Demand Deposit State and Local Government Series program described in 31 c.F.R. par 344.

-25- "Rebate Fund" means the fund, if any, identified and defined in paragraph 4.2 herein.

"Rebate Provisions" means the rebate requirements contained in Section 148(f) of the Code and in the Regulations.

"Regulations" means United States Treasury Regulations dealing with the tax -exempt bond provisions of the Code.

"Reimbursed Expenditures" means expenditures of the District paid prior to Closing to which Sale Proceeds or investment earnings thereon are or wil be allocated.

"Sale Proceeds" means amounts actually or constructively received from the sale of the Bonds, including (a) amounts used to pay underwriters' discount or compensation and accrued interest, other than accrued interest for a period not greater than one year before Closing but only if it is to be paid within one year after Closing and (b) amounts derived from the sale of any right that is part of the terms of a Bond or is otherwise associated with a Bond (e.g., a redemption right).

"Yield" means that discount rate which when used in computing the present value of all payments of principal and interest paid and to be paid on an obligation (using semiannual compounding on the basis of a 360-day year) produces an amount equal to the obligation's purchase price (or in the case of the Bonds, the issue price as established in paragraph 5.1 hereof), including accrued interest.

"Yield Reduction Payment" means a rebate payment or any other amount paid to the United States in the same manner as rebate amounts are required to be paid or at such other time or in such manner as the Internal Revenue Service may prescribe that wil be treated as a reduction in Yield of an investment under the Regulations.

2.1. Purpose of the Bonds. The Bonds are being issued to finance the Project in a prudent manner consistent with the revenue needs of the District. A breakdown of the sources and uses of funds is set forth in the preceding Section of this Resolution. At least 75% of the sum of (i) Sale Proceeds plus (ii) investment earnings thereon during the period ending on the date of completion of the Project, less (iii) Costs of Issuance paid from Sale Proceeds or investment earings thereon, less (iv) Sale Proceeds or investment earnings thereon deposited in a reasonably required reserve or replacement fund, are expected to be used for construction purposes with respect to property owned by a governmental unit or a Section 501(c)(3) organization.

2.2. The Project - Binding Commitment and Timing. The District has incurred or will, within six months of the Closing, incur a substantial binding obligation (not subject to contingencies within the control of the District or any member of the same Controlled Group as the Distrct) to a third par to expend at least five percent of the Net Sale Proceeds on the Project. It is expected that the work of acquiring and constructing the Project and the expenditure of amounts deposited into the Project Fund wil continue

-26- to proceed with due diligence through February 1, 2010, at which time it is anticipated that all Sale Proceeds and investment earings thereon wil have been spent.

It is expected that the Sale Proceeds deposited into the Project Fund, including investment earnings on the Project Fund, wil be spent to pay costs of the Project and interest on the Bonds not later than the date set forth in the preceding paragraph, the investment earnings on the Bond Fund wil be spent to pay interest on the Bonds, or to the extent permitted by law, investment earings on amounts in the Project Fund and the Bond Fund wil be commingled with substantial revenues from the governmental operations of the District, and the earnings are reasonably expected to be spent for governmental purposes within six months of the date earned. Interest earnings on the Project Fund and the Bond Fund have not been earmarked or restrcted by the Board for a designated purpose. Except for any accrued interest on the Bonds used to pay first interest due on the Bonds, no proceeds of the Bonds wil be used more than 30 days after the date of issue of the Bonds for the purpose of paying any principal or interest on any issue of bonds, notes, certificates or warrants or on any installment contract or other obligation of the District or for the purpose of replacing any funds of the Distrct used for such purpose.

2.3. Reimbursement. None of the Sale Proceeds or investment earnings thereon wil be used for Reimbursed Expenditures.

2.4. Working Capital. All Sale Proceeds and investment earnings thereon wil be used, directly or indirectly, to finance Capital Expenditures other than the following:

(a) an amount not to exceed five percent of the Sale Proceeds for working capital expenditures directly related to Capital Expenditures financed by the Bonds;

(b) payments of interest on the Bonds for a period commencing at Closing and ending on the later of the date three years after Closing or one year after the date on which the Project is Placed-in-Service;

(d) payments of rebate or Yield Reduction Payments made to the United States under the Regulations;

(e) principal of or interest on the Bonds paid from unexpected excess Sale Proceeds and investment earings thereon;

(f) fees for the Credit Facility; and

(g) investment earnings that are commingled with substantial other revenues and are expected to be allocated to expenditures within six months.

-27- 2.5. Consequences of Contrary Expenditure. The District acknowledges that if Sale Proceeds and investment earnings thereon are spent for non-Capital Expenditures other than as permitted by paragraph 2.4 hereof, a like amount of then available funds of the District wil be treated as unspent Sale Proceeds.

2.6. Investment of Bond Proceeds. Not more than 50% of the Sale Proceeds and investment earnings thereon are or wil be invested in investments (other than Qualified Tax Exempt Obligations) having a Yield that is substantially guaranteed for four years or more. No portion of the Bonds is being issued solely for the purpose of investing a portion of Sale Proceeds or investment earings thereon at a Yield higher than the Yield on the Bonds.

2.7. No Grants. None of the Sale Proceeds or investment earnings thereon wil be used to make grants to any person.

2.8. Hedges. Neither the District nor any member of the same Controlled Group as the District has entered into or expects to enter into any hedge (e.g., an interest rate swap, interest rate cap, futures contract, forward contract or an option) with respect to the Bonds. The District acknowledges that any such hedge could affect, among other things, the calculation of Bond Yield under the Regulations. The Internal Revenue Service could recalculate Bond Yield if the failure to account for the hedge fails to clearly reflect the economic substance of the transaction.

The District also acknowledges that if it acquires a hedging contract with an investment element (including e.g., an off-market swap agreement, or any cap agreement for which all or a portion of the premium is paid at, or before the effective date of the cap agreement), then a portion of such hedging contract may be treated as an investment of Gross Proceeds of the Bonds, and be subject to the fair market purchase price rules, rebate and yield restriction. The District agrees not to use proceeds of the Bonds to pay for any such hedging contract in whole or in par. The District also agrees that it wil not give any assurances to any Bond holder or any credit or liquidity enhancer with respect to the Bonds that any such hedging contract wil be entered into or maintained. The District recognizes that if a portion of a hedging contract is determined to be an investment of gross proceeds, such portion may not be fairly priced even if the hedging contract as a whole is fairly priced.

2.9. Internal Revenue Service Audits. The District represents that the Internal Revenue Service has not contacted the District regarding any obligations issued by or on behalf of the District. To the best of the knowledge of the Distrct, no such obligations of the District are currently under examination by the Internal Revenue Service.

3.1. Use of Proceeds. (a) The use of the Sale Proceeds and investment earnings thereon and the funds held under this Resolution at the time of Closing are described in the preceding Section of this Resolution. No Sale Proceeds wil be used to pay for goods or services to be received over a period of years prior to the date such goods or services are to be received. No Sale Proceeds or any investment earnings

-28- thereon wil be used to pay for or otherwise acquire goods or services from an Affiliated Person.

(b) Only the funds and accounts described in said Section will be funded at Closing. There are no other funds or accounts created under this Resolution, other than the Rebate Fund if it is created as provided in paragraph 4.2 hereof.

(d) Any Costs of Issuance incurred in connection with the issuance of the Bonds to be paid by the District will be paid at the time of Closing.

(e) The costs of the Project wil be paid from the Project Fund and no other moneys (except for investment earings on amounts in the Project Fund) are expected to be deposited therein.

3.2. Purpose of Bond Fund. The Bond Fund wil be used primarly to achieve a proper matching of revenues and earings with principal and interest payments on the Bonds in each bond year. It is expected that the Bond Fund wil be depleted at least once a year, except for a reasonable car over amount not to exceed the greater of (a) the earings on the investment of moneys in the Bond Fund for the immediately preceding bond year or (b) 1/12th of the principal and interest payments on the Bonds for the immediately preceding bond year.

