POS – College of the Sequoias 2017 GO

PRELIMINARY OFFICIAL STATEMENT DATED MAY 18, 2017

NEW ISSUE—FULL BOOK-ENTRY RATINGS:

Series C Bonds and Series E Bonds: S&P: “A+”; Moody’s: “A1” Series D Bonds: S&P: “A+”; Moody’s: “Aa3” (See “MISCELLANEOUS – Ratings” herein) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See “TAX MATTERS” with respect to tax consequences relating to the Bonds.

* er to buy, nor shall there $12,935,000 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT 2017 General Obligation Refunding Bonds, Series C (Hanford Campus Improvement District No. 1) (Tulare and Kings Counties, California) $19,435,000* $14,399,000* COLLEGE OF THE SEQUOIAS COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT COMMUNITY COLLEGE DISTRICT 2017 General Obligation Refunding Bonds, Series D 2017 General Obligation Refunding Bonds, Series E (Visalia Area Improvement District No. 2) (Tulare Area Improvement District No. 3) (Tulare County, California) (Tulare and Kings Counties, California) Dated: Date of Delivery Due: August 1, as shown on the inside cover pages This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. Capitalized terms used on this cover page not otherwise defined shall have the meanings set forth herein. The College of the Sequoias Community College District 2017 General Obligation Refunding Bonds, Series C (Hanford Campus Improvement District No. 1) (Tulare and Kings Counties, California) in the aggregate principal amount of $12,935,000* (the “Series C Bonds”), are being issued by the College of the Sequoias Community College District (the “District”) to (i) currently refund a portion of the District’s outstanding College of the Sequoias Hanford Campus Improvement District ities may not be sold, nor may offers to buy them be accepted, prior to to prior accepted, be them buy to offers may nor sold, be not may ities No. 1 of the College of the Sequoias Community College District (Tulare and Kings Counties, California) Election of 2006 General Obligation Bonds, Series A, and (ii) pay the costs of issuing the Series C Bonds. The Series C Bonds are general obligations of the District payable solely from ad valorem property taxes. The Boards of Supervisors of the Counties (as defined herein) are each empowered and obligated to levy such ad valorem taxes, without limitation as to rate or amount, upon all property within the Hanford Campus Improvement District No. 1 subject to taxation thereby (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Series C Bonds when due. The College of the Sequoias Community College District 2017 General Obligation Refunding Bonds, Series D (Visalia Area Improvement District No. 2) * (Tulare County, California) in the aggregate principal amount of $19,435,000 (the “Series D Bonds”), are being issued by the District to (i) advance refund a portion of the District’s outstanding College of the Sequoias Visalia Area Improvement District No. 2 of the College of the Sequoias Community College District (Tulare County, California) Election of 2008 General Obligation Bonds, Series A, (ii) advance refund a portion of the District’s outstanding College of the Sequoias Visalia Area Improvement District No. 2 of the College of the Sequoias Community College District (Tulare County, California) Election of 2008 General Obligation Bonds, Series C, unlawful.

and (iii) pay the costs of issuing the Series D Bonds. The Series D Bonds are general obligations of the District payable solely from ad valorem property taxes. The Board of Supervisors of the County (as defined herein) is empowered and obligated to levy such ad valorem taxes, without limitation as to rate or amount, upon all property within the Visalia Area Improvement District No. 2 subject to taxation thereby (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Series D when due. The College of the Sequoias Community College District 2017 General Obligation Refunding Bonds, Series E (Tulare Area Improvement District No. 3) (Tulare and Kings Counties, California) in the aggregate principal amount of $14,399,000* (the “Series E Bonds” and, collectively with the Series C Bonds and the Series D Bonds, the “Bonds”), are being issued by the District to (i) advance refund a portion of the District’s outstanding College of the Sequoias Tulare Area Improvement District No. 3 of the College of the Sequoias Community College District (Tulare and Kings Counties, California) Election of 2008 General Obligation Bonds, Series A, and (ii) pay the costs of issuing the Series E Bonds. The Series E Bonds are general obligations of the District payable solely from ad valorem property taxes. The Boards of Supervisors of the Counties are each empowered and obligated to levy such ad valorem taxes, without limitation as to rate or amount, upon all property within the Tulare Area Improvement District No. 3 subject to taxation thereby (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Series E Bonds when due. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee for The Depository Trust Company, New York, New York (collectively referred to herein as “DTC”). Purchasers of interests in the Bonds (the “Beneficial Owners”) will not receive physical certificates representing their interest in the Bonds, but will instead receive credit balances on the books of their respective Nominees.

. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an off The Bonds will be issued as current interest bonds such that interest accrues from the date of delivery, such interest to be payable on February 1 and August 1 of each year, commencing August 1, 2017. Payments of principal of and interest on the Bonds will be made by U.S. Bank National Association, the designated Paying Agent, to DTC for subsequent disbursement to DTC Participants who will remit such payments to the Beneficial Owners of the Bonds. The District has applied for municipal bond insurance for the scheduled payment of principal of and interest on the Bonds when due, which, if purchased, would be issued concurrently with the delivery of the Bonds. The Bonds are subject to optional and mandatory sinking fund redemption as further described herein.* ______Maturity Schedule* (See inside front cover pages) ______

Pursuant to the terms of a public sale on ______, 2017, the Bonds were awarded to ______, as underwriter therefor, at a True-Interest Cost of ______%. The Bonds are being offered when, as and if issued and received by the Underwriter, subject to the approval of legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, Bond Counsel and Disclosure Counsel. The Bonds, in book-entry form, will be available through the facilities of the Depository Trust Company in New York, New York, on or about ______, 2017.

Dated: ______, 2017 ______*Preliminary, subject to change This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These secur These amendment. or completion to subject are herein contained information the and Statement Official Preliminary This the time the Official Statementbe would sale or is deliveredsolicitation offer, in final such which formin jurisdiction any in securities these of, sale any be

MATURITY SCHEDULE* Base CUSIP†: 19428R

$______* COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT 2017 General Obligation Refunding Bonds, Series C (Hanford Campus Improvement District No. 1) (Tulare and Kings Counties, California)

$______Serial Bonds Maturity Principal Interest CUSIP (August 1) Amount Rate Yield Suffix(1)

*Preliminary, subject to change.

(1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services (“CGS”), managed by S&P Capital IQ, on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. None of the original purchaser(s) of the Bonds, the Financial Advisor or the District are responsible for the selection or correctness of the CUSIP numbers set forth herein and no representation is made as to their correctness on the applicable Bonds or as included herein. CUSIP numbers have been assigned by an independent company unaffiliated with the District, the Financial Advisor or the original purchaser(s) of the Bonds, and are included solely for the convenience of the registered owners of the Bonds. The CUSIP number for a specific maturity is subject to change after the issuance thereof, as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

MATURITY SCHEDULE * Base CUSIP†: 19428T

$______* COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT 2017 General Obligation Refunding Bonds, Series D (Visalia Area Improvement District No. 2) (Tulare County, California)

$______Serial Bonds Maturity Principal Interest CUSIP (August 1) Amount Rate Yield Suffix(1)

*Preliminary, subject to change.

MATURITY SCHEDULE * Base CUSIP†: 19428U

$______* COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT 2017 General Obligation Refunding Bonds, Series E (Tulare Area Improvement District No. 3) (Tulare and Kings Counties, California)

$______Serial Bonds Maturity Principal Interest CUSIP (August 1) Amount Rate Yield Suffix(1)

*Preliminary, subject to change.

This Official Statement does not constitute an offering of any security other than the original offering of the Bonds of the District. No dealer, broker, salesperson or other person has been authorized by the District to give any information or to make any representations other than as contained in this Official Statement, and if given or made, such other information or representation not so authorized should not be relied upon as having been given or authorized by the District.

The issuance and sale of the Bonds have not been registered under the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, in reliance upon exemptions provided thereunder by Section 3(a)2 and 3(a)12, respectively, for the issuance and sale of municipal securities. This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.

Certain information set forth herein has been obtained from sources outside the District which are believed to be reliable, but such information is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the District. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District since the date hereof. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.

When used in this Official Statement and in any continuing disclosure by the District in any press release and in any oral statement made with the approval of an authorized officer of the District or any other entity described or referenced in this Official Statement, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material.

IN CONNECTION WITH THIS OFFERING, THE PURCHASER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE PURCHASER MAY OFFER AND SELL THE BONDS TO CERTAIN SECURITIES DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE PURCHASER.

The District maintains a website. However, the information presented there is not part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds.

References to website addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader’s convenience. Unless specified otherwise, such websites and the information or links contained therein are not incorporated into, and are not part of, this Official Statement for purposes of, and as that term is defined in, the Rule (defined herein).

COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

Board of Trustees

Kenneth Nunes, President John Zumwalt, Vice President Earl Mann, Clerk Lori Cardoza, Member Greg Sherman, Member

District Administration

Stan A. Carrizosa, Superintendent/President Christine Statton, CPA, Vice President, Administrative Services Leangela Miller-Hernandez, Director, Budget and Categorical Accounting Linda McCauley, Chief Accounting Officer

PROFESSIONAL SERVICES

Bond and Disclosure Counsel

Stradling Yocca Carlson & Rauth, a Professional Corporation San Francisco, California

Financial Advisor

Dale Scott & Company, Inc. San Francisco, California

Escrow Agent, Paying Agent, Registrar, and Transfer Agent

U.S. Bank National Association Seattle, Washington

Verification Agent

Causey Demgen & Moore P.C. Denver, Colorado

TABLE OF CONTENTS Page

INTRODUCTION ...... 1 THE DISTRICT ...... 1 THE IMPROVEMENT DISTRICTS ...... 2 PURPOSE OF THE BONDS ...... 2 AUTHORITY FOR ISSUANCE OF THE BONDS ...... 3 SOURCES OF PAYMENT FOR THE BONDS ...... 3 DESCRIPTION OF THE BONDS ...... 4 TAX MATTERS ...... 4 OFFERING AND DELIVERY OF THE BONDS ...... 5 BOND OWNER’S RISKS ...... 5 CONTINUING DISCLOSURE ...... 5 FORWARD LOOKING STATEMENTS ...... 5 PROFESSIONALS INVOLVED IN THE OFFERING ...... 6 OTHER INFORMATION ...... 6 THE BONDS ...... 7 AUTHORITY FOR ISSUANCE ...... 7 SECURITY AND SOURCES OF PAYMENT ...... 7 BOND INSURANCE ...... 8 GENERAL PROVISIONS ...... 8 ANNUAL DEBT SERVICE ...... 9 REFUNDING PLAN ...... 11 REDEMPTION ...... 13 BOOK-ENTRY ONLY SYSTEM ...... 15 DISCONTINUATION OF BOOK-ENTRY ONLY SYSTEM; REGISTRATION, PAYMENT AND TRANSFER OF BONDS ...... 17 DEFEASANCE ...... 18 ESTIMATED SOURCES AND USES OF FUNDS ...... 19 TAX BASES FOR REPAYMENT OF BONDS ...... 19 AD VALOREM PROPERTY TAXATION ...... 19 ASSESSED VALUATIONS OF IMPROVEMENT DISTRICT NO. 1 ...... 20 ASSESSED VALUATIONS OF IMPROVEMENT DISTRICT NO. 2 ...... 25 ASSESSED VALUATIONS OF IMPROVEMENT DISTRICT NO. 3 ...... 28 ALTERNATIVE METHOD OF TAX APPORTIONMENT - TEETER PLAN ...... 33 TAX LEVIES, COLLECTIONS AND DELINQUENCIES ...... 33 TAX RATES ...... 35 LARGEST PROPERTY OWNERS ...... 37 STATEMENT OF DIRECT AND OVERLAPPING DEBT ...... 39 CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS ...... 43 ARTICLE XIIIA OF THE CALIFORNIA CONSTITUTION ...... 43 LEGISLATION IMPLEMENTING ARTICLE XIIIA ...... 44 UNITARY PROPERTY ...... 44 ARTICLE XIIIB OF THE CALIFORNIA CONSTITUTION ...... 44 ARTICLE XIIIC AND ARTICLE XIIID OF THE CALIFORNIA CONSTITUTION ...... 45 PROPOSITION 26 ...... 46 PROPOSITIONS 98 AND 111 ...... 46 PROPOSITION 39 ...... 48 JARVIS V. CONNELL ...... 48 PROPOSITION 1A AND PROPOSITION 22 ...... 49 PROPOSITIONS 30 AND 55 ...... 49 PROPOSITION 2 ...... 50

TABLE OF CONTENTS (cont'd)

Page

PROPOSITION 51 ...... 51 FUTURE INITIATIVES ...... 52 FUNDING OF COMMUNITY COLLEGE DISTRICTS IN CALIFORNIA ...... 53 MAJOR REVENUES ...... 53 BUDGET PROCEDURE ...... 55 MINIMUM FUNDING GUARANTEES FOR CALIFORNIA COMMUNITY COLLEGE DISTRICTS UNDER PROPOSITIONS 98 AND 111 ...... 55 ADDITIONAL SOURCES OF FUNDING ...... 57 DISSOLUTION OF REDEVELOPMENT AGENCIES ...... 57 STATE ASSISTANCE ...... 59 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT ...... 64 INTRODUCTION ...... 64 IMPROVEMENT DISTRICT NO. 1 ...... 64 IMPROVEMENT DISTRICT NO. 2 ...... 64 IMPROVEMENT DISTRICT NO. 3 ...... 65 ADMINISTRATION ...... 65 LABOR RELATIONS ...... 66 COLLEGE OF THE SEQUOIAS FOUNDATION ...... 66 RETIREMENT PROGRAMS ...... 66 OTHER POST EMPLOYMENT BENEFITS ...... 73 RISK MANAGEMENT ...... 74 JOINT POWERS AUTHORITY ...... 74 ACCOUNTING PRACTICES ...... 74 DISTRICT BUDGETING ...... 75 COMPARATIVE FINANCIAL STATEMENTS ...... 77 DISTRICT DEBT STRUCTURE ...... 79 TAX MATTERS ...... 85 LIMITATION ON REMEDIES; BANKRUPTCY ...... 87 LEGAL MATTERS ...... 88 LEGALITY FOR INVESTMENT IN CALIFORNIA ...... 88 CONTINUING DISCLOSURE ...... 88 NO LITIGATION ...... 89 INFORMATION REPORTING REQUIREMENTS ...... 89 ESCROW VERIFICATION ...... 89 LEGAL OPINION ...... 89 MISCELLANEOUS ...... 89 RATINGS ...... 89 FINANCIAL STATEMENTS ...... 90 UNDERWRITING ...... 90 ADDITIONAL INFORMATION ...... 91

APPENDIX A: FORMS OF OPINIONS OF BOND COUNSEL FOR THE BONDS ...... A-1 APPENDIX B: 2015-16 AUDITED FINANCIAL STATEMENTS OF THE DISTRICT ...... B-1 APPENDIX C: FORM OF CONTINUING DISCLOSURE CERTIFICATE FOR THE BONDS ...... C-1 APPENDIX D: GENERAL ECONOMIC AND DEMOGRAPHIC INFORMATION FOR KINGS COUNTY, TULARE COUNTY, THE CITY OF TULARE, THE CITY OF VISALIA AND THE CITY OF HANFORD ...... D-1 APPENDIX E: TULARE COUNTY INVESTMENT POOL ...... E-1

$12,935,000* COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT 2017 General Obligation Refunding Bonds, Series C (Hanford Campus Improvement District No. 1) (Tulare and Kings Counties, California) $19,435,000* $14,399,000* COLLEGE OF THE SEQUOIAS COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT COMMUNITY COLLEGE DISTRICT 2017 General Obligation Refunding Bonds, Series D 2017 General Obligation Refunding Bonds, Series E (Visalia Area Improvement District No. 2) (Tulare Area Improvement District No. 3) (Tulare County, California) (Tulare and Kings Counties, California)

INTRODUCTION

This Official Statement, which includes the cover page, inside cover pages, and appendices hereto, provides information in connection with the sale of the (i) College of the Sequoias Community College District 2017 General Obligation Refunding Bonds, Series C (Hanford Campus Improvement District No. 1) (Tulare and Kings Counties, California) (the “Series C Bonds”), (ii) College of the Sequoias Community College District 2017 General Obligation Refunding Bonds, Series D (Visalia Area Improvement District No. 2) (Tulare County, California) (the “Series D Bonds”) and (iii) College of the Sequoias Community College District 2017 General Obligation Refunding Bonds, Series E (Tulare Area Improvement District No. 3) (Tulare and Kings Counties, California) (the “Series E Bonds” and, collectively with the Series C Bonds and the Series D Bonds, the “Bonds”).

This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page, inside cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement.

The District

The College of the Sequoias Community College District (the “District”) began as Visalia Junior College in 1926 and became a community college district in 1949. The District is located in the heart of the San Joaquin Valley and at the foot of the Sierra Nevada mountains. It encompasses a 2,893 square- mile-area in the San Joaquin Valley midway between San Francisco and Los Angeles and serves communities in Tulare County (the “County”) and Kings County (together with the County, the “Counties”). The District currently operates one community college, College of the Sequoias, which provides collegiate level instruction across a wide spectrum of subjects for grades 13 and 14, and two full service centers, one in Hanford and one in Tulare. The College of the Sequoias is fully accredited by the Accrediting Commission of Community and Junior Colleges (“ACCJC”). For fiscal year 2016-17, the District’s projected full time equivalent student (“FTES”) count is 9,700 students.

The governing board of the District is the Board of Trustees (the “Board”). The Board includes five voting members elected by the voters of the District (the “Trustees”). The Trustees serve four-year terms. The management and policies of the District are administered by a Superintendent/President appointed by the Board of Trustees who is responsible for day-to-day District operations as well as the supervision of the District’s other key personnel. Stan A. Carrizosa is the District Superintendent/President.

For more information about the District generally, see “COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT” herein. For more information regarding the District’s assessed valuation, see “TAX BASES FOR REPAYMENT OF BONDS” herein. The District’s audited financial statements for the fiscal year ended June 30, 2016 are attached hereto as APPENDIX B and should be read in their entirety. The discussion of the District’s financial history and the financial information contained herein does not purport to be complete or definitive.

The Improvement Districts

Hanford Campus Improvement District No. 1 (“Improvement District No. 1”). Improvement District No. 1 is located primarily within Kings County and includes a small portion of the County. The area of Improvement District No. 1 is about 248 square miles, representing about eight percent of the territory of the District and includes the City of Hanford and surrounding communities. The boundaries of Improvement District No. 1 are coterminus with those of the Hanford Joint Union High School District. Taxable property within Improvement District No. 1 has a fiscal year 2016-17 assessed valuation of $5,492,240,891. See “COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT – Improvement District No. 1” herein.

Visalia Area Improvement District No. 2 (“Improvement District No. 2”). Improvement District No. 2 is located within the County, and includes the City of Visalia. Improvement District No. 2 encompasses about 1,783 square miles, representing about fifty-nine percent of the territory of the District. The boundaries of Improvement District No. 2 include the boundaries of Visalia Unified School District, the Exeter Union High School District, the Farmersville Unified School District, the Woodlake Union High School District, and those portions of the Cutler-Orosi Joint Unified School District which lie within the County, excluding portions of such district lying in Fresno County. Taxable property within Improvement District No. 2 has a fiscal year 2016-17 assessed valuation of $15,422,132,768. See “COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT – Improvement District No. 2” herein.

Tulare Area Improvement District No. 3 (“Improvement District No. 3”). Improvement District No. 3 is located primarily within the County, and a small portion of Kings County, and includes the City of Tulare. Improvement District No. 3 encompasses about 837 square miles, representing about twenty- eight percent of the territory of the District. The boundaries of Improvement District No. 3 include the Alpaugh Unified School District, the Lindsay Unified School District, the Corcoran Joint Unified School District, and the Tulare Joint Union High School District. Taxable property within Improvement District No. 3 has a fiscal year 2016-17 assessed valuation of $8,514,751,113. See “COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT – Improvement District No. 3” herein.

Improvement District No. 1, Improvement District No. 2 and Improvement District No. 3 are collectively referred to herein as the “Improvement Districts” and each may be referred to herein as an “Improvement District.” For more information regarding each of the Improvement Districts’ tax bases, see “TAX BASES FOR REPAYMENT OF BONDS” herein. See “FUNDING OF COMMUNITY COLLEGE DISTRICTS IN CALIFORNIA” and “COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT” herein for more general information regarding the District and its finances.

Purpose of the Bonds

Series C Bonds. The Series C Bonds are being issued to (i) currently refund a portion of the District’s outstanding College of the Sequoias Hanford Campus Improvement District No. 1 of the College of the Sequoias Community College District (Tulare and Kings Counties, California) Election of

2006 General Obligation Bonds, Series A (the “Prior Improvement District No. 1 Bonds”) and (ii) pay the costs of issuing the Series C Bonds.

Series D Bonds. The Series D Bonds are being issued to (i) advance refund a portion of the District’s outstanding College of the Sequoias Visalia Area Improvement District No. 2 of the College of the Sequoias Community College District (Tulare County, California) Election of 2008 General Obligation Bonds, Series A (the “Prior Improvement District No. 2 Series A Bonds”), (ii) advance refund a portion of the District’s outstanding College of the Sequoias Visalia Area Improvement District No. 2 of the College of the Sequoias Community College District (Tulare County, California) Election of 2008 General Obligation Bonds, Series C (the “Prior Improvement District No. 2 Series C Bonds” and, together with the Prior Improvement District No. 2 Series A Bonds, the “Prior Improvement District No. 2 Bonds”), and (iii) pay the costs of issuing the Series D Bonds.

Series E Bonds. The Series E Bonds are being issued to (i) advance refund a portion of the District’s outstanding College of the Sequoias Tulare Area Improvement District No. 3 of the College of the Sequoias Community College District (Tulare and Kings Counties, California) Election of 2008 General Obligation Bonds, Series A (the “Prior Improvement District No. 3 Bonds” and, collectively with the Prior Improvement District No. 1 Bonds and the Prior Improvement District No. 2 Bonds, the “Prior Bonds”), and (ii) pay the costs of issuing the Series E Bonds.

The portions of the Prior Bonds to be refunded with proceeds of the Bonds are referred to herein as the “Refunded Bonds.” See “THE BONDS – Refunding Plan” and “ESTIMATED SOURCES AND USES OF FUNDS” herein.

Authority for Issuance of the Bonds

The Bonds are issued pursuant to certain provisions of the State of California (the “State”) Government Code and other applicable law, and pursuant to resolutions relating to each of the series of Bonds adopted by the District Board on May 15, 2017 (the “Resolutions”). See “THE BONDS – Authority for Issuance” herein. Sources of Payment for the Bonds

Series C Bonds. The Series C Bonds are general obligations of the District payable solely from ad valorem property taxes. The Boards of Supervisors of the Counties (the “Counties’ Boards”) are each empowered and obligated to levy such ad valorem taxes, without limitation as to rate or amount, upon all property within Improvement District No. 1 subject to taxation thereby (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Series C Bonds when due. Series D Bonds. The Series D Bonds are general obligations of the District payable solely from ad valorem property taxes. The Board of Supervisors of the County (the “County Board”) is empowered and obligated to levy such ad valorem taxes, without limitation as to rate or amount, upon all property within Improvement District No. 2 subject to taxation thereby (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Series D Bonds when due. Series E Bonds. The Series E Bonds are general obligations of the District payable solely from ad valorem property taxes. The Counties’ Boards are each empowered and obligated to levy such ad valorem taxes, without limitation as to rate or amount, upon all property within Improvement District No. 3 subject to taxation thereby (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Series E Bonds when due.

See “THE BONDS – Security and Sources of Payment” and “TAX BASES FOR REPAYMENT OF BONDS” herein. Description of the Bonds

Form and Registration. The Bonds will be issued in fully registered form only, without coupons. Purchasers of the Bonds (the “Beneficial Owners”) will not receive physical certificates representing their interests in the Bonds purchased, but will instead receive credit balances on the books of their respective Nominees (as defined herein). The Bonds will be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository of the Bonds. See “THE BONDS – General Provisions” and “– Book-Entry Only System” herein. In the event that the book-entry only system described below is no longer used with respect to the Bonds, the Bonds will be registered in accordance with the Resolutions. See “THE BONDS – Discontinuation of Book-Entry Only System; Registration, Payment and Transfer of Bonds” herein.

So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references herein to the “Owners”, “Bondowners” or “Holders” of the Bonds (other than under the captions “INTRODUCTION – Tax Matters,” “TAX MATTERS” and in “APPENDIX A”) will mean Cede & Co. and will not mean the Beneficial Owners of the Bonds.

Denominations. Individual purchases of interests in the Bonds will be available to purchasers of the Bonds in the denominations of $5,000 principal amount or any integral multiples thereof.

Redemption.* The Bonds maturing on or after August 1, 2028 are subject to redemption prior to their respective stated maturity dates, at the option of the District, from any source of funds, on August 1, 2027 or on any date thereafter, as a whole or in part. See “THE BONDS – Redemption” herein.

Payments. The Bonds will be issued as current interest bonds, such that interest thereon will accrue from the initial date of delivery of the Bonds (the “Date of Delivery”), such interest to be payable semiannually on February 1 and August 1 of each year, commencing on August 1, 2017 (each, a “Bond Payment Date”). Principal of the Bonds is payable on August 1 in the amounts and years set forth on the inside cover pages hereof.

Payments of the principal of and interest on the Bonds will be made by U.S. Bank National Association, as the designated paying agent, bond registrar and transfer agent (the “Paying Agent”), to DTC for subsequent disbursement through DTC Participants (defined herein) to the Beneficial Owners. See also “THE BONDS – Book-Entry Only System” herein.

Bond Insurance. The District has applied for municipal bond insurance for the scheduled payment of principal of and interest on the Bonds when due, which, if purchased, would be issued concurrently with the delivery of the Bonds.

Tax Matters

In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, Bond Counsel, based on existing statutes, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax

* Preliminary, subject to change.

imposed on individuals and corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State personal income tax. In addition, the difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to the Bond constitutes original issue discount, and the amount of original issue discount that accrues to the owner of the Bond is excluded from gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State personal income tax. See “TAX MATTERS” herein with respect to tax consequences relating to the Bonds.

Offering and Delivery of the Bonds

The Bonds are offered when, as and if issued, subject to approval as to their legality by Bond Counsel. It is anticipated that the Bonds in book-entry form will be available for delivery through the facilities of DTC in New York, New York on or about ______, 2017.

Bond Owner’s Risks

The Bonds are general obligations of the District payable solely from ad valorem property taxes, which may be levied without limitation as to rate or amount (except with respect to certain personal property which is taxable at limited rates) on all taxable property within the respective Improvement Districts. For more complete information regarding the taxation of property within each of the Improvement Districts, see “TAX BASES FOR REPAYMENT OF BONDS” herein.

Continuing Disclosure

The District has covenanted that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. “Continuing Disclosure Certificate” shall mean that certain contractual undertaking relating to the disclosure of annual financial information and notices of certain listed events executed by the District as of the Date of Delivery of the Bonds, as it may be amended from time to time in accordance with its terms. See “LEGAL MATTERS – Continuing Disclosure – Current Undertaking” herein, and “APPENDIX C – FORM OF CONTINUING DISCLOSURE CERTIFICATE FOR THE BONDS” attached hereto. These covenants have been made in order to assist the Underwriter (defined herein) in complying with the SEC Rule 15c2-12(b)(5) (the “Rule”).

Forward Looking Statements

Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “intend,” “expect,” “estimate,” “project,” “budget” or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information regarding the District herein.

THE ACHIEVEMENTS OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE DISTRICT

DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.

Professionals Involved in the Offering

The Bonds will be issued subject to their approval by Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, acting as Bond Counsel and Disclosure Counsel to the District. Dale Scott & Company, Inc., San Francisco, California, is acting as Financial Advisor to the District. In addition to acting as Paying Agent, U.S. Bank National Association. will act as Escrow Agent (defined herein) for the Refunded Bonds. Causey Demgen & Moore P.C., Denver, Colorado, will act as Verification Agent (defined herein) with respect to the Bonds.

Other Information

This Official Statement speaks only as of its date, and the information contained herein is subject to change.

Copies of documents referred to herein and information concerning the Bonds are available from the College of the Sequoias Community College District, 915 S. Mooney Blvd., Visalia, California 93277, telephone: (559) 730-3731. The District may impose a charge for copying, mailing and handling.

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

This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The summaries and references to documents, statutes and constitutional provisions referred to herein do not purport to be comprehensive or definitive, and are qualified in their entireties by reference to each such documents, statutes and constitutional provisions.

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

Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms by the respective Resolutions.

THE BONDS

Authority for Issuance

The Bonds are issued pursuant to the provisions of the Government Code Articles 9 and 11 of Chapter 3 of Part 1 of Division 2 (the “Act”) and other applicable law, and pursuant to the Resolutions.

Security and Sources of Payment

Series C Bonds. The Series C Bonds are general obligations of the District payable solely from ad valorem property taxes. The Counties’ Boards are each empowered and obligated to levy such ad valorem taxes, without limitation as to rate or amount, upon all property within Improvement District No. 1 subject to taxation thereby (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Series C Bonds when due.

Series D Bonds. The Series D Bonds are general obligations of the District payable solely from ad valorem property taxes. The County Board is empowered and obligated to levy such ad valorem taxes, without limitation as to rate or amount, upon all property within Improvement District No. 2 subject to taxation thereby (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Series D Bonds when due.

Series E Bonds. The Series E Bonds are general obligations of the District payable solely from ad valorem property taxes. The Counties’ Boards are each empowered and obligated to levy such ad valorem taxes, without limitation as to rate or amount, upon all property within Improvement District No. 3 subject to taxation thereby (except certain personal property which is taxable at limited rates), for the payment of principal of and interest on the Series E Bonds when due.

General. The taxes described above will be levied annually in addition to all other taxes in an amount sufficient to pay the principal of and interest on the Bonds when due. The levy of ad valorem property taxes for payment of the Bonds may include an allowance for an annual reserve, established for the purpose of avoiding fluctuating tax levies. The Counties, however, are not obligated to establish or maintain such a reserve for any of the Bonds, and the District can make no representations that the Counties will do so. Such taxes, when collected (or in the case of taxes levied by Kings County, when received by the County therefrom), will be placed by the County in the respective Debt Service Funds (defined herein) relating to each series of the Bonds and established by the respective Resolutions, which are required to be segregated and maintained by the County and which are designated for the payment of the respective series of the Bonds and interest thereon when due, and for no other purpose. Pursuant to the Resolutions, the District has pledged funds on deposit in the respective Debt Service Funds to the payment of each series of the Bonds. Although the Counties are obligated to levy ad valorem property taxes for the payment of each series of the Bonds as described above, and the County will maintain the Debt Service Funds, none of the Bonds are not a debt of either of the Counties.

Pursuant to Government Code Section 53515, each series of the Bonds will be secured by a statutory lien on all revenues received pursuant to the levy and collection of ad valorem property taxes for the payment thereof. The lien automatically attaches, without further action or authorization by the District Board, and is valid and binding from the time the Bonds are executed and delivered. The revenues received pursuant to the levy and collection of the ad valorem property tax will be immediately subject to the liens, and such liens will be enforceable against the District, its successor, transferees and creditors, and all other parties asserting rights therein, irrespective of whether such parties have notice of the lien and without the need for physical delivery, recordation, filing or further act.

Moneys in the Debt Service Funds, to the extent necessary to pay the principal of and interest on the respective series of the Bonds as the same becomes due and payable, will be transferred by the County to the Paying Agent. The Paying Agent will in turn remit the funds to DTC for remittance of such principal and interest to its Participants (as defined herein) for subsequent disbursement to the respective Beneficial Owners of such Bonds.

The amount of the annual ad valorem property taxes levied by the Counties to repay the respective series of the Bonds as described above will be determined by the relationship between the assessed valuation of taxable property in the respective Improvement District and the amount of debt service due on the respective series of the Bonds in any year. Fluctuations in the annual debt service on each series of the Bonds and the assessed value of taxable property in the related Improvement District may cause the respective annual tax rates to fluctuate. Economic and other factors beyond the District’s control, such as general market decline in land values, disruption in financial markets that may reduce the availability of financing for purchasers of property, reclassification of property to a class exempt from taxation, whether by ownership or use (such as exemptions for property owned by the State and local agencies and property used for qualified education, hospital, charitable or religious purposes), or the complete or partial destruction of the taxable property caused by a natural or manmade disaster, such as earthquake, flood, drought or toxic contamination, could cause a reduction in the assessed value of taxable property within an Improvement District and necessitate a corresponding increase in the respective annual tax rates. For further information regarding each of the Improvement Districts’ assessed valuation, tax rates, overlapping debt, and other matters concerning taxation, see “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS – Article XIIIA of the California Constitution” and “TAX BASES FOR REPAYMENT OF BONDS” herein.

Bond Insurance

The District has applied for municipal bond insurance for the scheduled payment of principal of and interest on the Bonds when due, which, if purchased, would be issued concurrently with the delivery of the Bonds.

General Provisions

The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee for DTC. Beneficial Owners will not receive physical certificates representing their interest in the Bonds, but will instead receive credit balances on the books of their respective Nominees.

Interest on the Bonds accrues from the Date of Delivery, and is payable on each Bond Payment Date, commencing August 1, 2017. Interest on the Bonds shall be computed on the basis of a 360-day year of twelve 30-day months. Each Bond shall bear interest from the Bond Payment Date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the 16th day of the month immediately preceding any Bond Payment Date to and including such Bond Payment Date, in which event it shall bear interest from such Bond Payment Date, or unless it is authenticated on or before July 15, 2017, in which event it shall bear interest from the Date of Delivery. The Bonds are issuable in denominations of $5,000 principal amount, or any integral multiple thereof, and mature on August 1, in the years and amounts set forth on the inside cover page hereof.

Payments. The principal of the Bonds will be payable in lawful money of the United States of America to the registered Owner thereof, upon the surrender thereof at the principal office of the Paying Agent. The interest on the Bonds will be payable in lawful money to the person whose name appears on

the bond registration books of the Paying Agent as the registered Owner thereof as of the 15th day of the month preceding any Bond Payment Date (a “Record Date”), whether or not such day is a business day, such interest to be paid by wire transfer on such Bond Payment Date to such bank and account number as the registered Owner may have filed with the Paying Agent for that purpose.

Annual Debt Service

Series C Bonds. The following table summarizes the annual debt service requirements of the District for the Series C Bonds, assuming no optional redemptions are made.

Year Ending Annual Principal Annual Interest Total Debt August 1 Payment Payment(1) Service 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Total ______(1) Interest payments on Series C Bonds will be made semiannually on February 1 and August 1 of each year, commencing August 1, 2017.

Series D Bonds. The following table summarizes the annual debt service requirements of the District for the Series D Bonds, assuming no optional redemptions are made.

Year Ending Annual Principal Annual Interest Total Debt August 1 Payment Payment(1) Service 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Total ______(1) Interest payments on Series D Bonds will be made semiannually on February 1 and August 1 of each year, commencing August 1, 2017.

Series E Bonds. The following table summarizes the annual debt service requirements of the District for the Series E Bonds, assuming no optional redemptions are made.

Year Ending Annual Principal Annual Interest Total Debt August 1 Payment Payment(1) Service 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Total ______(1) Interest payments on Series E Bonds will be made semiannually on February 1 and August 1 of each year, commencing August 1, 2017.

See “COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT – District Debt Structure – General Obligation Bonds” herein for a full debt service schedule of all of the District’s outstanding general obligation bond debt.

Refunding Plan

Refunded Bonds. The Bonds are being issued by the District to (i) refund the Refunded Bonds, and (ii) pay the costs of issuing the Bonds. The following tables show information on the specific maturities of the Refunded Bonds.

REFUNDED BONDS*

COLLEGE OF THE SEQUOIAS HANFORD CAMPUS IMPROVEMENT DISTRICT NO. 1 OF THE COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT (Tulare and Kings Counties, California) Election of 2006 General Obligation Bonds, Series A

Initial Principal Maturity Principal Amount Interest Redemption Redemption Price Date Amount Refunded Rate Date (% of Par Amount) 8/1/2023 $1,325,000 $1,325,000 5.000% 8/1/2017 100% 8/1/2026 2,780,000 2,780,000 5.000 8/1/2017 100 2/1/2032 9,435,000 9,435,000 5.000 8/1/2017 100

COLLEGE OF THE SEQUOIAS VISALIA AREA IMPROVEMENT DISTRICT NO. 2 OF THE COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT (Tulare County, California) Election of 2008 General Obligation Bonds, Series A Initial Principal Maturity Principal Amount Interest Redemption Redemption Price Date Amount Refunded Rate Date (% of Par Amount) 8/1/2029 $7,180,000 $7,180,000 5.250% 8/1/2019 100% 8/1/2033 6,570,000 6,570,000 5.500 8/1/2019 100

COLLEGE OF THE SEQUOIAS VISALIA AREA IMPROVEMENT DISTRICT NO. 2 OF THE COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT (Tulare County, California) Election of 2008 General Obligation Bonds, Series C Initial Principal or Principal Accreted Interest or Maturity Denominational Amount Value at Accretion Redemption Redemption Price Date Amount Refunded Redemption Rate Date (% of Par Amount) 8/1/2034 $766,140 -- $1,684,197.20 7.740% 8/1/2021 100% 8/1/2036 3,755,000 $3,755,000 -- 5.500 8/1/2021 100

* Preliminary, subject to change.

COLLEGE OF THE SEQUOIAS TULARE AREA IMPROVEMENT DISTRICT NO. 3 OF THE COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT (Tulare and Kings Counties, California) Election of 2008 General Obligation Bonds, Series A Initial Principal Maturity Principal Amount Interest Redemption Redemption Price Date Amount Refunded Rate Date (% of Par Amount) 8/1/2029 $6,785,000 $6,785,000 5.250% 8/1/2019 100% 8/1/2033 7,420,000 7,420,000 5.500 8/1/2019 100

Escrow Fund and Escrow Subaccounts. The net proceeds from the sale of the Bonds will be paid to U.S. Bank National Association, acting as the Escrow Agent, to the credit of the “College of the Sequoias Community College District 2017 General Obligation Refunding Bonds Escrow Fund” (the “Escrow Fund”). Within the Escrow Fund, the Escrow Agent shall establish subaccounts (each an “Escrow Subaccount”) relating to each of the Series C Bonds (the “Series C Escrow Subaccount”), the Series D Bonds (the “Series D Escrow Subaccount”), and the Series E Bonds (the “Series E Escrow Subaccount”). Funds on deposit in the Series C Escrow Subaccount are not available to pay either the Prior Improvement District No. 2 Bonds or the Prior Improvement District No. 3 Bonds. Funds on deposit in the Series D Escrow Subaccount are not available to pay either the Prior Improvement District No. 1 Bonds or the Prior Improvement District No. 3 Bonds. Funds on deposit in the Series E Escrow Subaccount are not available to pay either the Prior Improvement District No. 1 Bonds or the Prior Improvement District No. 2 Bonds.

Pursuant to an escrow agreement (the “Escrow Agreement”) by and between the District and the Escrow Agent, the amounts deposited in the Escrow Subaccounts will be used to purchase certain noncallable direct and general obligations of the United States of America, or obligations unconditionally guaranteed as to payment by the United States of America, the principal of and interest on which will be sufficient, together with any monies deposited in the Escrow Subaccounts and held as cash, to enable the Escrow Agent to pay the redemption price of the Refunded Bonds on the respective first available optional redemption date as set forth above.

The sufficiency of the amounts on deposit in each Escrow Subaccount, together with realizable interest and earnings thereon, to pay the redemption price of the Refunded Bonds as described above will be verified by Causey Demgen & Moore P.C. (the “Verification Agent”). As a result of the deposit and application of funds so provided in the Escrow Agreement, and assuming the accuracy of the Verification Agent’s computations, the Refunded Bonds will be defeased and the obligation of the Counties to levy ad valorem property taxes for payment of the Refunded Bonds will cease.

Debt Service Funds. Any surplus moneys in the Escrow Fund, when received by the District following the redemption of the Refunded Bonds, will be kept separate and apart in the debt service funds relating to each series of Bonds created by the Resolutions (each, a “Debt Service Fund”), and used only for payment of principal of and interest on the respective series of Bonds to which such Debt Service Fund relates and for no other purpose. If, after payment in full of the Bonds, there remain excess proceeds, any such excess amounts will be transferred to the general fund of the District.