3.3. No Other Gross Proceeds. (a) Except for the Bond Fund and the Project Fund, and except for investment earnings that have been commingled as described in paragraph 2.2 and any credit enhancement or liquidity device related to the Bonds, after the issuance of the Bonds, neither the District nor any member of the same Controlled Group as the District has or wil have any property, including cash, securities or wil have any property, including cash, securities or any other property held as a passive vehicle for the production of income or for investment purposes, that constitutes:

(i) Sale Proceeds;

(ii) amounts in any fund or account with respect to the Bonds (other than the Rebate Fund);

(iii) amounts that have a sufficiently direct nexus to the Bonds or to the governmental purpose of the Bonds to conclude that the amounts would have been used for that governmental purpose if the Bonds were not used or to be used for that governmental purpose (the mere availability or preliminar eararking of such amounts for a governmental purpose, however, does not itself establish such a sufficient nexus);

(iv) amounts in a debt service fund, redemption fund, reserve fund, replacement fund or any similar fund to the extent reasonably expected to be used

-29- directly or indirectly to pay principal of or interest on the Bonds or any amounts for which there is provided, directly or indirectly, a reasonable assurance that the amount wil be available to pay principal of or interest on the Bonds or any obligations under any credit enhancement or liquidity device with respect to the Bonds, even if the District encounters financial difficulties;

(v) any amounts held pursuant to any agreement (such as an agreement to maintain certain levels of types of assets) made for the benefit of the Bondholders or any credit enhancement provider, including any liquidity device or negative pledge (e.g., any amount pledged to pay principal of or interest on an issue held under an agreement to maintain the amount at a paricular level for the direct or indirect benefit of holders of the Bonds or a guarantor of the Bonds); or

(vi) amounts actually or constructively received from the investment and reinvestment of the amounts described in (i) or (ii) above.

(b) No compensating balance, liquidity account, negative pledge of property held for investment purposes required to be maintained at least at a paricular level or similar arrangement exists with respect to, in any way, the Bonds or any credit enhancement or liquidity device related to the Bonds.

(c) The term of the Bonds is not longer than is reasonably necessary for the governmental purposes of the Bonds. The average reasonably expected economic life of the Project is at least 20 years. The weighted average maturity of the Bonds does not exceed 20 years and does not exceed 120 percent of the average reasonably expected economic life of the Project. The maturity schedule of the Bonds (the "Principal Payment Schedule ") is based on an analysis of revenues expected to be available to pay debt service on the Bonds. The Principal Payment Schedule is not more rapid (i.e., having a lower average maturity) because a more rapid schedule would place an undue burden on tax rates and cause such rates to be increased beyond prudent levels, and would be inconsistent with the governmental purpose of the Bonds as set forth in paragraph 2.1 hereof.

4.1. Compliance with Rebate Provisions. The District covenants to take such actions and make, or cause to be made, all calculations, transfers and payments that may be necessar to comply with the Rebate Provisions applicable to the Bonds. The District wil make, or cause to be made, rebate payments with respect to the Bonds in accordance with law.

4.2. Rebate Fund. The District is hereby authorized to create and establish a special fund to be known as the Rebate Fund (the "Rebate Fund"), which, if created, shall be continuously held, invested, expended and accounted for in accordance with this Resolution. Moneys in the Rebate Fund shall not be considered moneys held for the benefit of the owners of the Bonds. Except as provided in the Regulations, moneys in the Rebate Fund (including earnings and deposits therein) shall be held in trust for payment

-30- to the United States as required by the Rebate Provisions and by the Regulations and as contemplated under the provisions of this Resolution.

4.3. Records. The District agrees to keep and retain or cause to be kept and retained until six years (three years for the records required by paragraph 4.4(c) hereof) after the Bonds are paid in full adequate records with respect to the investment of all Gross Proceeds and amounts in the Rebate Fund. Such records shall include: (a) purchase price; (b) purchase date; (c) type of investment; (d) accrued interest paid; (e) interest rate; (f) principal amount; (g) maturity date; (h) interest payment date; (i) date of liquidation; and U) receipt upon liquidation.

If any investment becomes Gross Proceeds on a date other than the date such investment is purchased, the records required to be kept shall include the fair market value of such investment on the date it becomes Gross Proceeds. If any investment is retained after the date the last Bond is retired, the records required to be kept shall include the fair market value of such investment on the date the last Bond is retired. Amounts or investments wil be segregated whenever necessary to maintain these records.

4.4. Fair Market Value; Certifcates of Deposit and Investment Agreements. The District wil continuously invest all amounts on deposit in the Rebate Fund, together with the amounts, if any, to be transferred to the Rebate Fund, in any investment permitted under this Resolution. In making investments of Gross Proceeds or of amounts in the Rebate Fund the District shall take into account prudent investment standards and the date on which such moneys may be needed. Except as provided in the next sentence, all amounts that constitute Gross Proceeds and all amounts in the Rebate Fund shall be invested at all times to the greatest extent practicable, and no amounts may be held as cash or be invested in zero yield investments other than obligations of the United States purchased directly from the United States. In the event moneys cannot be invested, other than as provided in this sentence due to the denomination, price or availability of investments, the amounts shall be invested in an interest bearing deposit of a bank with a yield not less than that paid to the general public or held uninvested to the minimum extent necessar.

Gross Proceeds and any amounts in the Rebate Fund that are invested in certificates of deposit or in GICs shall be invested only in accordance with the following provisions:

(a) Investments in certificates of deposit of banks or savings and loan associations that have a fixed interest rate, fixed payment schedules and substantial penalties for early withdrawal shall be made only if either (i) the Yield on the certificate of deposit (A) is not less than the Yield on reasonably comparable direct obligations of the United States and (B) is not less than the highest Yield that is published or posted by the provider to be currently available from the provider on reasonably comparable certificates of deposit offered to the

-31- public or (ii) the investment is an investment in a GIC and qualifies under paragraph (b) below.

(b) Investments in GICs shall be made only if

(i) the bid specifications are in writing, include all material terms of the bid and are timely forwarded to potential providers (a term is material if it may directly or indirectly affect the yield on the GIC);

(ii) the terms of the bid specifications are commercially reasonable (a term is commercially reasonable if there is a legitimate business purpose for the term other than to reduce the yield on the GIC);

(iii) all bidders for the GIC have equal opportunity to bid so that, for example, no bidder is given the opportunity to review others bids (a last look) before bidding;

(iv) any agent used to conduct the bidding for the GIC does not bid to provide the GIC;

(v) at least three of the providers solicited for bids for the GIC are reasonably competitive providers of investments of the type purchased (i.e., providers that have established industry reputations as competitive providers of the type of investments being purchased);

(vi) at least three of the entities that submit a bid do not have a financial interest in the Bonds;

(vii) at least one of the entities that provided a bid is a reasonably competitive provider that does not have a financial interest in the Bonds;

(viii) the bid specifications include a statement notifying potential providers that submission of a bid is a representation that the potential provider did not consult with any other provider about its bid, that the bid was determined without regard to any other formal or informal agreement that the potential provider has with the District or any other person (whether or not in connection with the Bonds) and that the bid is not being submitted solely as a courtesy to the Distrct or any other person for purposes of satisfying the federal income tax requirements relating to the bidding for the GIC;

(ix) the determination of the terms of the GIC takes into account the reasonably expected deposit and drawdown schedule for the amounts to be invested;

-32- (x) the highest-yielding GIC for which a qualifying bid is made (determned net of broker's fees) is in fact purchased; and

(xi) the obligor on the GIC certifies the administrative costs that it is paying or expects to pay to third parties in connection with the GIC.

(c) If a GIC is purchased, the District wil retain the following records with its bond documents until three years after the Bonds are redeemed in their entirety:

(i) a copy of the GIC;

(ii) the receipt or other record of the amount actually paid for the GIC, including a record of any administrative costs paid, and the certification under subparagraph (b )(xi) of this paragraph;

(iii) for each bid that is submitted, the name of the person and entity submitting the bid, the time and date of the bid, and the bid results; and

(iv) the bid solicitation form and, if the terms of the GIC deviated from the bid solicitation form or a submitted bid is modified, a brief statement explaining the deviation and stating the purpose for the deviation.

Moneys to be rebated to the United States shall be invested to mature on or prior to the anticipated rebate payment date. All investments made with Gross Proceeds or amounts in the Rebate Fund shall be bought and sold at fair market value. The fair market value of an investment is the price at which a wiling buyer would purchase the investment from a wiling seller in a bona fide, arm's length transaction. Except for investments specifically described in this Section and United States Treasury obligations that are purchased directly from the United States Treasury, only investments that are traded on an established securities market, within the meaning of regulations promulgated under Section 1273 of the Code, wil be purchased with Gross Proceeds. In general, an "established securities market" includes: (i) property that is listed on a national securities exchange, an interdealer quotation system or certain foreign exchanges; (ii) property that is traded on a Commodities Futures Trading Commission designated board of trade or an interbank market; (iii) property that appears on a quotation medium; and (iv) property for which price quotations are readily available from dealers and brokers. A debt instrument is not treated as traded on an established market solely because it is convertible into property which is so traded.

An investment of Gross Proceeds in an External Commingled Fund shall be made only to the extent that such investment is made without an intent to reduce the amount to be rebated to the United States Government or to create a smaller profit or a larger loss than would have resulted if the transaction had been at ar's length and had the rebate or

-33- Yield restrction requirements not been relevant to the District. An investment of Gross Proceeds shall be made in a Commingled Fund other than an External Commingled Fund only if the investments made by such Commingled Fund satisfy the provisions of this paragraph.

A single investment, or multiple investments awarded to a provider based on a single bid may not be used for funds subject to different rules relating to rebate or yield restriction.

The foregoing provisions of this paragraph satisfy varous safe harbors set forth in the Regulations relating to the valuation of certain types of investments. The safe harbor provisions of this paragraph are contained herein for the protection of the District, who has covenanted not to take any action to adversely affect the tax-exempt status of the interest on the Bonds. The District wil contact Bond Counsel if it does not wish to comply with the provisions of this paragraph and forego the protection provided by the safe harbors provided herein.

4.5. Arbitrage Elections. The President and Secretary of the Board and the School Treasurer of the District are hereby authorized to execute one or more elections regarding certain matters with respect to arbitrage.

4.6. Small Issuer Exception. The District is a governmental unit that has the power to impose a tax or to cause another entity to impose a tax of general applicability that, when collected, may be used for the governmental purposes of the District. The power to impose such tax is not contingent on approval by another governmental unit; a tax of general applicability is one that is not limited to a small number of persons. The District is not subject to Control by any other governmental unit or political subdivision. None of the Bonds is or wil be a "private activity bond" (as defined in Section 141 of the Code). Ninety-five percent or more of the Sale Proceeds wil be used for local governmental activities of the District. Neither the District, any entity that issues tax-exempt bonds on behalf of the District nor any entity subject to Control by the District wil issue, during the calendar year 2007, any tax-exempt bonds in an aggregate face amount in excess of the maximum aggregate face amount (as hereinafter defined). As used herein, (a) "tax-exempt bonds" means obligations of any kind, the interest on which is excludable from gross income of the holders or owners thereof for federal income tax purposes pursuant to Section 103 of the Code but not including (i) "private activity bonds" (as defined in Section 141 of the Code) or (ii) obligations issued to refund another obligation if it is issued not more than 90 days before the redemption of the refunded obligation to the extent the amount of the refunding obligation does not exceed the outstanding amount of the refunded obligation, (b) "aggregate face amount" means, if an issue has more than a De minimis Amount of Original Issue Discount or Premium, the issue price of the issue and otherwise means the face amount of the issue and (c) "maximum aggregate face amount" means, the sum of (i) $5,000,000 and (ii) the aggregate face amount of bonds issued during the calendar year that are allocable to financing construction expenditures for public school facilities, but in no event can the maximum aggregate face amount exceed $10,000,000. As of the date hereof, no tax-

-34- exempt bonds or other obligations (other than the Bonds) have been issued by the District, any entity that issues tax-exempt bonds on behalf of the District or any entity subject to Control by the District during the calendar year 2007. The District does not reasonably expect that it, any entity that issues tax-exempt bonds on behalf of the District or any entity subject to Control by the District (including but not limited to the District) wil issue any such tax -exempt bonds or other obligations within calendar year 2007. Therefore, subject to compliance with all the terms and provisions hereof, the District is excepted from the required rebate of arbitrage profits on the Bonds under Section 148(f)(4)(D) of the Code and from the terms and provisions of this Resolution that need only be compIled with if the District is subject to the arbitrage rebate requirement.

5.1. Issue Price. For purposes of determining the Yield on the Bonds, the purchase price of the Bonds is equal to the first offering price (including accrued interest) at which the Purchaser sold at least ten percent of the principal amount of each maturity of the Bonds to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). All of the Bonds have been the subject of a bona fide initial offering to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers) at prices equal to those set forth in the Official Statement. Based upon prevailing market conditions, such prices are not less than the fair market value of each Bond as of the sale date for the Bonds.

5.2. Yield Limits. Except as provided in paragraph (a) or (b), all Gross Proceeds shall be invested at market prices and at a Yield (after taking into account any Yield Reduction Payments) not in excess of the Yield on the Bonds plus, if only amounts in the Project Fund are subject to this yield limitation, 1/8th of one percent.

The following may be invested without Yield restriction:

(a)(i) amounts on deposit in the Bond Fund (except for capitalized interest) that have not been on deposit under the Resolution for more than 13 months, so long as the Bond Fund continues to qualify as a bona fide debt service fund as described in paragraph 3.2 hereof;

(ii) amounts on deposit in the Project Fund that are reasonably expected to pay for the costs of the Project, costs of issuance of the Bonds, or interest on the Bonds during the three year period beginning on the date of issue of the Bonds prior to three years after Closing;

(iii) amounts in the Bond Fund to be used to pay capitalized interest on the Bonds prior to the earlier of three years after Closing or the payment of all capitalized interest;

(b) (i) An amount not to exceed the lesser of $100,000 or five percent of the Sale Proceeds;

-35- (ii) amounts invested in Qualified Tax Exempt Obligations (to the extent permtted by law and this Resolution);

(iii) amounts in the Rebate Fund;

(iv) all amounts other than Sale Proceeds for the first 30 days after they become Gross Proceeds; and

(v) all amounts derived from the investment of Sale Proceeds or investment earnings thereon for a period of one year from the date received.

5.3. Continuing Nature of Yield Limits. Except as provided in paragraph 7.9 hereof, once moneys are subject to the Yield limits of paragraph 5.2 hereof, such moneys remain Yield restricted until they cease to be Gross Proceeds.

5.4. Federal Guarantees. Except for investments meeting the requirements of paragraph 5.2(a) hereof, investments of Gross Proceeds shall not be made in (a) investments constituting obligations of or guaranteed, directly or indirectly, by the United States (except obligations of the United States Treasury, or investments in obligations issued pursuant to Section 21B(d)(3) of the Federal Home Loan Bank, as amended (e.g., Refcorp Strips)); or (b) federally insured deposits or accounts (as defined in Section 149(b)(4)(B) of the Code). Except as otherwise permitted in the immediately prior sentence and in the Regulations, no portion of the payment of principal or interest on the Bonds or any credit enhancement or liquidity device relating to the foregoing is or will be guaranteed, directly or indirectly (in whole or in part), by the United States (or any agency or instrumentality thereof), including a lease, incentive payment, research or output contract or any similar arangement, agreement or understanding with the United States or any agency or instrumentality thereof. No portion of the Gross Proceeds has been or wil be used to make loans the payment of principal or interest with respect to which is or wil be guaranteed (in whole or in par) by the United States (or any agency or instrmentality thereof). Neither this paragraph nor paragraph 5.5 hereof applies to any guarantee by the Federal Housing Administration, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, the Student Loan Marketing Association or the Bonneville Power Administration pursuant to the Northwest Power Act (16 U.S.c. 839d) as in effect on the date of enactment of the Tax Reform Act of 1984.

5.5. Investments After the Expiration of Temporary Periods, Etc. After the expiration of the temporar period set forth in paragraph 5.2(a)(ii) hereof, amounts in the Project Fund may not be invested in (i) federally insured deposits or accounts (as defined in Section 149(b)( 4 )(B) of the Code) or (ii) investments constituting obligations of or guaranteed, directly or indirectly, by the United States (except obligations of the United States Treasury or investments in obligations issued pursuant to Section 21B(d)(3) of the Federal Home Loan Bank Act, as amended (e.g., Refcorp Strips). Any other amounts that are subject to the yield limitation in paragraph 5.2 hereof because paragraph 5.2(a) hereof is not applicable and amounts not subject to yield restriction only because they are

-36- described in paragraph 5.2(b) hereof, are also subject to the limitation set forth in the preceding sentence.