Moneys in the Escrow Fund will be invested as described above. Moneys in the Debt Service Funds are expected to be invested through the Tulare County Investment Pool. See “APPENDIX E – TULARE COUNTY INVESTMENT POOL” herein.

Redemption

Optional Redemption.* The Bonds maturing on or before August 1, 2027 are not subject to redemption prior to their respective maturity dates. The Bonds maturing on August 1, 2028 are subject to redemption prior to their respective stated maturity dates, at the option of the District, from any source of available funds, in whole or in part, on any date on or after August 1, 2027, at a redemption price equal to the principal amount of the Bonds called for redemption, together with interest accrued thereon to the date of redemption, without premium.

Selection of Bonds for Redemption. Whenever provision is made for the redemption of Bonds and less than all Bonds are to be redeemed, the Paying Agent, upon written instruction from the District, shall select Bonds for redemption as so directed and if not directed, in inverse order of maturity. Within a maturity, the Paying Agent, shall select Bonds for redemption by lot. Redemption by lot shall be in such manner as the Paying Agent shall determine; provided, however, that the portion of any Bond to be redeemed in part shall be in a principal amount of $5,000, or any integral multiple thereof.

Redemption Notice. When redemption is authorized or required pursuant to the Resolutions, the Paying Agent, upon written instruction from the District, will give notice (a “Redemption Notice”) of the redemption of the Bonds. Each Redemption Notice will specify (a) the Bonds or designated portions thereof (in the case of redemption of the Bonds in part but not in whole) which are to be redeemed, (b) the date of redemption, (c) the place or places where the redemption will be made, including the name and address of the Paying Agent, (d) the redemption price, (e) the CUSIP numbers (if any) assigned to the Bonds to be redeemed, (f) the Bond numbers of the Bonds to be redeemed in whole or in part and, in the case of any Bond to be redeemed in part only, the principal amount of such Bond to be redeemed, and (g) the original issue date, interest rate and stated maturity date of each Bond to be redeemed in whole or in part.

The Paying Agent will take the following actions with respect to each such Redemption Notice: (a) at least 20 but not more than 45 days prior to the redemption date, such Redemption Notice will be given to the respective Owners of Bonds designated for redemption by registered or certified mail, postage prepaid, at their addresses appearing on the bond register; (b) at least 20 but not more than 45 days prior to the redemption date, such Redemption Notice will be given by registered or certified mail, postage prepaid, telephonically confirmed facsimile transmission, or overnight delivery service, to the Securities Depository; (c) at least 20 but not more than 45 days prior to the redemption date, such Redemption Notice will be given by registered or certified mail, postage prepaid, or overnight delivery service, to one of the Information Services; and (d) the Redemption Notice will be given to such other persons as may be required pursuant to the Continuing Disclosure Certificate.

“Information Services” means the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System; or, such other services providing information with respect to called municipal obligations as the District may specify in writing to the Paying Agent or, absent such written specification, as the paying Agent may select.

“Securities Depository” shall mean The Depository Trust Company, 55 Water Street, New York, New York 10041.

A certificate of the Paying Agent or the District that a Redemption Notice has been given as provided in the Resolutions will be conclusive as against all parties. Neither failure to receive any Redemption Notice nor any defect in any such Redemption Notice so given will affect the sufficiency of

* Preliminary, subject to change.

the proceedings for the redemption of the affected Bonds. Each check issued or other transfer of funds made by the Paying Agent for the purpose of redeeming Bonds will bear or include the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.

Payment of Redeemed Bonds. When a Redemption Notice has been given substantially as described above, and, when the amount necessary for the redemption of the Bonds called for redemption (principal, interest, and premium, if any) is irrevocably set aside in trust for that purpose, as described in “—Defeasance,” the Bonds designated for redemption in such notice will become due and payable on the date fixed for redemption thereof and upon presentation and surrender of said Bonds at the place specified in the Redemption Notice, said Bonds will be redeemed and paid at the redemption price out of such funds. All unpaid interest payable at or prior to the redemption date will continue to be payable to the respective Owners, but without interest thereon.

Partial Redemption of Bonds. Upon the surrender of any Bond redeemed in part only, the Paying Agent will execute and deliver to the Owner thereof a new Bond or Bonds of like tenor and maturity and of authorized denominations equal in principal amount to the unredeemed portion of the Bond surrendered. Such partial redemption is valid upon payment of the amount required to be paid to such Owner, and the Counties and the District will be released and discharged thereupon from all liability to the extent of such payment.

Effect of Redemption Notice. If on the applicable designated redemption date, money for the redemption of the Bonds to be redeemed, together with interest to such redemption date, is held by an independent escrow agent selected by the District so as to be available therefor on such redemption date as described in “—Defeasance,” and if a Redemption Notice thereof will have been given substantially as described above, then from and after such redemption date, interest on the Bonds to be redeemed shall cease to accrue and become payable.

Rescission of Redemption Notice. With respect to any Redemption Notice in connection with the optional redemption of Bonds (or portions thereof) as described above, unless upon the giving of such notice such Bonds or portions thereof shall be deemed to have been defeased as described in “— Defeasance,” such Redemption Notice will state that such redemption will be conditional upon the receipt by an independent escrow agent selected by the District, on or prior to the date fixed for such redemption, of the moneys necessary and sufficient to pay the principal, premium, if any, and interest on, such Bonds (or portions thereof) to be redeemed, and that if such moneys shall not have been so received said Redemption Notice will be of no force and effect, no portion of the Bonds will be subject to redemption on such date and such Bonds will not be required to be redeemed on such date. In the event that such Redemption Notice contains such a condition and such moneys are not so received, the redemption will not be made and the Paying Agent will within a reasonable time thereafter (but in no event later than the date originally set for redemption) give notice to the persons to whom and in the manner in which the Redemption Notice was given that such moneys were not so received. In addition, the District will have the right to rescind any Redemption Notice, by written notice to the Paying Agent, on or prior to the date fixed for such redemption. The Paying Agent will distribute a notice of the rescission of such Redemption Notice in the same manner as such notice was originally provided.

Bonds No Longer Outstanding. When any Bonds (or portions thereof), which have been duly called for redemption prior to maturity, or with respect to which irrevocable instructions to call for redemption prior to maturity at the earliest redemption date have been given to the Paying Agent, in form satisfactory to it, and sufficient moneys shall be held irrevocably in trust for the payment of the redemption price of such Bonds or portions thereof, and, accrued interest thereon to the date fixed for

redemption, then such Bonds will no longer be deemed outstanding and shall be surrendered to the Paying Agent for cancellation.

Book-Entry Only System

The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the District believes to be reliable, but neither the District nor the Underwriter take responsibility for the accuracy or completeness thereof. The District cannot and does not give any assurances that DTC, DTC Direct Participants or Indirect Participants (as defined herein) will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, on the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered Owner of the Bonds, or that they will so do on a timely basis or that DTC, Direct Participants or Indirect Participants will act in the manner described in this Official Statement. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with Participants are on file with DTC.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the securities (the “Bonds”). The Bonds 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 of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.

DTC, the world’s largest securities 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 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 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 certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants,” and together with the Direct Participants, the “Participants”). DTC has an S&P (defined herein) rating of “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from 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 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds 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 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, defaults, and proposed amendments to the Resolutions. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial 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.

Redemption notices shall be sent to DTC. If less than all of the Bonds 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.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds and distributions on the Bonds 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 the Paying 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,” and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds or distributions to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

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

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

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

Discontinuation of Book-Entry Only System; Registration, Payment and Transfer of Bonds

So long as any of the Bonds remain outstanding, the District will cause the Paying Agent to maintain at its principal office all books and records necessary for the registration, exchange and transfer of such Bonds, which shall at all times be open to inspection by the District, and, upon presentation for such purpose, the Paying Agent shall, under such reasonable regulations as it may prescribe, register, exchange or transfer or cause to be registered, exchanged or transferred, on said books, Bonds as provided in the Resolutions.

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

The principal of, premium and interest on the Bonds upon the redemption thereof will be payable in lawful money of the United States of America upon presentation and surrender of the Bonds at the principal trust office of the Paying Agent. Interest on the Bonds will be paid by the Paying Agent by either (i) check mailed to such Owner on the Bond Payment Date at his address as it appears on such registration books or at such other address as he may have filed with the Paying Agent for that purpose on or before the Record Date, or (ii) by wire transfer to the bank and account number on file with the Paying Agent as of the Record Date.

Any Bond may be exchanged for Bonds of like tenor, maturity and Transfer Amount (which with respect to any outstanding Bonds means the principal amount thereof,) upon presentation and surrender at the principal trust office of the Paying Agent, together with a request for exchange signed by the registered Owner or by a person legally empowered to do so in a form satisfactory to the Paying Agent. A Bond may be transferred only on the Bond Register by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation at the office of the Paying Agent, accompanied by delivery of a written instrument of transfer in a form approved by the Paying Agent, duly executed. Upon exchange or transfer, the Paying Agent will register, authenticate and deliver a new Bond or Bonds of like tenor and of any authorized denomination or denominations requested by the Owner equal to the Transfer Amount of the Bond surrendered and bearing interest at the same rate and maturing on the same date.

Neither the District nor the Paying Agent will be required (a) to issue or transfer any Bonds during a period beginning with the opening of business on the 16th day next preceding any Bond Payment Date, the stated maturity of any of the Bonds or any date of selection of Bonds to be redeemed and ending with the close of business on the applicable Bond Payment Date, the close of business on the applicable stated maturity date or any day on which the applicable notice of redemption is given or (b) to transfer any Bonds which have been selected or called for redemption in whole or in part.

Defeasance

All or any portion of the outstanding maturities of the Bonds may be defeased at any time prior to maturity in the following ways:

(a) Cash. By irrevocably depositing with an independent escrow agent selected by the District an amount of cash which together with amounts then transferred from the applicable Debt Service Fund, is sufficient to pay and discharge all Bonds outstanding and designated for defeasance (including all principal thereof, interest thereon and redemption premium, if any) at or before their maturity date; or

(b) Government Obligations. By irrevocably depositing with an independent escrow agent selected by the District noncallable Government Obligations (as defined below) together with amounts transferred from the applicable Debt Service Fund and any other cash, if required, in such amount as will, in the opinion of an independent certified public accountant, be fully sufficient to pay and discharge all Bonds outstanding and designated for defeasance (including all principal thereof, interest thereon and redemption premium, if any), at or before their maturity date; then, notwithstanding that any such maturities of Bonds shall not have been surrendered for payment, all obligations of the District with respect to all such designated outstanding Bonds shall cease and terminate, except only the obligation of the independent escrow agent selected by the District to pay or cause to be paid from funds deposited pursuant to paragraphs (a) or (b) above, to the Owners of such designated Bonds not so surrendered and paid all sums due with respect thereto.

“Government Obligations” means direct and general obligations of the United States of America, or obligations that are unconditionally guaranteed as to principal and interest by the United States of America (which may consist of obligations of the Resolution Funding Corporation that constitute interest strips). Government Obligations shall include evidences of direct ownership of proportionate interests in future interest or principal payments of such obligations. Investments in such proportionate interests must be limited to circumstances where (a) a bank or trust company acts as custodian and holds the underlying United States obligations; (b) the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor of the underlying United States obligations; and (c) the underlying United States obligations are held in a special account, segregated from the custodian’s general assets, and are not available to satisfy any claim of the custodian, any person claiming through the custodian, or any person to whom the custodian may be obligated; provided that such obligations are rated or assessed at least as high as direct and general obligations of the United States of America by Moody’s Investors Service (“Moody’s”) or S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC (“S&P”).

ESTIMATED SOURCES AND USES OF FUNDS

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

Sources of Funds Series C Bonds Series D Bonds Series E Bonds

Initial Principal Amount of Bonds Original Issue Premium

Total Sources

Uses of Funds

Deposit to Escrow Fund Costs of Issuance(1)

Total Uses

(1) Reflects all costs of issuance, including but not limited to the Underwriter’s discount, credit rating fees, printing costs, legal fees, bond insurance premium (if any), and the costs and fees of the Paying Agent, Escrow Agent and Verification Agent. See “MISCELLANEOUS – Underwriting” herein.

TAX BASES FOR REPAYMENT OF BONDS

The information in this section describes ad valorem property taxation, assessed valuation, and other measures of the tax base of the District. The Bonds are payable solely from ad valorem property taxes levied and collected by the Counties on taxable property in the respective Improvement Districts. The District’s general fund is not a source for the repayment of the Bonds.

Ad Valorem Property Taxation

District property taxes are assessed and collected by the Counties at the same time and on the same tax rolls as county, city and special district taxes. Assessed valuations are the same for both District and county taxing purposes.

Taxes are levied for each fiscal year on taxable real and personal property which is located in the District as of the preceding January 1. For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State assessed public utilities property and real property having a tax lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.” A supplemental roll is developed when property changes hands or new construction is completed. The County levies and collects all property taxes for property falling within its taxing boundaries.

The valuation of secured property is established as of January 1 and is subsequently enrolled in August. Property taxes on the secured roll are payable in two installments, due November 1 and February 1 of the calendar year. If unpaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10% penalty attaches to any delinquent installment plus any additional amount determined by the respective county treasurer. After the second installment of taxes on the secured roll is delinquent, the tax collector shall collect a cost of $10 for preparing the delinquent tax records and giving notice of delinquency. Property on the secured roll with delinquent taxes is declared tax-defaulted on

July 1 of the calendar year. Such property may thereafter be redeemed, until the right of redemption is terminated, by payment of the delinquent taxes and the delinquency penalty, plus a $15 redemption fee and a redemption penalty of 1.5% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to sale by the respective county treasurer.

Property taxes on the unsecured roll as of July 31 become delinquent if they are not paid by August 31 and are thereafter subject to a delinquent penalty of 10%. Taxes added to the unsecure tax roll after July 31, if unpaid are delinquent and subject to a penalty of 10% on the last day of the month succeeding the month of enrollment. In the case of unsecured property taxes, an additional penalty of 1.5% per month begins to accrue when such taxes remain unpaid on the last day of the second month after the 10% penalty attaches. The taxing authority has four ways of collecting unsecured personal property taxes: (1) a civil action against the assessee; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on specific property of the assessee; (3) filing a certificate of delinquency for record in the county recorder’s office in order to obtain a lien on specified property of the assessee; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee.

State law exempts from taxation $7,000 of the full cash value of an owner-occupied dwelling, but this exemption does not result in any loss of revenue to local agencies, since the State reimburses local agencies for the value of the exemptions.

All property is assessed using full cash value as defined by Article XIIIA of the State Constitution. State law provides exemptions from ad valorem property taxation for certain classes of property such as churches, colleges, non-profit hospitals, and charitable institutions.

Future assessed valuation growth allowed under Article XIIIA (new construction, certain changes of ownership, 2% inflation) will be allocated on the basis of “situs” among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies, including community college district, will share the growth of “base” revenues from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation in the following year.

Assessed Valuations of Improvement District No. 1

The table on the following page presents the assessed valuations for Improvement District No. 1 for the 10-year period of fiscal years 2007-08 through 2016-17.

ASSESSED VALUATIONS Fiscal Years 2007-08 through 2016-17 College of the Sequoias Community College District Hanford Campus Improvement District No. 1

Total Before Locally Secured Utility Unsecured Rdv. Increment

Kings County Portion

2007-08 $4,133,033,252 $68,233,028 $169,733,079 $4,370,999,359 2008-09 4,510,224,261 61,931,867 206,289,305 4,778,445,433 2009-10 4,503,467,345 58,731,930 216,893,916 4,779,093,191 2010-11 4,466,336,420 51,068,323 207,854,009 4,725,258,752 2011-12 4,491,063,733 44,268,456 218,658,905 4,753,991,094 2012-13 4,540,223,543 42,068,476 229,674,870 4,811,966,889 2013-14 4,610,513,800 43,169,254 230,539,622 4,884,222,676 2014-15 4,641,098,248 42,347,927 244,562,501 4,928,008,676 2015-16 4,888,437,350 45,247,927 240,807,180 5,174,492,457 2016-17 5,131,220,717 49,947,927 249,898,042 5,431,066,686

Tulare County Portion

2007-08 $34,675,143 $0 $3,712,444 $38,387,587 2008-09 36,230,870 0 3,692,564 39,923,434 2009-10 37,177,796 0 4,140,468 41,318,264 2010-11 47,450,914 0 5,601,903 53,052,817 2011-12 47,573,489 0 5,909,393 53,482,882 2012-13 51,010,682 0 5,049,357 56,060,039 2013-14 48,710,575 0 8,232,892 56,943,467 2014-15 46,870,733 0 11,352,055 58,222,788 2015-16 48,511,818 0 11,802,430 60,314,248 2016-17 49,991,112 0 11,183,093 61,174,205

Total District

2007-08 $4,167,708,395 $68,233,028 $173,445,523 $4,409,386,946 2008-09 4,546,455,131 61,931,867 209,981,869 4,818,368,867 2009-10 4,540,645,141 58,731,930 221,034,384 4,820,411,455 2010-11 4,513,787,334 51,068,323 213,455,912 4,778,311,569 2011-12 4,538,637,222 44,268,456 224,568,298 4,807,473,976 2012-13 4,591,234,225 42,068,476 234,724,227 4,868,026,928 2013-14 4,659,224,375 43,169,254 238,772,514 4,941,166,143 2014-15 4,687,968,981 42,347,927 255,914,556 4,986,231,464 2015-16 4,936,949,168 45,247,927 252,609,610 5,234,806,705 2016-17 5,181,211,829 49,947,927 261,081,135 5,492,240,891

______Source: California Municipal Statistics, Inc.

Assessed Valuation by Jurisdiction. The following tables below show an analysis of the distribution of taxable property in Improvement District No. 1 by jurisdiction, in terms of its fiscal year 2016-17 assessed valuation.

ASSESSED VALUATION BY JURISDICTION Fiscal Year 2016-17 College of the Sequoias Community College District Hanford Campus Improvement District No. 1

Assessed Valuation % of Assessed Valuation % of Jurisdiction Jurisdiction: in District District of Jurisdiction in District City of Hanford $3,606,717,201 65.67% $3,606,717,201 100.00% Unincorporated Kings County 1,824,349,485 33.22 3,910,622,024 46.65 Unincorporated Tulare County 61,174,205 1.11 12,205,310,805 0.50 Total District $5,492,240,891 100.00%

Summary by County: Kings County $5,431,066,686 98.89% $10,075,343,713 53.90% Tulare County 61,174,205 1.11 31,949,110,219 0.19 Total District $5,492,240,891 100.00% ______Source: California Municipal Statistics, Inc.

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Assessed Valuations and Parcels by Land Use. The following tables show the distribution of taxable property, during fiscal year 2016-17, by the principal purpose for which such property is used, and the number of parcels for each such use in Improvement District No. 1.

ASSESSED VALUATION AND PARCELS BY LAND USE Fiscal Year 2016-17 College of the Sequoias Community College District Hanford Campus Improvement District No. 1

2016-17 % of No. of % of Non-Residential: Assessed Valuation(1) Total Parcels Total Agricultural/Rural $1,106,360,549 21.35% 2,519 10.50% Commercial/Office 602,447,350 11.63 764 3.18 Vacant Commercial 8,670,430 0.17 71 0.30 Industrial 411,555,226 7.94 492 2.05 Government/Social/Institutional 21,009,061 0.41 111 0.46 Miscellaneous 6,954,722 0.13 222 0.93 Subtotal Non-Residential $2,156,997,338 41.63% 4,179 17.41%

Residential: Single Family Residence $2,481,737,281 47.90% 15,877 66.16% Condominium 18,605,776 0.36 247 1.03 Rural Residential 263,032,963 5.08 1,367 5.70 Mobile Home 18,777,705 0.36 536 2.23 Mobile Home Park 16,010,271 0.31 8 0.03 2-4 Residential Units 48,837,965 0.94 325 1.35 5+ Residential Units/Apartments 145,451,358 2.81 195 0.81 Miscellaneous Residential 2,972,791 0.06 364 1.52 Vacant Residential 28,788,381 0.56 901 3.75 Subtotal Residential $3,024,214,491 58.37% 19,820 82.59%

Total $5,181,211,829 100.00% 23,999 100.00%

(1) Local Secured Assessed Valuation, excluding tax-exempt property. Source: California Municipal Statistics, Inc.

Assessed Valuation of Single Family Homes. The following tables show the distribution of single family homes within Improvement District No. 1 among various fiscal year 2016-17 assessed valuation ranges, as well as the average and median assessed valuation of single family homes within Improvement District No. 1.

ASSESSED VALUATION OF SINGLE FAMILY HOMES Fiscal Year 2016-17 College of the Sequoias Community College District Hanford Campus Improvement District No. 1

No. of 2016-17 Average Median Parcels Assessed Valuation Assessed Valuation Assessed Valuation Single Family Residential 15,877 $2,481,737,281 $156,310 $143,850

2016-17 No. of % of Cumulative Total % of Cumulative Assessed Valuation Parcels(1) Total % of Total Valuation Total % of Total $0 - $24,999 279 1.757% 1.757% $4,760,078 0.192% 0.192% 25,000 - 49,999 984 6.198 7.955 38,038,131 1.533 1.725 50,000 - 74,999 1,337 8.421 16.376 84,219,535 3.394 5.118 75,000 - 99,999 1,816 11.438 27.814 159,697,366 6.435 11.553 100,000 - 124,999 2,016 12.698 40.511 227,205,241 9.155 20.708 125,000 - 149,999 1,944 12.244 52.756 266,662,348 10.745 31.453 150,000 - 174,999 1,838 11.576 64.332 298,622,049 12.033 43.486 175,000 - 199,999 1,484 9.347 73.679 277,928,322 11.199 54.685 200,000 - 224,999 1,196 7.533 81.212 253,464,318 10.213 64.898 225,000 - 249,999 942 5.933 87.145 223,240,412 8.995 73.893 250,000 - 274,999 722 4.547 91.692 188,799,529 7.608 81.501 275,000 - 299,999 436 2.746 94.438 125,037,245 5.038 86.539 300,000 - 324,999 305 1.921 96.360 95,167,942 3.835 90.374 325,000 - 349,999 186 1.172 97.531 62,720,861 2.527 92.901 350,000 - 374,999 129 0.812 98.344 46,505,639 1.874 94.775 375,000 - 399,999 78 0.491 98.835 30,113,601 1.213 95.989 400,000 - 424,999 40 0.252 99.087 16,397,541 0.661 99.649 425,000 - 449,999 36 0.227 99.313 15,753,634 0.635 97.284 450,000 - 474,999 18 0.113 99.427 8,312,287 0.335 97.619 475,000 - 499,999 9 0.057 99.484 4,365,037 0.176 97.795 500,000 and greater 82 0.516 100.000 54,726,165 2.205 100.000 Total 15,877 100.000% $2,481,737,281 100.000%

(1) Improved single family residential parcels. Excludes condominiums and parcels with multiple family units. Source: California Municipal Statistics, Inc.

Assessed Valuations of Improvement District No. 2

The following table presents the assessed valuations for Improvement District No. 2 for the ten- year period of fiscal years 2007-08 through 2016-17.

ASSESSED VALUATIONS Fiscal Year 2007-08 through 2016-17 College of the Sequoias Community College District Visalia Area Improvement District No. 2

Total Before Locally Secured Utility Unsecured Rdv. Increment 2007-08 $12,434,869,039 $3,970,463 $591,967,110 $13,030,806,612 2008-09 12,956,272,647 3,970,463 705,422,953 13,665,666,063 2009-10 12,389,075,672 3,627,734 742,384,248 13,135,087,654 2010-11 12,413,047,472 3,594,391 763,683,503 13,180,325,366 2011-12 12,282,990,119 3,596,102 797,447,092 13,084,033,313 2012-13 12,061,730,757 3,591,627 805,039,781 12,870,362,165 2013-14 12,539,226,817 3,349,059 778,106,532 13,320,682,408 2014-15 13,213,795,060 3,349,059 813,654,582 14,030,798,701 2015-16 13,916,919,969 3,349,059 833,502,935 14,753,771,963 2016-17 14,574,695,003 3,349,059 844,088,706 15,422,132,768

______Source: California Municipal Statistics, Inc.

Assessed Valuation by Jurisdiction. The following tables below show an analysis of the distribution of taxable property in Improvement District No. 2 by jurisdiction, in terms of its fiscal year 2016-17 assessed valuation.

ASSESSED VALUATION BY JURISDICTION Fiscal Year 2016-17 College of the Sequoias Community College District Visalia Area Improvement District No. 2

Assessed Valuation % of Assessed Valuation % of Jurisdiction Jurisdiction: in District District of Jurisdiction in District City of Exeter $546,349,466 3.54% $546,349,466 100.00% City of Farmersville 293,320,406 1.90 293,320,406 100.00 City of Visalia 10,372,002,104 67.25 10,422,059,936 99.52 City of Woodlake 201,791,364 1.31 201,791,364 100.00 Unincorporated Tulare County 4,008,669,428 25.99 12,205,310,805 32.84 Total District $15,422,132,768 100.00%

Tulare County $15,422,132,768 100.00% $31,949,110,219 48.27%

______Source: California Municipal Statistics, Inc.

ASSESSED VALUATION AND PARCELS BY LAND USE Fiscal Year 2016-17 College of the Sequoias Community College District Visalia Area Improvement District No. 2

2016-17 % of No. of % of Non-Residential: Assessed Valuation(1) Total Parcels Total Agricultural/Rural $1,406,489,832 9.65% 5,731 8.33% Commercial/Office 1,995,154,006 13.69 2,876 4.18 Vacant Commercial 133,216,835 0.91 477 0.69 Industrial 779,604,677 5.35 248 0.36 Vacant Industrial 85,961,910 0.59 228 0.33 Recreational 39,878,701 0.27 29 0.04 Government/Social/Institutional 136,317,182 0.94 373 0.54 Miscellaneous/Water Companies 112,127,724 0.77 727 1.06 Subtotal Non-Residential $4,688,750,867 32.17% 10,689 15.54%

Residential: Single Family Residence $8,658,866,261 59.41% 49,978 72.66% Condominium 216,430,130 1.48 1,837 2.67 Mobile Home 101,791,079 0.70 1,853 2.69 Mobile Home Park 57,615,571 0.40 26 0.04 2-4 Residential Units 319,279,272 2.19 1,598 2.32 5+ Residential Units/Apartments 362,877,557 2.49 417 0.61 Miscellaneous Residential 20,490,113 0.14 229 0.33 Vacant Residential 148,594,153 1.02 2,160 3.14 Subtotal Residential $9,885,944,136 67.83% 58,098 84.46%

Total $14,574,695,003 100.00% 68,787 100.00%

(1) Local Secured Assessed Valuation, excluding tax-exempt property. Source: California Municipal Statistics, Inc.

Assessed Valuation of Single Family Homes. The following tables show the distribution of single family homes within Improvement District No. 2 among various fiscal year 2016-17 assessed valuation ranges, as well as the average and median assessed valuation of single family homes within Improvement District No. 2.

ASSESSED VALUATION OF SINGLE FAMILY HOMES Fiscal Year 2016-17 College of the Sequoias Community College District Visalia Area Improvement District No. 2

No. of 2016-17 Average Median Parcels Assessed Valuation Assessed Valuation Assessed Valuation Single Family Residential 49,978 $8,658,866,261 $173,254 $151,000

2016-17 No. of % of Cumulative Total % of Cumulative Assessed Valuation Parcels(1) Total % of Total Valuation Total % of Total $0 - $24,999 1,052 2.105% 2.105% $17,781,461 0.205% 0.205% 25,000 - 49,999 2,933 5.869 7.974 116,177,407 1.342 1.547 50,000 - 74,999 4,148 8.300 16.273 260,060,440 3.003 4.550 75,000 - 99,999 5,055 10.114 26.388 443,395,335 5.121 9.671 100,000 - 124,999 5,967 11.939 38.327 671,053,833 7.750 17.421 125,000 - 149,999 5,588 11.181 49.508 767,846,262 8.868 26.289 150,000 - 174,999 5,481 10.967 60.475 889,889,785 10.277 36.566 175,000 - 199,999 4,540 9.084 69.559 845,966,415 9.770 46.336 200,000 - 224,999 3,352 6.707 76.266 709,107,923 8.189 54.525 225,000 - 249,999 2,758 5.518 81.784 654,672,388 7.561 62.086 250,000 - 274,999 2,069 4.140 85.924 541,598,840 6.255 68.341 275,000 - 299,999 1,805 3.612 89.535 516,552,375 5.966 74.307 300,000 - 324,999 1,159 2.319 91.854 361,451,621 4.174 78.481 325,000 - 349,999 834 1.669 93.523 280,707,058 3.242 81.723 350,000 - 374,999 654 1.309 94.832 236,250,826 2.728 84.451 375,000 - 399,999 477 0.954 95.786 184,652,475 2.133 86.584 400,000 - 424,999 404 0.808 96.595 166,055,199 1.918 88.501 425,000 - 449,999 280 0.560 97.155 122,220,179 1.412 89.913 450,000 - 474,999 236 0.472 97.627 108,700,773 1.255 91.168 475,000 - 499,999 192 0.384 98.011 93,559,671 1.081 92.249 500,000 and greater 994 1.989 100.000 671,165,995 7.751 100.000 Total 49,978 100.000% $8,658,866,261 100.000%

(1) Improved single family residential parcels. Excludes condominiums and parcels with multiple family units. Source: California Municipal Statistics, Inc.

Assessed Valuations of Improvement District No. 3

The following table presents the assessed valuations for Improvement District No. 3 for the ten- year period of fiscal years 2007-08 through 2016-17.

ASSESSED VALUATIONS Fiscal Years 2007-08 through 2016-17 College of the Sequoias Community College District Tulare Area Improvement District No. 3 Total Before Locally Secured Utility Unsecured Rdv. Increment

Tulare County Portion

2006-07 $5,014,079,472 $9,456,812 $286,261,441 $5,309,797,725 2007-08 5,646,504,030 5,640,595 328,714,776 5,980,859,401 2008-09 6,050,478,662 5,149,374 347,792,576 6,403,420,612 2009-10 6,246,660,550 6,025,395 379,622,384 6,632,308,329 2010-11 6,216,041,443 6,025,395 380,132,637 6,602,199,475 2011-12 6,060,279,769 6,025,395 387,686,489 6,453,991,653 2012-13 6,023,294,069 6,025,395 384,085,478 6,413,404,942 2013-14 6,111,624,676 5,239,236 390,166,210 6,507,030,122 2014-15 6,432,118,128 5,239,236 424,967,718 6,862,325,082 2015-16 6,749,910,158 5,239,236 447,641,061 7,202,790,455 2016-17 7,065,699,783 5,239,236 493,697,262 7,564,636,281

Kings County Portion

2006-07 $578,058,294 $835,663 $32,880,105 $611,774,062 2007-08 643,168,316 134,301 34,289,202 677,591,819 2008-09 692,032,298 134,301 70,604,970 762,771,569 2009-10 774,819,810 134,301 35,631,005 810,585,116 2010-11 781,888,896 155,499 38,759,420 820,803,815 2011-12 785,560,450 155,499 37,426,035 823,141,984 2012-13 805,588,531 155,499 40,051,136 845,795,166 2013-14 832,532,503 155,499 40,212,645 872,900,647 2014-15 840,105,524 24,982 37,073,985 877,204,491 2015-16 856,232,602 24,982 41,285,447 897,543,031 2016-17 904,533,314 24,982 45,556,536 950,114,832

Total District

2006-07 $5,592,137,766 $10,292,475 $319,141,546 $5,921,571,787 2007-08 6,289,672,346 5,774,896 363,003,978 6,658,451,220 2008-09 6,742,510,960 5,283,675 418,397,546 7,166,192,181 2009-10 7,021,480,360 6,159,696 415,253,389 7,442,893,445 2010-11 6,997,930,339 6,180,894 418,892,057 7,423,003,290 2011-12 6,845,840,219 6,180,894 425,112,524 7,277,133,637 2012-13 6,828,882,600 6,180,894 424,136,614 7,259,200,108 2013-14 6,944,157,179 5,394,735 430,378,855 7,379,930,769 2014-15 7,272,223,652 5,264,218 462,041,703 7,739,529,573 2015-16 7,606,142,760 5,264,218 488,926,508 8,100,333,486 2016-17 7,970,233,097 5,264,218 539,253,798 8,514,751,113 ______Source: California Municipal Statistics, Inc.

Assessed Valuation by Jurisdiction. The following tables below show an analysis of the distribution of taxable property in Improvement District No. 3 by jurisdiction, in terms of its fiscal year 2016-17 assessed valuation.

ASSESSED VALUATION BY JURISDICTION Fiscal Year 2016-17 College of the Sequoias Community College District Tulare Area Improvement District No. 3

Assessed Valuation % of Assessed Valuation % of Jurisdiction Jurisdiction: in District District of Jurisdiction in District City of Corcoran $403,109,620 4.73% $403,109,620 100.00% City of Lindsay 420,209,309 4.94 420,209,309 100.00 City of Tulare 4,116,213,619 48.34 4,116,213,619 100.00 City of Visalia 50,057,832 0.59 10,422,059,936 0.48 Unincorporated Kings County 547,005,212 6.42 3,910,622,024 13.99 Unincorporated Tulare County 2,978,155,521 34.98 12,205,310,805 24.40 Total District $8,514,751,113 100.00%

Summary by County: Kings County $950,114,832 11.16% $10,075,343,713 9.43% Tulare County 7,564,636,281 88.84 31,949,110,219 23.68 Total District $8,514,751,113 100.00%

______Source: California Municipal Statistics, Inc.

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ASSESSED VALUATION AND PARCELS BY LAND USE Fiscal Year 2016-17 College of the Sequoias Community College District Tulare Area Improvement District No. 3

2016-17 % of No. of % of Non-Residential: Assessed Valuation(1) Total Parcels Total Agricultural $1,364,817,050 17.12% 4,912 13.01% Commercial 755,702,119 9.48 1,219 3.23 Vacant Commercial 106,492,304 1.34 289 0.77 Industrial 1,370,665,329 17.20 306 0.81 Vacant Industrial 52,238,688 0.66 161 0.43 Government/Social/Institutional 10,826,562 0.14 421 1.12 Miscellaneous 4,567,911 0.06 29 0.08 Subtotal Non-Residential $3,665,309,963 45.99% 7,337 19.44%

Residential: Single Family Residence $3,782,300,080 47.46% 24,876 65.90% Condominium/Townhouse 32,792,627 0.41 315 0.83 Mobile Home 63,462,243 0.80 1,562 4.14 Mobile Home Park 31,338,178 0.39 26 0.07 2-4 Residential Units 132,203,141 1.66 664 1.76 5+ Residential Units/Apartments 187,847,522 2.36 179 0.47 Vacant Residential 74,979,343 0.94 2,791 7.39 Subtotal Residential $4,304,923,134 54.01% 30,413 80.56%

Total $7,970,233,097 100.00% 37,750 100.00%

(1) Local Secured Assessed Valuation, excluding tax-exempt property. Source: California Municipal Statistics, Inc.

Assessed Valuation of Single Family Homes. The following tables show the distribution of single family homes within Improvement District No. 3 among various fiscal year 2016-17 assessed valuation ranges, as well as the average and median assessed valuation of single family homes within Improvement District No. 3.

ASSESSED VALUATION OF SINGLE FAMILY HOMES Fiscal Year 2016-17 College of the Sequoias Community College District Tulare Area Improvement District No. 3

No. of 2016-17 Average Median Parcels Assessed Valuation Assessed Valuation Assessed Valuation Single Family Residential 24,876 $3,782,300,080 $152,046 $118,658

2016-17 No. of % of Cumulative Total % of Cumulative Assessed Valuation Parcels(1) Total % of Total Valuation Total % of Total $0 - $24,999 770 3.095% 3.095% $12,894,035 0.341% 0.341% 25,000 - 49,999 2,212 8.892 11.987 85,246,634 2.254 2.595 50,000 - 74,999 2,985 12.000 23.987 186,547,092 4.932 7.527 75,000 - 99,999 3,652 14.681 38.668 321,110,486 8.490 16.017 100,000 - 124,999 3,779 15.191 53.859 424,395,418 11.221 27.237 125,000 - 149,999 3,033 12.192 66.052 414,220,899 10.952 38.189 150,000 - 174,999 2,271 9.129 75.181 366,502,824 9.690 47.879 175,000 - 199,999 1,570 6.311 81.492 293,086,266 7.749 55.628 200,000 - 224,999 1,265 5.085 86.577 266,277,997 7.040 62.668 225,000 - 249,999 873 3.509 90.087 206,960,851 5.472 68.140 250,000 - 274,999 713 2.866 92.953 186,411,231 4.929 73.068 275,000 - 299,999 404 1.624 94.577 115,682,764 3.059 76.127 300,000 - 324,999 263 1.057 95.634 81,843,010 2.164 78.290 325,000 - 349,999 220 0.884 96.519 73,874,466 1.953 80.244 350,000 - 374,999 193 0.776 97.295 69,860,684 1.847 82.091 375,000 - 399,999 122 0.490 97.785 46,966,682 1.242 83.332 400,000 - 424,999 88 0.354 98.139 36,185,116 0.957 84.289 425,000 - 449,999 47 0.189 98.328 20,442,364 0.540 84.830 450,000 - 474,999 45 0.181 98.509 20,751,458 0.549 85.378 475,000 - 499,999 20 0.080 98.589 9,671,770 0.256 85.634 500,000 and greater 351 1.411 100.000 543,368,033 14.366 100.000 Total 24,876 100.000% $3,782,300,080 100.000%

(1) Improved single family residential parcels. Excludes condominiums and parcels with multiple family units. Source: California Municipal Statistics, Inc.

Reductions in Assessed Valuation. Economic and other factors beyond the District’s control, such as general market decline in property values, disruption in financial markets that may reduce availability of financing for purchasers of property, reclassification of property to a class exempt from taxation, whether by ownership or use (such as exemptions for property owned by the State and local agencies and property used for qualified education, hospital, charitable or religious purposes), or the complete or partial destruction of the taxable property caused by a natural or manmade disaster, such as earthquake, flood, drought or toxic contamination, could cause a reduction in the assessed value of taxable property within the District. Any such reduction would result in a corresponding increase in the annual tax rate levied by the Counties to pay the debt service with respect to the Bonds. See “THE BONDS – Security and Sources of Payment” herein.

Drought. On January 17, 2014, the State Governor (the “Governor”) declared a state-wide Drought State of Emergency. As of such date, the State faced water shortfalls due to the driest year in

recorded State history. On April 1, 2015, the Governor issued an executive order mandating certain temporary conservation measures, which were implemented by means of an emergency regulation adopted by the California State Water Resources Control Board (the “Water Board”) on May 5, 2015. The temporary conservation measures were extended and amended by subsequent executive orders of the Governor and Water Board regulations over the course of calendar years 2015 and 2016.

On April 7, 2017, the Governor issued an executive order terminating the state-wide Drought State of Emergency in light of successful conservation efforts and plentiful rain and snow during the 2016-17 winter season, also the second wettest winter on record for the local region. The executive order rescinds and modifies prior executive orders, ending most emergency regulations while maintaining the emergency regulations that provide for development of permanent prohibitions on wasteful water use. The Drought State of Emergency is continued in Fresno, Kings, Tulare and Tuolumne Counties, where emergency drinking water projects continue.

The District cannot make any representation regarding the effects that the current drought has had, or, if it should continue, may have on the value of taxable property within the District, or to what extent the drought could cause disruptions to economic or agricultural activity within the boundaries of the District.

Appeals and Adjustments of Assessed Valuations. Under California law, property owners may apply for a reduction of their property tax assessment by filing a written application, in form prescribed by the State Board of Equalization (the “SBE”), with the appropriate county board of equalization or assessment appeals board. County assessors may independently reduce assessed values as well based upon the above factors or reductions in the fair market value of the taxable property. In most cases, an appeal is filed because the applicant believes that present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value. Any reduction in the assessment ultimately granted as a result of such appeal applies to the year for which application is made and during which the written application was filed. Such reductions are subject to yearly reappraisals and may be adjusted back to their original values when market conditions improve. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS – Article XIIIA of the California Constitution” herein.

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

In addition to the above-described taxpayer appeals, county assessors may independently reduce assessed valuations based on changes in the market value of property, or for other factors such as the complete or partial destruction of taxable property caused by natural or man-made disasters such as earthquakes, floods, fire, drought or toxic contamination pursuant to relevant provisions of the State Constitution. See also “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS – Article XIIIA of the California Constitution.” Such reductions are subject to yearly reappraisals by the county assessor and may be adjusted back to their original values when real estate market conditions improve. Once property has regained its prior assessed value, adjusted for inflation, it once again is subject to the annual inflationary growth rate factor allowed under Article XIIIA.

No assurance can be given that property tax appeals, actions by county assessors, or other factors in the future will not significantly reduce the assessed valuation of property within the District.

Alternative Method of Tax Apportionment - Teeter Plan

Certain counties in the State of California operate under a statutory program entitled Alternate Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”). Under the Teeter Plan local taxing entities receive 100% of their tax levies net of delinquencies, but do not receive interest or penalties on delinquent taxes collected by the county. Kings County has not adopted the Teeter Plan, and consequently the Teeter Plan is not available to local taxing entities within Kings County, such as the Improvement Districts. Tulare County has discontinued the Teeter Plan, and consequently the Teeter Plan is not available to local taxing entities within Tulare County, such as the Improvement Districts. Therefore, the District’s receipt of property taxes from properties within the Improvement Districts are therefore subject to delinquencies.

Tax Levies, Collections and Delinquencies

The following table shows the secured tax charges and delinquencies for all taxes collected in Improvement District No. 1 by the Counties for fiscal years 2009-10 through 2015-16.

SECURED PROPERTY TAX CHARGES AND DELINQUENCIES Fiscal Years 2009-10 through 2016-17 College of the Sequoias Community College District Hanford Campus Improvement District No. 1

Kings County Portion

Secured Amt. Del. % Del. Tax Charge(1) June 30 June 30 2009-10 $554,489.93 $18,267.96 3.29% 2010-11 1,113,015.54 24,707.89 2.22 2011-12 627,479.70 12,442.32 1.98 2012-13 841,190.84 11,455.12 1.36 2013-14 1,081,538.91 14,177.35 1.31 2014-15 1,099,942.77 14,273.63 1.30 2015-16 995,949.26 8,927.92 0.90

Tulare County Portion

Secured Amt. Del. % Del. Tax Charge(1) June 30 June 30 2009-10 $2,616.91 $40.65 1.55% 2010-11 11,608.96 239.92 2.07 2011-12 6,898.25 35.21 0.51 2012-13 9,397.51 68.11 0.72 2013-14 10,477.57 156.08 1.49 2014-15 11,132.46 74.68 0.67 2015-16 9,818.28 149.16 1.52

(1) Bond debt service levy only. Source: California Municipal Statistics, Inc.

The following table shows the secured tax charges and delinquencies for all taxes collected in Improvement District No. 2 by the County for Fiscal Years 2009-10 through 2015-16.

SECURED PROPERTY TAX CHARGES AND DELINQUENCIES Fiscal Years 2009-10 through 2015-16 College of the Sequoias Community College District Visalia Area Improvement District No. 2

Secured Amt. Del. % Del. Tax Charge(1) June 30 June 30 2009-10 $602,997.51 $23,302.01 3.86% 2010-11 1,530,837.22 60,287.30 3.94 2011-12 2,997,978.88 83,790.72 2.79 2012-13 2,887,223.85 67,344.31 2.33 2013-14 1,818,198.84 35,728.73 1.97 2014-15 1,929,723.87 51,183.23 2.65 2015-16 2,000,311.29 36,004.94 1.80

(1) Bond debt service levy only. Source: California Municipal Statistics, Inc.

The following table shows the secured tax charges and delinquencies for all taxes collected in Improvement District No. 3 by the Counties for fiscal years 2009-10 through 2015-16.

SECURED PROPERTY TAX CHARGES AND DELINQUENCIES Fiscal Years 2009-10 through 2015-16 College of the Sequoias Community College District Tulare Area Improvement District No. 3

Tulare County Portion

Secured Amt. Del. % Del. Tax Charge(1) June 30 June 30 2009-10 $715,967.11 $34,600.44 4.83% 2010-11 1,702,779.21 82,678.85 4.86 2011-12 1,850,759.92 57,927.38 3.13 2012-13 1,628,434.84 62,185.29 3.82 2013-14 1,422,164.07 36,511.11 2.57 2014-15 1,805,886.45 38,397.11 2.13 2015-16 1,524,791.42 41,331.78 2.71

Kings County Portion

Secured Amt. Del. % Del. Tax Charge(1) June 30 June 30 2009-10 $89,723.76 $4,456.84 4.97% 2010-11 194,062.26 7,253.29 3.74 2011-12 215,943.29 8,401.79 3.89 2012-13 219,697.21 7,030.27 3.20 2013-14 191,674.78 4,241.48 2.21 2014-15 206,814.01 3,340.06 1.62 2015-16 173,421.03 4,090.58 2.36

(1) Bond debt service levy only. Source: California Municipal Statistics, Inc.

Tax Rates

The table below presents the total ad valorem property tax rates levied as a percentage of assessed valuation by all taxing entities in the representative tax rate area within Improvement District No. 1 during the five-year period from 2012-13 through 2016-17.

SUMMARY OF AD VALOREM TAX RATES Fiscal Years 2012-13 through 2016-17 College of the Sequoias Community College District Hanford Campus Improvement District No. 1

Typical Tax Rate Per $100 Assessed Valuation (TRA-2-006)(1) 2012-13 2013-14 2014-15 2015-16 2016-17 General Tax Rate 1.000000% 1.000000% 1.000000% 1.000000% 1.000000% Hanford School District .058872 .055140 .054548 .060581 .054849 Hanford High School District .060243 .059774 .060909 .058384 .054175 College of Sequoias Hanford Campus I.D. #1 .018700 .023700 .023900 .020300 .020200 Total Tax Rate 1.137815% 1.138614% 1.139357% 1.139265% 1.129224% ______(1) 2016-17 assessed valuation of TRA 2-006 is $383,105,395. Source: California Municipal Statistics, Inc.

The tables below present the total ad valorem property tax rates levied as a percentage of assessed valuation by all taxing entities in the representative tax rate area within Improvement District No. 2 during the five-year period from 2012-13 through 2016-17.

SUMMARY OF AD VALOREM TAX RATES Fiscal Years 2012-13 through 2016-17 College of the Sequoias Community College District Visalia Area Improvement District No. 2

Typical Tax Rate Per $100 Assessed Valuation (TRA-6-003)(1) 2012-13 2013-14 2014-15 2015-16 2016-17 General Tax Rate 1.000000% 1.000000% 1.000000% 1.000000% 1.000000% College of the Sequoias - Visalia SFID .025000 .014800 .014800 .014500 .012100 Visalia Unified School District .030000 .030000 .030000 .022600 .027000 Kaweah Delta Hospital District .025330 .028230 .020904 .023743 .020569 Total All Property Tax Rate 1.080330% 1.073030% 1.065704% 1.060843% 1.059669%

Kaweah Delta Water District .000100% .000400% .000500% .000400% .000300% Total Land and Improvement Only .000100% .000400% .000500% .000400% .000300% ______(1) 2016-17 assessed valuation of TRA 6-003 is $1,319,005,302. Source: California Municipal Statistics, Inc.

The tables below present the total ad valorem property tax rates levied as a percentage of assessed valuation by all taxing entities in the representative tax rate area within Improvement District No. 3 during the five-year period from 2012-13 through 2016-17.

SUMMARY OF AD VALOREM TAX RATES Fiscal Years 2012-13 through 2016-17 College of the Sequoias Community College District Tulare Area Improvement District No. 3

Typical Tax Rate Per $100 Assessed Valuation (TRA-5-017)(1) 2012-13 2013-14 2014-15 2015-16 2016-17 General Tax Rate 1.000000% 1.000000% 1.000000% 1.000000% 1.000000% Tulare Joint Union High School District .057800 .069100 .063200 .064500 .066200 Tulare Local Health Care District .081500 .081500 .081500 .081500 .085600 College of the Sequoias Improvement District No. 3 .027700 .023200 .025000 .020000 .017200 Total All Property Tax Rate 1.167000% 1.173800% 1.169700% 1.166000% 1.169000%

Kaweah Delta Water District (Land and Improvements only) .000100% .000400% .000500% .0004000% .0003000%

______(1) 2016-17 assessed valuation of TRA 5-017 is $642,846,590. Source: California Municipal Statistics, Inc.

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Largest Property Owners

The more property (by assessed value) which is owned by a single taxpayer within the District, the greater amount of tax collections that are exposed to weaknesses in such a taxpayer’s financial situation and ability or willingness to pay property taxes. The following tables list the 20 largest local secured taxpayers in each of the Improvement Districts in terms of their fiscal year 2016-17 secured assessed valuations. Each taxpayer listed below is a name listed on the tax rolls. The District cannot make any representation as to whether individual persons, corporations or other organizations are liable for tax payments with respect to multiple properties held in various names that in aggregate may be larger than is suggested by the table below. LARGEST LOCAL SECURED TAXPAYERS Fiscal Year 2016-17 College of the Sequoias Community College District Hanford Campus Improvement District No. 1

2016-17 % of Property Owner Primary Land Use Assessed Valuation Total(1) 1. Del Monte Foods Inc. Food Processing $84,586,723 1.63% 2. Tessenderlo Kerley Inc. Industrial 43,529,741 0.84 3. Passco Hanford Mall LLC Shopping Center 37,153,896 0.72 4. Centennial-Hanford Center Shopping Center 32,473,175 0.63 5. Nichols Pistachio Food Processing 31,575,488 0.61 6. Wasatch Pool Holdings LLC Apartments 30,076,305 0.58 7. Wal-Mart Real Estate Business Trust Commercial 24,806,636 0.48 8. Zonneveld Dairies Inc. Agricultural 23,278,860 0.45 9. Hanford Centenial Associates LP Apartments 21,277,940 0.41 10. Coveris Flexibles US LLC Industrial 19,999,780 0.39 11. Lansing LLC Agricultural 18,962,484 0.37 12. Valley View Farms Agricultural 17,671,701 0.34 13. SNR 27 Apartments 17,645,539 0.34 14. Manuel R. Monteiro Trust Agricultural 17,335,802 0.33 15. Warmerdam Land Co. LP Agricultural 17,014,804 0.33 16. Verwey Family Trust Agricultural 16,997,779 0.33 17. Jacob and Nicole De Jong Agricultural 16,048,206 0.31 18. David and Alice Te Velde Family Trust Agricultural 15,967,978 0.31 19. Marquez Investment Group LLC Industrial 15,768,478 0.30 20. Jon and Valerie Keller Trust Auto Dealership 15,621,087 0.30 $517,792,402 9.99% ______(1) 2016-17 Local Secured Assessed Valuation: $5,181,211,829. Source: California Municipal Statistics, Inc.

LARGEST LOCAL SECURED TAXPAYERS Fiscal Year 2016-17 College of the Sequoias Community College District Visalia Area Improvement District No. 2

2016-17 % of Property Owner Primary Land Use Assessed Valuation Total(1) 1. California Dairies Inc. Industrial $184,312,119 1.26% 2. Imperial Bondware Corp. Industrial 61,893,160 0.42 3. Visalia Mall LP Shopping Center 52,662,330 0.36 4. Perfection Pet Foods LLC Industrial 45,908,747 0.31 5. Ventura Coastal LLC Industrial 45,856,847 0.31 6. California Water Service Co. Water Company 39,688,728 0.27 7. Wawona Packing Company LLC Industrial 39,201,747 0.27 8. Western Milling LLC Industrial 37,410,028 0.26 9. Robert J. and Sharon J. Hilarides Agricultural/Dairy 37,081,897 0.25 10. VWR International LLC Industrial 36,946,878 0.25 11. Target Corporation Shopping Center 36,273,710 0.25 12. Cottonwood Fresno Holdings LLC Warehouse 36,000,000 0.25 13. Darlene and Jay Te Velde, Jr. Agricultural/Dairy 35,431,941 0.24 14. Duke Realty LP Warehouse 29,126,608 0.20 15. Blam Jade LP Commercial 29,086,639 0.20 16. Lowes HIW Inc. Shopping Center 28,273,210 0.19 17. Wal-Mart Real Estate Business Trust Commercial 28,166,116 0.19 18. Crystal J LP Warehouse 26,170,655 0.18 19. Arie H. De Jong Agricultural/Dairy 24,995,165 0.17 20. International Paper Company Industrial 24,815,202 0.17 $879,301,727 6.03% ______(1) 2016-17 Local Secured Assessed Valuation: $14,574,695,003. Source: California Municipal Statistics, Inc.

LARGEST LOCAL SECURED TAXPAYERS Fiscal Year 2016-17 College of the Sequoias Community College District Tulare Area Improvement District No. 3

2016-17 % of Property Owner Primary Land Use Assessed Valuation Total(1) 1. J.G. Boswell Co. Industrial $280,803,558 3.52% 2. Saputo Cheese and Protein LLC Industrial 252,832,060 3.17 3. Land O’Lakes Inc. Industrial 182,547,043 2.29 4. Oscar Mayer Foods Corp. Industrial 71,877,959 0.90 5. United States Cold Storage of California Industrial 64,207,904 0.81 6. Ventura Coastal LLC Industrial 60,972,911 0.77 7. Dreyers Grand Ice Cream Inc. Industrial 56,773,498 0.71 8. California Milk Producers Industrial 55,525,746 0.70 9. Bosman Dairy Agricultural/Dairy 53,326,933 0.67 10. Garrison Tulare LLC Shopping Center 46,204,892 0.58 11. GFP Ethanol LLC Industrial 36,786,335 0.46 12. SPS Atwell Island LLC Solar Farm 34,305,148 0.43 13. Gregory John Te Velde Agricultural/Dairy 31,231,151 0.39 14. Cornelius and Sherry Vander Eyk Family Trust Agricultural/Dairy 30,279,665 0.38 15. Schakel Family LP Agricultural/Dairy 26,978,428 0.34 16. John W. and Marjorie L. Roeloffs Trust Agricultural/Dairy 25,927,282 0.33 17. Sulphur Springs Cultured Specialties LLC Industrial 23,448,082 0.29 18. Target Corporation Shopping Center 23,172,542 0.29 19. J.D. Heiskell Holdings LLC Agricultural 21,993,578 0.28 20. Rick L. and Lanell G. Gorzeman Agricultural/Dairy 20,802,762 0.26 $1,399,997,477 17.57% ______(1) 2016-17 Local Secured Assessed Valuation: $7,970,233,097. Source: California Municipal Statistics, Inc.

Statement of Direct and Overlapping Debt

Set forth below are direct and overlapping debt reports (each a “Debt Report”) for each of the Improvement Districts, prepared by California Municipal Statistics, Inc, effective as of May 4, 2017 for debt outstanding as of May 1, 2017. The Debt Reports area included for general information purposes only. The District has not reviewed the Debt Reports for completeness or accuracy and makes no representation in connection therewith.

The Debt Reports generally include long-term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the respective Improvement District in whole or in part. Such long-term obligations generally are not payable from revenues of the District (except as indicated) nor are they necessarily obligations secured by land within the respective Improvement District. In many cases, long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency.

The tables show the percentage of each overlapping entity’s assessed value located within the boundaries of the respective Improvement District. The tables also show the corresponding portion of the overlapping entity’s existing debt payable from property taxes levied within the respective District. The total amount of debt for each overlapping entity is not given in the table.

The first column in the table names each public agency which has outstanding debt as of the date of the report and whose territory overlaps the respective Improvement District in whole or in part. The

second column shows the percentage of each overlapping agency’s assessed value located within the boundaries of the respective Improvement District. This percentage, multiplied by the total outstanding debt of each overlapping agency (which is not shown in the table) produces the amount shown in the third column, which is the apportionment of each overlapping agency’s outstanding debt to taxable property in the respective Improvement District.

STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT College of the Sequoias Community College District Hanford Campus Improvement District No. 1

2016-17 Assessed Valuation: $5,431,066,686

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/17 College of Sequoias Hanford Campus Improvement District No. 1 100.000% $19,907,989 (1) Hanford Joint Union High School District 100.000 35,797,809 Armona Union School District 100.000 2,200,000 Hanford School District 100.000 4,095,000 Pioneer Union School District 100.000 5,638,114 Corcoran Hospital District 9.432 1,241,198 Tulare Local Healthcare District 0.457 384,383 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $69,264,493

OVERLAPPING GENERAL FUND DEBT: Kings County General Fund Obligations 53.905% $5,921,464 Kings County Pension Obligation Bonds 53.905 3,438,284 Tulare County Certificates of Participation 0.191 65,962 Tulare County Office of Education Certificates of Participation 0.191 67,633 College of Sequoias Certificates of Participation 18.624 1,032,701 Hanford Joint Union High School District Certificates of Participation 100.000 3,355,000 Pioneer Union School District Certificates of Participation 100.000 2,435,000 TOTAL OVERLAPPING GENERAL FUND DEBT $16,316,044

COMBINED TOTAL DEBT $85,580,537 (2)

(1) Excludes general obligation bonds to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Ratios to 2016-17 Assessed Valuation: Direct Debt ($19,907,989) ...... 0.37% Total Direct and Overlapping Tax and Assessment Debt ...... 1.28% Combined Total Debt ...... 1.58%

______Source: California Municipal Statistics, Inc.

STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT College of the Sequoias Community College District Visalia Area Improvement District No. 2

2016-17 Assessed Valuation: $15,422,132,768

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/17 College of Sequoias Visalia School Facilities Improvement District No. 2 100.000% $25,790,481(1) Cutler-Orosi Unified School District 94.037 8,769,967 Farmersville Unified School District 100.000 4,006,259 Visalia Unified School District 100.000 57,984,971 Exeter Unified High School District (High School Purposes) 100.000 8,498,944 Woodlake Union High School District 100.000 5,568,686 Exeter Unified School District (Elementary School Purposes) 100.000 5,784,900 Stone Corral School District 100.000 366,956 Woodlake Union School District 100.000 1,115,000 Kaweah Delta Hospital District 99.124 45,136,113 City of Visalia 1915 Act Bonds 100.000 624,982 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $163,647,259

OVERLAPPING GENERAL FUND DEBT: Tulare County General Fund Obligations 48.271% $16,670,390 Tulare County Office of Education Certificates of Participation 48.271 17,092,761 College of Sequoias Certificates of Participation 52.296 2,899,813 Cutler-Orosi Joint Unified School District General Fund Obligations 94.037 1,222,481 Farmersville Unified School District General Fund Obligations 100.000 1,716,000 Visalia Unified School District Certificates of Participation 100.000 17,215,000 Woodlake Union High School District Certificates of Participation 100.000 362,093 Woodlake Union School District Certificates of Participation 100.000 3,666,616 City of Visalia General Fund Obligations 99.385 21,879,472 TOTAL OVERLAPPING GENERAL FUND DEBT $82,724,626

OVERLAPPING TAX INCREMENT DEBT (Successor Agencies): $2,605,885

COMBINED TOTAL DEBT $248,977,770 (2)

(1) Excludes issue to be sold. (2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and non-bonded capital lease obligations.

Ratios to 2016-17 Assessed Valuation: Direct Debt ($25,790,481) ...... 0.17% Total Direct and Overlapping Tax and Assessment Debt ... 1.06% Combined Total Debt ...... 1.61%

Ratio to Redevelopment Incremental Valuation ($1,468,797,339): Total Overlapping Tax Increment Debt ...... 0.18%

______Source: California Municipal Statistics, Inc.

STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT College of the Sequoias Community College District Tulare Area Improvement District No. 3

2016-17 Assessed Valuation: $8,514,751,113

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/17 College of Sequoias Tulare School Facilities Improvement District 100.000% $33,684,924 (1) Lindsay Unified School District 100.000 19,068,974 Tulare Joint Union High School District 100.000 25,361,883 Buena Vista School District 100.000 110,000 Liberty School District 100.000 724,844 Pixley Union School District 100.000 7,365,000 Sundale Union School District 100.000 514,008 Tipton School District 100.000 3,297,500 Corcoran Hospital District 68.919 9,070,664 Kaweah Delta Hospital District 0.876 398,887 Tulare Local Healthcare District 98.183 82,581,721 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $182,178,405

OVERLAPPING GENERAL FUND DEBT: Tulare County General Fund Obligations 23.677% $8,176,852 Tulare County Office of Education Certificate of Participation 23.677 8,384,026 Kings County General Fund Obligations 9.430 1,035,886 Kings County Pension Obligations 9.430 601,484 College of Sequoias Certificates of Participation 28.873 1,601,008 Corcoran Joint Unified School District Certificates of Participation 100.000 13,125,000 Lindsay Unified School District General Fund Obligations 100.000 5,750,000 Liberty School District Certificates of Participation 100.000 2,490,000 Tipton School District Certificates of Participation 100.000 1,424,859 Tulare School District Certificates of Participation 100.000 11,189,929 City of Lindsay General Fund Obligations 100.000 1,445,000 City of Tulare General Fund Obligations 100.000 26,670,000 City of Visalia Certificates of Participation 0.480 105,528 TOTAL OVERLAPPING GENERAL FUND DEBT $81,999,572

OVERLAPPING TAX INCREMENT DEBT: $36,694,115

COMBINED TOTAL DEBT $300,872,092 (2)

(1) Excludes issue to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Ratios to 2016-17 Assessed Valuation: Direct Debt ($33,684,924) ...... 0.40% Total Direct and Overlapping Tax and Assessment Debt ...... 2.14% Combined Total Debt ...... 3.53%

Ratios to Redevelopment Incremental Valuation ($1,105,793,477): Total Overlapping Tax Increment Debt ...... 3.32%

______Source: California Municipal Statistics, Inc.

CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS

The principal of and interest on the Bonds are payable solely from the proceeds of an ad valorem property tax levied by the Counties for the payment thereof. (See “THE BONDS – Security and Sources of Payment” herein). Articles XIIIA, XIIIB, XIIIC and XIIID of the Constitution, Propositions 98 and 111, and certain other provisions of law discussed below, are included in this section to describe the potential effect of these Constitutional and statutory measures on the ability of the Counties to levy taxes on behalf of the District and to the District to spend tax proceeds for operating and other purposes, and it should not be inferred from the inclusion of such materials that these laws impose any limitation on the ability of the Counties on behalf of the District to levy taxes for payment of the Bonds.

Article XIIIA of the California Constitution

Article XIIIA (“Article XIIIA”) of the State Constitution limits the amount of ad valorem taxes on real property to 1% of “full cash value” as determined by the county assessor. Article XIIIA defines “full cash value” to mean “the county assessor’s valuation of real property as shown on the 1975-76 bill under “full cash value,” or thereafter, the appraised value of real property when purchased, newly constructed or a change in ownership has occurred after the 1975 assessment,” subject to exemptions in certain circumstances of property transfer or reconstruction. Determined in this manner, the full cash value is also referred to as the “base year value.” The full cash value is subject to annual adjustment to reflect increases, not to exceed 2% for any year, or decreases in the consumer price index or comparable local data, or to reflect reductions in property value caused by damage, destruction or other factors.

Article XIIIA has been amended to allow for temporary reductions of assessed value in instances where the fair market value of real property falls below the adjusted base year value described above. Proposition 8—approved by the voters in November of 1978—provides for the enrollment of the lesser of the base year value or the market value of real property, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property, or other factors causing a similar decline. In these instances, the market value is required to be reviewed annually until the market value exceeds the base year value, adjusted for inflation. Reductions in assessed value could result in a corresponding increase in the annual tax rate levied by the Counties to pay debt service on the Bonds. See “THE BONDS – Security and Sources of Payment” and “TAX BASES FOR REPAYMENT OF BONDS” herein.

Article XIIIA requires a vote of two-thirds or more of the qualified electorate of a city, county, special district or other public agency to impose special taxes, while totally precluding the imposition of any additional ad valorem, sales or transaction tax on real property. Article XIIIA exempts from the 1% tax limitation any taxes above that level required to pay debt service (a) on any indebtedness approved by the voters prior to July 1, 1978, or (b) as the result of an amendment approved by State voters on June 3, 1986, on any bonded indebtedness approved by two-thirds or more of the votes cast by the voters for the acquisition or improvement of real property on or after July 1, 1978, or (c) bonded indebtedness incurred by a school district or community college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities, approved by 55% or more of the votes cast on the proposition, but only if certain accountability measures are included in the proposition. In addition, Article XIIIA requires the approval of two-thirds of all members of the State legislature to change any state taxes for the purpose of increasing tax revenues.

Legislation Implementing Article XIIIA

Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The 1% property tax is automatically levied by the relevant county and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1979.

Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the annual adjustment not to exceed 2% are allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation in future years.

All taxable property value included in this Official Statement is shown at 100% of taxable value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value.

Both the United States Supreme Court and the California State Supreme Court have upheld the general validity of Article XIIIA.

Unitary Property

Some amount of property tax revenue of the District is derived from utility property which is considered part of a utility system with components located in many taxing jurisdictions (“unitary property”). Under the State Constitution, such property is assessed by SBE as part of a “going concern” rather than as individual pieces of real or personal property. State-assessed unitary and certain other property is allocated to the Counties by SBE, taxed at special county-wide rates, and the tax revenues distributed to taxing jurisdictions (including the District) according to statutory formulae generally based on the distribution of taxes in the prior year. So long as the District is not a basic aid district, taxes lost through any reduction in assessed valuation will be compensated by the State as equalization aid under the State’s education financing formulas. See “FUNDING OF COMMUNITY COLLEGE DISTRICTS IN CALIFORNIA – Major Revenues” herein.

Article XIIIB of the California Constitution

Article XIIIB (“Article XIIIB”) of the State Constitution, as subsequently amended by Propositions 98 and 111, respectively, limits the annual appropriations of the State and of any city, county, school or community college district, authority or other political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost of living and in population and for transfers in the financial responsibility for providing services and for certain declared emergencies. As amended, Article XIIIB defines:

(a) “change in the cost of living” with respect to K-12 school districts and community college districts (collectively, “K-14 school districts”) to mean the percentage change in California per capita income from the preceding year, and

(b) “change in population” with respect to K-14 school districts to mean the percentage change in the average daily attendance (“ADA”) of such district from the preceding fiscal year.

For fiscal years beginning on or after July 1, 1990, the appropriations limit of each entity of government shall be the appropriations limit for the 1986-87 fiscal year adjusted for the changes made from that fiscal year pursuant to the provisions of Article XIIIB, as amended.

The appropriations of an entity of local government subject to Article XIIIB limitations include the proceeds of taxes levied by or for that entity and the proceeds of certain state subventions to that entity. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to the entity from (a) regulatory licenses, user charges and user fees (but only to the extent that these proceeds exceed the reasonable costs in providing the regulation, product or service), and (b) the investment of tax revenues.

Appropriations subject to limitation do not include (a) refunds of taxes, (b) appropriations for debt service such as the Bonds, (c) appropriations required to comply with certain mandates of the courts or the federal government, (d) appropriations of certain special districts, (e) appropriations for all qualified capital outlay projects as defined by the State legislature, (f) appropriations derived from certain fuel and vehicle taxes and (g) appropriations derived from certain taxes on tobacco products.

Article XIIIB includes a requirement that all revenues received by an entity of government other than the State in a fiscal year and in the fiscal year immediately following it in excess of the amount permitted to be appropriated during that fiscal year and the fiscal year immediately following it shall be returned by a revision of tax rates or fee schedules within the next two subsequent fiscal years.

Article XIIIB also includes a requirement that 50% of all revenues received by the State in a fiscal year and in the fiscal year immediately following it in excess of the amount permitted to be appropriated during that fiscal year and the fiscal year immediately following it shall be transferred and allocated to the State School Fund pursuant to Section 8.5 of Article XVI of the State Constitution. See “– Propositions 98 and 111” herein.

Article XIIIC and Article XIIID of the California Constitution

On November 5, 1996, the voters of the State approved Proposition 218, popularly known as the “Right to Vote on Taxes Act.” Proposition 218 added to the California Constitution Articles XIIIC and XIIID (respectively, “Article XIIIC” and “Article XIIID”), which contain a number of provisions affecting the ability of local agencies, including K-14 school districts, to levy and collect both existing and future taxes, assessments, fees and charges.

According to the “Title and Summary” of Proposition 218 prepared by the California Attorney General, Proposition 218 limits “the authority of local governments to impose taxes and property-related assessments, fees and charges.” Among other things, Article XIIIC establishes that every tax is either a “general tax” (imposed for general governmental purposes) or a “special tax” (imposed for specific purposes), prohibits special purpose government agencies such as K-14 school districts from levying general taxes, and prohibits any local agency from imposing, extending or increasing any special tax beyond its maximum authorized rate without a two-thirds vote; and also provides that the initiative power will not be limited in matters of reducing or repealing local taxes, assessments, fees and charges. Article XIIIC further provides that no tax may be assessed on property other than ad valorem property taxes imposed in accordance with Articles XIII and XIIIA of the California Constitution and special taxes approved by a two-thirds vote under Article XIIIA, Section 4. Article XIIID deals with assessments and property-related fees and charges, and explicitly provides that nothing in Article XIIIC or XIIID will be construed to affect existing laws relating to the imposition of fees or charges as a condition of property development.

The District does not impose any taxes, assessments, or property-related fees or charges which are subject to the provisions of Proposition 218. It does, however, receive a portion of the basic 1% ad valorem property tax levied and collected by the Counties pursuant to Article XIIIA of the California Constitution. The provisions of Proposition 218 may have an indirect effect on the District, such as by limiting or reducing the revenues otherwise available to other local governments whose boundaries encompass property located within the District thereby causing such local governments to reduce service levels and possibly adversely affecting the value of property within the District.

Proposition 26

On November 2, 2010, voters in the State approved Proposition 26. Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of “tax” to include “any levy, charge, or exaction of any kind imposed by a local government” except the following: (1) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (2) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (3) a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (4) a charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property; (5) a fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law; (6) a charge imposed as a condition of property development; and (7) assessments and property-related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.

Propositions 98 and 111

On November 8, 1988, California voters approved Proposition 98, a combined initiative constitutional amendment and statute called the “Classroom Instructional Improvement and Accountability Act” (the “Accountability Act”). Certain provisions of the Accountability Act have, however, been modified by Proposition 111, discussed below, the provisions of which became effective on July 1, 1990. The Accountability Act changed State funding of public education below the university level and the operation of the State’s appropriations limit. The Accountability Act guarantees State funding for K-14 school districts at a level equal to the greater of (a) the same percentage of State general fund revenues as the percentage appropriated to such districts in 1986-87, and (b) the amount actually appropriated to such districts from the State general fund in the previous fiscal year, adjusted for increases in enrollment and changes in the cost of living. The Accountability Act permits the State legislature to suspend this formula for a one-year period.

The Accountability Act also changed how tax revenues in excess of the State appropriations limit are distributed. Any excess State tax revenues up to a specified amount are instead of being returned to taxpayers, is transferred to K-14 school districts. Any such transfer to K-14 school districts would be excluded from the appropriations limit for K-14 school districts and the K-14 school district appropriations limit for the next year is automatically be increased by the amount of such transfer. These additional moneys would enter the base funding calculation for K-14 school districts for subsequent years, creating further pressure on other portions of the State budget, particularly if revenues decline in a

year following an Article XIIIB surplus. The maximum amount of excess tax revenues which can be transferred to K-14 school districts is 4% of the minimum State spending for education mandated by the Accountability Act.

Since the Accountability Act is unclear in some details, there can be no assurances that the State legislature or a court might not interpret the Accountability Act to require a different percentage of State general fund revenues to be allocated to K-14 school districts, or to apply the relevant percentage to the State’s budgets in a different way than is proposed in the Governor’s Budget.

On June 5, 1990, the voters of California approved Proposition 111 (Senate Constitutional Amendment No. 1) called the “Traffic Congestion Relief and Spending Limit Act of 1990” (“Proposition 111”) which further modified Article XIIIB and Sections 8 and 8.5 of Article XVI of the State Constitution with respect to appropriations limitations and school funding priority and allocation.

The most significant provisions of Proposition 111 are summarized as follows:

a. Annual Adjustments to Spending Limit. The annual adjustments to the Article XIIIB spending limit were liberalized to be more closely linked to the rate of economic growth. Instead of being tied to the Consumer Price Index, the “change in the cost of living” is now measured by the change in California per capita personal income. The definition of “change in population” specifies that a portion of the State’s spending limit is to be adjusted to reflect changes in attendance.

b. Treatment of Excess Tax Revenues. “Excess” tax revenues with respect to Article XIIIB are now determined based on a two-year cycle, so that the State can avoid having to return to taxpayers excess tax revenues in one year if its appropriations in the next fiscal year are under its limit. In addition, the Proposition 98 provision regarding excess tax revenues was modified. After any two-year period, if there are excess State tax revenues, 50% of the excess are to be transferred to K-14 school districts with the balance returned to taxpayers; under prior law, 100% of excess State tax revenues went to K-14 school districts, but only up to a maximum of 4% of such district’s minimum funding level. Also, reversing prior law, any excess State tax revenues transferred to K-14 school districts are not built into a districts’ base expenditures for calculating their entitlement for State aid in the next year, and the State’s appropriations limit is not to be increased by this amount.

c. Exclusions from Spending Limit. Two exceptions were added to the calculation of appropriations which are subject to the Article XIIIB spending limit. First, there are excluded all appropriations for “qualified capital outlay projects” as defined by the State State legislature. Second, there are excluded any increases in gasoline taxes above the 1990 level (then nine cents per gallon), sales and use taxes on such increment in gasoline taxes, and increases in receipts from vehicle weight fees above the levels in effect on January 1, 1990. These latter provisions were necessary to make effective the transportation funding package approved by the State legislature and the Governor, which was expected to raise over $15 billion in additional taxes from 1990 through 2000 to fund transportation programs.

d. Recalculation of Appropriations Limit. The Article XIIIB appropriations limit for each unit of government, including the State, is to be recalculated beginning in fiscal year 1990-91. It is based on the actual limit for fiscal year 1986-87, adjusted forward to 1990-91 as if Proposition 111 had been in effect.

e. School Funding Guarantee. There is a complex adjustment in the formula enacted in Proposition 98 which guarantees K-14 school districts a certain amount of State general fund revenues. Under prior law, K-14 school districts were guaranteed the greater of (1) 40.9% of State general fund revenues (“Test 1”) or (2) the amount appropriated in the prior year adjusted for changes in the cost of living (measured as in Article XIIIB by reference to per capita personal income) and enrollment (“Test 2”). Under Proposition 111, districts will receive the greater of (1) Test 1, (2) Test 2, or (3) a third test (“Test 3”), which will replace Test 2 in any year when growth in per capita State general fund revenues from the prior year is less than the annual growth in California per capita personal income. Under Test 3, districts will receive the amount appropriated in the prior year adjusted for change in enrollment and per capita State general fund revenues, plus an additional small adjustment factor. If Test 3 is used in any year, the difference between Test 3 and Test 2 will become a “credit” to K-14 school districts (also referred to as a “maintenance factor”) which will be paid in future years when State general fund revenue growth exceeds personal income growth.

Proposition 39

On November 7, 2000, California voters approved an amendment (commonly known as Proposition 39) to the California Constitution. This amendment (1) allows school facilities bond measures to be approved by 55% (rather than two-thirds) of the voters in local elections and permits property taxes to exceed the current 1% limit in order to repay the bonds and (2) changes existing statutory law regarding charter school facilities. As adopted, the constitutional amendments may be changed only with another Statewide vote of the people. The statutory provisions could be changed by a majority vote of both houses of the State legislature and approval by the Governor, but only to further the purposes of the proposition. The local school jurisdictions affected by this proposition are K-12 school districts, community college districts, including the District, and county offices of education. As noted above, the California Constitution previously limited property taxes to 1% of the value of property, and property taxes could only exceed this limit to pay for (1) any local government debts approved by the voters prior to July 1, 1978 or (2) bonds to acquire or improve real property that receive two-thirds voter approval after July 1, 1978.

The 55% vote requirement applies only if the local bond measure presented to the voters includes: (1) a requirement that the bond funds can be used only for construction, rehabilitation, equipping of school facilities, or the acquisition or lease of real property for school facilities; (2) a specific list of school projects to be funded and certification that the school board has evaluated safety, class size reduction, and information technology needs in developing the list; and (3) a requirement that the governing board conduct annual, independent financial and performance audits until all bond funds have been spent to ensure that the bond funds have been used only for the projects listed in the measure. Legislation approved in June 2000 placed certain limitations on local school bonds to be approved by 55% of the voters. These provisions require that the tax rate per $100,000 of taxable property value projected to be levied as the result of any single election be no more than $60 (for a unified school district), $30 (for a high school or elementary school district), or $25 (for a community college district) when assessed valuation is projected to increase in accordance with Article XIIIA of the Constitution. These requirements are not part of Proposition 39 and can be changed with a majority vote of both houses of the State legislature and approval by the Governor.

Jarvis v. Connell

On May 29, 2002, the California Court of Appeal for the Second District decided the case of Howard Jarvis Taxpayers Association, et al. v. Kathleen Connell (as Controller of the State of

California). The Court of Appeal held that either a final budget bill, an emergency appropriation, a self- executing authorization pursuant to state statutes (such as continuing appropriations) or the California Constitution or a federal mandate is necessary for the State Controller to disburse funds. The foregoing requirement could apply to amounts budgeted by the District as being received from the State. To the extent the holding in such case would apply to State payments reflected in the District’s budget, the requirement that there be either a final budget bill or an emergency appropriation may result in the delay of such payments to the District if such required legislative action is delayed, unless the payments are self-executing authorizations or are subject to a federal mandate. On May 1, 2003, the California Supreme Court upheld the holding of the Court of Appeal, stating that the Controller is not authorized under State law to disburse funds prior to the enactment of a budget or other proper appropriation, but under federal law, the Controller is required, notwithstanding a budget impasse and the limitations imposed by State law, to timely pay those State employees who are subject to the minimum wage and overtime compensation provisions of the federal Fair Labor Standards Act.

Proposition 1A and Proposition 22

On November 2, 2004, California voters approved Proposition 1A, which amends the State constitution to significantly reduce the State’s authority over major local government revenue sources. Under Proposition 1A, the State can not (i) reduce local sales tax rates or alter the method of allocating the revenue generated by such taxes, (ii) shift property taxes from local governments to schools or community colleges, (iii) change how property tax revenues are shared among local governments without two-third approval of both houses of the State legislature or (iv) decrease Vehicle License Fee revenues without providing local governments with equal replacement funding. Proposition 1A does allow the State to approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county. Proposition 1A also amends the State Constitution to require the State to suspend certain State laws creating mandates in any year that the State does not fully reimburse local governments for their costs to comply with the mandates. This provision does not apply to mandates relating to schools or community colleges or to those mandates relating to employee rights.

Proposition 22, The Local Taxpayer, Public Safety, and Transportation Protection Act, approved by the voters of the State on November 2, 2010, prohibits the State from enacting new laws that require redevelopment agencies to shift funds to schools, community colleges or other agencies and eliminates the State’s authority to shift property taxes temporarily during a severe financial hardship of the State. In addition, Proposition 22 restricts the State’s authority to use State fuel tax revenues to pay debt service on state transportation bonds, to borrow or change the distribution of state fuel tax revenues, and to use vehicle license fee revenues to reimburse local governments for state mandated costs. Proposition 22 impacts resources in the State’s general fund and transportation funds, the State’s main funding source for schools and community colleges, as well as universities, prisons and health and social services programs. According to an analysis of Proposition 22 submitted by the Legislative Analyst’s Office (the “LAO”) on July 15, 2010, the long-term effect of Proposition 22 will be an increase in the State’s general fund costs by approximately $1 billion annually for several decades.

Propositions 30 and 55

On November 6, 2012, voters of the State approved the Temporary Taxes to Fund Education, Guaranteed Local Public Safety Funding, Initiative Constitutional Amendment (also known as “Proposition 30”), which temporarily increased the State Sales and Use Tax and personal income tax rates on higher incomes. For personal income taxes imposed beginning in the taxable year commencing January 1, 2012 and ending December 31, 2018, Proposition 30 increases the marginal personal income tax rate by: (i) 1% for taxable income over $250,000 but less than $300,001 for single filers (over $500,000 but less than $600,001 for joint filers and over $340,000 but less than $408,001 for head-of-

household filers), (ii) 2% for taxable income over $300,000 but less than $500,001 for single filers (over $600,000 but less than $1,000,001 for joint filers and over $408,000 but less than $680,001 for head-of- household filers), and (iii) 3% for taxable income over $500,000 for single filers (over $1,000,000 for joint filers and over $680,000 for head-of-household filers).

The California Children’s Education and Health Care Protection Act of 2016 (also known as “Proposition 55”) is a constitutional amendment approved by the voters of the State on November 8, 2016. Proposition 55 extends the increases to personal income tax rates for high-income taxpayers that were approved as part of Proposition 30 through 2030. Proposition 55 did not extend the temporary State Sales and Use Tax rate increase enacted under Proposition 30, which expired as of January 1, 2017.