6.1. Payment and Use Tests. (a) No more than five percent of the Sale Proceeds plus investment earings thereon wil be used, directly or indirectly, in whole or in par, in any Private Business Use. The District acknowledges that, for purposes of the preceding sentence, Gross Proceeds used to pay costs of issuance and other common costs (such as capitalized interest and fees paid for a qualified guarantee or qualified hedge) or invested in a reserve or replacement fund must be ratably allocated among all the purposes for which Gross Proceeds are being used.

(b) The payment of more than five percent of the principal of or the interest on the Bonds wil not be, directly or indirectly (i) secured by any interest in (A) property used or to be used in any Private Business Use or (B) payments in respect of such property or (ii) on a present value basis, derived from payments (whether or not to the District or a member of the same Controlled Group as the District) in respect of property, or borrowed money, used or to be used in any Private Business Use.

(c) No more than the lesser of five percent of the sum of the Sale Proceeds and investment earnings thereon or $5,000,000 wil be used, directly or indirectly, to make or finance loans to any persons. The District acknowledges that, for purposes of the preceding sentence, Gross Proceeds used to pay costs of issuance and other common costs (such as capitalized interest and fees paid for a qualified guarantee or qualified hedge) or invested in a reserve or replacement fund must be ratably allocated among all the purposes for which Gross Proceeds are being used.

(d) No user of the Project other than a state or local governmental unit wil use more than five percent of the Project, in the aggregate, on any basis other than the same basis as the general public.

6.2. I.R.S. Form 8038-G. The information contained in the Information Return for Tax-Exempt Governmental Obligations, Form 8038-G, is true and complete. The District wil file Form 8038-G (and all other required information reporting forms) in a timely manner.

6.3. Bank Qualifcation. (a) The Distrct hereby designates each of the Bonds as a "qualified tax-exempt obligation" for the purposes and within the meaning of Section 265(b)(3) of the Code. In support of such designation, the District hereby certifies that (i) none of the Bonds wil be at anytime a "private activity bond" (as defined in Section 141 of the Code) other than a "qualified 501(c)(3) bond" (as defined in Section 145 of the Code), (ii) as of the date hereof in calendar year 2007, the District has not issued any tax-exempt obligations of any kind other than the Bonds nor have any tax-exempt obligations of any kind been issued on behalf of the District and (iii) not more than $10,000,000 of obligations of any kind (including the Bonds) issued by or on behalf of the District during calendar year 2007 wil be designated for purposes of Section 265(b )(3) of the Code.

-37- (b) The District is not subject to Control by any entity, and there are no entities subject to Control by the District.

(c) On the date hereof, the District does not reasonably anticipate that for calendar year 2007 it will issue any Section 265 Tax-Exempt Obligations (other than the Bonds), or that any Section 265 Tax-Exempt Obligations wil be issued on behalf of it. "Section 265 Tax-Exempt Obligations" are obligations the interest on which is excludable from gross income of the owners thereof under Section 103 of the Code, except for private activity bonds other than qualified 501 (c )(3) bonds, both as defined in Section 141 of the Code. The District wil not issue or permit the issuance on behalf of it or by any entity subject to Control by the District (which may hereafter come into existence) of Section 265 Tax-Exempt Obligations (including the Bonds) that exceed the aggregate amount of $ 10,000,000 during calendar year 2007 unless it first obtains an opinion of Bond Counsel to the effect that such issuance wil not adversely affect the treatment of the Bonds as "qualified tax-exempt obligations" for the purposes and within the meaning of Section 265(b )(3) of the Code.

7.1. Termination; Interest of District in Rebate Fund. The terms and provisions set forth in this Section shall terminate at the later of (a) 75 days after the Bonds have been fully paid and retired or (b) the date on which all amounts remaining on deposit in the Rebate Fund, if any, shall have been paid to or upon the order of the United States and any other payments, if any, required to satisfy the Rebate Provisions of the Code have been made to the United States. Notwithstanding the foregoing, the provisions of paragraph 4.3 hereof shall not terminate until the sixth anniversary of the date the Bonds are fully paid and retired, and the provisions of paragraphs 4.4(c) and 7.9 hereof shall not terminate until the third anniversar of the date the Bonds are fully paid and retired.

7.2. Separate Issue. Since a date that is 15 days prior to the date of sale of the Bonds by the District to the Purchaser, neither the District nor any member of the same Controlled Group as the District has sold or delivered any tax-exempt obligations other than the Bonds that are reasonably expected to be paid out of substantially the same source of funds as the Bonds. Neither the District nor any member of the same Controlled Group as the District wil sell or deliver within 15 days after the date of sale of the Bonds any tax-exempt obligations other than the Bonds that are reasonably expected to be paid out of substantially the same source of funds as the Bonds.

7.3. No Sale of the Project. (a) Other than as provided in the next sentence, neither the Project nor any portion thereof has been, is expected to be, or wil be sold or otherwise disposed of, in whole or in part, prior to the earlier of (i) the last date of the reasonably expected economic life to the District of the property (determined on the date of issuance of the Bonds) or (ii) the last maturity date of the Bonds. The District may dispose of personal property in the ordinar course of an established government program prior to the earlier of (i) the last date of the reasonably expected economic life to the District of the property (determined on the date of issuance of the Bonds) or (ii) the last maturity of the Bonds, provided: (A) the weighted average maturity of the Bonds

-38- financing the personal property is not greater than 120 percent of the reasonably expected actual use of that property for governmental purposes; (B) the District reasonably expects on the issue date that the fair market value of that property on the date of disposition wil be not greater than 25 percent of its cost; (C) the property is no longer suitable for its governmental purposes on the date of disposition; and (D) the District deposits amounts received from the disposition in a commingled fund with substantial tax or other governmental revenues and the District reasonably expects to spend the amounts on governmental programs within six months from the date of the commingling.

(b) The District acknowledges that if Bond-financed property is sold or otherwise disposed of in a manner contrary to (a) above, such sale or disposition may constitute a "deliberate action" within the meaning of the Regulations that may require remedial actions to prevent the Bonds from becoming private activity bonds. The District shall promptly contact Bond Counsel if a sale or other disposition of bond-financed property is considered by the District.

7.4. Purchase of Bonds by District. The District wil not purchase any of the Bonds except to cancel such Bonds.

7.5. First Call Date Limitation. The period between the date of Closing and the first call date of the Bonds is not more than 10-1/2 years.

7.6. Registered Form. The District recognizes that Section 149(a) of the Code requires the Bonds to be issued and to remain in fully registered form in order that interest thereon be exempt from federal income taxation under laws in force at the time the Bonds are delivered. In this connection, the District agrees that it wil not take any action to permit the Bonds to be issued in, or converted into, bearer or coupon form.

7.7. First Amendment. The District acknowledges and agrees that it wil not use, or allow the Project to be used, in a manner which is prohibited by the Establishment of Religion Clause of the First Amendment to the Constitution of the United States of America or by any comparable provisions of the Constitution of the State of Ilinois.

7.8. Future Events. The District acknowledges that any changes in facts or expectations from those set forth herein may result in different Yield restrictions or rebate requirements from those set forth herein. The District shall promptly contact Bond Counsel if such changes do occur.

7.9. Record Retention. The District agrees to keep and retain or cause to be kept and retained sufficient records to support the continued exclusion of the interest paid on the Bonds from federal income taxation and to show that all tax-exempt Bond related returns submitted to the Internal Revenue Service are correct. Such records shall include, but are not limited to, basic records relating to the Bond transaction (including this Resolution and the Bond Counsel opinion); documentation evidencing the expenditure of Bond proceeds; documentation evidencing the use of Bond-financed property by public and private sources (i.e., copies of management contracts and research agreements);

-39- documentation evidencing all sources of payment or security for the Bonds; and documentation pertaining to any investment of Bond proceeds (including the purchase and sale of securities, SLGs subscriptions, yield calculations for each class of investments, actual investment income received from the investment of proceeds, guaranteed investment contracts and rebate calculations). Such records shall be kept for as long as the Bonds are outstanding, plus three (3) years after the later of the final redemption date of the Bonds or the final redemption date of any obligations or series of obligations issued to refund all or a portion of the Bonds.

7.10. Permitted Changes; Opinion of Bond Counsel. The Yield restrictions contained in paragraph 5.2 hereof or any other restriction or covenant contained herein need not be observed or may be changed if such nonobservance or change wil not result in the loss of any exemption for the purpose of federal income taxation to which interest on the Bonds is otherwise entitled and the District receives an opinion of Bond Counsel to such effect. Unless the District otherwise directs, such opinion shall be in such form and contain such disclosures and disclaimers as may be required so that such opinion wil not be treated as a covered opinion or a state or local bond opinion for purposes of Treasury Department regulations governing practice before the Internal Revenue Service (Circular 230) 31 CFR Par 10.

7.11. Successors and Assigns. The terms, provisions, covenants and conditions of this Section shall bind and inure to the benefit of the respective successors and assigns of the Board and the District. 7.12. Expectations. The Board has reviewed the facts, estimates and circumstances in existence on the date of issuance of the Bonds. Such facts, estimates and circumstances, together with the expectations of the District as to future events, are set forth in summary form in this Section. Such facts and estimates are true and are not incomplete in any material respect. On the basis of the facts and estimates contained herein, the District has adopted the expectations contained herein. On the basis of such facts, estimates, circumstances and expectations, it is not expected that Sale Proceeds, investment earings thereon or any other moneys or property wil be used in a manner that wil cause the Bonds to be arbitrage bonds within the meaning of the Rebate Provisions and the Regulations. Such expectations are reasonable and there are no other facts, estimates and circumstances that would materially change such expectations.

The District also agrees and covenants with the purchasers and holders of the Bonds from time to time outstanding that, to the extent possible under Ilinois law, it wil comply with whatever federal tax law is adopted in the future which applies to the Bonds and affects the tax-exempt status of the Bonds.

-40- The Board hereby authorizes the officials of the District responsible for issuing the

Bonds, the same being the President and Secretary of the Board and the School Treasurer who

receives the taxes of the Distrct, to make such further covenants and certifications as may be

necessar to assure that the use thereof will not cause the Bonds to be arbitrage bonds and to

assure that the interest on the Bonds wil be exempt from federal income taxation. In connection

therewith, the District and the Board further agree: (a) through their officers, to make such further specific covenants, representations as shall be truthful, and assurances as may be

necessary or advisable; (b) to consult with counsel approving the Bonds and to comply with such

advice as may be given; (c) to pay to the United States, as necessary, such sums of money representing required rebates of excess arbitrage profits relating to the Bonds; (d) to file such forms, statements, and supporting documents as may be required and in a timely manner; and

(e) if deemed necessar or advisable by their officers, to employ and pay fiscal agents, financial advisors, attorneys, and other persons to assist the District in such compliance.

Section 14. List of Bondholders. The Bond Registrar shall maintain a list of the names and addresses of the holders of all Bonds and upon any transfer shall add the name and address of the new Bondholder and eliminate the name and address of the transferor Bondholder.

Section 15. Duties of Bond Registrar. Ifrequested by the Bond Registrar, the President and Secretary of the Board are authorized to execute the Bond Registrar's standard form of agreement between the District and the Bond Registrar with respect to the obligations and duties of the Bond Registrar hereunder which may include the following:

(a) to act as bond registrar, authenticating agent, paying agent and transfer agent as provided herein;

(b) to maintain a list of Bondholders as set forth herein and to furnish such list to the District upon request, but otherwise to keep such list confidential;

-41- (d) to cancel and/or destroy Bonds which have been paid at maturity or upon earlier redemption or submitted for exchange or transfer;

(e) to furnish the District at least annually a certificate with respect to Bonds cancelled and/or destroyed; and

(f) to furnish the District at least annually an audit confirmation of Bonds paid, Bonds outstanding and payments made with respect to interest on the Bonds.

Section 16. Severability. If any section, paragraph, clause or provision of this

Section 17. Repeal. All resolutions or pars thereof in conflict herewith be and the same are hereby repealed and this Resolution shall be in full force and effect forthwith upon its adoption.

Adopted Januar 17,2007. ~ . ~~\l ~ President, Board bf Education

~~Secretar, B d of Education

-42- Member C0(~ moved and Member Zo.d/~ seconded the motion that said resolution as presented and read by title be adopted. After a full and complete discussion of said resolution, the President directed the

Secretary to call the roll for a vote upon the motion to adopt said resolution.

Upon the roll being called, the following members voted AYE: Wei+f-s ~ F~ i ~'- Fvu i ¡v0¡r I -Z~/ I kU¡¿b,-Kus

The following members voted NAY: AID tV L

Whereupon the President declared the motion cared and said resolution duly adopted, in open meeting approved and signed said resolution and directed the Secretary to record the same in full in the records of the Board of Education of Community High School District Number 207,

Winnebago and Boone Counties, Ilinois, which was done.

Other business not pertinent to the adoption of said resolution was duly transacted at the meeting.

Upon motion duly made, seconded and cared, the meeting was adjourned.

y1w~Secretar, ard of Education STATEOFlLLINOIS ) ) SS COUNTY OF WINNEBAGO )

CERTIFICATION OF MINUTES AND RESOLUTION

I, the undersigned, do hereby certify that I am the duly qualified and acting Secretar of the Board of Education of Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "Board"), and as such official I am the keeper of the records and files of the Board.

I do further certify that the foregoing is a full, tre and complete transcript of that portion of the minutes of the meeting of the Board held on the 17th day of January, 2007, insofar as same relates to the adoption of a resolution entitled:

RESOLUTION providing for the issue of $625,000 General Obligation Limited Bonds, Series 2007, of Community High School District Number 207, Winnebago and Boone Counties, Ilinois, and for the levy of a direct annual tax to pay the principal and interest on said bonds. a true, correct and complete copy of which said resolution as adopted at said meeting appears in the foregoing transcript of the minutes of said meeting.

I do further certify that the deliberations of the Board on the adoption of said resolution were conducted openly, that the vote on the adoption of said resolution was taken openly, that said meeting was held at a specified time and place convenient to the public, that notice of said meeting was duly given to all of the news media requesting such notice, that an agenda for said meeting was posted at the location where said meeting was held and at the principal office of the Board at least 120 hours in advance of the holding of said meeting, that a true, correct and complete copy of said agenda as so posted is attached hereto as Exhibit A, that said meeting was called and held in strict compliance with the provisions of the Open Meetings Act of the State of Ilinois, as amended, the School Code of the State of Ilinois, as amended, and the Local Government Debt Reform Act of the State of Ilinois, as amended, that the Board has complied with all of the provisions of said Acts and said Code and with all of the procedural rules of the Board in the conduct of said meeting and in the adoption of said resolution.

IN WITNESS WHEREOF, I hereunto affix my official signature, this 17th day of Januar, 2007. li()~()~~f3Áli ~ C(),","U~IT¥ lilf3li ~Cl-()()L ()1~Tl?ICT :lfJI

Dr. Randy Gross, Superintendent rgross(§ hononegah.org

Board of Education Office, 307 Salem Street-Rockton, Illinois 61072-2630 Telephone (815)-624-5010; Fax (815) 624-5029

12~(7UlA12 U()Á12U ,"~~TI~(7

DATE: Wednesday, January 17, 2006 PLACE: Hononegah High School, 307 Salem St. Rockton, Illinois 61072, High School Library TIME: 6:00 p.m. Á(7~~UÁ

FINANCE COMMITTEE MEETNG-6:00 p.m. 1. Review Financials on Regular Agenda 2. Tax Appeal Intervention and Appraisal 3. Discuss Bond Resolution

1. CALL TO ORDER - President Kurlinkus (Approx. 6:30 p.m.) 1.1 Roll Call 1.2 Approval of Agenda

3. RETURN TO OPEN SESSION (Approx. 7:00 p.m.)

4. PLEDGE OF ALLEGIANCE 10.7 Adopt Bond Resolution to Issue $625,000 General Obligation Limited Bonds, Series 2007. 10.8 First Reading of Job Descriptions for District Office

11. MISCELLANEOUS

12. CLOSED SESSION 15.1 Go into Closed Session to Review Closed Session Minutes and to discuss land sale/purchase, appointment, employment, compensation, discipline, performance, or dismissal of specific employees of the public body or legal counsel for the public body, including hearing testimony on a complaint lodged against an employee of the public body or against legal counsel for the public body to determine its validity.