The revenues generated from the personal income tax increases will be included in the calculation of the Proposition 98 Minimum Funding Guarantee (defined herein) for school districts and community college districts. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS – Propositions 98 and 111” herein. From an accounting perspective, the revenues generated from the personal income tax increases are being deposited into the State account created pursuant to Proposition 30 called the Education Protection Account (the “EPA”). Pursuant to Proposition 30, funds in the EPA will be allocated quarterly, with 89% of such funds provided to schools districts and 11% provided to community college districts. The funds will be distributed to school districts and community college districts in the same manner as existing unrestricted per-student funding, except that no school district will receive less than $200 per unit of ADA and no community college district will receive less than $100 per full time equivalent student. The governing board of each school district and community college district is granted sole authority to determine how the moneys received from the EPA are spent, provided that the appropriate governing board is required to make these spending determinations in open session at a public meeting and such local governing board is prohibited from using any funds from the EPA for salaries or benefits of administrators or any other administrative costs.

Proposition 2

On November 4, 2014, voters approved the Rainy Day Budget Stabilization Fund Act (also known as “Proposition 2”). Proposition 2 is a legislatively-referred constitutional amendment which makes certain changes to State budgeting practices, including substantially revising the conditions under which transfers are made to and from the State’s Budget Stabilization Account (the “BSA”) established by the California Balanced Budget Act of 2004 (also known as Proposition 58).

Under Proposition 2, and beginning in fiscal year 2015-16 and each fiscal year thereafter, the State will generally be required to annually transfer to the BSA an amount equal to 1.5% of estimated State general fund revenues (the “Annual BSA Transfer”). Supplemental transfers to the BSA (a “Supplemental BSA Transfer”) are also required in any fiscal year in which the estimated State general fund revenues that are allocable to capital gains taxes exceed 8% of the total estimated general fund tax revenues. Such excess capital gains taxes—net of any portion thereof owed to K-14 school districts pursuant to Proposition 98—will be transferred to the BSA. Proposition 2 also increases the maximum size of the BSA to an amount equal to 10% of estimated State general fund revenues for any given fiscal year. In any fiscal year in which a required transfer to the BSA would result in an amount in excess of the 10% threshold, Proposition 2 requires such excess to be expended on State infrastructure, including deferred maintenance.

For the first 15-year period ending with the 2029-30 fiscal year, Proposition 2 provides that half of any required transfer to the BSA, either annual or supplemental, must be appropriated to reduce certain State liabilities, including making certain payments owed to K-14 school districts, repaying State

interfund borrowing, reimbursing local governments for State mandated services, and reducing or prefunding accrued liabilities associated with State-level pension and retirement benefits. Following the initial 15-year period, the Governor and the State legislature are given discretion to apply up to half of any required transfer to the BSA to the reduction of such State liabilities. Any amount not applied towards such reduction must be transferred to the BSA or applied to infrastructure, as described above.

Proposition 2 changes the conditions under which the Governor and the State legislature may draw upon or reduce transfers to the BSA. The Governor does not retain unilateral discretion to suspend transfers to the BSA, nor does the State legislature retain discretion to transfer funds from the BSA for any reason, as previously provided by law. Rather, the Governor must declare a “budget emergency,” defined as an emergency within the meaning of Article XIIIB of the Constitution or a determination that estimated resources are inadequate to fund State general fund expenditures, for the current or ensuing fiscal year, at a level equal to the highest level of State spending within the three immediately preceding fiscal years. Any such declaration must be followed by a legislative bill providing for a reduction or transfer. Draws on the BSA are limited to the amount necessary to address the budget emergency, and no draw in any fiscal year may exceed 50% of the funds on deposit in the BSA unless a budget emergency was declared in the preceding fiscal year.

Proposition 2 also requires the creation of the Public School System Stabilization Account (the “PSSSA”) into which transfers will be made in any fiscal year in which a Supplemental BSA Transfer is required (as described above). Such transfer will be equal to the portion of capital gains taxes above the 8% threshold that would otherwise be paid to K-14 school districts as part of the minimum funding guarantee. A transfer to the PSSSA will only be made if certain additional conditions are met, as follows: (i) the minimum funding guarantee was not suspended in the immediately preceding fiscal year, (ii) the operative Proposition 98 formula for the fiscal year in which a PSSSA transfer might be made is “Test 1,” (iii) no maintenance factor obligation is being created in the budgetary legislation for the fiscal year in which a PSSSA transfer might be made, (iv) all prior maintenance factor obligations have been fully repaid, and (v) the minimum funding guarantee for the fiscal year in which a PSSSA transfer might be made is higher than the immediately preceding fiscal year, as adjusted for ADA growth and cost of living. Proposition 2 caps the size of the PSSSA at 10% of the estimated minimum guarantee in any fiscal year, and any excess funds must be paid to K-14 school districts. Reductions to any required transfer to the PSSSA, or draws on the PSSSA, are subject to the same budget emergency requirements described above. However, Proposition 2 also mandates draws on the PSSSA in any fiscal year in which the estimated minimum funding guarantee is less than the prior year’s funding level, as adjusted for ADA growth and cost of living.

Proposition 51

The Kindergarten Through Community College Public Education Facilities Bond Act of 2016 (also known as Proposition 51) is a voter initiative that was approved by voters on November 8, 2016. Proposition 51 authorizes the sale and issuance of $9 billion in general obligation bonds for the new construction and modernization of K-14 facilities.

K-12 School Facilities. Proposition 51 includes $3 billion for the new construction of K-12 facilities and an additional $3 billion for the modernization of existing K-12 facilities. K-12 school districts will be required to pay for 50% of the new construction costs and 40% of the modernization costs with local revenues. If a school districts lack sufficient local funding, it may apply for additional state grant funding, up to 100% of the project costs. In addition, a total of $1 billion will be available for the modernization and new construction of charter school ($500 million) and technical education ($500 million) facilities. Generally, 50% of modernization and new construction project costs for charter school and technical education facilities must come from local revenues. However, schools that cannot cover

their local share for these two types of projects may apply for state loans. State loans must be repaid over a maximum of 30 years for charter school facilities and 15 years for career technical education facilities. For career technical education facilities, state grants are capped at $3 million for a new facility and $1.5 for a modernized facility. Charter schools must be deemed financially sound before project approval.

Community College Facilities. Proposition 51 includes $2 billion for community college district facility projects, including buying land, constructing new buildings, modernizing existing buildings, and purchasing equipment. In order to receive funding, community college districts must submit project proposals to the Chancellor of the community college system, who then decides which projects to submit to the State legislature and Governor based on a scoring system that factors in the amount of local funds contributed to the project. The Governor and State legislature will select among eligible projects as part of the annual state budget process.

The District has qualified for Proposition 51 state facilities funding and anticipates receiving the $16 million allocation in fiscal year 2018-19.

The table below shows the expected use of bond funds under Proposition 51:

PROPOSITION 51 Use of Bond Funds (In Millions)

K-12 Public School Facilities New Construction $3,000 Modernization 3,000 Career Technical Education Facilities 500 Charter School Facilities 500 Subtotal $7,000

Community College Facilities $2,000 Total $9,000

Future Initiatives

Article XIIIA, Article XIIIB, Article XIIIC and Article XIIID of the California Constitution and Propositions 22, 26, 30, 39, 98 and 51 were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time other initiative measures could be adopted further affecting District revenues or the District’s ability to expend revenues. The nature and impact of these measures cannot be anticipated by the District.

FUNDING OF COMMUNITY COLLEGE DISTRICTS IN CALIFORNIA

The information in this section concerning State funding of community colleges is provided as supplementary information only, and it should not be inferred from the inclusion of this information in this Official Statement that the principal of and interest on the Bonds is payable from State revenues. The Bonds are payable from the proceeds of an ad valorem property tax required to be levied by the Counties in an amount sufficient for the payment thereof.

Major Revenues

California community college districts (other than Basic Aid Districts, as described below) receive a majority of their funding from the State, and the balance from local and federal sources. State funds include general apportionment, categorical funds, capital construction, lottery funds (which generally is less than 3 percent), and other minor sources. State aid is subject to the appropriation of funds in the State’s annual budget. As a result, decreases in State revenues may affect appropriations made by the State legislature to community college districts. A bill passed the State legislature (“SB 361”), and signed by the Governor on September 29, 2006, established the present system of funding for community college districts. This system includes allocation of state general apportionment revenues to community college districts based on criteria developed by the Board of Governors of the California Community Colleges (the “Board of Governors”) in accordance with prescribed statewide minimum requirements. In establishing these minimum requirements, the Board of Governors was required to acknowledge community college districts’ need to receive an annual allocation based on the number of colleges and comprehensive centers in each respective district, plus funding received based on the number of credit and noncredit FTES in each district.

SB 361 also specified that, commencing with the 2006-07 fiscal year the minimum funding per FTES would be: (a) not less than $4,367 per credit FTES; (b) at a uniform rate of $2,626 per noncredit FTES; and (c) set at $3,092 per FTES for a new instructional category of “career development and college preparation” (“CDCP”) enhanced non-credit rate. Each such minimum funding rate is subject to cost of living adjustments (each, a “COLA”), if any, funded through the State budgeting legislation in each fiscal year. Pursuant to SB 361, the State Chancellor developed criteria for one-time grants for districts that would have received more funding under the prior system or a then-proposed rural college access grant, than under the current system.

One unit of FTES is equivalent to 525 student contact hours, which is determined based on a State formula of one student multiplied by 15 weekly contact hours multiplied by 35 weeks. Accordingly, the number of FTES in the District may not equal the number of students enrolled in the District.

In each fiscal year, the State budget will establish an enrollment cap on the maximum number of FTES, known as the “funded” FTES, for which a community college district will receive a revenue allocation, as determined by the program-based model. A district’s enrollment cap is based on the previous fiscal year’s reported FTES, plus the growth allowance provided for by the State budget, if any. All student hours in excess of the enrollment cap are considered “unfunded” FTES.

The following table shows the District’s FTES figures for the last nine fiscal years, along with the projected figures for fiscal year 2016-17:

FULL TIME-EQUIVALENT STUDENTS(1) Fiscal Years 2007-08 through 2016-17 College of the Sequoias Community College District

Year Funded FTES(2) Unfunded FTES Total FTES 2007-08 8,930(3) -- 8,210 2008-09 9,042 1,118 10,160 2009-10 8,697 1,918 10,615 2010-11 8,945 1,617 10,562 2011-12 8,261 772 9,033 2012-13 8,466 180 8,647 2013-14 8,714 753 9,449 2014-15 8,869 -- 8,869 2015-16 9,430 -- 9,430 2016-17(4) 9,700 -- 9,700

(1) One FTES is equivalent to 525 student contract hours, which is determined based on a State formula of one student multiplied by 15 weekly contact hours multiplied by 35 weeks. Accordingly, the number of FTES in the District may not equal the number of students enrolled in the District. (2) In allocating per-student funding each year, the State budget establishes an enrollment limit (the “Cap”), on the maximum number of FTES for which each district will be funded (the “Funded FTES”). Each community college district’s Cap is based on the previous year’s reported FTES, plus an additional growth allowance. The excess of FTES over Cap is the unfunded FTES (the “Unfunded FTES”). (3) Reflects FTES in excess of the District’s actual FTES count, and for which it received stability funding. See “—Stability Funding” herein. (4) Projected. Source: College of the Sequoias Community College District.

The major local revenue source is local property taxes that are collected from within District boundaries, with student enrollment fees accounting for the most of the remainder. A small part of a community college district’s budget is from local sources other than property taxes and student enrollment fees, such as interest income, donations, educational foundation contributions and sales of property. Every community college district receives the same amount of lottery funds per pupil from the State, however, these are not categorical funds as they are not for particular programs or students. The initiative authorizing the lottery does require the funds to be used for instructional purposes, and prohibits their use for capital purposes.

“Basic Aid” community college districts (also referred to as “community supported” districts) are those districts whose local property tax and student enrollment fee collections exceed the revenue allocation determined by the program based model. Basic aid districts do not receive any general apportionment funding from the State (though they are currently entitled to the minimum amount of funding derived from taxes levied pursuant to Proposition 30, in an amount equal to $100 per unit of FTES). See also “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPRORPRIATIONS – Propositions 30 and 55.” The current law in California allows these districts to keep the excess funds without penalty. The implication for Basic Aid districts is that the legislatively determined annual COLAs and other politically determined factors are less significant in determining such districts primary funding sources. Rather, property tax growth and the local economy become the determining factors. The District is not a Basic Aid district.

Stability Funding. Under California Code Regulations Section 58776, during the initial year of a decline in FTES, community college districts are eligible to receive “stability” funding, in an amount

equal to the revenue loss associated with a decline in FTES for that year. If FTES are not restored to the pre-decline level within a period of two years following the initial decline, a community college district that has received stability funding is subject to a permanent reduction of its funded FTES and an attendant decline in operating revenue. See “ – FTES” above.

Budget Procedure

On or before September 15, the Board of Trustees of the District is required under Section 58305 of the California Code of Regulations, Title V, to adopt a balanced budget. Each September, every State agency, including the Chancellor’s Office of the California Community Colleges, submits to the Department of Finance (“DOF”) proposals for changes in the State budget. These proposals are submitted in the form of Budget Change Proposals (“BCPs”), involving analyses of needs, proposed solutions and expected outcomes. Thereafter, the DOF makes recommendations to the governor, and by June 10 a proposed State budget is presented by the governor to the State legislature. The Governor’s Budget is then analyzed and discussed in committees and hearings begin in the State Assembly and Senate. In May, based on the debate, analysis and changes in the economic forecasts, the governor issues a revised budget with changes he or she can support. The law requires the State legislature to submit its approved budget by June 15, and by June 30 the governor should announce his or her line item reductions and sign the State budget. In response to growing concern for accountability and with enabling legislation (AB 2910, Chapter 1486, Statutes of 1986), the statewide governing board of the California community colleges (the “Board of Governors”) and the Chancellor’s Office have established expectations for sound district fiscal management and a process for monitoring and evaluating the financial condition to ensure the financial health of California’s community college districts. In accordance with statutory and regulatory provisions, the Chancellor has been given the responsibility to identify districts at risk and, when necessary, the authority to intervene to bring about improvement in their financial condition. To stabilize a district’s financial condition, the Chancellor may, as a last resort, seek an appropriation for an emergency apportionment.

The monitoring and evaluation process is designed to provide early detection and amelioration that will stabilize the financial condition of a district before an emergency apportionment is necessary. This is accomplished by (1) assessing the financial condition of districts through the use of various information sources and (2) taking appropriate and timely follow-up action to bring about improvement in a district’s financial condition, as needed. A variety of instruments and sources of information are used to provide a composite of each district’s financial condition, including quarterly financial status reports, annual financial and budget reports, attendance reports, annual district audit reports, district input and other financial records. In assessing each district’s financial condition, the Chancellor will pay special attention to each district’s general fund balance, spending pattern, and full-time equivalent student patterns. Those districts with greater financial difficulty will receive follow-up visits from the Chancellor’s Office where financial solutions to the district’s problems will be addressed and implemented.

See “COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT – General Fund Budgeting” herein for more information regarding the District’s recent budgets.

Minimum Funding Guarantees for California Community College Districts Under Propositions 98 and 111

General. In 1988, California voters approved Proposition 98, an initiative that amended Article XVI of the State Constitution and provided specific procedures to determine a minimum guarantee for annual K-14 funding. The constitutional provision links the K-14 funding formulas to growth factors that are also used to compute the State appropriations limit. Proposition 111 (Senate Constitutional

Amendment 1), adopted in June 1990, among other things, changed some earlier school funding provisions of Proposition 98 relating to the treatment of revenues in excess of the State spending limit and added a third funding “test” to calculate the annual funding guarantee. This third calculation is operative in years in which State general fund tax revenue growth is weak. The amendment also specified that under Test 2 (see below), the annual COLA for the minimum guarantee for annual K-14 funding would be the change in California’s per-capita personal income, which is the same COLA used to make annual adjustments to the State appropriations limit (Article XIII B).

Calculating Minimum Funding Guarantee. There are currently three tests which determine the minimum level of K-14 funding. Under implementing legislation for Proposition 98 (AB 198 and SB 98 of 1989), each segment of public education (K-12 districts, community college districts, and direct elementary and secondary level instructional services provided by the State) has separately calculated amounts under the Proposition 98 tests. The base year for the separate calculations is 1989-90. Each year, each segment is entitled to the greater of the amounts separately computed for each under Test 1 or 2. Should the calculated amount under Proposition 98 guarantee (K-14 education aggregated) be less than the sum of the separate calculations, then the Proposition 98 guarantee amount shall be prorated to the three segments in proportion to the amount calculated for each. This statutory split has been suspended in every year beginning with 1992-93. In those years, community colleges received less than was required from the statutory split.

Test 1 guarantees that K-14 education will receive at least the same funding share of the State general fund budget it received in 1986-87. Initially, that share was just over 40 percent. Because of the major shifts of property tax from local government to community colleges and K-12 which began in 1992-93 and increased in 1993-94, the percentage dropped to 33.0%.

Test 2 provides that K-14 education will receive as a minimum, its prior-year total funding (including State general fund and local revenues) adjusted for enrollment growth and per-capita personal income COLA.

Test 3, established pursuant to Proposition 111, provides an alternative calculation of the funding base in years in which State per-capita general fund revenues grow more slowly than per-capita personal income. When this condition exists, K-14 minimum funding is determined based on the prior-year funding level, adjusted for changes in enrollment and COLA where the COLA is measured by the annual increase in State per-capita general fund revenues, instead of the higher per-capita personal income factor. The total allocation, however, is increased by an amount equal to one-half of one percent of the prior-year funding level as a funding supplement.

In order to make up for the lower funding level under Test 3, in subsequent years K-14 education receives a maintenance allowance equal to the difference between what should have been provided if the revenue conditions had not been weak and what was actually received under the Test 3 formula. This maintenance allowance is paid in subsequent years when the growth in per-capita State tax revenue outpaces the growth in per-capita personal income.

The enabling legislation to Proposition 111, Chapter 60, Statutes of 1990 (SB 98, Garamendi), further provides that K-14 education shall receive a supplemental appropriation in a Test 3 year if the annual growth rate in non-Proposition 98 per-capita appropriations exceeds the annual growth rate in per- pupil total spending.

Additional Sources of Funding

Tax Offset and Pass-Through Revenues. The District receives tax offset revenue from the Counties as a part of certain redevelopment projects within the Counties (the “Tax Offset Revenues”). The Tax Offset Revenues received are deposited directly into the general fund of the District and offset the State apportionment received by the District. The District also receives pass-through tax increment revenue (the “Pass-Through Revenues”) from the former redevelopment agencies within the District’s boundaries. The Pass-Through Revenues received by the District are deposited into the District’s capital projects fund, and are used for facilities improvements. The Pass-Through Revenues do not offset the State apportionment received by the District. The amount of Tax Offset Revenues and Pass-Through Revenues received by the District from fiscal years 2010-11 through 2015-16, as well as receipts to-date for fiscal year 2016-17, are shown in the following table.

TAX OFFSET AND PASS-THROUGH REVENUES Fiscal Years 2010-11 through 2016-17 College of the Sequoias Community College District

Fiscal Tax Offset Pass-Through Year Revenues(1) Revenues(2) 2010-11 $23,301 $119,372 2011-12 361,900 217,690 2012-13 1,202,514 152,976 2013-14 1,149,027 166,167 2014-15 823,056 200,686 2015-16 767,876 228,981 2016-17(3) 932,459 131,797 ______(1) Tax Offset Revenues received offset State apportionments received by the District. (2) Pass-Through Revenues received do not offset State apportionments received by the District. (3) Reflects revenues received through April 19, 2017. Source: College of the Sequoias Community College District.

The District, however, can make no representations that Tax Offset Revenues and Pass-Through Revenues will continue to be received by the District in amounts consistent with prior years, or as currently projected, particularly in light of the recently enacted legislation eliminating redevelopment agencies. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING DISTRICT REVENUES AND APPROPRIATIONS – Proposition 1A and Proposition 22” herein. The Bonds, however, are not payable from such revenue. The Bonds are payable solely from the proceeds of an ad valorem property tax required to be levied by the Counties in an amount sufficient for the payment thereof. See “THE BONDS – Security and Sources of Payment” herein.

Dissolution of Redevelopment Agencies

On December 30, 2011, the California Supreme Court issued its decision in the case of California Redevelopment Association v. Matosantos, finding ABx1 26, a trailer bill to the 2011-12 State budget, to be constitutional. As a result, all redevelopment agencies in California ceased to exist as a matter of law on February 1, 2012.

ABx1 26 was modified by Assembly Bill No. 1484 (Chapter 26, Statutes of 2011-12) (“AB 1484”), which, together with ABx1 26, is referred to herein as the “Dissolution Act.” The Dissolution Act provides that all rights, powers, duties and obligations of a redevelopment agency under the California Community Redevelopment Law that have not been repealed, restricted or revised pursuant to ABx1 26 will be vested in a successor agency, generally the county or city that authorized the creation of

the redevelopment agency (each, a “Successor Agency”). All property tax revenues that would have been allocated to a redevelopment agency, less the corresponding county auditor-controller’s cost to administer the allocation of property tax revenues, are now allocated to a corresponding Redevelopment Property Tax Trust Fund (“Trust Fund”), to be used for the payment of pass-through payments to local taxing entities, and thereafter to bonds of the former redevelopment agency and any “enforceable obligations” of the Successor Agency, as well as to pay certain administrative costs. The Dissolution Act defines “enforceable obligations” to include bonds, loans, legally required payments, judgments or settlements, legal binding and enforceable obligations, and certain other obligations.

Among the various types of enforceable obligations, the first priority for payment is tax allocation bonds issued by the former redevelopment agency; second is revenue bonds, which may have been issued by the host city, but only where the tax increment revenues were pledged for repayment and only where other pledged revenues are insufficient to make scheduled debt service payments; third is administrative costs of the Successor Agency, equal to at least $250,000 in any year, unless the oversight board reduces such amount for any fiscal year or a lesser amount is agreed to by the Successor Agency; then, fourth tax revenues in the Trust Fund in excess of such amounts, if any, will be allocated as residual distributions to local taxing entities in the same proportions as other tax revenues. Moreover, all unencumbered cash and other assets of former redevelopment agencies will also be allocated to local taxing entities in the same proportions as tax revenues. Notwithstanding the foregoing portion of this paragraph, the order of payment is subject to modification in the event a Successor Agency timely reports to the State Controller and the Department of Finance that application of the foregoing will leave the Successor Agency with amounts insufficient to make scheduled payments on enforceable obligations. If the county auditor- controller verifies that the Successor Agency will have insufficient amounts to make scheduled payments on enforceable obligations, it shall report its findings to the State Controller. If the State Controller agrees there are insufficient funds to pay scheduled payments on enforceable obligations, the amount of such deficiency shall be deducted from the amount remaining to be distributed to taxing agencies, as described as the fourth distribution above, then from amounts available to the Successor Agency to defray administrative costs. In addition, if a taxing agency entered into an agreement pursuant to Health and Safety Code Section 33401 for payments from a redevelopment agency under which the payments were to be subordinated to certain obligations of the redevelopment agency, such subordination provisions shall continue to be given effect.

As noted above, the Dissolution Act expressly provides for continuation of pass-through payments to local taxing entities. Per statute, 100% of contractual and statutory two percent pass- throughs, and 56.7% of statutory pass-throughs authorized under the Community Redevelopment Law Reform Act of 1993 (AB 1290, Chapter 942, Statutes of 1993) (“AB 1290”), are restricted to educational facilities without offset against revenue limit apportionments by the State. Only 43.3% of AB 1290 pass- throughs are offset against State aid so long as the District uses the moneys received for land acquisition, facility construction, reconstruction, or remodeling, or deferred maintenance as provided under Education Code Section 42238(h).

ABx1 26 states that in the future, pass-throughs shall be made in the amount “which would have been received had the redevelopment agency existed at that time,” and that the county auditor-controller shall “determine the amount of property taxes that would have been allocated to each redevelopment agency had the redevelopment agency not been dissolved pursuant to the operation of ABx1 26 using current assessed values and pursuant to statutory pass-through formulas and contractual agreements with other taxing agencies.”

Successor Agencies continue to operate until all enforceable obligations have been satisfied and all remaining assets of the Successor Agency have been disposed of. AB 1484 provides that once the

debt of the Successor Agency is paid off and remaining assets have been disposed of, the Successor Agency shall terminate its existence and all pass-through payment obligations shall cease.

The District can make no representations as to the extent to which its revenue limit apportionments may be offset by the future receipt of pass-through tax increment revenues, or any other surplus property tax revenues pursuant to the Dissolution Act.

State Assistance

California community college districts’ principal funding formulas and revenue sources are derived from the State budget. The following information concerning the State’s budgets has been obtained from publicly available information which the District believes to be reliable; however, neither the District nor the Financial Advisor guaranty the accuracy or completeness of this information and neither the District nor the Financial Advisor have independently verified such information. Furthermore, it should not be inferred from the inclusion of this information herein that the principal of or interest on the Bonds is payable from the general fund of the District. The Bonds are payable solely from the proceeds of an ad valorem property tax required to be levied by the Counties in an amount sufficient for the payment thereof.

2016-17 Budget. On June 27, 2016, the Governor signed into the law the State budget for fiscal year 2016-17 (the “2016-17 Budget”). The following information is drawn from the Department of Finance’s summary of the 2016-17 Budget and the LAO’s preliminary review of the 2016-17 Budget.

The 2016-17 Budget projects, for fiscal year 2015-16, total general fund revenues and transfers of $117 billion and total expenditures of $115.6 billion. The State is projected to end the 2015-16 fiscal year with total available reserves of $7.3 billion, including $3.9 billion in the traditional general fund reserve and $3.4 billion in the BSA. For fiscal year 2016-17, the 2016-17 Budget projects a growth in State general fund revenues driven primarily by total general fund revenues of $120.3 billion and authorizes expenditures of $122.5 billion. The State is projected to end the 2016-17 fiscal year with total available reserves of $8.5 billion, including $1.8 billion in the traditional general fund reserve and $6.7 billion in the BSA.

As a result of higher general fund revenue estimates for fiscal years 2015-16 and 2016-17, and after accounting for expenditures controlled by constitutional funding requirements such as Proposition 2 and Proposition 98, the 2016-17 Budget allocates over $6 billion in discretionary funding for various purposes. These include (i) additional deposits of $2 billion to the BSA (reflected in the discussion above) and $600 million to the State’s discretionary budget reserve fund, (ii) approximately $2.9 billion in one-time funding for various purposes including infrastructure, affordable housing and public safety programs, and (iii) $700 million in on-going funding commitments for higher education (California State University and the University of California systems), corrections and rehabilitation and State courts.

As required by Proposition 2, the 2016-17 Budget applies $1.3 billion towards the repayment of existing State liabilities, including loans from special funds, State and University of California pension and retiree health benefits and settle-up payments to K-14 school districts resulting from an underfunding of the Proposition 98 minimum funding guarantee in a prior fiscal year.

With respect to education funding, the 2016-17 Budget revises the Proposition 98 minimum funding guarantees for both fiscal years 2014-15 and 2015-16, as a result of increased revenue estimates. The 2016-17 Budget sets the Proposition 98 minimum funding guarantee for fiscal year 2016-17 at $71.9 billion, an increase of $2.8 billion over the revised level from the prior fiscal year. Significant features with respect to community college funding include the following:

• Base Allocations – An increase of $114.3 million to base allocations to support 2% growth in student enrollment. The 2016-17 Budget also provides $75 million to increase base allocations in recognition of increased operating expenses including in the areas of facilities, employee and retirement benefits and professional development. • Local Property Tax Adjustments – Funding levels reflect decreases of $198.4 million in Proposition 98 funding in fiscal year 2016-17 for community college districts, as a result of higher offsetting property tax receipts. The 2016-17 Budget’s funding levels also reflect an increase of $31.7 million in Proposition 98 funding, allocable to fiscal year 2015-16, to address an anticipated shortfall in redevelopment agency property taxes for community college apportionments. • Career Technical Education (CTE) – $200 million in Proposition 98 funding to expand access to workforce-aligned CTE through existing regional adult education consortia composed of school districts, community college districts and other stakeholders. The 2016- 17 Budget also provides $48 million to support the Career Pathways Trust Program, which provides grant awards to community college districts to develop, enhance and expand career technical education programs that build upon existing regional capacity to meet labor demands. • Student Success – $30 million in one-time funding for grants that support basic skills instruction aimed at improving students’ transition to college-level courses. The 2016-17 Budget also provides $15 million in one-time Proposition 98 grant funding to support coordinated student outreach by local educational agencies and community college districts aimed at increasing college preparation, access, and success. • Innovation Awards – $25 million in Proposition 98 funding for awards to community college districts that develop innovations in curriculum and instruction, prior learning assessments and access to financial aid. • On-line Education – $20 million in one-time Proposition 98 funding to support the development of online courses available through the Online Course Exchange, a program which allows students to enroll in online courses across participating community colleges without requiring students to complete separate application and matriculation processes. • Telecommunications and Technology – An increase of $15 million in Proposition 98 funding, including $5 million in ongoing funding, to expand broadband capacity across community college campuses. • Zero-Textbook-Cost-Degrees – An increase of $5 million in Proposition 98 funding to support the creation of degree, certificate and credentialing programs that use only freely accessible, openly licensed educational resources. • Deferred Maintenance and Instructional Equipment – $184.6 million in one-time Proposition 98 funding for deferred facility maintenance, instructional equipment, or specified water conservation projects. • Mandates – $105.5 million in one-time Proposition 98 funding to reduce the existing backlog of unpaid reimbursement claims to community college districts for the cost of State-mandated programs. The funding would be provided to local educational agencies on a per-student basis, and would be available to be used at local discretion. • Proposition 39 – Passed by voters in November 2012, Proposition 39 increases State corporate tax revenues and requires that, for a five-year period starting in fiscal year 2013-14, and requires that a portion of these additional revenues be used allocated to local education

agencies to improve energy efficiency and expand the use of alternative energy in public buildings. The 2016-17 Budget allocates $49.3 million to support community college energy efficiency projects and clean energy job development programs, an increase of $10.5 million from the prior-year level.

Governor’s Proposed 2017-18 Budget. On January 10, 2017, the Governor released his proposed State budget for fiscal year 2017-18 (the “Proposed Budget”). The following information is drawn from the Department of Finance’s summary of the Proposed Budget and the LAO’s overview of the Proposed Budget.

Following several years of increases, the Governor reports that the three main sources of State revenues—income, sales and corporation taxes—are showing weakness. Consequently, the Proposed Budget includes a revised revenue forecast for fiscal years 2015-16 and 2016-17 that is $3.2 billion lower for than what was included in the current State budget. The Governor attributes the change in expectations to a pattern of shortfalls in monthly revenue collections and a growth in lower-income workers, which results in decreased revenues due to the State’s progressive tax structure. The Governor also identifies some increases in State general fund spending relative to the 2016-17 Budget, most significant among those being an increase in Medi-Cal costs of approximately $1.8 billion. As a result, absent corrective action, the Governor projects that the State would face a general fund deficit of approximately $1.6 billion in fiscal year 2017-18, as well as comparable deficits in future years.

To close the projected deficit, the Proposed Budget includes $3.2 billion in remedial budgetary measures designed to reduce State general fund spending in a variety of areas. Significantly, the Proposed Budget would lower, by $1.7 billion, the existing Proposition 98 funding appropriations for fiscal years 2015-16 and 2016-17 which, as a result of the drop in State revenues, are projected to overappropriate the minimum funding guarantee. As a result, the Proposed Budget also shifts, on a one- time basis (i) $310 million of previously appropriated discretionary K-12 funding from the 2015-16 fiscal year to the 2016-17 fiscal year, and (ii) $859.1 million in Local Control Funding Formula payments to school districts from June 2017 to July 2017. These shifts would bring Proposition 98 spending in line with the revised funding guarantees described below. Other significant remedial measures include eliminating a $400 million set aside for affordable housing and $300 million in previously approved funding for the replacement and renovation of State office buildings.

Assuming the implementation of these measures, the Proposed Budget projects, for fiscal year 2016-17, total general fund revenues and transfers of $118.8 billion and total expenditures of $122.8 billion. The State is projected to end the 2016-17 fiscal year with total available reserves of $7.7 billion, including $980 million in the traditional general fund reserve and $6.7 billion in the BSA. For fiscal year 2017-18, the Proposed Budget projects total general fund revenues of $124 billion and authorizes expenditures of $122.5 billion. The State is projected to end the 2017-18 fiscal year with total available reserves of $8.8 billion, including $980 million in the traditional general fund reserve and $7.9 billion in the BSA.

As a result of the revised State revenue estimates discussed above, the Proposed Budget adjusts the minimum funding guarantee for fiscal year 2015-16 to $68.7 billion, a decrease of $379 million from the level set by the 2016-17 Budget. Similarly, for fiscal year 2016-17, the minimum funding guarantee is revised at $71.4 billion, reflecting a decrease of $506 million from the level set by the 2016-17 Budget. For fiscal year 2017-18, the Proposed Budget sets the minimum funding guarantee at $73.5 billion, including $51.4 billion from the State general fund, reflecting a year-to-year increase of $2.1 billion (or 3%). Fiscal year 2017-18 is projected to be “Test 3” year, with the increase in the minimum guarantee driven primarily by an increase in per capita State general fund revenues.

Significant proposals with respect to community college funding include the following:

• Base Allocations – $94.1 million and $79.3 million to fund, respectively, a 1.48% COLA and a 1.34% growth in enrollment. The Proposed Budget would also provide $23.6 million to support increased operating expenses. Funding increases provided in the Proposed Budget are offset by unused enrollment growth provided in fiscal year 2015-16 and offsetting increased property tax revenues. • Student Fees – The Proposed Budget would keep student fees flat, at $46 per unit. • Student Success – $150 million to support the development of detailed, term-by-term roadmaps for students to complete academic programs, accompanied by early academic planning and ongoing student support services. • Deferred Maintenance – $43.7 million in one-time Proposition 98 funding for deferred maintenance, instructional equipment and specified water conservation projects. • Innovation Awards – $20 million in one-time Proposition 98 funding to provide innovation grants to incentivize the development and implementation of innovative practices in various functional areas. • On-line Education – $10 million in Proposition 98 funding to provide system-wide access to the learning management system for the On-line Education Initiative (“OEI”). The OEI is a collaborative effort among California community colleges intended to increase both access to and success in high-quality online courses. • Library Systems – $6 million in one-time Proposition 98 funding to facilitate the development of and access to an integrated, cloud-based library system. • Proposition 39 – $3 million in Proposition 39 corporate tax revenues to fund energy efficiency projects.

For additional information regarding the Proposed Budget, see the State Department of Finance website at www.dof.ca.gov and the LAO’s website at www.lao.ca.gov. However, the information presented on such websites is not incorporated herein by reference

May Revision. On May 11, 2017, the Governor released his May revision (the “May Revision”) to the Proposed Budget. The following information is drawn from the Department of Finance’s summary of the May Revision.

The May Revision includes a modestly improved fiscal outlook as compared to the Proposed Budget, primarily due to a recent surge in the performance of the stock market. State revenues are projected to be $2.5 billion higher, which the May Revision would redirect primarily towards education, in home supportive services, child care and the reduction of unfunded pension liabilities. For fiscal year 2016-17, the May Revision projects total general fund revenues and transfers of $118.5 billion and total expenditures of $122.3 billion. The State is projected to end the 2016-17 fiscal year with total available reserves of $7.7 billion, including $980 million in the traditional general fund reserve and $6.7 billion in the BSA. For fiscal year 2017-18, the May Revision projects total general fund revenues of $126.6 billion and authorizes expenditures of $124 billion. The State is projected to end the 2017-18 fiscal year with total available reserves of $9.5 billion, including $980 million in the traditional general fund reserve and $8.5 billion in the BSA.

The May Revision notes, however, that the improved fiscal outlook assumes the continued expansion of the economy, and that even a moderate recession would reduce State revenues by

approximately $20 billion annually for several years. The May Revision also notes that several proposed changes to federal fiscal policies, including to Medicaid, trade, immigration and the federal tax structure, could have serious and detrimental effects on the State’s economy and budget.

For fiscal year 2017-18, the May Revision sets the minimum funding guarantee at $74.6 billion, reflecting an increase of $1.1 billion from the level included in the Proposed Budget. Other significant adjustments made by the May Revision to community college funding include the following:

• Base Allocations – a net increase of $34.1 million in Proposition 98 funding for base apportionments, reflecting increases to account for amounts earned back by community college districts that experienced declining enrollment within the past five years, unused prior-year enrollment growth funding, and a change in the COLA provided by the Proposed Budget from 1.48% to 1.56%. Total funding is offset by an adjustment to the funded enrollment increase provided in the Proposed Budget, from 1.34% to 1.0%. The May Revision also provides a net increase of $160 million in Proposition 98 funding to support increased operating expenses. • Deferred Maintenance – an increase of $92.1 million in one-time Proposition 98 funding for deferred maintenance, instructional equipment and specified water conservation projects. • Categorical Programs – an increase of $229,000 in Proposition 98 funding to reflect a change in the COLA from 1.48% to 1.56% for certain categorical programs. • Grants – an increase of $1.9 million in Proposition 98 funding to reflect an increased estimate of eligible Cal Grant B and Cal Grant C recipients in fiscal year 2017-18, and to align grant amounts with a statewide annual academic average of $600 per student. • Equal Employment Opportunity Program (EEOP) – an increase of $1.8 million in EEOP funding to promote hiring and promotion opportunities at community college districts. • Proposition 39 – a decrease of $5.8 million in Proposition 39 corporate tax revenues relative to the level set by the Proposed Budget, bringing total available revenues for energy efficiency projects undertaken by community college districts in fiscal year 2017-18 to $46.5 million For additional information regarding the May Revision, see the State Department of Finance website at www.dof.ca.gov. However, the information presented on such website is not incorporated herein by reference.

Future Actions. The District cannot predict what actions will be taken in the future by the State legislature and the Governor to address changing State revenues and expenditures. The District also cannot predict the impact such actions will have on State revenues available in the current or future years for education. The State budget will be affected by national and State economic conditions and other factors over which the District will have no control. Certain actions or results could produce a significant shortfall of revenue and cash, and could consequently impair the State’s ability to fund schools. State budget shortfalls in future fiscal years may also have an adverse financial impact on the financial condition of the District. However, the obligation to levy ad valorem property taxes upon all taxable property within the District for the payment of principal of and interest on the Bonds would not be impaired.

COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

The information in this section concerning the operations of the District and the District finances are provided as supplementary information only, and it should not be inferred from the inclusion of this information in this Official Statement that the principal of and interest on the Bonds is payable from the general fund of the District. The Bonds are payable from the proceeds of an ad valorem property tax levied by the Counties upon property within the respective Improvement Districts for the payment thereof. See “THE BONDS – Security and Sources of Payment” herein.

Introduction

The District began as Visalia Junior College in 1926 and became a community college district in 1949. The District is located in the heart of the San Joaquin Valley and at the foot of the Sierra Nevada mountains. It encompasses a 2,893 square-mile-area in the San Joaquin Valley midway between San Francisco and Los Angeles and serves communities in Tulare County and Kings County. The District currently operates one community college, College of the Sequoias (the “College”), which provides collegiate level instruction across a wide spectrum of subjects for grades 13 and 14, and two full service centers, one in the Hanford and one in Tulare. The College of the Sequoias is fully accredited by the ACCJC. For fiscal year 2016-17, the District’s projected FTES count is 9,700 students.

Improvement District No. 1

General Description. On July 17, 2006, Improvement District No. 1 was established by the Board of the District pursuant to its Resolution No. 2006-08 and the Education Code Chapter 2, Part 10, Division 1, Title 1.

Location and Territory. Improvement District No. 1 is located primarily within Kings County and includes a small portion of the County. The area of Improvement District No. 1 is about 248 square miles, representing about eight percent of the territory of the District and includes the City of Hanford and surrounding communities. The boundaries of Improvement District No. 1 are coterminous with those of the Hanford Joint Union High School District. Taxable property within Improvement District No. 1 has a fiscal year 2016-17 assessed valuation of $5,492,240,891.

Improvement District No. 2

General Description. On May 5, 2008, Improvement District No. 2 was established by the Board of the District pursuant to its Resolution No. 2008-12 and the Education Code Chapter 2, Part 10, Division 1, Title 1.