13. ACTION ON CLOSED SESSION

14. OTHER

15. PUBLIC COMMENTS

16. ADJOURNMENT STATE OF ILLINOIS ) ) SS COUNTY OF WINNEBAGO )

FILING CERTIFICATE

I, the undersigned, do hereby certify that I am the duly qualified and acting County Clerk of The County of Winnebago, Ilinois, and as such official I do further certify that on the

¿day of Januar, 2007, there was fied in my office a duly certified copy of a resolution entitled:

RESOLUTION providing for the issue of $625,000 General Obligation Limited Bonds, Series 2007, of Community High School District Number 207, Winnebago and Boone Counties, Ilinois, and for the levy of a direct annual tax to pay the principal and interest on said bonds. duly adopted by the Board of Education of Community High School District Number 207,

Winnebago and Boone Counties, Ilinois, on the 17th day of January, 2007, and that the same has been deposited in the official fies and records of my office.

IN WITNESS WHEREOF, I hereunto affix my official signature and the seal of said County, this '3L~a.y of Januar, 2007.

" IlinoisClerk of The 6 County y ofJ~ Winnebago, (SEAL) STATE OF ILLINOIS ) ) SS COUNTY OF BOONE )

FILING CERTIFICATE I, the undersigned, do hereby certify that I am the duly qualified and acting County Clerk

of The County of Boone, Ilinois, and as such official I do further certify that on the .s day of

Januar, 2007, there was filed in my office a duly certified copy of a resolution entitled:

duly adopted by the Board of Education of Community High School District Number 207,

Winnebago and Boone Counties, Ilinois, on the 17th day of January, 2007, and that the same has

been deposited in the official files and records of my office.

)N WITNESS WHEREOF, I hereunto affix my official signature and the seal of said County,

.this ::/ day of Januar, 2007.

g L County Clerk of The County of Ilinois (SEAL) STATE OF ILLINOIS ) ) SS COUNTY OF WINNEBAGO )

FILING CERTIFICATE I, the undersigned, do hereby certify that I am the duly qualified and acting School

Treasurer who receives the taxes of Community High School District Number 207, Winnebago and Boone Counties, Ilinois, and as such official I do further certify that on the 17th day of

Januar, 2007, there was fied in my office a duly certified copy of a resolution entitled:

RESOLUTION providing for the issue of $625,000 General Obligation Limited Bonds, Series 2007, of Community High School District Number 207, Winnebago and Boone Counties, Ilinois, and for the levy of a direct annual tax to pay the principal and interest on said bonds. duly adopted by the Board of Education of said School District on the 17th day of Januar, 2007, and that the same has been deposited in the offcial files and records of my office.

IN WITNESS WHEREOF, I hereunto affix my official signature, this 17th day of January,

2007.

~Ll(!!!t~/¡School Tr urer q2 ~ . STATE OF ILLINOIS ) ) SS COUNY OF WINNEBAGO )

TREASURER'S SURETY BOND CERTIFICATE I, the undersigned, do hereby certify that I am the duly qualified and acting Secretary of the Board of Education (the "Board") of Community High School District Number 207,

Winnebago and Boone Counties, Ilinois (the "District"), and as such official I do further certify that Kris R. Molencupp , being the duly qualified and acting School Treasurer of the District, has executed a surety bond in accordance with all of the provisions of Section 19-6 of the School Code of the State of Ilinois, as amended, said surety bond being payable to the Board and conditioned upon the faithful discharge of his or her duties with respect to the disbursement of the proceeds of the sale of $625,000 General Obligation Limited Bonds,

Series 2007, dated February 1, 2007, proposed to be issued by the District. I do further certify that said surety bond in the amount of $156,250 and with

Lloyd's London as surety thereon was duly submitted to the Board for approval or rejection at a legally convened meeting held on the 17th day of January, 2007, and pursuant to motion duly made, seconded and adopted was approved by the Board.

IN WITNESS WHEREOF, I hereunto affix my official signature, this 17th day of January,

2007. I, the undersigned, do hereby certify that I am the duly qualified and acting Regional

Superintendent of Schools for the Regional Office of Education serving the Educational Service

Region including Winnebago County, Ilinois, and as such official I do further certify that as of the date hereof said surety bond has been filed in my office and has been approved by me and deposited in the offcial files and records of my office.

IN WITNESS WHEREOF, I hereunto affix my official signature, this ß¿:J"~ay of

,2007. fi~- nt of Schools

-2- STATE OF ILLINOIS ) ) SS COUNY OF WINNEBAGO )

No PETITION CERTIFICATE I, the undersigned, do hereby certify that I am the duly qualified and acting Regional

Superintendent of Schools for the Regional Office of Education serving the Educational Service

Region including Winnebago and Boone Counties, Ilinois, and as such official I do further certify that the records of my office do evidence that Community High School District

Number 207, Winnebago and Boone Counties, Ilinois (the "District"), or any part thereof, is not involved in any manner whatsoever in any proceedings for the conversion or combination of the

District or the formation of a combined elementary district, a combined high school district, a combined unit district, a unit district, a combined high school-unit district, a new elementary district or an optional elementary unit district or to dissolve and establish a new school district or districts or become part of an optional elementary unit district pursuant to the provisions of

Article l1E of the School Code of the State of Ilinois, as amended, or of any other provision of said Code.

I do further certify that as such Regional Superintendent I am also ex-officio Secretary of the Regional Board of School Trustees of said Region (including said Counties), and as such official I do further certify that the records of my office do evidence that there has not been filed in my office nor is there now pending any petition or petitions affecting in any manner whatsoever the present boundaries of the District as the District is now constituted.

IN WITNESS WHEREOF, I hereunto affix my official signature, this.(..). ~~ Itöay of i, ,2007. "ær~ chools and egional Board of STATE OF ILLINOIS ) ) SS COUNY OF WINNEBAGO )

INCUMBENCY, NON-LITIGATION, NON-CERTIFICATION, NON-ARBITRAGE,

COMFORT AND SIGNATURE IDENTIFICATION CERTIFICATE

We, the undersigned, being authorized and directed to sign the bonds hereinafter described, do hereby certify that we are now and were at the time of signing said bonds the duly qualified and acting officials of Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District"), as indicated by the titles appended to our respective signatures, and that as such offcials we have executed $625,000 General Obligation Limited Bonds, Series 2007, of the District (the "Bonds"), dated February 1, 2007, fully registered and without coupons, due serially on February 1 of the years and in the amounts and bearing interest as follows:

YEAR OF PRNCIPAL RATE OF MATURITY AMOUNT INTEREST

2021 $100,000 4.35% 2022 225,000 4.40% 2023 200,000 4.45% 2024 100,000 4.50% and subject to redemption prior to maturity at the option of the District as a whole or in part in any order of their maturity as determined by the District (less than all of the Bonds of a single maturity to be selected by the Bond Registrar), on February 1,2015, or on any date thereafter, at the redemption price of par plus accrued interest to the redemption date, by signing the Bonds in the manner and capacity indicated by our respective signatures and titles appended hereto.

We do further certify that there is no litigation or controversy pending or threatened questioning or affecting in any manner whatsoever the corporate existence of the District, the boundaries thereof, the right of the District to levy taxes for school purposes, the title of any of its present offcials to their respective offices, the proceedings incident to the issue or sale of the Bonds or the issue, sale or validity of the Bonds, that none of the proceedings providing for the issue or sale of the Bonds have been revoked or rescinded, that the District, or any part thereof, is not involved in any manner whatsoever in any proceedings for the conversion or combination of the District or the formation of a combined elementary district, a combined high school district, a combined unit district, a unit district, a combined high school-unit district, a new elementary district or an optional elementary unit district or to dissolve and establish a new school district or districts or become part of an optional elementary unit district pursuant to the provisions of Article lIE of the School Code of the State of Ilinois, as amended (the "Code "), or of any other provision of the Code, and that there has not been filed nor is there now pending any petition or petitions affecting in any manner whatsoever the present boundaries of the District as the District is now constituted. We do further certify that (i) the District has not been certified to be in financial difficulty by the State Board of Education of the State of Ilinois (the "State Board") pursuant to Section 1A-8 of the Code, (ii) the State Board has not approved or established a Financial Oversight Panel for the District pursuant to Article IB of the Code, and (iii) the State Board has not allowed, approved or granted a petition for or created or established a School Finance Authority for the District pursuant to either Article IE or Article IF of the Code.