Location and Territory. Improvement District No. 2 is located within the County, and includes the City of Visalia. Improvement District No. 2 encompasses about 1,783 square miles, representing about fifty-nine percent of the territory of the District. The boundaries of Improvement District No. 2 include the boundaries of Visalia Unified School District, the Exeter Union High School District, the Farmersville Unified School District, the Woodlake Union High School District, and those portions of the Cutler-Orosi Joint Unified School District which lie within the County, excluding portions of such district lying in Fresno County. Taxable property within Improvement District No. 2 has a fiscal year 2016-17 assessed valuation of $15,422,132,768.

Improvement District No. 3

General Description. On May 5, 2008, Improvement District No. 3 was established by the Board of the District pursuant to its Resolution No. 2008-13 and the Education Code Chapter 2, Part 10, Division 1, Title 1.

Location and Territory. Improvement District No. 3 is located primarily within the County, and a small portion of Kings County, and includes the City of Tulare. Improvement District No. 3 encompasses about 837 square miles, representing about twenty-eight percent of the territory of the District. The boundaries of Improvement District No. 3 include the Alpaugh Unified School District, the Lindsay Unified School District, the Corcoran Joint Unified School District, and the Tulare Joint Union High School District. Taxable property within Improvement District No. 3 has a fiscal year 2016-17 assessed valuation of $8,514,751,113.

Administration

The District is governed by a five-member Board of Trustees, each member of which is elected to a four-year term. Elections for positions to the Board are held every two years, alternating between two and three available positions. Current members of the Board, together with their offices and the dates their terms expire, are listed below:

Board Member Office Term Expires Kenneth Nunes President 2018 John Zumwalt Vice President 2018 Earl Mann Clerk 2020 Lori Cardoza Member 2020 Greg Sherman Member 2018

The Superintendent/President is appointed by the Board and reports to the Board. The Superintendent/President is responsible for management of the District’s day-to-day operations and supervises the work of other key administrators. Stan A. Carrizosa is the Superintendent/President and Christine Statton, CPA, is the Vice President, Administrative Services of the District. Leangela Miller- Hernandez is the Director, Budget and Categorical Accounting and Linda McCauley is the Chief Accounting Officer.

Stan A. Carrizosa, Superintendent/President. Stan Carrizosa was hired as the District’s Superintendent/President effective July 1, 2012. Prior thereto, he spent two years as the Superintendent of Burbank Unified School District, 10 years as the Superintendent of Visalia Unified School District, and seven years as the Superintendent of Dinuba Unified School District. He has over 30 years in combined public education administration experience. He received his B.S. from California State University, Northridge and his M.A. in Education Administration from Fresno Pacific University.

Christine Statton, CPA, Vice President, Administrative Services. Christine Statton was hired as the District’s Vice President, Administrative Services in August 2013. Prior to this, she spent over two years as Assistant Superintendent of Administrative Services in Burbank Unified School District, five years as CFO for Visalia Unified School District, and four years as Internal Auditor for Visalia Unified School District. She received her B.S. in Accounting from Oral Roberts University, has been a CPA for 31 years, and worked for 17 years in public accounting.

Leangela Miller-Hernandez, Director, Budget and Categorical Accounting. Leangela Miller- Hernandez has served in the Business Office at the District since 2001. Previously she worked as an

accountant for Tulare County Health and Human Services. She received her B.S. from Kansas State University and her M.B.A. from California State University, Dominguez Hills.

Linda McCauley, Chief Accounting Officer. Linda McCauley has served in the Business Office at the District since 2006. Previously she worked as an accountant for Tulare County Health and Human Services and M. Green & Co. CPAs. She received her B.S. from Fresno State University and her M.A. in Leadership and Organizational Studies from Fresno Pacific University.

Labor Relations

The District employs 560 full-time equivalent and part-time certificated and 257 classified, management and confidential employees. These employees, except management and some part-time employees, are represented by three bargaining units as noted below:

LABOR RELATIONS ORGANIZATIONS College of the Sequoias Community College District

Number of Employees Contract Labor Organization In Organization Expiration Date College of the Sequoias Teachers Association (COSTA) 177 June 30, 2019 California School Employees Association (CSEA) 175 June 30, 2017 College of the Sequoias Adjunct Faculty Association (COSAFA) 383 June 30, 2019

Source: College of the Sequoias Community College District.

College of the Sequoias Foundation

The College of the Sequoias Foundation (the “Foundation”) is a legally separate, tax-exempt component unit of the District. The Foundation acts primarily as a fundraising organization to provide grants and scholarships to students and support to employees, programs, and departments of the District. The 33 member board of the Foundation consists of community members, alumni, and other supporters of the Foundation. Although the District does not control the timing or amount of receipts from the Foundation, the majority of resources, or income thereon, that the Foundation holds and invests are restricted to the activities of the District by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the District, the Foundation is considered a component unit of the District. As of June 30, 2016, the Foundation had net assets valued at $9,166,403. See “APPENDIX B – 2015-16 AUDITED FINANCIAL STATEMENTS OF THE DISTRICT” attached hereto.

Retirement Programs

The information set forth below regarding the STRS and PERS programs (as defined herein), other than the information provided by the District regarding its annual contributions thereto, has been obtained from publicly available sources which are believed to be reliable but are not guaranteed as to accuracy or completeness, and should not to be construed as a representation by either the District or the Financial Advisor.

STRS. All full-time certificated employees, as well as certain classified employees, are members of the State Teachers’ Retirement System (“STRS”). STRS provides retirement, disability and survivor benefits to plan members and beneficiaries under a defined benefit program (the “STRS Defined Benefit Program”). The STRS Defined Benefit Program is funded through a combination of investment earnings

and statutorily set contributions from three sources: employees, employers, and the State. Benefit provisions and contribution amounts are established by State statutes, as legislatively amended from time to time.

Prior to fiscal year 2014-15, and unlike typical defined benefit programs, none of the employee, employer nor State contribution rates to the STRS Defined Benefit Program varied annually to make up funding shortfalls or assess credits for actuarial surpluses. In recent years, the combined employer, employee and State contributions to the STRS Defined Benefit Program have not been sufficient to pay actuarially required amounts. As a result, and due to significant investment losses, the unfunded actuarial liability of the STRS Defined Benefit Program has increased significantly in recent fiscal years. In September 2013, STRS projected that the STRS Defined Benefit Program would be depleted in 31 years assuming existing contribution rates continued, and other significant actuarial assumptions were realized. In an effort to reduce the unfunded actuarial liability of the STRS Defined Benefit Program, the State recently passed the legislation described below to increase contribution rates.

Prior to July 1, 2014, K-14 school districts were required by such statutes to contribute 8.25% of eligible salary expenditures, while participants contributed 8% of their respective salaries. On June 24, 2014, the Governor signed AB 1469 (“AB 1469”) into law as a part of the State’s fiscal year 2014-15 budget. AB 1469 seeks to fully fund the unfunded actuarial obligation with respect to service credited to members of the STRS Defined Benefit Program before July 1, 2014 (the “2014 Liability”), within 32 years, by increasing member, K-14 school district and State contributions to STRS. Commencing July 1, 2014, the employee contribution rate increased over a three-year phase-in period in accordance with the following schedule:

MEMBER CONTRIBUTION RATES STRS (Defined Benefit Program)

STRS Members Hired Prior to STRS Members Hired Effective Date January 1, 2013 After January 1, 2013 July 1, 2014 8.150% 8.150% July 1, 2015 9.200 8.560 July 1, 2016 10.250 9.205 ______Source: AB 1469.

Pursuant to the Reform Act (defined below), the contribution rates for members hired after the Implementation Date (defined below) will be adjusted if the normal cost increases by more than 1% since the last time the member contribution was set. While the contribution rate for employees hired after the Implementation Date will remain unchanged at 9.205% of creditable compensation for fiscal year commencing July 1, 2017, the STRS actuary currently estimates that member contribution rates for such members will have to increase to 10.205% of creditable compensation effective July 1, 2018, based on the new actuarial assumptions discussed below.

Pursuant to AB 1469, K-14 school districts’ contribution rate will increase over a seven-year phase-in period in accordance with the following schedule:

K-14 SCHOOL DISTRICT CONTRIBUTION RATES STRS (Defined Benefit Program)

Effective Date K-14 school districts July 1, 2014 8.88% July 1, 2015 10.73 July 1, 2016 12.58 July 1, 2017 14.43 July 1, 2018 16.28 July 1, 2019 18.13 July 1, 2020 19.10 ______Source: AB 1469.

Based upon the recommendation from its actuary, for fiscal year 2021-22 and each fiscal year thereafter the STRS Teachers’ Retirement Board (the “STRS Board”), is required to increase or decrease the K-14 school districts’ contribution rate to reflect the contribution required to eliminate the remaining 2014 Liability by June 30, 2046; provided that the rate cannot change in any fiscal year by more than 1% of creditable compensation upon which members’ contributions to the STRS Defined Benefit Program are based; and provided further that such contribution rate cannot exceed a maximum of 20.25%. In addition to the increased contribution rates discussed above, AB 1469 also requires the STRS Board to report to the State legislature every five years (commencing with a report due on or before July 1, 2019) on the fiscal health of the STRS Defined Benefit Program and the unfunded actuarial obligation with respect to service credited to members of that program before July 1, 2014. The reports are also required to identify adjustments required in contribution rates for K-14 school districts and the State in order to eliminate the 2014 Liability.

The District’s contributions to STRS were $1,551,493 in fiscal year 2012-13, $1,558,872 in fiscal year 2013-14, $1,705,993 in fiscal year 2014-15 and $2,200,906 in fiscal year 2015-16. The District has projected $2,881,541 for its contribution to STRS for fiscal year 2016-17.

The State also contributes to STRS, currently in an amount equal to 6.328% of teacher payroll for fiscal year 2016-17. The State’s contribution reflects a base contribution rate of 2.017%, and a supplemental contribution rate that will vary from year to year based on statutory criteria. Based upon the recommendation from its actuary, for fiscal year 2017-18 and each fiscal year thereafter, the STRS Board is required, with certain limitations, to increase or decrease the State’s contribution rates to reflect the contribution required to eliminate the unfunded actuarial accrued liability attributed to benefits in effect before July 1, 1990. For the first time, in fiscal year 2017-18, the State contribution rate will increase 0.5% of covered payroll (the maximum rate increase allowed per year under current law) to 6.828%.

In addition, the State is currently required to make an annual general fund contribution up to 2.5% of the fiscal year covered STRS member payroll to the Supplemental Benefit Protection Account (the “SBPA”), which was established by statute to provide supplemental payments to beneficiaries whose purchasing power has fallen below 85% of the purchasing power of their initial allowance.

PERS. Classified employees working four or more hours per day are members of the Public Employees’ Retirement System (“PERS”). PERS provides retirement and disability benefits, annual cost- of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are established by the State statutes, as legislatively amended from time to time. PERS operates a number of retirement plans including the Public Employees Retirement Fund (“PERF”). PERF is a multiple- employer defined benefit retirement plan. In addition to the State, employer participants at June 30, 2014 included 1,580 public agencies and 1,513 K-14 school districts. PERS acts as the common investment and administrative agent for the member agencies. The State and K-14 school districts (for “classified employees,” which generally consist of school employees other than teachers) are required by law to participate in PERF. Employees participating in PERF generally become fully vested in their retirement benefits earned to date after five years of credited service. One of the plans operated by PERS is for K-14 school districts throughout the State (the “Schools Pool”).

Contributions by employers to the Schools Pool are based upon an actuarial rate determined annually and contributions by plan members vary based upon their date of hire. The District is currently required to contribute to PERS at an actuarially determined rate, which is 13.888% of eligible salary expenditures for fiscal year 2016-17. Participants enrolled in PERS prior to January 1, 2013 contribute 7% of their respective salaries, while participants enrolled after January 1, 2013 contribute at an actuarially determined rate, which is 6% of their respective salaries for fiscal year 2016-17. See “— California Public Employees’ Pension Reform Act of 2013” herein.

The District’s contributions to PERS were $1,652,591 in fiscal year 2012-13, $1,677,243 in fiscal year 2013-14, $1,827,724 in fiscal year 2014-15 and $1,149,921 in fiscal year 2015-16. The District has projected $1,902,496 for its contribution to PERS for fiscal year 2016-17.

State Pension Trusts. Each of STRS and PERS issues a separate comprehensive financial report that includes financial statements and required supplemental information. Copies of such financial reports may be obtained from each of STRS and PERS as follows: (i) STRS, P.O. Box 15275, Sacramento, California 95851-0275; (ii) PERS, P.O. Box 942703, Sacramento, California 94229-2703. Moreover, each of STRS and PERS maintains a website, as follows: (i) STRS: www.calstrs.com; (ii) PERS: www.calpers.ca.gov. However, the information presented in such financial reports or on such websites is not incorporated into this Official Statement by any reference.

Both STRS and PERS have substantial statewide unfunded liabilities. The amount of these unfunded liabilities will vary depending on actuarial assumptions, returns on investments, salary scales and participant contributions. The following table summarizes information regarding the actuarially-determined accrued liability for both STRS and PERS. Actuarial assessments are “forward- looking” information that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or be changed in the future. Actuarial assessments will change with the future experience of the pension plans.

FUNDED STATUS STRS (Defined Benefit Program) and PERS (Dollar Amounts in Millions) (1) Fiscal Years 2010-11 through 2015-16 STRS Value of Value of Trust Unfunded Trust Unfunded Fiscal Accrued Assets Liability Assets Liability Year Liability (MVA)(2) (MVA)(2)(3) (AVA)(4) (AVA)(4) 2010-11 $208,405 $147,140 $68,365 $143,930 $64,475 2011-12 215,189 143,118 80,354 144,232 70,957 2012-13 222,281 157,176 74,374 148,614 73,667 2013-14 231,213 179,749 61,807 158,495 72,718 2014-15 241,753 180,633 72,626 165,553 76,200 2015-16 266,704 177,914 101,586 169,976 96,728

PERS Value of Value of Trust Unfunded Trust Unfunded Fiscal Accrued Assets Liability Assets Liability Year Liability (MVA)(2) (MVA)(2) (AVA)(4) (AVA)(4) 2010-11 $58,358 $45,901 $12,457 $51,547 $6,811 2011-12 59,439 44,854 14,585 53,791 5,648 2012-13 61,487 49,482 12,005 56,250 5,237 2013-14 65,600 56,838 8,761 --(5) --(5) 2014-15 73,325 56,814 16,511 --(5) --(5)

(1) Amounts may not add due to rounding. (2) Reflects market value of assets. (3) Excludes assets allocated to the SBPA reserve. (4) Reflects actuarial value of assets. (5) Effective for the June 30, 2014 actuarial valuation, PERS no longer uses an actuarial value of assets. Source: PERS Schools Pool Actuarial Valuation; STRS Defined Benefit Program Actuarial Valuation.

The STRS Board has sole authority to determine the actuarial assumptions and methods used for the valuation of the STRS Defined Benefit Program. Based on the multi-year CalSTRS Experience Analysis (spanning from July 1, 2010, through June 30, 2015), on February 1, 2017, the STRS Board adopted a new set of actuarial assumptions that reflect member’s increasing life expectancies and current economic trends. These new assumptions were first reflected in the STRS Defined Benefit Program Actuarial Valuation, as of June 30, 2016 (the “2016 Actuarial Valuation”). The new actuarial assumptions include, but are not limited to: (i) adopting a generational mortality methodology to reflect past improvements in life expectancies and provide a more dynamic assessment of future life spans, (ii) decreasing the investment rate of return (net of investment and administrative expenses) to 7.25% for the 2016 Actuarial Valuation and 7.00% for the June 30, 2017 actuarial evaluation, and (iii) decreasing the projected wage growth to 3.50% and the projected inflation rate to 2.75%. The 2016 Actuarial Valuation continues using the Entry Age Normal Actuarial Cost Method.

Based on the change in actuarial assumptions adopted by the STRS Board, recent investment experience and the insufficiency of the contributions received in fiscal year 2015-16 to cover interest on the unfunded actuarial obligation, the 2016 Actuarial Valuation reports that the unfunded actuarial obligation increased by $20.5 billion since the June 30, 2015 actuarial valuation and the funded ratio decreased by 4.8% to 63.7% over such time period. Had the investment rate of return been lowered to 7.00% for the 2016 Actuarial Valuation, the unfunded actuarial obligation and the funded ratio would have been $105.1 billion and 61.8%, respectively. As a result, it is currently projected that there will be a

need for higher contributions from the State, employers and members in the future to reach full funding by 2046.

According to the 2016 Actuarial Valuation, the future revenues from contributions and appropriations for the STRS Defined Benefit Program are projected to be sufficient to finance its obligations, except for a small portion of the unfunded actuarial obligation related to service accrued on or after July 1, 2014 for member benefits adopted after 1990, for which AB 1469 provides no authority to the STRS Board to adjust rates to pay down that portion of the unfunded actuarial obligation. This finding reflects the scheduled contribution rate increases directed by statute, assumes additional increases in the scheduled contribution rates allowed under the current law will be made, and is based on the valuation assumptions and valuation policy adopted by the STRS Board, including a 7.00% investment rate of return assumption.

In recent years, the PERS Board of Administration (the “PERS Board”) has taken several steps, as described below, intended to reduce the amount of the unfunded accrued actuarial liability of its plans, including the Schools Pool.

On March 14, 2012, the PERS Board voted to lower the PERS’ rate of expected price inflation and its investment rate of return (net of administrative expenses) (the “PERS Discount Rate”) from 7.75% to 7.5%. On February 18, 2014, the PERS Board voted to keep the PERS Discount Rate unchanged at 7.5%. On November 17, 2015, the PERS Board approved a new funding risk mitigation policy to incrementally lower the PERS Discount Rate by establishing a mechanism whereby such rate is reduced by a minimum of 0.05% to a maximum of 0.25% in years when investment returns outperform the existing PERS Discount Rate by at least four percentage points. On December 21, 2016, the PERS Board voted to lower the PERS Discount Rate to 7.0% over the next three years in accordance with the following schedule: 7.375% in fiscal year 2017-18, 7.25% in fiscal year 2018-19 and 7.00% in fiscal year 2019-20. The new discount rate will go into effect July 1, 2017 for the State and July 1, 2018 for K-14 school districts and other public agencies. Lowering the PERS Discount Rate means employers that contract with PERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities. Active members hired after January 1, 2013, under the Reform Act (defined below) will also see their contribution rates rise. The three-year reduction of the discount rate to 7.0% is expected to result in average employer rate increases of approximately 1-3% of normal cost as a percent of payroll for most miscellaneous retirement plans and a 2-5% increase for most safety plans.

On April 17, 2013, the PERS Board approved new actuarial policies aimed at returning PERS to fully-funded status within 30 years. The policies include a rate smoothing method with a 30-year fixed amortization period for gains and losses, a five-year increase of public agency contribution rates, including the contribution rate at the onset of such amortization period, and a five year reduction of public agency contribution rates at the end of such amortization period. The new actuarial policies were first included in the June 30, 2014 actuarial valuation and were implemented with respect the State, K-14 school districts and all other public agencies in fiscal year 2015-16.

Also, on February 20, 2014, the PERS Board approved new demographic assumptions reflecting (i) expected longer life spans of public agency employees and related increases in costs for the PERS system and (ii) trends of higher rates of retirement for certain public agency employee classes, including police officers and firefighters. The new actuarial assumptions will first be reflected in the Schools Pool in the June 30, 2015 actuarial valuation. The increase in liability due to the new assumptions will be amortized over 20 years with increases phased in over five years, beginning with the contribution requirement for fiscal year 2016-17. The new demographic assumptions affect the State, K-14 school districts and all other public agencies.

The District can make no representations regarding the future program liabilities of STRS, or whether the District will be required to make additional contributions to STRS in the future above those amounts required under AB 1469. The District can also provide no assurances that the District’s required contributions to PERS will not increase in the future.

California Public Employees’ Pension Reform Act of 2013. On September 12, 2012, the Governor signed into law the California Public Employees’ Pension Reform Act of 2013 (the “Reform Act”), which makes changes to both STRS and PERS, most substantially affecting new employees hired after January 1, 2013 (the “Implementation Date”). For STRS participants hired after the Implementation Date, the Reform Act changes the normal retirement age by increasing the eligibility for the 2% age factor (the age factor is the percent of final compensation to which an employee is entitled for each year of service) from age 60 to 62 and increasing the eligibility of the maximum age factor of 2.4% from age 63 to 65. Similarly, for non-safety PERS participants hired after the Implementation Date, the Reform Act changes the normal retirement age by increasing the eligibility for the 2% age factor from age 55 to 62 and increases the eligibility requirement for the maximum age factor of 2.5% to age 67. Among the other changes to PERS and STRS, the Reform Act also: (i) requires all new participants enrolled in PERS and STRS after the Implementation Date to contribute at least 50% of the total annual normal cost of their pension benefit each year as determined by an actuary, (ii) requires STRS and PERS to determine the final compensation amount for employees based upon the highest annual compensation earnable averaged over a consecutive 36-month period as the basis for calculating retirement benefits for new participants enrolled after the Implementation Date (previously 12 months for STRS members who retire with 25 years of service), and (iii) caps “pensionable compensation” for new participants enrolled after the Implementation Date at 100% of the federal Social Security contribution (to be adjusted annually based on changes to the Consumer Price Index for all Urban Consumers) and benefit base for members participating in Social Security or 120% for members not participating in social security (to be adjusted annually based on changes to the Consumer Price Index for all Urban Consumers), while excluding previously allowed forms of compensation under the formula such as payments for unused vacation, annual leave, personal leave, sick leave, or compensatory time off.

GASB Statement Nos. 67 and 68. On June 25, 2012, GASB approved Statements Nos. 67 and 68 (“Statements”) with respect to pension accounting and financial reporting standards for state and local governments and pension plans. The new Statements, No. 67 and No. 68, replace GASB Statement No. 27 and most of Statements No. 25 and No. 50. The changes impact the accounting treatment of pension plans in which state and local governments participate. Major changes include: (1) the inclusion of unfunded pension liabilities on the government’s balance sheet (currently, such unfunded liabilities are typically included as notes to the government’s financial statements); (2) more components of full pension costs being shown as expenses regardless of actual contribution levels; (3) lower actuarial discount rates being required to be used for underfunded plans in certain cases for purposes of the financial statements; (4) closed amortization periods for unfunded liabilities being required to be used for certain purposes of the financial statements; and (5) the difference between expected and actual investment returns being recognized over a closed five-year smoothing period. In addition, according to GASB, Statement No. 68 means that, for pensions within the scope of the Statement, a cost-sharing employer that does not have a special funding situation is required to recognize a net pension liability, deferred outflows of resources, deferred inflows of resources related to pensions and pension expense based on its proportionate share of the net pension liability for benefits provided through the pension plan. Because the accounting standards do not require changes in funding policies, the full extent of the effect of the new standards on the District is not known at this time. The reporting requirements for pension plans took effect for the fiscal year beginning July 1, 2013 and the reporting requirements for government employers, including the District, took effect for the fiscal year beginning July 1, 2014.

See “APPENDIX B – 2015-16 AUDITED FINANCIAL STATEMENTS OF THE DISTRICT – Note 14” for information on the District’s proportionate shares of the net pension liabilities for STRS and PERS as of June 30, 2016.

APPLE. As established by Federal law, all public sector employees who are not members of their employer’s existing retirement system must be covered by Social Security or an alternate plan. The District has elected to use Accumulative Program Part-time Limited Employee (“APPLE”). Contributions made by the District and an employee vest immediately.

The District requires plan members to contribute 5.2 percent of their salary and the District is required to contribute 2.3 percent of annual payroll. The actuarial method used for determining the rate is based on the required 7.5 percent contribution rate set by Social Security.

The District’s contributions for APPLE for the fiscal year ending June 30, 2016, 2015, 2014 and 2013 were $57,521, $51,218, $55,875 and $50,371, respectively, and equal 100% of the required contributions for each year. The District estimates its contribution to APPLE for fiscal year 2016-17 will be $58,000.

Other Post Employment Benefits

The District provides postemployment health care benefits for retired employees in accordance with negotiated contracts with the various bargaining units of the District.

Plan Description. The Retiree Health Benefits Funding Program Plan (the “Plan”) is a single- employer defined benefit healthcare plan administered by the District. The Plan provides medical and dental insurance benefits to eligible retirees and their spouses. As of June 30, 2016, membership of the Plan consisted of approximately 79 retirees and beneficiaries currently receiving benefits and approximately 354active plan members.

Funding Policy. The contribution requirements of plan members and the District are established and may be amended by the District and the District's bargaining units. The required contribution is based on projected pay-as-you-go financing requirements with an additional amount to prefund benefits as determined annually through agreements between the District and the bargaining units. For fiscal year 2013-14, the District contributed $1,000,488 to the Plan, all of which was used for current premiums. For fiscal year 2014-15, the District contributed $1,226,406 to the Plan, all of which was used for current premiums. For fiscal year 2015-16, the District contributed $914,975 to the Plan, all of which was used for current premiums. For fiscal year 2016-17, the District has budgeted a contribution of $874,202 to the Plan, all of which will be used for current premiums.

The District has also established an irrevocable trust to fund its accrued liability for the Post- Employment Benefits (the “OPEB Trust”). As of June 30, 2016, the value of assets in the OPEB Trust was $6,850,236 and the District has budgeted a contribution of $553,000 for fiscal year 2016-17.

Actuarial Valuation. The District has implemented GASB Statements Nos. 74 and 75, pursuant to which the District has commissioned and received an actuarial study of its outstanding liabilities with respect to the Post-Employment Benefits. The most recent of these studies, dated as of October 31, 2016, concluded that the actuarial present value of projected benefit payments (the “APVPBP”) with respect to such benefits, as of July 1, 2016, was $13,309,211, and the total OPEB liability (that portion of the APVPBP attributable to employees’ service prior to July 1, 2016) was $9,614,736. The net OPEB liability, representing the unfunded portion of the total OPEB liability, was $2,764,500.

Risk Management

Health and Welfare. During fiscal year ending June 30, 2016, employee health coverage benefits were provided by by the California Valued Trust (“CVT”) joint powers agency through contributions made by the District. Effective October 2016, the District no longer contracts with CVT and has contracted with Self-Insured Schools of California (“SISC”) for employee health coverage benefits. The District provides health insurance benefits to District employees, their families, and retired employees of the District.

Property and Liability. During fiscal year ending June 30, 2016, the District contracted with the Statewide Association of Community Colleges (“SWACC”) joint powers authority for property and liability insurance coverage. Settled claims have not exceeded this commercial coverage in any of the past three years.

Workers’ Compensation. During fiscal year ending June 30, 2015, the District participated in the Tulare County Schools Insurance Group (“TCSIG”), an insurance purchasing pool. The intent of the JPA is to achieve the benefit of a reduced premium for the District by virtue of its grouping and representation with other participants in the JPA. The workers’ compensation experience of the participating districts is calculated as one experience, and a common premium rate is applied to all districts in the JPA. Each participant pays its workers’ compensation premium based on its .individual rate. Total savings are then calculated and each participant’s individual performance is compared to the overall saving. A participant will then either receive money from or be required to contribute to the “equity-pooling fund.” This “equity pooling” arrangement insures that each participant shares equally in the overall performance of the JPA. Participation in the JPA is limited to K-12 and community college districts that can meet the JPA’s selection criteria.

For more information, see “APPENDIX B – THE 2015-16 AUDITED FINANCIAL STATEMENTS OF THE DISTRICT – Note 13” attached hereto.

Joint Powers Authority

The District is a member of the SWACC, TCSIG, and SISC public entity risk pools. The District pays an annual premium to each entity for its health, property and liability and workers’ compensation coverage. The relationships between the District and the pools are such that they are not component units of the District for financial reporting purposes. The District has appointed no Board members to the Governing Board of the TCSIG or SISC. The District has appointed a Board member to the Governing Board for SWACC. For more information, see “APPENDIX B – THE 2015-16 AUDITED FINANCIAL STATEMENTS OF THE DISTRICT – Note 15” attached hereto.

Accounting Practices

The accounting policies of the District conform to generally accepted accounting principles in accordance with policies and procedures of the California Community College Budget and Accounting Manual. This manual, according to Section 84030 of the California Education Code, is to be followed by all California community college districts. The Governmental Accounting Standards Board (“GASB”) has released (i) Statement No. 34, which is effective for the District and makes changes in the annual financial statements for all governmental agencies in the United States, especially in recording of fixed assets and their depreciation, and in the way the report itself is formatted, and (ii) Statement No. 35, which is effective for the District and makes changes in the required content and format of annual

financial statements for public colleges and universities. Revenues are recognized in the period in which they become both measurable and available to finance expenditures of the current fiscal period. Expenditures are recognized in the period in which the liability is incurred.

District Budgeting

The table on the following page shows the District’s general fund budgets for fiscal years 2012-13 through 2016-17, ending results for fiscal years 2012-13 through 2015-16, and projected ending results for fiscal years 2016-17.

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COMPARISON OF GENERAL FUND BUDGETS AND ACTUAL RESULTS Fiscal Years 2012-13 through 2016-17 College of the Sequoias Community College District Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2012-13 2013-14 2014-15 2015-16 2016-17

Budget(1) Actual(1) Budget(1) Actual(1) Budget(1) Actual(1) Budget(1) Actual(1) Budget(1) Projected(2) REVENUES: Federal $2,823,645 $3,397,308 $3,114,536 $3,214,269 $3,621,894 $3,336,854 $2,330,906 $2,465,647 $1,690,685 $2,673,828 State 34,414,178 36,418,263 39,144,585 37,890,819 41,440,709 40,900,766 46,809,028 52,149,126 50,875,843 55,886,603 Local 14,968,629 14,643,171 14,763,699 15,976,553 13,948,608 15,498,492 15,861,035 18,288,977 17,934,042 18,631,111 TOTAL REVENUES 52,206,452 54,458,742 57,022,820 57,081,641 59,011,211 59,736,112 65,000,969 72,903,750 70,500,570 77,191,542 EXPENDITURES: Academic Salaries 21,166,070 21,347,503 21,805,930 22,332,090 22,767,182 22,519,320 23,606,263 24,180,612 25,503,309 2,6278,273 Classified Salaries 11,897,951 11,665,141 11,745,098 11,574,155 11,992,838 11,931,155 13,177,575 13,082,683 15,004,062 15,185,755 Employee Benefits 11,346,074 11,390,693 11,519,498 11,009,256 12,414,343 11,791,225 13,814,251 13,075,613 15,435,266 15,093,474 Books and Supplies 1,560,051 1,527,127 1,845,739 1,605,400 1,630,187 1,622,479 2,415,137 1,536,481 1,985,576 3,760,377 Services and Other Operating 5,903,461 7,222,004 7,837,495 6,382,986 7,255,399 7,247,630 7,127,672 6,930,739 7,959,044 9,276,874 Expenditures Capital Outlay 598,143 529,926 1,545,043 1,325,756 2,209,125 1,554,159 2,505,582 2,885,856 2,548,682 3,996,524 TOTAL 52,471,750 53,682,394 56,298,803 54,229,643 58,269,074 56,665,968 62,646,480 61,691,984 68,435,939 73,591,277 EXPENDITURES EXCESS (DEFICIENCY) OF (265,298) 776,348 724,017 2,851,998 742,137 3,070,144 2,354,489 11,211,766 2,064,631 3,600,265 REVENUE OVER EXPENDITURES OTHER FINANCING 309,105 338,076 232,032 118,203 107,340 126,446 112,424 131,352 109,592 103,223 SOURCES (USES) OTHER OUTGO (745,663) (1,167,622) (956,049) (1,213,137) (839,430) (1,218,105) (1,108,041) (5,766,320) (1,536,387) (3,464,669) NET INCREASE (DECREASE) (701,856) (53,198) -- 1,757,064 10,047 1,978,485 1,358,872 5,576,798 637,836 238,819 IN FUND BALANCES BEGINNING FUND 2,716,645 2,716,645 2,737,411 2,737,411 4,709,679 4,709,679 7,109,168 7,109,168 12,626,587 12,626,587 BALANCE Prior Year Adjustments -- 73,964 -- 215,204 -- 421,004 -- (59,379) -- 49,800 Adjusted Beginning Balance -- 2,790,609 -- 2,952,615 -- 5,130,683 -- 7,049,789 -- 12,676,387 ENDING FUND BALANCE $2,014,789 $2,737,411 $2,737,411 $4,709,679 $4,719,726 $7,109,168 $8,468,040 $12,626,587 $13,264,423 $12,915,206

(1) From the District’s CCFS-311 Reports filed with the California Community Colleges Chancellor’s Office. Unaudited results for fiscal years 2011-12 and 2014-15 in object-oriented format provided for comparison. For audited results of those fiscal years in revised reporting format, see “College of the Sequoias Community College District – Comparative Financial Statements” herein. (2) As of April 19, 2017. Source: College of the Sequoias Community College District.

Comparative Financial Statements

Pursuant to applicable guidance from GASB, the District’s financial statements present a comprehensive, entity-wide perspective of the District’s assets, liabilities, and cash flows rather than the fund-group perspective previously required. The table on the following page displays the District’s revenues, expenses and changes in net assets for fiscal years 2011-12 through 2015-16. [REMAINDER OF PAGE LEFT BLANK]

STATEMENT OF TOTAL REVENUES AND EXPENDITURES AND CHANGES IN NET POSITION Fiscal Years 2011-12 through 2015-16 College of the Sequoias Community College District Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2011-12 2012-13 2013-14 2014-15 2015-16 OPERATING REVENUES Tuition and fees, net $3,097,923 $2,567,802 $2,999,598 $3,415,468 $3,974,344 Auxiliary sales and charges: Cafeteria 743,537 685,256 689,315 645,598 705,887 Farm 448,720 954,134 545,746 736,934 449,070 TOTAL OPERATING REVENUES 4,290,180 4,207,192 4,234,659 4,798,000 5,129,301

OPERATING EXPENSES Salaries 34,553,449 34,881,624 35,251,746 35,139,082 37,969,519 Employee benefits 12,301,537 11,391,548 10,823,457 13,349,977 13,289,408 Supplies, materials and other operating expenses and services 34,925,753 37,805,606 10,656,611 14,634,322 36,970,994 Depreciation 3,624,993 2,298,100 4,518,162 5,117,412 6,057,258 TOTAL OPERATING EXPENSES 85,405,732 86,376,878 61,249,976 68,240,793 94,287,179

OPERATING LOSS (81,115,552) (82,169,686) (57,015,317) (63,442,793) (89,157,878)

NON-OPERATING REVENUES (EXPENSES) State apportionments, noncapital 30,396,033 30,247,367 31,220,627 33,304,198 36,747,776 Local property taxes, levied from general purposes 9,430,575 9,775,338 10,641,065 11,212,857 13,210,125 Taxes levied for a specific purpose 6,401,569 6,622,167 5,658,271 5,973,141 6,011,536 State taxes and other local revenues 2,020,653 1,647,127 1,455,143 2,088,801 6,711,861 Grants and contracts, noncapital: Federal 22,853,740 21,847,709 3,210,259 3,332,221 22,108,818 State 6,511,311 6,980,150 5,985,797 7,303,388 13,394,689 Investment income 793,442 429,034 406,252 404,386 433,460 Principal expense on capital-related debt 608,662 ------Interest expense on capital-related debt (5,951,281) (3,301,677) (3,811,293) (5,784,227) (5,825,421) Other non-operating revenue 4,237,137 9,057,677 2,960,773 820,735 1,937,460 TOTAL NON-OPERATING REVENUES (EXPENSES) 77,301,841 83,304,747 57,726,894 58,655,500 94,730,304

INCOME (LOSS) BEFORE OTHER REVENUES AND EXPENSES (3,813,711) 1,135,061 711,577 (4,787,293) 5,572,426

OTHER REVENUES State revenues, capital 21,217,403 10,225,131 1,105,045 198,644 495,010 Local revenues, capital 242,438 588,277 1,981,620 285,359 261,734 TOTAL OTHER REVENUES AND EXPENSES 21,459,841 10,813,408 3,086,665 484,003 756,744

CHANGE IN NET ASSETS 17,646,130 11,948,469 3,798,242 (4,303,290) 6,329,170 NET ASSETS, BEGINNING OF YEAR 92,138,894 119,085,033(1) 128,565,932(2) 132,364,174 85,706,382 RESTATEMENT ------(42,354,502)(3) -- NET ASSETS, END OF YEAR $109,785,024 $131,033,502 $132,364,174 $85,706,382 $92,035,552 ______(1) The beginning net position was restated by $9,300,009 due to the implementation of GASB Statement No. 62, which requires the District to capitalize interest as part of the historical cost of constructing certain business-type activity assets and is effective beginning with fiscal year 2012-13. (2) The beginning net position was restated by ($2,467,570) due to the implementation of GASB Statement No. 65, which reclassifies certain items previously reported as assets and liabilities, and is effective beginning with fiscal year 2013-14. Specifically, the restatement reflects the reclassification of amortized District debt issuance costs. (3) Restated to recognize the net pension liability, net of related deferred outflows of resources, as a result of the implementation of GASB Statement No. 68. Source: College of the Sequoias Community College District.

District Debt Structure

Long-Term Debt. A schedule of changes in long-term debt for fiscal year ending June 30, 2016 is shown below:

Balance Balance July 1, 2015 Additions Deductions June 30, 2016 Certificates of participation 2004 $2,960,000 -- $100,000 $2,860,000 General Obligation Bonds 2006, A (Hanford): Current interest 13,540,000 -- -- 13,540,000 Capital appreciation 1,964,774 $182,615 245,000 1,902,389 General Obligation Bonds 2008, B (Hanford): Current interest 3,980,000 -- 335,000 3,645,000 Capital appreciation 3,884,225 287,695 -- 4,171,920 General Obligation Bonds 2008, A (Tulare): Current interest 14,205,000 -- -- 14,205,000 Capital appreciation 6,404,654 617,772 665,000 6,357,426 General Obligation Bonds 2008, B (Tulare): Current interest 3,650,000 -- -- 3,650,000 Capital appreciation 8,862,955 706,483 220,000 9,349,438 General Obligation Bonds 2008, C (Tulare): Current interest 1,425,000 -- -- 1,425,000 Capital appreciation 2,254,386 156,936 -- 2,411,322 General Obligation Bonds 2008, D (Tulare): Current interest -- 3,710,000 -- 3,710,000 General Obligation Bonds 2008, A (Visalia): Current interest 13,750,000 -- -- 13,750,000 Capital appreciation 5,430,178 561,678 630,000 5,361,856 General Obligation Bonds 2008, B (Visalia): Current interest 4,650,000 -- -- 4,650,000 Capital appreciation 622,438 73,510 -- 695,948 General Obligation Bonds 2008, C (Visalia): Current interest 3,755,000 -- -- 3,755,000 Capital appreciation 1,857,194 181,608 -- 2,038,802 Unamortized premium on bonds 5,835,032 235,465 289,180 5,781,317 Lease Revenue Bonds, Series 2010A 2,885,000 -- 95,000 2,790,000 Bond Anticipation Note 2013 (Tulare) 5,433,888 86,112 5,520,000 -- Loan Agreement – California Energy Commission 903,070 2,078,004 -- 2,981,074 Early retirement incentive 280,722 -- 280,722 -- Total $108,533,516 $8,877,878 $8,379,902 $109,031,492

Accumulated vacation/ banked leave - net $1,886,547 $5,804 -- $1,892,351

Discounts $36,214 -- $1,811 $34,403

______Source: College of the Sequoias Community College District.

Improvement District No. 1 General Obligation Bonds. On November 7, 2006, the voters of Improvement District No. 1 authorized not-to-exceed $22,000,000 of general obligation bonds of the Improvement District No. 1 (the “Improvement District No. 1 Authorization”). On March 22, 2007, the District issued its Improvement District No. 1 Election of 2006 General Obligation Bonds, Series A (the “Improvement District No. 1 Series A Bonds”) in the aggregate principal amount of $14,999,982.30. On February 11, 2009, the District issued its Improvement District No. 1 Election of 2006 General Obligation Bonds, Series B (the “Improvement District No. 1 Series B Bonds”) in the aggregate principal amount of $6,995,777.90. The Improvement District No. 1 Series B Bonds represented the second and final series of bonds issued pursuant to the Improvement District No. 1 Authorization.

The following table summarizes the annual debt service requirements for the Improvement District No. 1 general obligation bonds, and assuming no optional redemptions.