We do further certify that all of the certifications, conclusions, expectations, representations and statements made and set forth by the Board of Education of the District in

Section 13 of the resolution adopted on the 17th day of January, 2007, authorizing the Bonds (the "Resolution ") are stil reasonable and true; that the foregoing certification is based in part upon the amounts set forth in said section of the Resolution having actually been received and paid into the various funds and accounts of the District as set forth in said section; that the undersigned have reviewed the facts, estimates and circumstances in existence on the date hereof and such facts, estimates and circumstances, together with the expectations of the District as to future events, are set forth in summary form in said section; that said facts and estimates are true and are not incomplete in any material respect; and that such expectations are reasonable and there are no other facts, estimates or circumstances that would materially change such expectations.

We do further certify that to the best of our knowledge and belief all Official Statements, Notices of Sale and other documents, information or materials, together with any supplements thereto, distributed and all representations made by the District and by its officials in any manner whatsoever in connection with the sale of the Bonds were at all times and are now true and correct in all material respects and did not at any time and do not now contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; that the District has duly performed all of its obligations under the Resolution to be performed on or prior to the date hereof; and that all representations and warranties of the District contained in all contracts entered into by the District providing for the sale of the Bonds are true and correct on and as of the date hereof as if made at the date hereof and the District has complied with all of the agreements and satisfied all the conditions on its part to be performed or satisfied prior to the date hereof.

We do further certify that the District is in compliance with each and every undertaking previously entered into by it pursuant to Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934.

-2- IN WITNESS WHEREOF, we hereunto affix our official signatures, this 8th day of February, 2007.

SIGNATURES OFFCIAL TITLES

President, Board of Education

, Secretary, Board of Education

School Treasurer

I do hereby certify that I am a ì(e~.lve- Vice President of Ehlers & Associates Inc., Lisle, Ilinois, and that I am personally acquainted with the officials whose signatures appear above and that I know that they are now and were at the time of signing the Bonds the duly qualified and acting officials of the District, as indicated by the titles appended to their respective signatures, and I do hereby identify said signatures, together with those on the Bonds, as being in all respects true and genuine.

DATED as of the date shown hereinabove.

-3- TREASURER'S RECEIPT I, the undersigned, do hereby certify that I am the duly qualified and acting School

Treasurer who receives the taxes of Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District"), and as such official I do further certify that

$625,000 General Obligation Limited Bonds, Series 2007, of the District (the "Bonds"), dated February I, 2007, fully registered and without coupons, have been delivered to the purchaser

thereof, namely, Bankers' Bank, Madison, Wisconsin, and that the Bonds have been paid for in full by said purchaser in accordance with the terms of sale and at a price of not less than

$620,937.50, plus accrued interest to date of delivery, and that the Bonds have been sold at such

price and bear interest at such rates that neither the true interest cost (yield) nor the net interest

rate received by the District upon such sale exceed 7.00%.

I do further certify that the total aggregate indebtedness of the District, howsoever

evidenced and howsoever incurred, including the Bonds but not including (alternate or double-

barrelled) bonds issued pursuant to Section 15 of the Local Government Debt Reform Act of the

State of Ilinois, as amended ("Alternate Bonds "), does not exceed the sum of $ 'JD i 3ò7( 5Y1 ,

and that the amount now to the credit of the Working Cash Fund of the District (the "Fund"),

including the amount of cash on hand and any transfers from the Fund to any other funds of the

District, the amount of all taxes levied or extended for the Fund, but not yet received by the

District, and the proceeds received by the District from the issue of the Bonds, does not exceed the sum of $1:, 133/tJ ;)(J, h G,

I do further certify that no taxes, other than a designated revenue source, have ever been extended to pay Alternate Bonds.

I do further certify that the officials whose signatures appear upon the Bonds were in occupancy and possession of their respective offices at the time of signing and delivery of the

Bonds. I do further certify that simultaneously with and as a part of the same transaction as the delivery and issue of the Bonds, I applied the proceeds of sale of the Bonds as follows:

(a) In the Working Cash Fund of the District ...... $ 595,04.14

(b) To paying the expenses of issuing the Bonds...... $ 11,221.00

I do further certify that in addition to the Bonds, the only outstanding bond issues of the

District that include bonds issued by the District without referendum, but not including Alternate

Bonds or refunding obligations issued to refund or continue to refund obligations initially issued pursuant to referendum, are as follows:

DESCRIPTION OF ORIGINAL PRINCIPAL AMOUNT BONDS PRNCIPAL AMOUN OUTSTANDING

General Obligation Limited Tax Capital $ 517,549.14 $ 517,549.14 Appreciation School Bonds, Series 1998, dated October 1, 1998 General Obligation Limited School Bonds, $4,040,000.00 $3,290,000.00 Series 2004A, dated June 15,2004 General Obligation Limited Bonds, $1,255,000.00 $1,255,000.00 Series 2005A, dated March 1, 2005 Taxable General Obligation Limited Bonds, $1,945,000.00 $1,945,000.00 Series 2005B, dated March 15,2005 General Obligation Limited Refunding Bonds, $1,095,000.00 $ 595,000.00 Series 2005D, dated March 15,2005

IN WITNESS WHEREOF, I hereunto affix my official signature, this 8th day of February,

2007. STATE OF MINESOTA ) ) SS COUNTY OF RAMSEY )

CERTIFICATE OF BOND REGISTRAR

We, the undersigned, do hereby certify that we are officers of Bond Trust Services Corporation, Rosevile, Minnesota (the "Bond Registrar"), and as such officers we do further certify as follows:

1. That the Bond Registrar has been appointed bond registrar for $625,000 General Obligation Lirnited Bonds, Series 2007, dated February 1, 2007 (the "Bonds "), of Community High School District Number 207, Winnebago and Boone Counties, Ilinois (the "District"), pursuant to a resolution adopted by the Board of Education of the District on the 1 7th day of January, 2007 (the "Bond Resolution ").

2. That the Bond Registrar has heretofore and does hereby accept the duties as bond registrar so imposed by the Bond Resolution.

3. That pursuant to proper authorization and direction frorn the District dated as of the date hereof, the Bond Registrar has authenticated and delivered Bonds in the amount of$625,000 to the purchaser thereof, namely, Baners' Bank, Madison, Wisconsin.

4. That each of the persons named below is an authorized agent of the Bond Registrar; one or rnore of such persons, in accordance with the provisions of the Bond Resolution, are duly authorized and empowered to authenticate and did authenticate on the date hereof the Bonds issued under the Bond Resolution; and the signature appearing after the narne of each such person as follows is a true and correct specirnen of each such person's genuine signature:

NAME OFFICE SIGNATURE

Angela Davis Paving Agent Administrator . Ao\1t7 Debra Eller Paving Agent Administrator C/h~?¿ /ie~

5. That the Bond Registrar has full power and authority under the applicable laws of the United States of America and the State of Ilinois to act as bond registrar for the Bonds in the maner contemplated by the Bond Resolution; it has taken all necessary corporate action by its properly authorized officers, employees or agents to accept said offices and duties; and the undersigned are duly qualified and acting officers of the Bond Registrar as indicated by the titles set under their names and are authorized by the Bond Registrar to execute and attest this Certificate. 6. That the Bond Registrar acknowledges receipt of a certified copy of the Bond Resolution.

IN WITNESS WHEREOF, we hereunto affix our signatues and the seal of the Bond Registrar, this 8th day of February, 2007.

BOND TRUST SERVICES CORPORATION Rosevile, Minnesota By ~i? Its Paving Agent Administrator

Attest: JJ~ Le&~ Its Paving Agent Administrator

(SEAL OF BOND REGISTRAR) STATE OF ILLINOIS ) ) SS COUNTY OF DUPAGE )

CERTIFCATION OF FINANCIAL ADVISOR

I, the undersigned, do hereby certify that I am E )('e t-l- '(. c. Vi ¡: of Ehlers & Associates, Inc., Lisle, Ilinois ("Ehlers"), and as such officer I do further certify as follows:

i. That Ehlers is acting as independent financial advisor to Community High

School District Number 207, Winnebago and Boone Counties, Ilinois (the "District"), in

connection with the issuance and sale of $625,000 General Obligation Limited Bonds,

Series 2007, dated February I, 2007, of the District (the "Bonds").

2. That the District and Bankers' Bank, Madison, Wisconsin (the

"Purchaser"), have entered into a contract, dated January 17, 2007 (the "Contract"),

concerning the purchase by the Purchaser from the District of the Bonds.

3. That the Contract is in full force and effect and has not been modified,

repealed, rescinded or amended.

4. That the Purchaser has confirmed to Ehlers that as of the date of the

Contract the Purchaser reasonably expected that the first price at which at least ten

percent of the principal amount of each maturity of the Bonds would be sold to the public

(excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers) would be equal to the prices

(the "Prices") as shown on the cover page of the Official Statement, dated January i 7, 2007, and related to the issuance of the Bonds and that no Bonds of any maturity would

be sold at a higher price before at least ten percent of such maturity was sold at the Price

for such maturity. 5. That the Purchaser has confirmed to Ehlers that all of the Bonds have been the subject of a bona fide initial offering to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers) at prices equal to the Prices.

6. That on the date of the Contract, based upon Ehlers's assessment of then prevailing market conditions, the Prices are not less than the fair market value of each

Bond as of the date of the Contract.

IN WITNESS WHEREOF, I hereunto affix my signature, this 8th day of February, 2007.

EHLERS & ASSOCIAlES, INC. Lisle, Ilinois

By ,M- Title: ¡3'K~vt- it P STATE OF WISCONSIN ) ) SS COUNTY OF DANE )

CERTIFICATION OF UNDERWRTER I, the undersigned, do hereby certify that I am Sev¡ l ù, V; C-e Artj ìcl.tlv1- of

Bankers' Bank, Madison, Wisconsin (the "Underwriter"), and as such officer I do further certify as follows:

1. That the Underwriter and Community High School District Number 207,

Winnebago and Boone Counties, Ilinois (the "District"), have entered'into a contract,

dated January 17, 2007 (the "Contract"), concerning the purchase by the Underwriter

from the District of $625,000 General Obligation Limited Bonds, Series 2007, dated

February 1, 2007, of the District (the "Bonds ").

2. That the Contract is in full force and effect and has not been modified,

repealed, rescinded or amended.

3. That the Underwriter hereby confirms that the first price at which at least ten

percent of the principal amount of each maturity of the Bonds has been sold to the public

(excluding bond houses, brokers, or similar persons or organizations acting in the

capacity of underwriters, placement agents or wholesalers) is equal to the prices (the

"Prices ") as shown on the cover page of the Official Statement, dated January 17, 2007,

and related to the issuance of the Bonds, and that in addition, accrued interest to the date

of issuance of the Bonds by the District wil be paid by the investors purchasing the

Bonds.

4. That all of the Bonds have been the subject of a bona fide initial offering to

the public (excluding bond houses, brokers, or similar persons or organizations acting in

the capacity of underwriters, placement agents or wholesalers) at prices equal to the

Prices. 5. That on the date of the Contract, based upon the Underwriter's assessment of then prevailng market conditions, the Prices are not less than the fair market value of each Bond as of the date of the Contract.

IN WITNESS WHEREOF, I hereunto affix my signature, this 8th day of February, 2007.

BANKERS' BANK, BY~~Madison, Wisconsin 11ft t( II Y(i -JTl -p /VI K Title: J't:7l120¡( VICt! ~KFJ/ ¡)uvr

-2- Law Offces of / CHAPMA AN CUTLER LLP Theodore S. Chapman 111 West Monroe Street, Chicago, Ilinois 60603-4080 San Francisco 1877-1943 Henry E. Cutler Telephone (312) 845-3000 595 Market Street 1879-1959 Facsimile (312) 701 -2361 San Francisco, CA 94105 chapman.com (415) 541-0500

Salt Lake City 0 201 South Main Street Salt Lake City, UT 84111 (801) 533-0066 February 8, 2007

CERTIFIED MAIL REURN RECEIPT REQUESTED

Internal Revenue Service Center Ogden, Utah 84201

Gentlemen:

At the request of Community High School District Number 207, Winnebago and Boone Counties, Ilinois, and in regard to its General Obligation Limited Bonds, Series 2007, we are filing the enclosed Form 8038G with the Internal Revenue Service.

We are enclosing a duplicate original of this form, and we request that you acknowledge the filng thereof by stamping such duplicate copy and returning the same to us. We are enclosing a stamped, self-addressed envelope for your convenience in this regard.

Thank you for your cooperation and assistance.

Very truly yours,

CHAPMAN AND CUTLER LLP By ~i~d~~ ETB/kd Enclosures

2191894.01.oi.doc 'JL1.L"Q Form 8038-G Information Return for Tax-Exempt Governmental Obligations ~ Under Internal Revenue Code section 149(e) (Rev. November 2000) OMS No. 1545-0720 ~ See separate Instructions. Caution: If the issue price is under $100,000, use Form B03B-GC. If Amended Return, check here ~ 0 Issuer's name 2 Issuer's employer identification number Community High School District Number 207, Winnebago and Boone Counties, Illnois 36 : 6005757 3 Number and street (or P.O. box if mail is not delivered to street address) Room/suite 4 Report number 307 Salem Street 5 City, town, or post office, state, and zip code 6 Date of3 issue 01 7 Rockton,Name of Ilinois issue 61702 8 CUSIP February number 8, 2007 General Obligation Limited Bonds, Series 2007 974374 EF3 9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of offcer or legal representative Dr. Randy Gross, Superintendent ( 815 ) 624-5010 ilT e ofEducation Issue (check a Iicable box(es) and enter the11 issue rice)625, See instructions and000 attach schedule o HealthTransportationPublic and safety. hospital . 14 1312 o Environment Housing (including sewage. . bonds) 16 15 o Other.Utilities Describe ~17 18 If obligations are TANs or RANs, check box ~ 0 If obligations are BANs, check box ~ 0 If obli ations are in the form of a lease or installment sale, check box .... ~ 0 Descri tion of Obli ations. Com lete for the entire issue for which this form is bein

(e) Stated redemption (d) Weighted price at maturity (e) Yield 2/1/2024 $ 625, 000 $ 625,000 average maturity ears % Uses of Proceeds of Bond Issue (includin underwriters' discount) 22 Proceeds used for accrued interest . 537.64 23 Issue price of entire issue (enter amount from line 21, column (b)) . . . . . 625,000.00 24 Proceeds used for bond-issuance costs (including underwriters' discount) 24 15 283.50 25 Proceeds used for credit enhancement . 25 -0- 26 Proceeds allocated to reasonably required reserve or replacement fund 26 -0- 27 Proceeds used to currently refund prior issues 27 -0- 28 Proceeds used to advance refund prior issues 28 -0- 29 Total (add lines 24 through 28) . 15,283.50 30 Nonrefundin roceeds of the issue (subtract line 29 from line 23 and enter amount here) . 609,716.50 Descri tion of Refunded Bonds (Com lete this art anI for refundin bonds.) 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . ~ years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . ~ years 33 Enter the last date on which the refunded bonds will be called . . ~ 34 Enter the daters) the refunded bonds were issued ~ Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141 (b)(5) -0- 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions) -0- b Enter the final maturity date of the guaranteed investment contract ~ 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a -0- b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ~ 0 and enter the name of the issuer ~ and the date of the issue ~ 38 If the issuer has designated the issue under section 265(b)(3)(B)(i)(1I1) (small issuer exception), check box ~ II 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box ~ 0 40 If the issuer has identified a hed e, check box . . . . ~ 0 Under penalties of perjury, i declare that i have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Sign KLis Molencupp Here February 8, 2007 ~ ~hrrl" iir~"'AjAg, School Treasurer Date r Type or print name and title For Paperwork Reduction Act Notice, see page 2 of the Instructions. 2179159.01.03.pdf (i Cat. No. 637735 Form 8038-G (Rev. 11-2000)