Year Ending Improvement District Improvement District 2017 Refunding Total Annual (August 1) No. 1 Series A Bonds(1) No. 1 Series B Bonds Series C Bonds Debt Service 2017 $1,012,000.00 $534,312.50 2018 1,067,000.00 540,837.50 2019 1,117,000.00 555,650.00 2020 1,172,000.00 568,250.00 2021 1,232,000.00 575,000.00 2022 1,292,000.00 590,250.00 2023 1,356,250.00 598,500.00 2024 1,420,750.00 614,994.60 2025 1,495,250.00 623,238.65 2026 1,569,000.00 633,756.25 2027 1,646,750.00 647,107.80 2028 1,728,000.00 654,591.00 2029 1,812,250.00 670,000.00 2030 1,904,000.00 676,017.00 2031 1,997,500.00 686,460.60 2032 2,096,125.00(2) 695,000.00 2033 -- 2,870,000.00 2034 -- 2,985,000.00(3) Total $23,917,875.00 $15,718,965.90 ______(1) Includes debt service expected to be refunded with proceeds of the Series C Bonds. (2) Final principal maturity and interest payment at February 1, 2032. (3) Final principal maturity and interest payment at February 1, 2034. Source: College of the Sequoias Community College District.

Improvement District No. 2 General Obligation Bonds. On November 4, 2008, the voters of Improvement District No. 2 authorized not-to-exceed $28,000,000 of general obligation bonds (the “Improvement District No. 2 Authorization”). On February 11, 2009, the District issued its Improvement District No. 2 Election of 2008 General Obligation Bonds, Series A (the “Improvement District No. 2 Series A Bonds”) in the aggregate principal amount of $17,997,403.90. On June 3, 2010, the District issued its Improvement District No. 2 Election of 2008 General Obligation Bonds, Series B (the “Improvement District No. 2 Series B Bonds”) in the aggregate principal amount of $4,999,651.80. On March 17, 2011, the District issued its Improvement District No. 2 Election of 2008 General Obligation Bonds, Series C Bonds (the “Improvement District No. 2 Series C Bonds”) in the aggregate principal amount of $4,995,438.60. The Improvement District No. 2 Series C Bonds represented the third and final series of bonds issued pursuant to the Improvement District No. 2 Authorization.

The following table summarizes the annual debt service requirements for the Improvement District No. 2 general obligation bonds, and assuming no optional redemptions.

Improvement Improvement Improvement Year Ending District No. 2 District No. 2 District No. 2 2017 Refunding Total Annual August 1 Series A Bonds(1) Series B Bonds Series C Bonds(1) Series D Bonds Debt Service 2017 $1,483,300.00 $232,500.00 $226,525.00 2018 1,543,300.00 232,500.00 241,525.00 2019 1,603,300.00 232,500.00 261,525.00 2020 1,668,300.00 232,500.00 276,525.00 2021 1,733,300.00 232,500.00 296,525.00 2022 1,803,300.00 232,500.00 316,525.00 2023 1,878,300.00 232,500.00 331,525.00 2024 1,953,300.00 232,500.00 351,525.00 2025 1,883,300.00 232,500.00 486,525.00 2026 1,958,187.50 232,500.00 511,525.00 2027 2,035,987.50 232,500.00 536,525.00 2028 2,116,175.00 232,500.00 566,525.00 2029 2,203,225.00 232,500.00 596,525.00 2030 2,291,350.00 232,500.00 626,525.00 2031 2,380,200.00 232,500.00 660,393.20 2032 2,478,325.00 232,500.00 691,910.85 2033 184,625.00 1,232,500.00 1,759,032.25 2034 -- 1,352,500.00 1,916,525.00 2035 -- 1,407,500.00 1,996,525.00 2036 -- 1,467,500.00 2,073,075.00 2037 -- 1,522,500.00 -- 2038 -- 2,382,500.00 -- 2039 -- 2,625,000.00 -- Total $31,197,775.00 $15,710,000.00 $14,723,811.30

(1) Includes debt service expected to be refunded with proceeds of the Series D Bonds. Source: College of the Sequoias Community College District.

Improvement District No. 3 General Obligation Bonds. On November 4, 2008, the voters of Improvement District No. 3 authorized not-to-exceed $60,000,000 of general obligation bonds (the “Improvement District No. 3 Authorization”). On February 11, 2009, the District issued its Improvement District No. 3 Election of 2008 General Obligation Bonds, Series A Bonds (the “Improvement District No. 3 Series A Bonds) in the aggregate principal amount of $19,998,218.80. On May 17, 2011, the District issued its Improvement District No. 3 Election of 2008 General Obligation Bonds, Series B Bonds in the aggregate principal amount of $10,004,927.35. On August 14, 2013, the District issued its Improvement District No. 3 Election of 2008 General Obligation Bonds, Series C Bonds in the aggregate principal amount of $3,401,460.30. On June 1, 2016, the District issued its Improvement District No. 3 Election of 2008 General Obligation Bonds, Series D Bonds in the aggregate principal amount of $3,710,000. There remains $22,885,393.55 available under the Improvement District No. 3 Authorization.

The following table summarizes the annual debt service requirements for the Improvement District No. 3 general obligation bonds, and assuming no optional redemptions.

Year Improvement Improvement Improvement Improvement Ending District No. 3 District No. 3 District No. 3 District No. 3 2017 Refunding Total Annual August 1 Series A Bonds(1) Series B Bonds Series C Bonds Series D Bonds Series E Bonds Debt Service 2017 $1,549,312.50 $428,625.00 $63,075.00 $239,400.00 2018 1,609,312.50 448,625.00 128,075.00 179,150.00 2019 1,674,312.50 473,625.00 126,775.00 186,650.00 2020 1,739,312.50 506,825.00 120,475.00 188,650.00 2021 1,809,312.50 538,225.00 118,975.00 190,400.00 2022 1,884,312.50 571,575.00 112,175.00 196,900.00 2023 1,959,312.50 609,956.26 104,700.00 197,900.00 2024 2,034,312.50 646,487.50 102,950.00 203,650.00 2025 2,119,312.50 686,168.76 90,575.00 213,900.00 2026 2,204,312.50 728,368.76 88,675.00 213,400.00 2027 2,288,712.50 778,131.26 81,775.00 222,650.00 2028 2,384,712.50 823,618.76 70,112.00 231,150.00 2029 2,476,262.50 875,881.26 63,925.00 240,350.00 2030 2,578,100.00 929,381.26 52,975.00 248,950.00 2031 2,678,750.00 988,850.00 42,500.00 258,700.00 2032 2,787,300.00 1,043,750.00 42,500.00 268,000.00 2033 242,650.00 2,863,750.00 798,295.00 181,850.00 2034 -- 3,168,750.00 774,732.50 248,100.00 2035 -- 3,318,750.00 806,507.50 252,250.00 2036 -- 3,478,750.00 829,907.50 271,100.00 2037 -- 3,642,091.55 860,270.00 284,200.00 2038 -- 3,815,106.25 891,920.00 291,700.00 2039 -- 3,997,415.90 919,520.00 308,750.00 2040 -- 4,185,600.00 957,530.00 319,687.50 2041 -- 4,386,525.00 985,402.50 -- 2042 -- -- 4,183,480.00 -- Total $34,019,612.50 $43,934,832.52 $13,417,802.00 $5,637,437.50

(1) Includes debt service expected to be refunded with proceeds of the Series E Bonds. Source: College of the Sequoias Community College District.

Certificates of Participation. In September 2004, the District executed and delivered certificates of participation in the amount of $3,945,000 (the “2004 Certificates of Participation”). The proceeds of the sale were used to finance the renovation of the bookstore and student center facility.

The following table summarizes the annual certificate payment requirements of the District.

Date Total Annual (May 1) Principal Payments Interest Payments Certificate Payments

2018 $110,000.00 $128,305.00 $238,305.00 2019 115,000.00 123,905.00 238,905.00 2020 120,000.00 119,075.00 239,075.00 2021 125,000.00 113,975.00 238,975.00 2022 130,000.00 108,537.50 238,537.50 2023 135,000.00 102,362.50 237,362.50 2024 145,000.00 95,950.00 240,950.00 2025 150,000.00 89,062.50 239,062.50 2026 155,000.00 81,937.50 236,937.50 2027 165,000.00 74,575.00 239,575.00 2028 175,000.00 66,737.50 241,737.50 2029 180,000.00 58,425.00 238,425.00 2030 190,000.00 49,875.00 239,875.00 2031 200,000.00 40,850.00 240,850.00 2032 210,000.00 31,350.00 241,350.00 2033 220,000.00 21,375.00 241,375.00 2034 230,000.00 10,925.00 240,925.00

Total $2,755,000.00 $1,317,222.50 $4,072,222.50

Source: College of the Sequoias Community College District.

Lease Revenue Bonds. On June 30, 2010 the District executed and delivered its Lease Revenue Bonds, Series 2010A (the “Lease Revenue Bonds”) in the aggregate principal amount not-to-exceed $3,310,000. The following table summarizes the annual debt service requirements with respect to the Lease Revenue Bonds.

Year Ending Principal Interest Total Annual (June 1) Component Component Lease Payment

2017 $100,000.00 $131,256.26 $231,256.26 2018 100,000.00 128,006.26 228,006.26 2019 105,000.00 124,506.26 229,506.26 2020 110,000.00 120,568.76 230,568.76 2021 115,000.00 116,168.76 231,168.76 2022 120,000.00 111,425.00 231,425.00 2023 120,000.00 106,325.00 226,325.00 2024 130,000.00 101,075.00 231,075.00 2025 135,000.00 95,225.00 230,225.00 2026 140,000.00 88,981.26 228,981.26 2027 145,000.00 81,981.26 226,981.26 2028 155,000.00 74,731.26 229,731.26 2029 160,000.00 66,981.26 226,981.26 2030 170,000.00 58,981.26 228,981.26 2031 180,000.00 50,481.26 230,481.26 2032 190,000.00 41,256.26 231,256.26 2033 195,000.00 31,518.76 226,518.76 2034 205,000.00 21,525.00 226,525.00 2035 215,000.00 11,018.76 226,018.76

Total $2,790,000.00 $1,562,012.64 $4,352,012.64

Source: College of the Sequoias Community College District.

California Energy Commission Loan. In January 2014, the District Board authorized loan agreements to install solar panel equipment in an amount not-to-exceed $3,000,000 (the “Solar Loan”). The debt service due on the Solar Loan is as shown below.

Year Ending Lease June 30 Payment 2017 $176,395 2018 176,395 2019 176,395 2020 176,395 2021 176,395 2022-2026 881,975 2027-2031 881,975 2032-2033 335,149 Total $2,981,074

Balance, July 1, 2015 $903,070 Additions 2,078,004 Balance, June 30, 2016 $2,981,074

Source: College of the Sequoias Community College District.

TAX MATTERS

In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. Bond Counsel notes that, with respect to corporations, interest on the Bonds may be included as an adjustment in the calculation of alternative minimum taxable income which may affect the alternative minimum tax liability of corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax.

The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of the same maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by the Bond Owner will increase the Bond Owner’s basis in the Bond. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the owner of the Bond is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax.

Bond Counsel’s opinion as to the exclusion from gross income of interest (and original issue discount) on the Bonds is based upon certain representations of fact and certifications made by the District and others and is subject to the condition that the District complies with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds to assure that interest (and original issue discount) on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest (and original issue discount) on the Bonds to be included in gross

income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District has covenanted to comply with all such requirements.

The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium, which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable Bond premium.

The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of similar bonds). No assurance can be given that in the course of an audit, as a result of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the Bonds to the extent that it adversely affects the exclusion from gross income of interest on the Bonds or their market value.

SUBSEQUENT TO THE ISSUANCE OF THE BONDS THERE MIGHT BE FEDERAL, STATE, OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY INTERPRETATIONS OF FEDERAL, STATE, OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE, OR LOCAL TAX TREATMENT OF THE BONDS OR THE MARKET VALUE OF THE BONDS. TAX REFORM PROPOSALS ARE BEING CONSIDERED BY CONGRESS. IT IS POSSIBLE THAT LEGISLATIVE CHANGES MIGHT BE INTRODUCED IN CONGRESS, WHICH, IF ENACTED, WOULD RESULT IN ADDITIONAL FEDERAL OR STATE INCOME TAX BEING IMPOSED ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE BONDS. THE INTRODUCTION OR ENACTMENT OF ANY OF SUCH CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE BONDS. NO ASSURANCE CAN BE GIVEN THAT SUBSEQUENT TO THE ISSUANCE OF THE BONDS SUCH CHANGES (OR OTHER CHANGES) WILL NOT BE INTRODUCED OR ENACTED OR INTERPRETATIONS WILL NOT OCCUR. BEFORE PURCHASING ANY OF THE BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE BONDS.

Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Resolutions and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of bond counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of interest (and original issue discount) on the Bonds for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth.

Although Bond Counsel has rendered an opinion that interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes provided that the District continues

to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest (and original issue discount) on the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds.

Copies of the proposed forms of opinions of Bond Counsel for the Bonds is attached hereto as Appendix A.

LIMITATION ON REMEDIES; BANKRUPTCY

General. State law contains certain safeguards to protect the financial solvency of community college districts. See “FUNDING OF COMMUNITY COLLEGE DISTRICTS IN CALIFORNIA” herein. If the safeguards are not successful in preventing a community college district from becoming insolvent, the State Chancellor and the Board of Governors, operating through a special trustee appointed by the State Chancellor, may be authorized under State law to file a petition under Chapter 9 of the United States Bankruptcy Code (the “Bankruptcy Code”) on behalf of the community college district for the adjustment of its debts. In addition, an insolvent community college district may be able to file a petition under Chapter 9 before a special trustee is appointed. Prior to such petition, if any, the community college district is required to participate in a neutral evaluation process with interested parties as provided in the Government Code or declare a fiscal emergency and adopt a resolution by a majority vote of the governing board that includes findings that the financial state of the community college district jeopardizes the health, safety, or well-being of the residents of its jurisdiction or service area absent the protections of Chapter 9.

Bankruptcy courts are courts of equity and as such have broad discretionary powers. If the District were to become the debtor in a proceeding under Chapter 9 of the Bankruptcy Code, the automatic stay provisions of Bankruptcy Code Sections 362 and 922 generally would prohibit creditors from taking any action to collect amounts due from the District or to enforce any obligation of the District related to such amounts due, without consent of the District or authorization of the bankruptcy court (although such stays would not operate to block creditor application of pledged special revenues to payment of indebtedness secured by such revenues). In addition, as part of its plan of adjustment in a chapter 9 bankruptcy case, the District may be able to alter the priority, interest rate, principal amount, payment terms, collateral, maturity dates, payment sources, covenants (including tax-related covenants), and other terms or provisions of the Bonds and other transaction documents related to the Bonds, as long as the bankruptcy court determines that the alterations are fair and equitable. There also may be other possible effects of a bankruptcy of the District that could result in delays or reductions in payments on the Bonds. Moreover, regardless of any specific adverse determinations in any District bankruptcy proceeding, the fact of a District bankruptcy proceeding could have an adverse effect on the liquidity and market price of the Bonds.

Statutory Lien. Pursuant to Government Code Section 53515, the Bonds are secured by a statutory lien on all revenues received pursuant to the levy and collection of the tax, and such lien automatically arises, without the need for any action or authorization by the District or its Board, and is valid and binding from the time the Bonds are executed and delivered. See “THE BONDS – Security and Sources of Payment” herein. Although a statutory lien would not be automatically terminated by the filing of a Chapter 9 bankruptcy petition by the District, the automatic stay provisions of the Bankruptcy Code would apply and payments that become due and owing on the Bonds during the pendency of the Chapter 9 proceeding could be delayed, unless the Bonds are determined to be secured by a pledge of “special revenues” within the meaning of the Bankruptcy Code and the pledged ad valorem taxes are applied to pay the Bonds in a manner consistent with the Bankruptcy Code.

Special Revenues. If the ad valorem tax revenues that are pledged to the payment of the Bonds are determined to be “special revenues” within the meaning of the Bankruptcy Code, then the application in a manner consistent with the Bankruptcy Code of the pledged ad valorem revenues should not be subject to the automatic stay. “Special revenues” are defined to include, among others, taxes specifically levied to finance one or more projects or systems of the debtor, but excluding receipts from general property, sales, or income taxes levied to finance the general purposes of the debtor. State law prohibits the use of the tax proceeds for any purpose other than payment of the Bonds and the Bond proceeds can only be used to fund the acquisition or improvement of real property and other capital expenditures included in the proposition, so such tax revenues appear to fit the definition of special revenues. However, there is no binding judicial precedent dealing with the treatment in bankruptcy proceedings of ad valorem tax revenues collected for the payments of bonds in California, so no assurance can be given that a bankruptcy court would not hold otherwise.

Possession of Tax Revenues; Remedies. The County on behalf of the District is expected to be in possession of the annual ad valorem property taxes and certain funds to repay the Bonds and may invest these funds in the Tulare County Investment Pool, as described in “APPENDIX E – TULARE COUNTY INVESTMENT POOL” attached hereto. If the County goes into bankruptcy and has possession of tax revenues (whether collected before or after commencement of the bankruptcy), and if the County does not voluntarily pay such tax revenues to the owners of the Bonds, it is not entirely clear what procedures the owners of the Bonds would have to follow to attempt to obtain possession of such tax revenues, how much time it would take for such procedures to be completed, or whether such procedures would ultimately be successful. Further, should those investments suffer any losses, there may be delays or reductions in payments on the Bonds.

Opinion of Bond Counsel Qualified by Reference to Bankruptcy, Insolvency and Other Laws Relating to or Affecting Creditor’s Rights. The proposed forms of the approving opinions of Bond Counsel attached hereto as APPENDIX A are qualified by reference to bankruptcy, insolvency and other laws relating to or affecting creditor’s rights. Bankruptcy proceedings, if initiated, could subject the owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation, or modification of their rights.

LEGAL MATTERS

Legality for Investment in California

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

Continuing Disclosure

Current Undertaking. In connection with the issuance of the Bonds, the District has covenanted for the benefit of bondholders (including Beneficial Owners of the Bonds) to provide certain financial information and operating data relating to the District (the “Annual Reports”) by not later than nine months following the end of the District’s fiscal year (which currently ends June 30), commencing with the report for the 2016-17 fiscal year, and to provide notices of the occurrence of certain Listed Events. The Annual Reports and notices of Listed Events will be filed by the District in accordance with the requirements of S.E.C. Rule 15c2-12(b)(5) (the “Rule”). The specific nature of the information to be contained in the Annual Reports or the notices of Listed Events is included in “APPENDIX C – FORM

OF CONTINUING DISCLOSURE CERTIFICATE FOR THE BONDS” attached hereto. These covenants have been made in order to assist the Underwriter in complying with the Rule.

Prior Undertakings. Within the past five years, the District failed to file in a timely manner certain portions of the Annual Reports for fiscal year 2013-14 and 2014-15, as required by its prior undertakings pursuant to the Rule. The District also failed to file in a timely manner certain notices of material events, as required by such prior undertakings.

No Litigation

No litigation is pending or threatened concerning the validity of the Bonds, and a certificate to that effect will be furnished to purchasers at the time of the original delivery of the Bonds. The District is not aware of any litigation pending or threatened questioning the political existence of the District or contesting the District’s ability to receive ad valorem property taxes or to collect other revenues or contesting the District’s ability to issue and retire the Bonds.

Information Reporting Requirements

On May 17, 2006, the President signed the Tax Increase Prevention and Reconciliation Act of 2005 (“TIPRA”). Under Section 6049 of the Internal Revenue Code of 1986, as amended by TIPRA, interest paid on tax-exempt obligations is subject to information reporting in a manner similar to interest paid on taxable obligations. The effective date of this provision is for interest paid after December 31, 2005, regardless of when the tax-exempt obligations were issued. The purpose of this change was to assist in relevant information gathering for the IRS relating to other applicable tax provisions. TIPRA provides that backup withholding may apply to such interest payments made after March 31, 2007 to any bondholder who fails to file an accurate Form W-9 or who meets certain other criteria. The information reporting and backup withholding requirements of TIPRA do not affect the excludability of such interest from gross income for federal income tax purposes.

Escrow Verification

Upon delivery of the Bonds, the Verification Agent will deliver a report on the mathematical accuracy of certain computations based upon certain information and assertions provided to them relating to (a) the adequacy of the moneys in the Escrow Funds to pay the redemption price of and interest on the Refunded Bonds and (b) the computations of yield of the Bonds which support Bond Counsel’s opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes.

Legal Opinion

The legal opinions of Bond Counsel, approving the validity of the Bonds, will be supplied to the original purchasers thereof without cost. Copies of the proposed forms of such legal opinions for the Bonds are attached to this Official Statement as APPENDIX A.

MISCELLANEOUS

Ratings

The Series A Bonds have been assigned ratings of “A1” and “A+” by Moody’s and S&P, respectively. The Series B Bonds have been assigned ratings of “Aa3” and “A+” by Moody’s and S&P, respectively.

The Series C Bonds have been assigned ratings of “A1” and “A+” by Moody’s and S&P, respectively.

The ratings reflect only the view of the rating agencies, and any explanation of the significance of such ratings should be obtained from the rating agencies at the following addresses: Moody’s Investors Service, 7 World Trade Center at 250 Greenwich Street, New York, NY 10007; S&P, 55 Water Street, 45th Floor, New York, New York 10041. There is no assurance that the ratings will be retained for any given period of time or that the same will not be revised downward or withdrawn entirely by the rating agencies if, in the judgment of the rating agencies, circumstances so warrant. The District undertakes no responsibility to oppose any such revision or withdrawal. Any such downward revision or withdrawal of the ratings obtained may have an adverse effect on the market price of the Bonds.

Generally, rating agencies base their ratings on information and materials furnished to them (which may include information and material from the District which is not included in this Official Statement), and on independent investigations, studies and assumptions by such rating agencies.

The District has covenanted in a Continuing Disclosure Certificate to file notices of any rating changes on the Bonds on EMMA. See “APPENDIX C - FORM OF CONTINUING DISCLOSURE” attached hereto. Notwithstanding such covenant, information relating to rating changes on the Bonds may be publicly available from the rating agencies prior to such information being provided to the District and prior to the date the District is obligated to file a notice of rating change on EMMA. Purchasers of the Bonds are directed to the rating agencies and their respective websites and official media outlets for the most current rating changes with respect to the Bonds after the initial issuance of the Bonds.

Financial Statements

The District’s audited financial statements with required supplemental information for the year ended June 30, 2016, the independent auditor’s report of the District, and the related statements of activities and of cash flows for the year then ended, and the report dated December 22, 2016 of Vavrinek, Trine, Day & Co., LLP (the “Auditor”), are included in this Official Statement as Appendix B. In connection with the inclusion of the financial statements and the report of the Auditor thereon in Appendix B to this Official Statement, the District did not request the Auditor to, and the Auditor has not undertaken to, update its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness of the statements made in this Official Statement, and no opinion is expressed by the Auditor with respect to any event subsequent to the date of its report.

Underwriting

Pursuant to the terms of a Notice Inviting Proposals for Purchase of Bonds (the “Notice Inviting Proposals”), the Bonds were awarded to ______, as underwriter therefor (the “Underwriter”), at a True Interest Cost of ______%. The Underwriter will purchase all of the Bonds for a purchase price of $______(which is equal to the principal amount of the Bonds of $______, plus original issue premium of $______, and less $______of underwriting discount.

The Notice Inviting Proposals provides that the Underwriter will purchase all of the Bonds, if any are purchased. The initial offering prices stated on the inside cover of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than such initial offering prices.

Additional Information

The purpose of this Official Statement is to supply information to prospective buyers of the Bonds. Quotations from and summaries and explanations of the Bonds, the Resolutions providing for issuance of the Bonds, and the constitutional provisions, statutes and other documents referenced herein, do not purport to be complete, and reference is made to said documents, constitutional provisions and statutes for full and complete statements of their provisions.

All data contained herein has been taken or constructed from District records. Appropriate District officials, acting in their official capacities, have reviewed this Official Statement and have determined that, as of the date hereof, the information contained herein is, to the best of their knowledge and belief, true and correct in all material respects and does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made herein, in light of the circumstances under which they were made, not misleading. This Official Statement has been approved by the District.

COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

By: Stan A. Carrizosa Superintendent/President

APPENDIX A

FORMS OF OPINIONS OF BOND COUNSEL FOR THE BONDS

Upon issuance and delivery of the Bonds, Stradling Yocca Carlson & Rauth, Bond Counsel, proposes to render its final approving opinion with respect to the Series C Bonds substantially in the following form

______, 2017

Board of Trustees College of the Sequoias Community College District

Members of the Board:

We have examined a certified copy of the record of the proceedings relative to the issuance and sale of $______College of the Sequoias Community College District 2017 General Obligation Refunding Bonds, Series C (Hanford Campus Improvement District No. 1) (Tulare and Kings Counties, California) (the “Bonds”). As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation.

Based on our examination as bond counsel of existing law, certified copies of such legal proceedings and such other proofs as we deem necessary to render this opinion, we are of the opinion, as of the date hereof and under existing law, that:

1. Such proceedings and proofs show lawful authority for the issuance and sale of the Bonds pursuant to the State of California Government Code Articles 9 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5, and a resolution (the “Resolution”) of the Board of Trustees of the College of the Sequoias Community College District (the “District”).

2. The Bonds constitute valid and binding general obligations of the District, payable as to both principal and interest from the proceeds of a levy of ad valorem taxes on all property subject to such taxes in the District’s Hanford Campus Improvement District No. 1, which taxes are unlimited as to rate or amount.

3. Under existing statutes, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that, with respect to corporations, such interest may be included as an adjustment in the calculation of alternative minimum taxable income, which may affect the alternative minimum tax liability of corporations.

4. Interest on the Bonds is exempt from State of California personal income tax.

A-1

purposes of the previous sentence, the stated redemption price at maturity includes the aggregate sum of all debt service payments on Capital Appreciation Bonds. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bond owner will increase the Bond owner’s basis in the applicable Bond. Original issue discount that accrues to the Bond owner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax.

6. The amount by which a Bond owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium, which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bond owner’s basis in the applicable Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond owner realizing a taxable gain when a Bond is sold by the Bond owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Bond owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable Bond premium.

The opinions expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Resolution and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. No opinion is expressed herein as to the effect on the exclusion from gross income of interest (and original issue discount) for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counsel other than ourselves. Other than expressly stated herein, we express no opinion regarding tax consequences with respect to the Bonds.

The opinions expressed herein as to the exclusion from gross income of interest (and original issue discount) on the Bonds are based upon certain representations of fact and certifications made by the District and others and are subject to the condition that the District complies with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds to assure that such interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District has covenanted to comply with all such requirements.

It is possible that subsequent to the issuance of the Bonds there might be federal, state, or local statutory changes (or judicial or regulatory interpretations of federal, state, or local law) that affect the federal, state, or local tax treatment of the Bonds or the market value of the Bonds. No assurance can be given that subsequent to the issuance of the Bonds such changes or interpretations will not occur.

A-2

The rights of the owners of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted to the extent constitutionally applicable and their enforcement may also be subject to the exercise of judicial discretion in appropriate cases and by the limitations on legal remedies against public agencies in the State of California.

Respectfully submitted,

A-3

Upon issuance and delivery of the Bonds, Stradling Yocca Carlson & Rauth, Bond Counsel, proposes to render its final approving opinion with respect to the Series D Bonds substantially in the following form

______, 2017

Board of Trustees College of the Sequoias Community College District

Members of the Board:

We have examined a certified copy of the record of the proceedings relative to the issuance and sale of $______College of the Sequoias Community College District 2017 General Obligation Refunding Bonds, Series D (Visalia Area Improvement District No. 2) (Tulare County, California) (the “Bonds”). As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation.

2. The Bonds constitute valid and binding general obligations of the District, payable as to both principal and interest from the proceeds of a levy of ad valorem taxes on all property subject to such taxes in the District’s Visalia Area Improvement District No. 2, which taxes are unlimited as to rate or amount.

4. Interest on the Bonds is exempt from State of California personal income tax.

5. The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bonds constitutes original issue discount. For purposes of the previous sentence, the stated redemption price at maturity includes the aggregate sum of all debt service payments on Capital Appreciation Bonds. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bond owner will increase the Bond owner’s basis in the applicable Bond. Original issue discount that accrues to the Bond owner is excluded from the gross income of such

A-4

owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax.

A-5

Respectfully submitted,

A-6

Upon issuance and delivery of the Bonds, Stradling Yocca Carlson & Rauth, Bond Counsel, proposes to render its final approving opinion with respect to the Series E Bonds substantially in the following form

______, 2017

Board of Trustees College of the Sequoias Community College District

Members of the Board:

We have examined a certified copy of the record of the proceedings relative to the issuance and sale of $______College of the Sequoias Community College District 2017 General Obligation Refunding Bonds, Series E (Tulare Area Improvement District No. 3) (Tulare and Kings Counties, California) (the “Bonds”). As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation.

2. The Bonds constitute valid and binding general obligations of the District, payable as to both principal and interest from the proceeds of a levy of ad valorem taxes on all property subject to such taxes in the District’s Tulare Area Improvement District No. 3, which taxes are unlimited as to rate or amount.

4. Interest on the Bonds is exempt from State of California personal income tax.

A-7

Original issue discount that accrues to the Bond owner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax.

A-8

Respectfully submitted,

A-9

APPENDIX B

2015-16 AUDITED FINANCIAL STATEMENTS OF THE DISTRICT

B-1

COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

ANNUAL FINANCIAL REPORT

JUNE 30, 2016 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

TABLE OF CONTENTS JUNE 30, 2016

FINANCIAL SECTION Independent Auditor's Report 2 Management's Discussions and Analysis 5 Basic Financial Statements – Primary Government Statement of Net Position 12 Statement of Revenues, Expenses, and Changes in Net Position 13 Statement of Cash Flows 14 Fiduciary Funds Statement of Net Position 16 Statement of Changes in Net Position 17 Discretely Presented Component Unit - College of the Sequoias Foundation Statement of Financial Position 18 Statement of Activities 19 Statement of Cash Flows 20 Notes to Financial Statements 21

REQUIRED SUPPLEMENTARY INFORMATION Schedule of Other Postemployment Benefits (OPEB) Funding Progress 66 Schedule of the District's Proportionate Share of the Net Pension Liability 67 Schedule of District Contributions 68 Note to Required Supplementary Information 69

SUPPLEMENTARY INFORMATION District Organization 71 Schedule of Expenditures of Federal Awards 72 Schedule of Expenditures of State Awards 74 Schedule of Workload Measures for State General Apportionment 75 Reconciliation of Education Code Section 84362 (50 Percent Law) Calculation 76 Proposition 30 Education Protection Act (EPA) Expenditure Report 79 Reconciliation of Annual Financial and Budget Report (CCFS-311) With Audited Financial Statements 80 Reconciliation of Governmental Funds to the Statement of Net Position 81 Note to Supplementary Information 83

INDEPENDENT AUDITOR'S REPORTS Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 86 Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance 88 Report on State Compliance 90

SCHEDULE OF FINDINGS AND QUESTIONED COSTS Summary of Auditor's Results 93 Financial Statement Findings and Recommendations 94 Federal Awards Findings and Questioned Costs 95 State Awards Findings and Questioned Costs 96 Summary Schedule of Prior Audit Findings 97 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

TABLE OF CONTENTS JUNE 30, 2016

UNAUDITED SUPPLEMENTARY INFORMATION Governmental Funds Balance Sheets 99 Statements of Revenues, Expenditures, and Changes in Fund Balances 100 Proprietary Funds Balance Sheets 101 Statements of Revenues, Expenses, and Changes in Retained Earnings 102 Fiduciary Funds Balance Sheets 103 Statements of Revenues, Expenditures, and Changes in Fund Balances 104 Note to Unaudited Supplementary Information 105 FINANCIAL SECTION

1 Vavrinek, Trine, Day & Co., LLP VALUE THE DIFFERENCE Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT

Board of Trustees College of the Sequoias Community College District Visalia, California

Report on the Financial Statements

We have audited the accompanying financial statements of the business-type activities, the aggregate discretely presented component unit (College of the Sequoias Foundation), and the aggregate remaining fund information of College of the Sequoias Community College District (the District) as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the Table of Contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the 2015-2016 Contracted District Audit Manual, issued by the California Community Colleges Chancellor's Office. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

6051 N. Fresno Street, Suite 101 Fresno, CA 93710 Tel: 559.248.0871 www.vtdcpa.com Fax: 559.248.0875 Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, the aggregate discretely presented component unit, and the aggregate remaining fund information of the District as of June 30, 2016, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require the Management's Discussion and Analysis on pages 5 through 11, the Schedule of Other Postemployment Benefits (OPEB) Funding Progress on page 66, the Schedule of the District's Proportionate Share of the Net Pension Liability on page 67, and the Schedule of District Contributions on page 68, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's basic financial statements. The accompanying supplementary information listed in the Table of Contents, including the Schedule of Expenditures of Federal Awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the basic financial statements.

The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The accompanying unaudited supplementary information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it.

3 Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 27, 2016, on our consideration of the District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control over financial reporting and compliance.

Fresno, California December 27, 2016

4 Phone (559)730-3700 Fax (559)730-3894

In June 1999, the Government Accounting Standards Board (GASB) issued Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments, which established a new reporting format for annual financial statements of governmental entities. In November 1999, GASB issued Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities, which applies these new reporting standards to public colleges and universities such as the College of the Sequoias Community College District (the District). The following discussion and analysis provides an overview of the District's financial activity. This report presents this information in a comparative format. Responsibility for the completeness and fairness of this information rests with the District.

USING THIS ANNUAL REPORT

As required by accounting principles, the annual report consists of three basic financial statements that provide information on the District's activities as a whole: the Statement of Net Position; the Statement of Revenues, Expenses, and Changes in Net Position; and the Statement of Cash Flows.

The focus of the Statement of Net Position is designed to be similar to bottom line results for the District. This statement combines and consolidates current financial resources (net short-term spendable resources) with capital assets and long-term obligations. The Statement of Revenues, Expenses, and Changes in Net Position focuses on the costs of the District's operational activities, which are supported mainly by property taxes and by State and other revenues. This approach is intended to summarize and simplify the user's analysis of the cost of various District services to students and the public. The Statement of Cash Flows provides an analysis of the sources and uses of cash within the operations of the District.

OVERVIEW OF THE FINANCIAL STATEMENTS

The College of the Sequoias Community College District's financial statements are presented in accordance with Governmental Accounting Standards Board Statements No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments and No. 35, Basic Financial Statements - and Management Discussion and Analysis - for Public College and Universities. These statements allow for the presentation of financial activity and results of operations which focuses on the District as a whole. The entity- wide financial statements present the overall results of operations whereby all of the District's activities are consolidated into one total versus the traditional presentation by fund type. The focus of the Statement of Net Position is designed to be similar to the bottom line results of the District. This statement combines and consolidates current financial resources with capital assets and long-term obligations. The Statement of Revenues, Expenses, and Changes in Net Position focuses on the costs of the District's operational activities with revenues and expenses categorized as operating and nonoperating, and expenses are reported by natural classification. The Statement of Cash Flows provides an analysis of the sources and uses of cash within the operations of the District.

The California Community Colleges Chancellor's Office has recommended that all State community colleges follow the Business -Type Activity (BTA) model for financial statement reporting purposes.

5 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2016

FINANCIAL HIGHLIGHTS

College of the Sequoias Community College District had a strong financial year in 2015-16 due to the rebound in the State of California's economy. The District was able to end the fiscal year with a surplus, and a healthy fund balance.

 The District's primary funding source is California SB361. SB361 provides funding for Credit FTES, Non- credit FTES, Enhanced non-credit FTES (limited at this time) and foundation grants for COS and Tulare campuses. Funding is comprised of State apportionment, Education Protection Account, local property taxes, and student enrollment fees. The primary basis of this apportionment is the calculation of Full-Time Equivalent Students (FTES). During the 2015-2016 fiscal year, the District's actual resident FTES were comprised of 8,921.49 credit FTES and 508.79 non-credit FTES for a total of 9,430.28 FTES, which was an increase from the prior year FTES. During the 2014-2015 fiscal year, the District's actual resident FTES were comprised of 8,457.51 credit FTES and 411.39 non-credit FTES for a total of 8,868.90 FTES. These FTES are generated at the District's Visalia College campus, Tulare Center campus, and Hanford Center campus.  The Hanford Educational Center was able to generate 1036.77 FTES during 2015-2016, thus qualifying the campus for a state "Center" status commencing in 2016-2017.  The District ended the year with a General Fund balance of $12.629 million. The State System's Office recommends reserve levels of five percent of unrestricted General Fund expenditures be set aside for economic uncertainties. The District exceeded this requirement for the current year, closing the year with over 22 percent in General Fund reserve.  The primary expenditure of the District is for the salaries and benefits of the Academic, Classified, and Administrative District employees. In addition to the costs for current employees' insurance coverage, the District provides insurance benefits to retirees meeting plan eligibility requirements.  The District provides student financial aid to qualifying students of the District in the amount of approximately $22.643 million. This aid is provided through grants, loans from the Federal government and State System's Office, and local funding.

6 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2016

Condensed financial information is as follows (in thousands):

NET POSITION As of June 30, 2016 and 2015

2016 2015 Change ASSETS Current Assets Cash, investments, and short term receivables $ 51,193 $ 41,997 $ 9,196 Inventory and prepaids 466 656 (190) Total Current Assets 51,659 42,653 9,006 Non-Current Assets Other non-current assets 6,758 5,861 897 Capital assets, net of depreciation 197,342 198,487 (1,145) Total Non-Current Assets 204,100 204,348 (248) Total Assets 255,759 247,001 8,758 DEFERRED OUTFLOWS OF RESOURCES Current year pension contribution 9,365 2,846 6,519 LIABILITIES Current Liabilities Accounts payable 3,154 2,165 989 Unearned revenue 6,891 6,093 798 Long-term liabilites - current portion 2,965 3,010 (45) Total Current Liabilites 13,010 11,268 1,742 Non-Current Liabilities Aggregate net pension liability 43,223 35,595 7,628 Long-term liabilites 107,959 107,410 549 Total Non-Current Liabilities 151,182 143,005 8,177 Total Liabilities 164,192 154,273 9,919 DEFERRED INFLOWS OF RESOURCES Difference between projected and actual earnings on pension plan investments 8,896 9,868 (972) NET POSITION Net investment in capital assets 89,003 94,489 (5,486) Restricted for expendable purposes 22,085 17,751 4,334 Unrestricted (19,052) (26,534) 7,482 Total Net Position $ 92,036 $ 85,706 $ 6,330

This schedule has been prepared from the District's Statement of Net Position (page 12), which is presented on an accrual basis of accounting whereby capital assets are capitalized and depreciated.

7 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2016

The District implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions – and amendment of GASB No. 27 as of June 30, 2015, which required the district to recognize its proportionate share of the unfunded pension obligation for CalSTRS and CalPERS. As of June 30, 2016, the District reported Deferred Outflows from pension activities of $9.4 million. Deferred Inflows from pension activities of $8.9 million and a Net Pension Liability of $43.2 million. We present more detailed information regarding our net pension liability in the Notes to Financial Statements.

Cash and short-term investments consist primarily of funds held in the Tulare County Treasury. The changes in the cash position are explained in the Statement of Cash Flows (pages 14 and 15).

Operating Results for the Years Ended June 30, 2016 and 2015 (in thousands)

2016 2015 Difference OPERATING REVENUES Tuition and fees, net $ 3,974 $ 2,678 $ 1,296 Auxiliary sales and charges 1,155 1,383 (228) Total Operating Revenues 5,129 4,061 1,068 OPERATING EXPENSES Salaries and benefits 51,259 48,489 2,770 Other expenses 36,971 36,153 818 Depreciation 6,057 5,117 940 Total Operating Expenses 94,287 89,759 4,528 NET LOSS ON OPERATIONS (89,158) (85,698) (3,460) NONOPERATING REVENUES AND (EXPENSES) State apportionments 36,748 33,304 3,444 Property taxes 19,222 17,186 2,036 Other state revenues/mandated cost reimbursements 6,712 2,089 4,623 Grants and contracts 35,504 31,827 3,677 Interest income 433 404 29 Interest expense (5,826) (5,784) (42) Other non-operating revenues 1,938 1,557 381 Total Nonoperating Revenues 94,731 80,583 14,148 OTHER REVENUES State revenues, capital 495 199 296 Local revenues, capital 262 285 (23) Total Other Revenues 757 484 273 NET INCREASE (DECREASE) IN NET POSITION $ 6,330 $ (4,631) $ 10,961

This schedule has been prepared from the Statement of Revenues, Expenses and Changes in Net Position presented on page 13.

8 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2016

The operating revenue for the District is specifically defined as revenues from users of the colleges' facilities and programs. Excluded from the operating revenues are the components of the primary source of District funding - the State apportionment process. These components include the State apportionment and local property taxes. As these sources of revenue are from the general population of the State of California, and not from the direct users of the educational services, they are considered to be nonoperating. There was an overall increase in the District's net position of $6.3 million.

Auxiliary revenue consists of Farm and Food Service revenues. The Food Service operation provides meals to the students and faculty of the college. The Farm operation provides farming revenue to supplement agriculture education costs and provide educational opportunities for students in agriculture.

Grant and contract revenues relate to student financial aid, as well as specific Federal and State grants received for programs serving the students of the District. These grant and program revenues are restricted as to the allowable expenses related to the programs.

The interest income is primarily the result of cash held at the Tulare County Treasurer. The interest expense relates to interest payments on the long-term obligations which are described in Note 11 of the financial statements; primarily General Obligation Bonds.

The District has recorded the depreciation expense related to capital assets. The detail of the changes in capital assets for the year is included in the Notes to Financial Statements as Note 7.

In accordance with requirements set forth by the California State System's Office, the District reports operating expenses by object code. Operating expenses by functional classification are as follows:

June 30, 2016 Supplies Material and Employee Other Expenses Salaries Benefits and Services Depreciation Total Instructional activities $ 20,212,582 $ 5,235,608 $ 2,131,252 $ - $ 27,579,442 Academic support 3,471,165 1,502,182 - - 4,973,347 Student services 6,363,316 2,597,826 1,941,716 - 10,902,858 Plant operations and maintenance 1,603,005 958,628 3,321,578 - 5,883,211 Instructional support services 4,940,427 2,541,809 4,191,178 - 11,673,414 Community services and economic development 277,227 74,126 65,354 - 416,707 Ancillary services and auxiliary operations 1,101,797 379,229 1,365,917 - 2,846,943 Student Aid - - 22,643,326 - 22,643,326 Physical property and related acquisitions - - 1,310,673 - 1,310,673 Depreciation expense - - - 6,057,258 6,057,258 Total $ 37,969,519 $13,289,408 $ 36,970,994 $ 6,057,258 $ 94,287,179

9 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2016

June 30, 2015 Supplies Material and Employee Other Expenses Salaries Benefits and Services Depreciation Total Instructional activities $ 18,853,037 $ 6,880,546 $ 1,961,754 $ - $ 27,695,337 Academic support 2,883,533 928,298 - - 3,811,831 Student services 5,570,697 1,944,348 1,972,423 - 9,487,468 Plant operations and maintenance 1,509,666 832,521 3,843,328 - 6,185,515 Instructional support services 4,963,139 2,342,556 3,732,065 - 11,037,760 Community services and economic development 354,674 69,679 138,609 - 562,962 Ancillary services and auxiliary operations 1,004,336 352,029 1,199,734 - 2,556,099 Student Aid - - 21,519,440 - 21,519,440 Physical property and related acquisitions - - 1,786,409 - 1,786,409 Depreciation expense - - - 5,117,412 5,117,412 Total $ 35,139,082 $ 13,349,977 $ 36,153,762 $ 5,117,412 $ 89,760,233

Statement of Cash Flows for the Years Ended June 30, 2016 and 2015 (in thousands)

2016 2015 Difference CASH PROVIDED BY (USED IN) Operating activities $ (83,017) $ (77,880) $ (5,137) Noncapital financing activities 102,885 89,066 13,819 Capital financing activities (10,079) (4,252) (5,827) Investing activities 438 404 34 Net Increase (Decrease) in Cash and Cash Equivalents $ 10,227 $ 7,338 $ 2,889

The Statement of Cash Flows provides information about cash receipts and payments during the year. This statement also assists users in assessing the District's ability to meet its obligations as they come due and its need for external financing.

The primary operating receipts are student tuition and fees and Federal, State, and local grants and contracts. The primary operating expense of the District is the payment of salaries and benefits to instructional and classified support staff, as well as District administrators.

While State apportionment and property taxes are the primary source of non-capital related revenue, the new GASB accounting standards require that this source of revenue is shown as nonoperating revenue as it come from the general resources of the State and not from the primary users of the colleges' programs and services (students). The District depends upon this funding as the primary source of funds to continue the current level of operations.

10 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2016

ECONOMIC FACTORS AFFECTING THE FUTURE OF COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

Fiscal year 2015-2016 allowed the State to continue recovery from the devastating cuts of fiscal 2009-2010 through fiscal year 2011-2012. Fiscal year 2015-16 was actually one of the highest funded fiscal years for California Community Colleges in decades. Even though the state only funded a 1.02 percent COLA, it also made 5.87 percent Access Funding (Growth Funding) available to College of the Sequoias, and increased the District’s base allocation by $2.2 million. The District adopted fiscal year 2015-2016 budget at 100 FTES Access and 1.02 percent COLA. College of the Sequoias settled negotiations with CSEA implementing an increase to benefits cap to cover 50 percent of the Health & Welfare annual increase for fiscal year 2015-2016. Management and Confidentials also received an increase to benefits cap to cover 50 percent of the health & welfare annual increase for fiscal year 2015-2016. College of the Sequoias settled negotiations with COSAFA implementing an increase to salaries of two percent. The District did not negotiate with COSTA during this year due to a PERB hearing settlement that agreed to forego further negotiations until 2016-2017.

2016-2017 negotiations were settled early for all units except COSAFA, and the District was able to offer a six percent salary increase for COSTA, Classified, and Management/Confidentials, in addition to a one percent stipend. Those three units were settled by September 2016, allowing for a positive fiscal start to the 2016-2017 year. There are currently no other known facts, decisions, or conditions that will have a significant effect on the financial position (net assets) or results of operations (revenues, expenses, and changes in net assets) of the District.

CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, students, investors and creditors with a general overview of the District's finances and to show the District's accountability for the funding it receives. If you have questions about this report or need any additional financial information, contact Christine Statton, CPA, Vice President, Administrative Services at the College of the Sequoias Community College District, 915 South Mooney Blvd., Visalia, California 93277, or e-mail at [email protected].

11 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

STATEMENT OF NET POSITION – PRIMARY GOVERNMENT JUNE 30, 2016

ASSETS Current Assets Cash and investments $ 22,351,832 Restricted investments 23,579,645 Accounts receivable 2,149,052 Student loans receivable, net 3,035,787 Due from fiduciary funds 162 Prepaid expenses 405,370 Inventories 60,429 Other current assets (note receivable) 76,710 Total Current Assets 51,658,987 Noncurrent Assets Unamortized discounts 34,403 Net Plan Asset - OPEB Trust 6,723,521 Nondepreciable capital assets 13,871,261 Depreciable capital assets 230,711,430 Less: Accumulated depreciation (47,240,112) Total Noncurrent Assets 204,100,503 TOTAL ASSETS 255,759,490 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pensions 9,365,034 LIABILITIES Current Liabilities Accounts payable 3,154,165 Unearned revenue 6,891,597 Long-term liabilities 2,964,994 Total Current Liabilities 13,010,756 Noncurrent Liabilities Compensated absences/banked leave 1,892,351 Aggregate net pension obligation 43,222,831 Long-term liabilities 106,066,498 Total Noncurrent Liabilities 151,181,680 TOTAL LIABILITIES 164,192,436 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions 8,896,536 NET POSITION Net investment in capital assets 89,002,983 Restricted for: Debt service 17,134,496 Capital projects 4,416,901 Other activities 533,303 Unrestricted (19,052,131) TOTAL NET POSITION $ 92,035,552 The accompanying notes are an integral part of these financial statements.

12 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION – PRIMARY GOVERNMENT FOR THE YEAR ENDED JUNE 30, 2016

OPERATING REVENUES Tuition and Fees, net $ 3,974,344 Auxiliary Sales and Charges Cafeteria 705,887 Farm 449,070 TOTAL OPERATING REVENUES 5,129,301 OPERATING EXPENSES Salaries 37,969,519 Employee benefits 13,289,408 Supplies, materials, and other operating expenses and services 36,970,994 Depreciation 6,057,258 TOTAL OPERATING EXPENSES 94,287,179 OPERATING LOSS (89,157,878) NON-OPERATING REVENUES (EXPENSES) State apportionments, noncapital 36,747,776 Local property taxes, levied for general purposes 13,210,125 Taxes levied for other specific purposes 6,011,536 State taxes and other local revenues 6,711,861 Grants and Contracts, noncapital: Federal 22,108,818 State 13,394,689 Investment income 433,460 Interest expense on capital related debt (5,825,421) Other non-operating revenues 1,937,460 TOTAL NON-OPERATING REVENUES (EXPENSES) 94,730,304 INCOME (LOSS) BEFORE OTHER REVENUES 5,572,426 OTHER REVENUES State revenues, capital 495,010 Local revenues, capital 261,734 TOTAL OTHER REVENUES 756,744 CHANGE IN NET POSITION 6,329,170 NET POSITION, BEGINNING OF YEAR 85,706,382 NET POSITION, END OF YEAR $ 92,035,552

The accompanying notes are an integral part of these financial statements.

13 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

STATEMENT OF CASH FLOWS – PRIMARY GOVERNMENT FOR THE YEAR ENDED JUNE 30, 2016

CASH FLOWS FROM OPERATING ACTIVITIES Tuition and fees $ 3,981,698 Payments to studends and vendors for finanacial aid, supplies and services (36,741,353) Payments to or on behalf of employees (51,412,614) Auxiliary enterprise sales and charges 1,154,957 Net Cash Flows Used In Operating Activities (83,017,312)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State apportionments 37,508,042 Noncapital grants and contracts 36,722,387 Property taxes - non debt related 19,221,661 State taxes and other apportionments 6,409,435 Other nonoperating 3,023,419 Net Cash Flows From Noncapital Financing Activities 102,884,944

CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES Purchase of capital assets (5,797,069) Proceeds from capital debt 8,877,878 State revenue, capital projects 495,010 Local revenue, capital projects 261,734 Proceeds from sale/disposal of capital assets 7,835 Principal paid on capital debt (8,099,180) Interest and cost of issuance paid on capital debt (5,825,421) Net Cash Flows Used In Capital Financing Activities (10,079,213)

CASH FLOWS FROM INVESTING ACTIVITIES Interest received from investments 437,828 Net Cash Flows From Investing Activities 437,828

NET CHANGE IN CASH AND CASH EQUIVALENTS 10,226,247 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 35,705,230 CASH AND CASH EQUIVALENTS, END OF YEAR $ 45,931,477

The accompanying notes are an integral part of these financial statements.

14 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

STATEMENT OF CASH FLOWS – PRIMARY GOVERNMENT, Continued FOR THE YEAR ENDED JUNE 30, 2016

RECONCILIATION OF NET OPERATING LOSS TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating Loss $ (89,157,878) Adjustments to Reconcile Operating Loss to Net Cash Flows from Operating Activities: Depreciation expense 6,057,258 Changes in Assets and Liabilities: Receivables (329,456) Inventories 10,733 Prepaid expenses and deferred charges 97,984 Accounts payable 179,573 Unearned revenue 261,301 Compensated absences, early retirement, and pension obligations 7,352,896 Deferred inflows/outlfows for related to pensions (7,489,723) Total Adjustments 6,140,566 Net Cash Flows From Operating Activities $ (83,017,312)

NON CASH TRANSACTIONS On behalf payments for benefits $ 1,346,487

The accompanying notes are an integral part of these financial statements.

15 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2016

Agency Trust Funds Funds ASSETS Deposits and investments $ 643,651 $ 1,234,970 Receivables 19,948 16,504 Student loans receivable, net - 220,176 Total Assets 663,599 1,471,650

LIABILITIES Accounts payable 15,300 1,470 Due to primary government 162 - Unearned revenue 129,040 192,223 Total Liabilities 144,502 193,693

NET POSITION Restricted 519,097 1,277,957 Total Net Position $ 519,097 $ 1,277,957

The accompanying notes are an integral part of these financial statements.

16 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30, 2016

Agency Trust Funds Funds ADDITIONS Local revenues 348,918 $ 409,941 Total Revenues 348,918 409,941 DEDUCTIONS Current Expenditures Classified salaries 63,785 535 Employee benefits 37,235 64 Books and supplies 163,333 45,054 Services and operating expenditures 1,047 240,437 Debt service - principal - 27,484 Debt service - interest and other - 37,516 Total Expenditures 265,400 351,090 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 83,518 58,851 OTHER FINANCING SOURCES (USES) Operating transfers in 67,655 38 Operating transfers out (67,693) (15,000) Other uses - (500) Total Other Financing Sources (Uses) (38) (15,462) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER EXPENDITURES AND OTHER USES 83,480 43,389 NET POSITION, BEGINNING OF YEAR 435,617 1,234,568 NET POSITION, END OF YEAR $ 519,097 $ 1,277,957

The accompanying notes are an integral part of these financial statements.

17 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

DISCRETELY PRESENTED COMPONENT UNIT - COLLEGE OF THE SEQUOIAS FOUNDATION STATEMENT OF FINANCIAL POSITION JUNE 30, 2016

ASSETS Current Assets: Cash and cash equivalents $ 653,486 Short-term investments 8,663,574 TOTAL CURRENT ASSETS 9,317,060 Noncurrent Assets: Nondepreciable capital assets 329,478 TOTAL ASSETS $ 9,646,538 LIABILITIES TOTAL LIABILITIES $ 480,135 NET ASSETS Unrestricted 7,407,070 Permanently restricted 1,759,333 TOTAL NET ASSETS 9,166,403 TOTAL LIABILITIES AND NET ASSETS $ 9,646,538

The accompanying notes are an integral part of these financial statements.

18 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

DISCRETELY PRESENTED COMPONENT UNIT - COLLEGE OF THE SEQUOIAS FOUNDATION STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2016

Temporarily Permanently Unrestricted Restricted Restricted Total PUBLIC SUPPORT, REVENUES AND RECLASSIFICATIONS: Contributions $ 384,650 $ - $ - $ 384,650 Revenues: Investment income 255,690 - - 255,690 Fundraisers 312,721 - - 312,721 Program fees 212,130 - - 212,130 Net assets released from restrictions 480,136 (323,958) (156,178) - Total Support and Revenue 1,645,327 (323,958) (156,178) 1,165,191 EXPENSES: Scholarships 848,852 - - 848,852 College enhancement 830,153 - - 830,153 General administrative 206,596 - - 206,596 Total Expenses 1,885,601 - - 1,885,601 CHANGE IN NET ASSETS (240,274) (323,958) (156,178) (720,410) NET ASSETS, BEGINNING OF YEAR 6,928,777 1,538,901 1,433,867 9,901,545 PRIOR PERIOD ADJUSTMENT, ACCOUNTING CHANGE (14,732) - - (14,732) PRIOR PERIOD ADJUSTMENT, REALLOCATION 733,299 (1,214,943) 481,644 - NET ASSETS, BEGINNING OF YEAR AS RESTATED 7,647,344 323,958 1,915,511 9,886,813 NET ASSETS, END OF YEAR $ 7,407,070 $ - $ 1,759,333 $ 9,166,403

The accompanying notes are an integral part of these financial statements.

19 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

DISCRETELY PRESENTED COMPONENT UNIT - COLLEGE OF THE SEQUOIAS FOUNDATION STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2016

CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ (720,410) Adjustments to reconcile net assets provided by operating activities: Decrease in operating assets: Accounts receivable 300 Increase in operating liabilities: Accounts payable 480,135 Net Cash Used by Operating Activities (239,975)

CASH FLOWS FROM INVESTING ACTIVITIES Net purchaes of investments (424,069) Net Cash Used by Investing Activities (424,069)

NET CHANGE IN CASH AND CASH EQUIVALENTS (664,044) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,317,530 CASH AND CASH EQUIVALENTS, END OF YEAR $ 653,486

The accompanying notes are an integral part of these financial statements.

20 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

NOTE 1 - ORGANIZATION

The College of the Sequoias Community College District (the District) was established in 1926 as a political subdivision of the State of California and is a comprehensive, public, two-year institution offering educational services to residents of Tulare and Kings Counties. The District operates under a locally elected five member- Board of Trustees form of government, which establishes the policies and procedures by which the District operates. Currently, the District operates one college with three centers located in the Counties of Tulare and Kings, State of California. While the District is a political subdivision of the State of California, it is legally separate and is independent of other State and local governments, and it is not a component unit of the State in accordance with the provisions of Governmental Accounting Standards Board (GASB) Statement No. 61. The District is classified as a Public Educational Institution under Internal Revenue Code Section 115 and is, therefore, exempt from Federal taxes.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial Reporting Entity

The District has adopted GASB Statement No. 61, Determining Whether Certain Organizations are Component Units. This statement amends GASB Statement No. 14, The Financial Reporting Entity, to provide additional guidance to determine whether certain organizations, for which the District is not financially accountable, should be reported as component units based on the nature and significance of their relationship with the District. The three components used to determine the presentation are: providing a "direct benefit", the "environment and ability to access/influence reporting", and the "significance" criterion. As defined by accounting principles generally accepted in the United States of America and established by the Governmental Accounting Standards Board, the financial reporting entity consists of the primary government, the District, and the following component units:

 College of the Sequoias Foundation

The College of the Sequoias Foundation (the Foundation) is a legally separate, tax-exempt component unit of the District. The Foundation acts primarily as a fundraising organization to provide grants and scholarships to students and support to employees, programs, and departments of the District. The 38 member board of the Foundation consists of community members, alumni, and other supporters of the Foundation. Although the District does not control the timing or amount of receipts from the Foundation, the majority of resources, or income thereon that the Foundation holds and invests are restricted to the activities of the District by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the District, the Foundation is considered a component unit of the District with the inclusion of the statements as a discretely presented component unit. The Foundation is reported in separate financial statements because of the difference in its reporting model, as further described below.

21 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

The Foundation is a not-for-profit organization under Internal Revenue Code (IRC) Section 501(c)(3) that reports its financial results in accordance with Financial Accounting Standards Codifications. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. No modifications have been made to the Foundation's financial information in the District's financial reporting entity for these differences.

Complete financial statements for the Foundation can be obtained from the Foundation's Business Office at 915 South Mooney Blvd., Visalia, CA 93277.

Measurement Focus, Basis of Accounting, and Financial Statement Presentation

For financial reporting purposes, the District is considered a special-purpose government engaged only in business-type activities as defined by GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37, No. 38, and No. 39. This presentation provides a comprehensive entity-wide perspective of the District's assets, liabilities, activities, and cash flows and replaces the fund group perspective previously required. Accordingly, the District's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. The significant accounting policies followed by the District in preparing these financial statements are in accordance with accounting principles generally accepted in the United States of America as prescribed by GASB. Additionally, the District's policies comply with the California Community Colleges Chancellor's Office Budget and Accounting Manual. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All material intra- agency and intra-fund transactions have been eliminated.

Revenues resulting from exchange transactions, in which each party gives and receives essentially equal value, are classified as operating revenues. These transactions are recorded on the accrual basis when the exchange takes place. Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the District, operating revenues consist primarily of student fees and auxiliary activities through the bookstore and cafeteria.

Nonexchange transactions, in which the District receives value without directly giving equal value in return, include State apportionments, property taxes, certain Federal and State grants, entitlements, and donations. Property tax revenue is recognized in the fiscal year received. State apportionment revenue is earned based upon criteria set forth from the Community Colleges Chancellor's Office and includes reporting of full-time equivalent students (FTES) attendance. The corresponding apportionment revenue is recognized in the period the FTES are generated. Revenue from Federal and State grants and entitlements are recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements may include time and/or purpose requirements.

Operating expenses are costs incurred to provide instructional services including support costs, auxiliary services, and depreciation of capital assets. All other expenses not meeting this definition are reported as nonoperating. Expenses are recorded on the accrual basis as they are incurred, when goods are received, or services are rendered.

The District reports are based on all applicable GASB pronouncements, as well as applicable Financial Accounting Standards Board (FASB) pronouncements issued on or before November 30, 1989, unless those pronouncements conflict or contradict GASB pronouncements. The District has not elected to apply FASB pronouncements after that date.

22 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

The financial statements are presented in accordance with the reporting model as prescribed in GASB Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments, and GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities, as amended by GASB Statements No. 37, No. 38, and No. 39. The business-type activities model followed by the District requires the following components of the District's financial statements:

 Management's Discussion and Analysis  Basic Financial Statements for the District as a whole including: o Statement of Net Position o Statement of Revenues, Expenses, and Changes in Net Position o Statement of Cash Flows  Notes to the Financial Statements

Cash and Cash Equivalents

The District's cash and cash equivalents are considered to be unrestricted cash on hand, demand deposits, and short-term unrestricted investments with original maturities of three months or less from the date of acquisition. Cash equivalents also include unrestricted cash with county treasury balances for purposes of the statement of Cash Flows. Restricted cash and cash equivalents represented balances restricted by external sources such as grants and contracts or specifically restricted for the repayment of capital debt.

Investments

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and External Investment Pools, investments held at June 30, 2016, are stated at fair value. Fair value is estimated based on quoted market prices at year-end. Short-term investments have an original maturity date greater than three months, but less than one year at time of purchase. Long-term investments have an original maturity of greater than one year at the time of purchase.

Restricted Assets

Restricted assets arise when restrictions on their use change the normal understanding of the availability of the asset. Such constraints are either imposed by creditors, contributors, grantors, or laws of other governments or imposed by enabling legislation. Restricted assets represent investments required by debt covenants to be set aside by the District for the purpose of satisfying certain requirements of the bonded debt issuance.

Accounts Receivable

Accounts receivable include amounts due from the Federal, State and/or local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the District's grants and contracts. Accounts receivable also consist of tuition and fee charges to students and auxiliary enterprise services provided to students, faculty, and staff, the majority of each residing in the State of California. The District provides for an allowance for uncollectible accounts as an estimation of amounts that may not be received. The allowance for the student related accounts receivable is $2,199,975 for the fiscal year ending June 30, 2016. This allowance is based upon management's estimates and analysis. Management has analyzed these accounts and believes the net amounts are fully collectable.

23 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Prepaid Expenses

Prepaid expenditures (expenses) represent amounts paid in advance of receiving goods or services and that will benefit periods beyond June 30. The District has the option of reporting an expenditure in governmental funds for prepaid items either when purchased or during the benefiting period. The District has chosen to report the expenditures when incurred.

Inventories

Inventories consists primarily of farm livestock and cafeteria food and supplies held for resale to the students and faculty of the colleges. Inventories are stated at cost, utilizing the weighted average method. The cost is recorded as an expense as the inventory is consumed.

Capital Assets and Depreciation

Capital assets are long-lived assets of the District as a whole and include land, construction in progress, buildings, leasehold improvements, and equipment. The District maintains an initial unit cost capitalization threshold of $5,000 and an estimated useful life greater than one year. Assets are recorded at historical cost, or estimated historical cost, when purchased or constructed. The District does not possess any infrastructure. Donated capital assets are recorded at estimated fair market value at the date of donation. Improvements to buildings and land that significantly increase the value or extend the useful life of the asset are capitalized; the costs of routine maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are charged as an operating expense in the year in which the expense was incurred. Major outlays for capital improvements are capitalized as construction in progress as the projects are constructed.

Depreciation of capital assets is computed and recorded utilizing the straight-line method. Estimated useful lives of the various classes of depreciable capital assets are as follows: buildings, 25 to 50 years; improvements, 25 to 50 years; equipment, 5 to 10 years; vehicles 5 to 10 years.

Accrued Liabilities and Long-Term Obligations

All payables, accrued liabilities, and long-term obligations are reported in the entity-wide financial statements.

Debt Premiums and Discounts

Debt premiums and discounts, as well as issuance costs related to prepaid insurance costs, are amortized over the life of the bonds using the straight-line method.

Deferred Outflows/Inflows of Resources

In addition to assets, the Statement of Net Position also reports deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to a future period and so will not be recognized as an expense or expenditure until then. The District reports deferred outflows of resources for pension related items.

24 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

In addition to liabilities, the Statement of Net Position reports a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to a future period and so will not be recognized as revenue until then. The District reports deferred inflows of resources for pension related items.

Pensions

For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions and pension expense, information about the fiduciary net position of the California State Teachers' Retirement System (CalSTRS) and the California Public Employees' Retirement System (CalPERS) plan for schools (the Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CalSTRS and CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Member contributions are recognized in the period in which they are earned. Investments are reported at fair value.

Compensated Absences

Accumulated unpaid employee vacation benefits are accrued as a liability as the benefits are earned. The entire compensated absence liability is reported on the entity-wide financial statements. The current portion of unpaid compensated absences is recognized upon the occurrence of relevant events such as employee resignation and retirements that occur prior to year end that have not yet been paid within the fund from which the employees who have accumulated the leave are paid. The District also participates in "load banking" with eligible academic employees whereby the employee may teach extra courses in one period in exchange for time off in another period. The liability for this benefit is reported on the entity-wide financial statements.

Sick leave is accumulated without limit for each employee based upon negotiated contracts. Leave with pay is provided when employees are absent for health reasons; however, the employees do not gain a vested right to accumulated sick leave. Employees are never paid for any sick leave balance at termination of employment or any other time. Therefore, the value of accumulated sick leave is not recognized as a liability in the District's financial statements. However, retirement credit for unused sick leave is applicable to all classified school members who retire after January 1, 1999. At retirement, each member will receive .004 year of service credit for each day of unused sick leave. Retirement credit for unused sick leave is applicable to all academic employees and is determined by dividing the number of unused sick days by the number of base service days required to complete the last school year, if employed full time.

Unearned Revenue

Unearned revenue arises when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period or when resources are received by the District prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the District has a legal claim to the resources, the liability for unearned revenue is removed from the combined balance sheet and revenue is recognized. Unearned revenue includes (1) amounts received for tuition and fees prior to the end of the fiscal year that are related to the subsequent fiscal year and (2) amounts received from Federal and State grants received before the eligibility requirements are met.

25 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Noncurrent Liabilities

Noncurrent liabilities include bonds and certificates of participation, compensated absences, capital lease obligations, pensions, and lease revenue bonds with maturities greater than one year.

Net Position

GASB Statements No. 34 and No. 35 report equity as "Net Position" and represent the difference between assets and liabilities. The net position is classified according to imposed restrictions or availability of assets for satisfaction of District obligations according to the following net asset categories:

Net Investment in Capital Assets consists of capital assets, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets. To the extent debt has been incurred, but not yet expended for capital assets, such accounts are not included as a component invested in capital assets – net of related debt.

Restricted: Net position is reported as restricted when there are limitations imposed on their use, either through enabling legislation adopted by the District, or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. The District first applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted resources are available.

None of the District's restricted net position has resulted from enabling legislation adopted by the District.

Unrestricted: Net position that is not subject to externally imposed constraints. Unrestricted net position may be designated for specific purposes by action of the Board of Trustees or may otherwise be limited by contractual agreements with outside parties. Substantially all unrestricted net position is designated for economic uncertainties.

When both restricted and unrestricted resources are available for use, it is the District's practice to use restricted resources first and the unrestricted resources when they are needed.

State Apportionments

Certain current year apportionments from the State are based on financial and statistical information of the previous year. Any corrections due to the recalculation of the apportionment are made in February of the subsequent year. When known and measurable, these recalculations and corrections are accrued in the year in which the FTES are generated.

Property Taxes

Secured property taxes attach as an enforceable lien on property as of January 1. Taxes are payable in two installments on November 1 and February 1 and become delinquent on December 10 and April 10, respectively. Unsecured property taxes are payable in one installment on or before August 31. The Counties of Tulare, Kings, and Fresno bill and collect the taxes on behalf of the District. Local property tax revenues are recorded when received.

26 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

The voters of the District passed numerous General Obligation Bonds for the acquisition, construction, and remodeling of certain District property. As a result of the passage of the Bond, property taxes are assessed on the property within the District specifically for the repayment of the debt incurred. The taxes are assessed, billed, and collected as noted above and remitted to the District when collected.

Scholarships, Discounts, and Allowances

Student tuition and fee revenue is reported net of scholarships, discounts, and allowances. Fee waivers approved by the Board of Governors are included within the scholarships, discounts, and allowances in the Statement of Revenues, Expenses, and Changes in Net Position. Scholarship discounts and allowances represent the difference between stated charges for enrollment fees and the amount that is paid by students or third parties making payments on the students' behalf.

Federal Financial Assistance Programs

The District participates in federally funded Pell Grants, SEOG Grants, and Federal Work-Study programs, as well as other programs funded by the Federal government. Financial aid to students is either reported as operating expenses or scholarship allowances, which reduce revenues. The amount reported as operating expense represents the portion of aid that was provided to the student in the form of cash. Scholarship allowances represent the portion of aid provided to students in the form of reduced tuition. These programs are audited in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.

Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

Interfund Activity

Interfund transfers and interfund receivables and payables are eliminated during the consolidation process in the Primary Government and Fiduciary Funds' financial statements, respectively.

Foundation Financial Statement Presentation

The College of the Sequoias Foundation presents its financial statements in accordance with Statement of Financial Accounting Codifications. Under these reporting requirements, the Foundation is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. As permitted by the codification, the Foundation does not use fund accounting.

Permanently Restricted Net Assets – Net assets subject to donor-imposed stipulations that they be maintained permanently by the Foundation. Generally the donors of these assets permit the Foundation to use all or part of the income earned on related investments for general or specific purposes

27 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Temporarily Restricted Net Assets – Net assets subject to donor-imposed stipulations that will be met by actions of the Foundation and/or the passage of time.

Unrestricted Net Assets – Net assets not subject to donor-imposed restrictions.

Revenues and expenses are recorded when incurred in accordance with the accrual basis of accounting. Revenues are reported as increases in the unrestricted net assets classification unless use of the related assets is limited by donor-imposed restrictions. Contributions, including unconditional promises to give, are recognized as revenue in the period received. Conditional promises to give are not recognized as revenue until the conditions on which they depend are substantially met. Contributions for in-kind gifts from outside sources are recorded at their fair market value on the date of the donation.

Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law.

Investments are reported at fair value in accordance with FASB Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures.

The Foundation is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and related California Franchise Tax Codes.

Change in Accounting Principles

In February 2015, the GASB issued Statement No. 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements.

The District has implemented the provisions of this Statement as of June 30, 2016.

In June 2015, the GASB issued Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. The objective of this Statement is to improve the usefulness of information about pensions included in the general purpose external financial reports of State and local governments for making decisions and assessing accountability. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits with regard to providing decision- useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency.

28 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

This Statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment to GASB Statement No. 27, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of GASB Statement No. 68. It also amends certain provisions of GASB Statement No. 67, Financial Reporting for Pension Plans—an amendment to GASB Statement No. 25, and GASB Statement No. 68 for pension plans and pensions that are within their respective scopes.

The provisions in this Statement, effective as of June 30, 2016, include the provisions for assets accumulated for purposes of providing pensions through defined benefit plans and the amended provisions of GASB Statements No. 67 and No. 68. The District has implemented these provisions as of June 30, 2016. The provisions in this Statement related to defined benefit pensions that are not within the scope of GASB Statement No. 68 are effective for periods beginning after June 15, 2016.

In June 2015, the GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of this Statement is to identify—in the context of the current governmental financial reporting environment—the hierarchy of generally accepted accounting principles (GAAP). The "GAAP hierarchy" consists of the sources of accounting principles used to prepare financial statements of State and local governmental entities in conformity with GAAP and the framework for selecting those principles. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and non-authoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP.

This Statement supersedes GASB Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments.

The District has implemented the provisions of this Statement as of June 30, 2016.

In December 2015, the GASB issued Statement No. 79, Certain External Investment Pools and Pool Participants. This Statement addresses accounting and financial reporting for certain external investment pools and pool participants. Specifically, it establishes criteria for an external investment pool to qualify for making the election to measure all of its investments at amortized cost for financial reporting purposes. An external investment pool qualifies for that reporting if it meets all of the applicable criteria established in this Statement. The specific criteria address (1) how the external investment pool transacts with participants; (2) requirements for portfolio maturity, quality, diversification, and liquidity; and (3) calculation and requirements of a shadow price. Significant noncompliance prevents the external investment pool from measuring all of its investments at amortized cost for financial reporting purposes. Professional judgment is required to determine if instances of noncompliance with the criteria established by this Statement during the reporting period, individually or in the aggregate, were significant.

If an external investment pool does not meet the criteria established by this Statement, that pool should apply the provisions in paragraph 16 of GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, as amended. If an external investment pool meets the criteria in this Statement and measures all of its investments at amortized cost, the pool's participants also should measure their investments in that external investment pool at amortized cost for financial reporting purposes. If an external investment pool does not meet the criteria in this Statement, the pool's participants should measure their investments in that pool at fair value, as provided in paragraph 11 of GASB Statement No. 31, as amended.

29 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

This Statement establishes additional note disclosure requirements for qualifying external investment pools that measure all of their investments at amortized cost for financial reporting purposes and for governments that participate in those pools. Those disclosures, for both the qualifying external investment pools and their participants, include information about any limitations or restrictions on participant withdrawals.

The District has implemented the provisions of this Statement as of June 30, 2016.

New Accounting Pronouncements

In June 2015, the GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of State and local governmental OPEB plans for making decisions and assessing accountability. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency.

This Statement replaces GASB Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple- Employer Plans. It also includes requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in GASB Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, as amended, No. 43, and No. 50, Pension Disclosures.

The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2016. Early implementation is encouraged.

In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pension. The primary objective of this Statement is to improve accounting and financial reporting by State and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by State and local governmental employers about financial support for OPEB that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency.

This Statement replaces the requirements of GASB Statements No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans, for OPEB. GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans.

The requirements of this Statement are effective for financial statements for periods beginning after June 30, 2017. Early implementation is encouraged.

30 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

In August 2015, the GASB issued Statement No. 77, Tax Abatement Disclosures. This Statement requires governments that enter into tax abatement agreements to disclose the following information about the agreements:

 Brief descriptive information, such as the tax being abated, the authority under which tax abatements are provided, eligibility criteria, the mechanism by which taxes are abated, provisions for recapturing abated taxes, and the types of commitments made by tax abatement recipients  The gross dollar amount of taxes abated during the period  Commitments made by a government, other than to abate taxes, as part of a tax abatement agreement

The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2015. Early implementation is encouraged.

In December 2015, the GASB issued Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans. The objective of this Statement is to address a practice issue regarding the scope and applicability of GASB Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment to GASB Statement No. 27. This issue is associated with pensions provided through certain multiple-employer defined benefit pension plans and to State or local governmental employers whose employees are provided with such pensions.

Prior to the issuance of this Statement, the requirements of GASB Statement No. 68 applied to the financial statements of all State and local governmental employers whose employees are provided with pensions through pension plans that are administered through trusts that meet the criteria in paragraph 4 of that Statement.

This Statement amends the scope and applicability of GASB Statement No. 68 to exclude pensions provided to employees of State or local governmental employers through a cost-sharing multiple-employer defined benefit pension plan that (1) is not a State or local governmental pension plan; (2) is used to provide defined benefit pensions both to employees of State or local governmental employers and to employees of employers that are not State or local governmental employers; and (3) has no predominant State or local governmental employer (either individually or collectively with other State or local governmental employers that provide pensions through the pension plan). This Statement establishes requirements for recognition and measurement of pension expense, expenditures, and liabilities; note disclosures; and required supplementary information for pensions that have the characteristics described above.

The requirements of this Statement are effective for reporting periods beginning after December 15, 2015. Early implementation is encouraged.

In January 2016, the GASB issued Statement No. 80, Blending Requirements for Certain Component Units—an amendment to GASB Statement No. 14. The objective of this Statement is to improve financial reporting by clarifying the financial statement presentation requirements for certain component units. This Statement amends the blending requirements established in paragraph 53 of GASB Statement No. 14, The Financial Reporting Entity. The additional criterion requires blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. The additional criterion does not apply to component units included in the financial reporting entity pursuant to the provisions of GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units—an amendment to GASB Statement No. 14.

31 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

The requirements of this Statement are effective for reporting periods beginning after June 15, 2016. Early implementation is encouraged.

In March 2016, the GASB issued Statement No. 81, Irrevocable Split-Interest Agreements. The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement.

This Statement requires that a government that receives resources pursuant to an irrevocable split-interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of the agreement. Furthermore, this Statement requires that a government recognize assets representing its beneficial interests in irrevocable split-interest agreements that are administered by a third party, if the government controls the present service capacity of the beneficial interests. This Statement requires that a government recognize revenue when the resources become applicable to the reporting period.

The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2016, and should be applied retroactively. Early implementation is encouraged.

In March 2016, the GASB issued Statement No. 82, Pension Issues—an amendment of GASB Statements No. 67, No. 68, and No. 73. The objective of this Statement is to address certain issues that have been raised with respect to GASB Statement No. 67, Financial Reporting for Pension Plans—an amendment to GASB Statement No. 25, GASB Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment to GASB Statement No. 27, and GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. Specifically, this Statement addresses issues regarding (1) the presentation of payroll-related measures in required supplementary information; (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes; and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements.

The requirements of this Statement are effective for reporting periods beginning after June 15, 2016, except for the requirements of this Statement for the selection of assumptions in a circumstance in which an employer's pension liability is measured as of a date other than the employer's most recent fiscal year end. In that circumstance, the requirements for the selection of assumptions are effective for that employer in the first reporting period in which the measurement date of the pension liability is on or after June 15, 2017. Early implementation is encouraged.

32 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

NOTE 3 - DEPOSITS AND INVESTMENTS

Policies and Practices

The District is authorized under California Government Code to make direct investments in local agency bonds, notes, or warrants within the State; U.S. Treasury instruments; registered State warrants or treasury notes; securities of the U.S. Government, or its agencies; bankers acceptances; commercial paper; certificates of deposit placed with commercial banks and/or savings and loan companies; repurchase or reverse repurchase agreements; medium term corporate notes; shares of beneficial interest issued by diversified management companies, certificates of participation, obligations with first priority security; and collateralized mortgage obligations.

Investment in County Treasury - The District is considered to be an involuntary participant in an external investment pool as the District is required to deposit all receipts and collections of monies with their County Treasurer (Education Code Section (ECS) 41001). The fair value of the District's investment in the pool is reported in the accounting financial statements at amounts based upon the District's pro-rata share of the fair value provided by the County Treasurer for the entire portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by the County Treasurer, which is recorded on the amortized cost basis.

Investment in the State Investment Pool - The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the District's investment in the pool is reported in the accompanying financial statement at amounts based upon the District's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which is recorded on the amortized cost basis.

33 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

General Authorizations

Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are indicated in the schedules below:

Maximum Maximum Maximum Remaining Percentage Investment Authorized Investment Type Maturity of Portfolio in One Issuer Local Agency Bonds, Notes, Warrants 5 years None None Registered State Bonds, Notes, Warrants 5 years None None U.S. Treasury Obligations 5 years None None U.S. Agency Securities 5 years None None Banker's Acceptance 180 days 40% 30% Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposit 5 years 30% None Repurchase Agreements 1 year None None Reverse Repurchase Agreements 92 days 20% of base None Medium-Term Corporate Notes 5 years 30% None Mutual Funds N/A 20% 10% Money Market Mutual Funds N/A 20% 10% Mortgage Pass-Through Securities 5 years 20% None County Pooled Investment Funds N/A None None Local Agency Investment Fund (LAIF) N/A None None Joint Powers Authority Pools N/A None None

Summary of Deposits and Investments

Deposits and investments as of June 30, 2016, consist of the following:

Primary government $ 45,931,477 Fiduciary funds 1,878,621 Total Deposits and Investments $ 47,810,098

Cash on hand and in banks $ 2,525,634 Cash in revolving 50,000 Cash with fiscal agent 20,000 Investments 45,214,464 Total Deposits and Investments $ 47,810,098

34 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The District manages its exposure to interest rate risk by investing in the County Pool and having the Pool purchase a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Segmented Time Distribution

Information about the sensitivity of the fair values of the District's investments to market interest rate fluctuations is provided by the following schedule that shows the distribution of the District's investments by maturity:

Fair 12 Months 13 - 24 25 - 60 More Than Investment Type Value or Less Months Months 60 Months County Pool $ 45,432,171 $ - $ - $ 45,432,171 $ - State Investment Pool 167,000 167,000 - - - Held by Trustee: GASB 45 Trust-Balanced Portfolio 6,850,236 6,850,236 - - - Total $ 52,449,407 $ 7,017,236 $ - $ 45,432,171 $ -

Concentration of Credit Risk

The investment policy of the District contains no limitations on the amount that can be invested in any one issuer beyond the amount stipulated by the California Government code. Investments in any one issuer that represent five percent or more of the total investments are as follows:

Reported Issuer Investment Type Amount GASB 45 Trust-Balanced Portfolio Balanced Portfolio $ 6,850,236

35 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Custodial Credit Risk - Deposits

This is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The District does not have a policy for custodial credit risk. However, the California Government Code requires that a financial institution secure deposits made by State or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under State law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agency. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits and letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secured deposits. As of June 30, 2016, the District's bank balance of $2,833,510 was exposed to custodial credit risk because it was uninsured and collateralized with securities held by the pledging financial institution's trust department or agent, but not in the name of the District.

Custodial Credit Risk - Investments

This is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral securities that are in possession of an outside party. The California Government Code requires that a financial institution secure deposits made by State or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under State law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agency. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits and letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secured deposits. Of the investment in the GASB 45 Trust-balanced portfolio of $6,850,236, the District has a custodial credit risk exposure of $6,850,236 because the related securities are uninsured, unregistered, and held by the brokerage firm which is also the counterparty for these securities.

NOTE 4 - FAIR VALUE MEASUREMENTS

The District categorizes the fair value measurements of its investments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset's fair value. The following provides a summary of the hierarchy used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets that the District has the ability to access at the measurement date. Level 1 assets may include debt and equity securities that are traded in an active exchange market and that are highly liquid and are actively traded in over-the-counter markets.

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, or other inputs that are observable, such as interest rates and curves observable at commonly quoted intervals, implied volatilities, and credit spreads. For financial reporting purposes, if an asset has a specified term, a Level 2 input is required to be observable for substantially the full term of the asset.

36 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Level 3 - Unobservable inputs should be developed using the best information available under the circumstances, which might include the District's own data. The District should adjust that data if reasonably available information indicates that other market participants would use different data or certain circumstances specific to the District are not available to other market participants.

Uncategorized - Investments in the Tulare County Treasury Investment Pool, State Investment Pool, and the GASB 45 Trust-Balanced Portfolio are not measured using the input levels above because the District's transactions are based on a stable net asset value per share. All contributions and redemptions are transacted at $1.00 net asset value per share.

NOTE 5 - ACCOUNTS RECEIVABLE

Accounts receivable at June 30, 2016, consisted of intergovernmental grants, entitlements, interest, and other local sources and are as follows:

Primary Fiduciary Government Funds Total Federal Government Categorical aid $ 302,535 $ 29,188 $ 331,723 State Government State grants and entitlements 1,021,311 - 1,021,311 Local Sources 825,206 7,264 832,470 Subtotal 2,149,052 36,452 2,185,504 Student loans and grants receivable, net 3,035,787 220,176 3,255,963 Total $ 5,184,839 $ 256,628 $ 5,441,467

NOTE 6 - PREPAID EXPENDITURES

Prepaid expenditures at June 30, 2016, consist of the following:

Primary Government Vendor payments $ 405,370

37 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

NOTE 7 - CAPITAL ASSETS

Capital asset activity for the fiscal year ended June 30, 2016, are as follows:

Beginning End of Year Additions Deductions of Year Capital Assets Not Being Depreciated Land $ 11,314,803 $ - $ - $ 11,314,803 Construction in progress 1,437,769 4,320,525 3,201,836 2,556,458 Total Capital Assets Not Being Depreciated 12,752,572 4,320,525 3,201,836 13,871,261 Capital Assets Being Depreciated Land improvements 9,752,382 3,051,905 - 12,804,287 Buildings and improvements 207,611,611 149,931 - 207,761,542 Furniture and equipment 9,513,529 909,207 277,135 10,145,601 Total Capital Assets Being Depreciated 226,877,522 4,111,043 277,135 230,711,430 Total Capital Assets 239,630,094 8,431,568 3,478,971 244,582,691 Less Accumulated Depreciation Land improvements 4,466,982 480,148 - 4,947,130 Buildings and improvements 29,787,046 5,145,089 - 34,932,135 Furniture and equipment 6,888,677 741,470 269,300 7,360,847 Total Accumulated Depreciation 41,142,705 6,366,707 269,300 47,240,112 Net Capital Assests $198,487,389 $ 2,064,861 $ 3,209,671 $ 197,342,579

Depreciation expense for the year was $6,366,707. There was no interest capitalized during the year but $300,096 of depreciation expense was recognized related to prior capitalized interest.

NOTE 8 - ACCOUNTS PAYABLE

Accounts payable at June 30, 2016, consist of the following:

Primary Fiduciary Government Funds Total Vendor invoices $ 1,318,084 $ 16,770 $ 1,334,854 State apportionment 1,082,329 - 1,082,329 Benefits 318,758 - 318,758 Deferred payroll 434,994 - 434,994 Total $ 3,154,165 $ 16,770 $ 3,170,935

38 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Discretely Presented Component Unit

The Foundation had scholarships payable totaling $480,135 as of June 30, 2016.

NOTE 9 - UNEARNED REVENUE

Unearned revenue at June 30, 2016, consists of the following:

Primary Fiduciary Government Funds Total Federal financial assistance $ 126,688 $ - $ 126,688 State categorical aid 2,751,590 - 2,751,590 Student fees 2,625,585 321,263 2,946,848 Other local 1,387,734 - 1,387,734 Total $ 6,891,597 $ 321,263 $ 7,212,860

NOTE 10 - INTERFUND TRANSACTIONS

Interfund Receivables and Payable (Due To/Due From)

Interfund receivable and payable balances arise from interfund transactions and are recorded by all funds affected in the period in which transactions are executed. Interfund activity within the governmental funds and fiduciary funds has been eliminated respectively in the consolidation process of the basic financial statements.

Interfund Operating Transfers

Operating transfers between funds of the District are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and (3) use restricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Operating transfers within the funds of the District have been eliminated in the consolidation process.

39 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

NOTE 11 - LONG-TERM OBLIGATIONS

The changes in the District's long-term obligations during the year consisted of the following:

Balance Balance Due in July 1, 2015 Additions Deductions June 30, 2016 One Year Certificates of participation 2004 $ 2,960,000 $ - $ 100,000 $ 2,860,000 $ 105,000 General Obligation Bonds 2006, A (Hanford): Current interest 13,540,000 - - 13,540,000 - Capital appreciation 1,964,774 182,615 245,000 1,902,389 290,000 General Obligation Bonds 2008, B (Hanford): Current interest 3,980,000 - 335,000 3,645,000 355,000 Capital appreciation 3,884,225 287,695 - 4,171,920 - General Obligation Bonds 2008, A (Tulare): Current interest 14,205,000 - - 14,205,000 - Capital appreciation 6,404,654 617,772 665,000 6,357,426 725,000 General Obligation Bonds 2008, B (Tulare): Current interest 3,650,000 - - 3,650,000 - Capital appreciation 8,862,955 706,483 220,000 9,349,438 230,000 General Obligation Bonds 2008, C (Tulare): Current interest 1,425,000 - - 1,425,000 - Capital appreciation 2,254,386 156,936 - 2,411,322 - General Obligation Bonds 2008, D (Tulare): Current interest - 3,710,000 - 3,710,000 - General Obligation Bonds 2008, A (Visalia): Current interest 13,750,000 - - 13,750,000 - Capital appreciation 5,430,178 561,678 630,000 5,361,856 685,000 General Obligation Bonds, 2008, B (Visalia): Current interest 4,650,000 - - 4,650,000 - Capital appreciation 622,438 73,510 - 695,948 - General Obligation Bonds 2008, C (Visalia): Current interest 3,755,000 - - 3,755,000 - Capital appreciation 1,857,194 181,608 - 2,038,802 - Unamortized premium on bonds 5,835,032 235,465 289,180 5,781,317 298,599 Lease Revenue Bonds, Series 2010A 2,885,000 - 95,000 2,790,000 100,000 Bond Anticipation Note 2013 (Tulare) 5,433,888 86,112 5,520,000 - - Capital leases-Solar Project 903,070 2,078,004 - 2,981,074 176,395 Early retirement incentive 280,722 - 280,722 - - Total $ 108,533,516 $ 8,877,878 $ 8,379,902 $ 109,031,492 $ 2,964,994

Accumulated vacation/banked leave - net $ 1,886,547 $ 5,804 $ - $ 1,892,351 $ -

Discounts $ 36,214 $ - $ 1,811 $ 34,403 $ -

Payments on the Certificates of Participation are paid by the General Fund and the Student Center Trust. Payments on the General Obligation Bonds are made by the Bond Interest and Redemption Fund with local property tax revenues. Payments on the Lease Revenue Bonds, Bond Anticipation Note and capital leases are made by the General Fund. The accumulated vacation, banked leave, and the early retirement incentive will be paid by the fund for which the employee worked.

40 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Certificates of Participation

In January 2005, the College of the Sequoias Community College District, through the California School Board Association Financing Corporation, issued certificates of participation in the amount of $3,945,000 with interest rates ranging from 2.00 percent to 4.35 percent. The proceeds of the sale were used to finance the renovation of the bookstore and student center facility.

The certificates mature through 2034 as follows:

Year Ending June 30, Principal Interest Total 2017 $ 105,000 $ 132,505 $ 237,505 2018 110,000 128,305 238,305 2019 115,000 123,905 238,905 2020 120,000 119,075 239,075 2021 125,000 113,975 238,975 2022-2026 715,000 477,852 1,192,852 2027-2031 910,000 290,463 1,200,463 2032-2034 660,000 63,650 723,650 Total $ 2,860,000 $ 1,449,730 $ 4,309,730

Bonded Debt

The District's bonded debt is summarized as follows:

Bonds Bonds Year Maturity Interest Original Outstanding Accreted/ Outstanding Issued Campus Date Rate % Issue July 1, 2015 Issued Redeemed June 30, 2016 General obligation bonds: 2006 Hanford 2/1/2033 3.58-4.25 $14,999,982 $ 15,504,774 $ 182,615 $ 245,000 $ 15,442,389 2008 Hanford 2/1/2034 1.85-6.99 6,995,778 7,864,225 287,695 335,000 7,816,920 2008 Tulare 8/1/2033 2.4-6.36 19,998,219 20,609,654 617,772 665,000 20,562,426 2011 Tulare 8/1/2040 3.28-7.62 10,004,927 12,512,955 706,483 220,000 12,999,438 2013 Tulare 8/1/2042 2.09-5.20 3,401,460 3,679,386 156,936 - 3,836,322 2016 Tulare 8/1/2040 3.00-5.00 3,710,000 - 3,710,000 - 3,710,000 2008 Visalia 8/1/2033 2.4-6.22 17,997,404 19,180,178 561,678 630,000 19,111,856 2010 Visalia 8/1/2039 5.1-6.610 4,999,652 5,272,438 73,510 - 5,345,948 2011 Visalia 8/1/2036 4.12-7.74 4,995,439 5,612,194 181,608 - 5,793,802 Lease revenue bonds: 2010 Hanford 6/1/2035 3.00-5.28 3,310,000 2,885,000 - 95,000 2,790,000 Bond Anticipation Note: 2013 Tulare 7/1/2016 1.57 5,276,844 5,433,888 86,112 5,520,000 - Total $ 98,554,692 $6,564,409 $7,710,000 $ 97,409,101

41 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

2006 Hanford Series A, Current Interest General Obligation Bonds:

Year Ending June 30, Principal Interest Total 2017 $ - $ 677,000 $ 677,000 2018 - 677,000 677,000 2019 - 677,000 677,000 2020 - 677,000 677,000 2021 - 677,000 677,000 2022-2026 3,060,000 3,181,250 6,241,250 2027-2031 6,630,000 2,030,000 8,660,000 2032-2033 3,850,000 243,625 4,093,625 Total $ 13,540,000 $ 8,839,875 $ 22,379,875

2006 Hanford Series A, Capital Appreciation General Obligation Bonds:

Year Ending Value at Accreted Interest to June 30, Maturity Obligation Accrete 2017 $ 290,000 $ 290,000 $ - 2018 335,000 302,840 32,160 2019 390,000 318,708 71,292 2020 440,000 325,072 114,928 2021 495,000 330,660 164,340 2022 555,000 335,109 219,891 Total $ 2,505,000 $ 1,902,389 $ 602,611

2008 Hanford Series B, Current Interest General Obligation Bonds:

Year Ending June 30, Principal Interest Total 2017 $ 355,000 $ 161,738 $ 516,738 2018 385,000 149,313 534,313 2019 405,000 135,838 540,838 2020 435,000 120,650 555,650 2021 465,000 103,250 568,250 2022-2024 1,600,000 163,750 1,763,750 Total $ 3,645,000 $ 834,539 $ 4,479,539

42 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

2008 Hanford Series B, Capital Appreciation General Obligation Bonds:

Year Ending Value at Accreted Interest to June 30, Maturity Obligation Accrete 2030 $ 4,560,000 $ 1,906,992 $ 2,653,008 2033 2,205,000 739,116 1,465,884 2034 5,855,000 1,525,812 4,329,188 Total $ 12,620,000 $ 4,171,920 $ 8,448,080

2008 Tulare Series A, Current Interest General Obligation Bonds:

Year Ending June 30, Principal Interest Total 2017 $ - $ 764,313 $ 764,313 2018 - 764,313 764,313 2019 - 764,313 764,313 2020 - 764,313 764,313 2021 - 764,313 764,313 2022-2026 - 3,821,565 3,821,565 2027-2031 8,955,000 2,977,102 11,932,102 2032-2034 5,250,000 458,700 5,708,700 Total $ 14,205,000 $ 11,078,932 $ 25,283,932

2008 Tulare Series A, Capital Appreciation General Obligation Bonds:

Year Ending Value at Accreted Interest to June 30, Maturity Obligation Accrete 2017 $ 725,000 $ 725,000 $ - 2018 785,000 708,698 76,302 2019 845,000 688,675 156,325 2020 910,000 669,578 240,422 2021 975,000 647,790 327,210 2022-2026 5,985,000 2,917,685 3,067,315 Total $ 10,225,000 $ 6,357,426 $ 3,867,574

43 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

2008 Tulare Series B, Current Interest General Obligation Bonds:

Year Ending June 30, Principal Interest Total 2017 $ - $ 178,625 $ 178,625 2018 - 178,625 178,625 2019 - 178,625 178,625 2020 295,000 178,625 473,625 2021 340,000 166,825 506,825 2022-2026 770,000 687,413 1,457,413 2027-2031 1,685,000 456,631 2,141,631 2032 560,000 30,100 590,100 Total $ 3,650,000 $ 2,055,469 $ 5,705,469

2008 Tulare Series B, Capital Appreciation General Obligation Bonds:

Year Ending Value at Accreted Interest to June 30, Maturity Obligation Accrete 2017 $ 230,000 $ 230,000 $ - 2018 250,000 222,500 27,500 2019 270,000 213,840 56,160 2034-2037 11,880,000 2,485,155 9,394,845 Total $ 12,630,000 $ 3,151,495 $ 9,478,505

2008 Tulare Series B, Capital Appreciation Term General Obligation Bonds:

Mandatory sinking fund requirements: Value at Mandatory Year Ending Redemption Accreted Interest to June 30, Date Obligation Accrete 2038-2041 $ 12,737,439 $ 2,345,743 $ 10,391,696

Final Maturity:

Year Ending Value at June 30, Maturity 2041 $ 14,285,000

44 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

2008 Tulare Series B, Convertible Capital Appreciation Term General Obligation Bonds:

Capital Appreciation Term Bonds:

Year Ending Value at Accreted Interest to June 30, Maturity Obligation Accrete 2022 $ 5,500,000 $ 3,852,200 $ 1,647,800

Upon maturity of capital appreciation term bonds, current interest bond payment requirements:

Year Ending June 30, Principal Interest Total 2022-2026 $ - $ 1,595,000 $ 1,595,000 2027-2031 - 1,993,750 1,993,750 2032-2036 - 1,993,750 1,993,750 2037-2041 5,500,000 1,789,300 7,289,300 Total $ 5,500,000 $ 7,371,800 $ 12,871,800

2008 Tulare Series C, Current Interest General Obligation Bonds:

Year Ending June 30, Principal Interest Total 2017 $ - $ 63,075 $ 63,075 2018 - 63,075 63,075 2019 65,000 63,075 128,075 2020 65,000 61,775 126,775 2021 60,000 60,475 120,475 2022-2026 255,000 274,375 529,375 2027-2031 130,000 227,463 357,463 2032-2036 - 212,500 212,500 2037-2041 - 212,500 212,500 2042-2043 850,000 85,000 935,000 Total $ 1,425,000 $ 1,323,313 $ 2,748,313

45 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

2008 Tulare Series C, Convertible Capital Appreciation Term General Obligation Bonds:

Capital Appreciation Term Bonds:

Year Ending Value at Accreted Interest to June 30, Maturity Obligation Accrete 2039 $ 2,130,000 $ 736,554 $ 1,393,446 2042 4,920,000 1,674,768 3,245,232 Total $ 7,050,000 $ 2,411,322 $ 4,638,678

Upon maturity of capital appreciation term bonds, current interest bonds with mandatory early redemptions:

Year Ending June 30, Principal Interest Total 2032-2036 $ 865,000 $ 1,387,036 $ 2,252,036 2037-2041 2,420,000 1,826,648 4,246,648 2042-2043 3,765,000 468,883 4,233,883 Total $ 7,050,000 $ 3,682,567 $ 10,732,567

2008 Tulare Series D, Current Interest General Obligation Bonds:

Year Ending June 30, Principal Interest Total 2017 $ - $ 22,400 $ 22,400 2018 105,000 134,400 239,400 2019 50,000 129,150 179,150 2020 60,000 126,650 186,650 2021 65,000 123,650 188,650 2022-2026 440,000 562,750 1,002,750 2027-2031 725,000 1,331,500 2,056,500 2032-2036 920,000 288,900 1,208,900 2037-2041 1,345,000 130,438 1,475,438 Total $ 3,710,000 $ 2,849,838 $ 6,559,838

46 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

2008 Visalia Series A, Current Interest General Obligation Bonds:

Year Ending June 30, Principal Interest Total 2017 $ - $ 738,300 $ 738,300 2018 - 738,300 738,300 2019 - 738,300 738,300 2020 - 738,300 738,300 2021 - 738,300 738,300 2022-2026 1,145,000 3,691,500 4,836,500 2027-2031 7,965,000 2,639,926 10,604,926 2032-2034 4,640,000 403,150 5,043,150 Total $ 13,750,000 $ 10,426,076 $ 24,176,076

2008 Visalia Series A, Capital Appreciation General Obligation Bonds:

Year Ending Value at Accreted Interest to June 30, Maturity Obligation Accrete 2017 $ 685,000 $ 685,000 $ - 2018 745,000 666,924 78,076 2019 805,000 645,127 159,873 2020 865,000 620,551 244,449 2021 930,000 597,246 332,754 2022-2025 4,415,000 2,147,008 2,267,992 Total $ 8,445,000 $ 5,361,856 $ 3,083,144

2008 Visalia Series B, Current Interest General Obligation Bonds:

Year Ending June 30, Principal Interest Total 2017 $ - $ 232,500 $ 232,500 2018 - 232,500 232,500 2019 - 232,500 232,500 2020 - 232,500 232,500 2021 - 232,500 232,500 2022-2026 - 1,162,500 1,162,500 2027-2031 - 1,162,500 1,162,500 2032-2036 - 1,162,500 1,162,500 2037-2040 4,650,000 822,500 5,472,500 Total $ 4,650,000 $ 5,472,500 $ 10,122,500

47 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

2008 Visalia Series B, Capital Appreciation General Obligation Bonds:

Year Ending Value at Accreted Interest to June 30, Maturity Obligation Accrete 2034-2038 $ 5,820,000 $ 695,948 $ 5,124,052

2008 Visalia Series C, Current Interest General Obligation Bonds:

Year Ending June 30, Principal Interest Total 2017 $ - $ 206,525 $ 206,525 2018 - 206,525 206,525 2019 - 206,525 206,525 2020 - 206,525 206,525 2021 - 206,525 206,525 2022-2026 - 1,032,625 1,032,625 2027-2031 - 1,032,625 1,032,625 2032-2036 1,790,000 1,032,625 2,822,625 2037 1,965,000 108,075 2,073,075 Total $ 3,755,000 $ 4,238,575 $ 7,993,575

2008 Visalia Series C, Capital Appreciation General Obligation Bonds:

Year Ending Value at Accreted Interest to June 30, Maturity Obligation Accrete 2018 $ 20,000 $ 17,800 $ 2,200 2019 35,000 27,720 7,280 2020 55,000 38,775 16,225 2021 70,000 43,918 26,082 2022-2026 750,000 315,392 434,608 2027-2031 1,805,000 443,501 1,361,499 2035 4,520,000 1,151,696 3,368,304 Total $ 7,255,000 $ 2,038,802 $ 5,216,198

48 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Lease Revenue Bonds

2010 Series A, Lease Revenue Bonds:

Year Ending June 30, Principal Interest Total 2017 $ 100,000 $ 131,256 $ 231,256 2018 100,000 128,006 228,006 2019 105,000 124,506 229,506 2020 110,000 120,569 230,569 2021 115,000 116,169 231,169 2022-2026 645,000 503,031 1,148,031 2027-2031 810,000 333,155 1,143,155 2032-2035 805,000 105,319 910,319 Total $ 2,790,000 $ 1,562,011 $ 4,352,011

Premiums on Issuances

The following premiums on the District' bonds will be amortized over the life of the obligation:

Unamortized Issuance Campus Premium 2006, Series B Hanford $ 276,213 2008, Series A Tulare 1,943,835 2008, Series B Tulare 572,648 2008, Series D Tulare 235,465 2008, Series A Visalia 1,813,876 2008, Series B Visalia 575,583 2008, Series C Visalia 363,697 Total unamortized premium $ 5,781,317

49 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Capital Lease - Solar Project

The District's liability on the capital lease agreement is summarized below:

Year Ending Lease June 30, Payment 2017 $ 176,395 2018 176,395 2019 176,395 2020 176,395 2021 176,395 2022-2026 881,975 2027-2031 881,975 2032-2033 335,149 Total $ 2,981,074

Balance, July 1, 2015 $ 903,070 Additions 2,078,004 Balance, June 30, 2016 $ 2,981,074

Early Retirement Incentive

The District previously adopted an early retirement incentive program, pursuant to Education Code Sections 22714 and 44929, whereby the service credit to eligible employees is increased by two years. Eligible employees must have five or more years of service under the State Teachers' Retirement System and retire during a period of not more than 120 days or less than 60 days from the date of the formal action taken by the District. The District entered into agreements with 13 employees and the final obligation of $280,722 was paid in full during the fiscal year ending June 30, 2016.

Accumulated Unpaid Employee Compensation

The long-term portion of accumulated unpaid employee compensation and banked leave for the District at June 30, 2016, amounted to $1,892,351.

50 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

NOTE 12 - POSTEMPLOYMENT HEALTH CARE PLAN AND OTHER POSTEMPLOYMENT BENEFITS (OPEB) ASSET

The District provides postemployment health care benefits for retired employees in accordance with negotiated contracts with the various bargaining units of the District.

Plan Description

The Retiree Health Benefits Funding Program Plan (the Plan) is a single-employer defined benefit healthcare plan administered by College of the Sequoias Community College District. The Plan provides medical and dental insurance benefits to eligible retirees and their spouses. Membership of the Plan consists of approximately 91 retirees and beneficiaries currently receiving benefits and approximately 377 active plan members. Separate financial statements are not prepared for the Trust.

Contribution Information

The contribution requirements of plan members and the District are established and may be amended by the District and the District's bargaining units. The required contribution is based on projected pay-as-you-go financing requirements with an additional amount to prefund benefits as determined annually through agreements between the District and the bargaining units. For fiscal year 2015-2016, the District contributed $914,975 to the Plan, all of which was used for current premiums (approximately 76 percent of total premiums). The District made an additional contribution of $1,000,000 to the OPEB Trust. Plan members receiving benefits contributed $296,719, or approximately 24 percent of total premiums. The annual required contribution (ARC) for the District as of July 1, 2014, was $921,001. The net amount of the Trust's investment returns/losses and the cumulative balance of the ARC has left a Net Plan Asset totaling $6,723,521 as of June 30, 2016.

Annual OPEB Cost and Net OPEB Asset

The District's annual OPEB cost (expense) is calculated based on the annual required contribution of the employer, an amount actuarially determined in accordance with the payments of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial accrued liabilities (UAAL) (or funding costs) over a period not to exceed 30 years. The table presented in the Required Supplementary Information section of this report shows the components of the District's annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the District's net OPEB asset to the Plan.

Annual required contribution $ (921,001) Interest adjustment (491,706) Adjustment to annual required contribution 396,497 Annual OPEB cost (expense) (1,016,210) Contributions made 1,914,975 Change in net OPEB asset 898,765 Net OPEB asset, beginning of year 5,824,756 Net OPEB asset, end of year $ 6,723,521

51 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Trend Information

Trend information for the annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB asset for the past three years is as follows:

Year Ended Annual OPEB Percentage Net OPEB June 30, Cost Contribution Contributed Asset 2016 $ 1,016,210 $ 1,914,975 188% $ 6,723,521 2015 774,011 1,226,406 158% 5,824,756 2014 663,347 1,000,488 151% 5,372,361

Funding Status and Funding Progress

A schedule of funding progress as of the most recent actuarial valuation is as follows:

Actuarial valuation of an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the Plan and the annual required contribution of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Schedule of Other Postemployment Benefits Funding Progress, presented as required supplementary information, follows the notes to the financial statements and presents multi-year trend information about whether the actuarial value of Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive Plan (the Plan as understood by the employer and the Plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and the Plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short- term volatility in actuarial accrued liabilities and the actuarial values of assets, consistent with the long-term perspective of the calculations.

52 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

In the November 1, 2014, actuarial valuation, the entry age normal method was used. The actuarial assumptions included a 7.0 percent investment rate of return (net of administrative expenses), based on the Plan being funded in an irrevocable employee benefit trust fund invested in a long-term fixed income portfolio. The healthcare cost trend rate was 4.0 percent. The UAAL is being amortized at a level dollar method. The remaining amortization period at July 1, 2016, was 29 years. The actuarial value of assets was $6,056,322 in this actuarial valuation. At June 30, 2016, the Trust held assets in the amount of $6,850,236, which consisted of deposits with U.S. Bank in the Retiree Health Benefits Funding Program JPA.

NOTE 13 - RISK MANAGEMENT

Health and Welfare

Employee health coverage benefits are covered by the California Valued Trust joint powers agency through contribution made by the District. The District provides health insurance benefits to District employees, their families, and retired employees of the District.

Property and Liability

During fiscal year ending June 30, 2016, the District contracted with the Statewide Association of Community Colleges joint powers agency for property and liability insurance coverage. Settled claims have not exceeded this commercial coverage in any of the past three years. There has not been a significant reduction in coverage from the prior year.

Workers' Compensation

During fiscal year ending June 30, 2016, the District participated in the Tulare County Schools Insurance Group, an insurance purchasing pool. The intent of the JPA is to achieve the benefit of a reduced premium for the District by virtue of its grouping and representation with other participants in the JPA. The workers' compensation experience of the participating districts is calculated as one experience, and a common premium rate is applied to all districts in the JPA. Each participant pays its workers' compensation premium based on its individual rate. Total savings are then calculated and each participant's individual performance is compared to the overall saving. A participant will then either receive money from or be required to contribute to the "equity- pooling fund." This "equity pooling" arrangement insures that each participant shares equally in the overall performance of the JPA. Participation in the JPA is limited to K-12 and community college districts that can meet the JPA's selection criteria.

NOTE 14 - EMPLOYEE RETIREMENT SYSTEMS

Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the State of California. Academic employees are members of CalSTRS and classified employees are members of CalPERS.

53 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

For the fiscal year ended June 30, 2016, the District reported the net pension liabilities, deferred outflows of resources, deferred inflows of resources, and pension expense for each of the above plans as follows:

Collective Collective Collective Net Deferred Outflows Deferred Inflows Collective Pension Plan Pension Liability of Resources of Resources Pension Expense CalSTRS $ 28,201,515 $ 4,642,351 $ 4,992,151 $ 2,191,153 CalPERS 15,021,316 4,722,683 3,904,385 1,521,302 Total $ 43,222,831 $ 9,365,034 $ 8,896,536 $ 3,712,455

The details of each plan are as follows:

California State Teachers' Retirement System (CalSTRS)

Plan Description

The District contributes to the State Teachers Retirement Plan (STRP) administered by the California State Teachers' Retirement System (CalSTRS). STRP is a cost-sharing multiple-employer public employee retirement system defined benefit pension plan. Benefit provisions are established by State statutes, as legislatively amended, within the State Teachers' Retirement Law.

A full description of the pension plan regarding benefit provisions, assumptions (for funding, but not accounting purposes), and membership information is listed in the June 30, 2014, annual actuarial valuation report, Defined Benefit Program Actuarial Valuation. This report and CalSTRS audited financial information are publically available reports that can be found on the CalSTRS website under Publications at: http://www.calstrs.com/member-publications.

Benefits Provided

The STRP provides retirement, disability and survivor benefits to beneficiaries. Benefits are based on members' final compensation, age, and years of service credit. Members hired on or before December 31, 2012, with five years of credited service are eligible for the normal retirement benefit at age 60. Members hired on or after January 1, 2013, with five years of credited service are eligible for the normal retirement benefit at age 62. The normal retirement benefit is equal to 2.0 percent of final compensation for each year of credited service.

The STRP is comprised of four programs: Defined Benefit Program, Defined Benefit Supplement Program, Cash Balance Benefit Program, and Replacement Benefits Program. The STRP holds assets for the exclusive purpose of providing benefits to members and beneficiaries of these programs. CalSTRS also uses plan assets to defray reasonable expenses of administering the STRP. Although CalSTRS is the administrator of the STRP, the state is the sponsor of the STRP and obligor of the trust. In addition, the state is both an employer and nonemployer contributing entity to the STRP.

The District contributes exclusively to the STRP Defined Benefit Program, thus disclosures are not included for the other plans.

54 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

The STRP provisions and benefits in effect at June 30, 2016, are summarized as follows:

STRP Defined Benefit Program On or before On or after Hire date December 31, 2012 January 1, 2013 Benefit formula 2% at 60 2% at 62 Benefit vesting schedule 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life Retirement age 60 62 Monthly benefits as a percentage of eligible compensation 2.0% - 2.4% 2.0% - 2.4% Required employee contribution rate 9.20% 8.56% Required employer contribution rate 10.73% 10.73% Required state contribution rate 7.12589% 7.12589%

Contributions

Required member, District and State of California contributions rates are set by the California Legislature and Governor and detailed in Teachers' Retirement Law. The contributions rates are expressed as a level percentage of payroll using the entry age normal actuarial method. In accordance with AB 1469, employer contributions into the CalSTRS will be increasing to a total of 19.1 percent of applicable member earnings phased over a seven-year period. The contribution rates for each plan for the year ended June 30, 2016, are presented above and the District's total contributions were $2,200,906.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2016, the District reported a liability for its proportionate share of the net pension liability that reflected a reduction for State pension support provided to the District. The amount recognized by the District as its proportionate share of the net pension liability, the related state support and the total portion of the net pension liability that was associated with the District were as follows:

Total net pension liability, including State share:

District's proportionate share of net pension liability $ 28,201,515 State's proportionate share of the net pension liability associated with the District 14,915,493 Total $ 43,117,008

The net pension liability was measured as of June 30, 2015. The District's proportion of the net pension liability was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of all participating school districts and the State, actuarially determined. The District's proportionate share for the measurement period June 30, 2015 and June 30, 2014, respectively was 0.0419 percent and 0.0415 percent, resulting in a net increase in the proportionate share of 0.0004 percent.

55 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

For the year ended June 30, 2016, the District recognized pension expense of $2,191,153. In addition, the District recognized pension expense and revenue of $1,155,372 for support provided by the State. At June 30, 2016, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources Pension contributions subsequent to measurement date $ 2,200,906 $ - Net change in proportionate share of net pension liability 219,430 - Difference between projected and actual earnings on pension plan investments 2,222,015 4,520,897 Differences between expected and actual experience in the measurement of the total pension liability - 471,254 Total $ 4,642,351 $ 4,992,151

The deferred outflows of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the subsequent fiscal year. The deferred outflows/(inflows) of resources related to the difference between projected and actual earnings on pension plan investments will be amortized over a closed five-year period and will be recognized in pension expense as follows:

Deferred Year Ended Outflows/(Inflows) June 30, of Resources 2017 $ (951,462) 2018 (951,462) 2019 (951,462) 2020 555,504 Total $ (2,298,882)

56 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

The deferred outflows/(inflows) of resources related to the net change in proportionate share of net pension liability and the differences between expected and actual experience in the measurement of the total pension liability will be amortized over the Expected Average Remaining Service Life (EARSL) of all members that are provided benefits (active, inactive, and retirees) as of the beginning of the measurement period. The EARSL for the 2014-2015 measurement period is seven years and will be recognized in pension expense as follows:

Deferred Year Ended Outflows/(Inflows) June 30, of Resources 2017 $ (41,971) 2018 (41,971) 2019 (41,971) 2020 (41,971) 2021 (41,971) Thereafter (41,969) Total $ (251,824)

Actuarial Methods and Assumptions

Total pension liability for STRP was determined by applying update procedures to a financial reporting actuarial valuation as of June 30, 2014, and rolling forward the total pension liability to June 30, 2015. The financial reporting actuarial valuation as of June 30, 2014, used the following methods and assumptions, applied to all prior periods included in the measurement:

Valuation date June 30, 2014 Measurement date June 30, 2015 Experience study July 1, 2006 through June 30, 2010 Actuarial cost method Entry age normal Discount rate 7.60% Investment rate of return 7.60% Consumer price inflation 3.00% Wage growth 3.75%

CalSTRS uses custom mortality tables to best fit the patterns of mortality among its members. These custom tables are based on RP2000 series tables adjusted to fit CalSTRS experience.

57 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. The best estimate ranges were developed using capital market assumptions from CalSTRS general investment consultant. Based on the model for CalSTRS consulting actuary's investment practice, a best estimate range was determined by assuming the portfolio is re-balanced annually and that the annual returns are lognormally distributed and independent from year to year to develop expected percentiles for the long-term distribution of annualized returns. The assumed asset allocation is based on Teachers' Retirement Board of the California State Teachers' Retirement System (board) policy for target asset allocation in effect on February 2, 2012, the date the current experience study was approved by the board. Best estimates of ten-year geometric real rates of return and the assumed asset allocation for each major asset class used as input to develop the actuarial investment rate of return are summarized in the following table:

Long-Term Assumed Asset Expected Real Asset Class Allocation Rate of Return Global equity 47% 4.50% Private equity 12% 6.20% Real estate 15% 4.35% Inflation sensitive 5% 3.20% Fixed income 20% 0.20% Cash/liquidity 1% 0.00%

Discount Rate

The discount rate used to measure the total pension liability was 7.60 percent. The projection of cash flows used to determine the discount rate assumed the contributions from plan members and employers will be made at statutory contribution rates. Projected inflows from investment earnings were calculated using the long-term assumed investment rate of return (7.60 percent) and assuming that contributions, benefit payments and administrative expense occurred midyear. Based on these assumptions, the STRP's fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the long-term assumed investment rate of return was applied to all periods of projected benefit payments to determine total pension liability.

The following presents the District's proportionate share of the net pension liability calculated using the current discount rate as well as what the net pension liability would be if it were calculated using a discount rate that is one percent lower or higher than the current rate:

Net Pension Discount Rate Liability 1% decrease (6.60%) $ 42,582,093 Current discount rate (7.60%) $ 28,201,515 1% increase (8.60%) $ 16,250,095

58 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

California Public Employees Retirement System (CalPERS)

Plan Description

Qualified employees are eligible to participate in the School Employer Pool (SEP) under the California Public Employees' Retirement System (CalPERS), a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalPERS. Benefit provisions are established by State statutes, as legislatively amended, within the Public Employees' Retirement Law.

A full description of the pension plan regarding benefit provisions, assumptions (for funding, but not accounting purposes), and membership information is listed in the June 30, 2014 annual actuarial valuation report, Schools Pool Actuarial Valuation, 2014. This report and CalPERS audited financial information are publically available reports that can be found on the CalPERS website under Forms and Publications at: https://www.calpers.ca.gov/page/forms-publications.

Benefits Provided

CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of service credit, a benefit factor and the member's final compensation. Members hired on or before December 31, 2012, with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. Members hired on or after January 1, 2013, with five years of total service are eligible to retire at age 52 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after five years of service. The Basic Death Benefit is paid to any member's beneficiary if the member dies while actively employed. An employee's eligible survivor may receive the 1957 Survivor Benefit if the member dies while actively employed, is at least age 50 (or 52 for members hired on or after January 1, 2013), and has at least five years of credited service. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law.

The CalPERS provisions and benefits in effect at June 30, 2016, are summarized as follows:

School Employer Pool (CalPERS) On or before On or after Hire date December 31, 2012 January 1, 2013 Benefit formula 2% at 55 2% at 62 Benefit vesting schedule 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life Retirement age 55 62 Monthly benefits as a percentage of eligible compensation 1.1% - 2.5% 1.0% - 2.5% Required employee contribution rate 7.000% 6.000% Required employer contribution rate 11.847% 11.847%

59 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Contributions

Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Total plan contributions are calculated through the CalPERS annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The District is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. The contributions rates are expressed as percentage of annual payroll. The contribution rates for each plan for the year ended June 30, 2016, are presented above and the total District contributions were $1,149,921.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

As of June 30, 2016, the District reported net pension liabilities for its proportionate share of the CalPERS net pension liability totaling $15,021,316. The net pension liability was measured as of June 30, 2015. The District's proportion of the net pension liability was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of all participating school districts, actuarially determined. The District's proportionate share for the measurement period June 30, 2015 and June 30, 2014, respectively was 0.1019 percent and 0.0997 percent, resulting in a net increase in the proportionate share of 0.0022 percent.

For the year ended June 30, 2016, the District recognized pension expense of $1,521,302. At June 30, 2016, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources Pension contributions subsequent to measurement date $ 1,149,921 $ - Net change in proportionate share of net pension liability 247,180 - Difference between projected and actual earnings on pension plan investments 2,467,092 2,981,434 Differences between expected and actual experience in the measurement of the total pension liability 858,490 - Changes of assumptions - 922,951 Total $ 4,722,683 $ 3,904,385

60 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Deferred Year Ended Outflows/(Inflows) June 30, of Resources 2017 $ (377,038) 2018 (377,038) 2019 (377,038) 2020 616,772 Total $ (514,342)

The deferred outflows/(inflows) of resources related to the net change in proportionate share of net pension liability, changes of assumptions, and the differences between expected and actual experience in the measurement of the total pension liability will be amortized over the Expected Average Remaining Service Life (EARSL) of all members that are provided benefits (active, inactive, and retirees) as of the beginning of the measurement period. The EARSL for the 2014-2015 measurement period is 3.9 years and will be recognized in pension expense as follows:

Deferred Year Ended Outflows/(Inflows) June 30, of Resources 2017 $ 63,007 2018 63,007 2019 56,705 Total $ 182,719

61 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Actuarial Methods and Assumptions

Total pension liability for the SEP was determined by applying update procedures to a financial reporting actuarial valuation as of June 30, 2014, and rolling forward the total pension liability to June 30, 2015. The financial reporting actuarial valuation as of June 30, 2014, used the following methods and assumptions, applied to all prior periods included in the measurement:

Valuation date June 30, 2014 Measurement date June 30, 2015 Experience study July 1, 1997 through June 30, 2011 Actuarial cost method Entry age normal Discount rate 7.65% Investment rate of return 7.65% Consumer price inflation 2.75% Wage growth Varies by entry age and service

Mortality assumptions are based on mortality rates resulting from the most recent CalPERS experience study adopted by the CalPERS Board. For purposes of the post-retirement mortality rates, those revised rates include five years of projected ongoing mortality improvement using Scale AA published by the Society of Actuaries.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds' asset classes, expected compound returns were calculated over the short-term (first ten years) and the long- term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Long-Term Assumed Asset Expected Real Asset Class Allocation Rate of Return Global equity 51% 5.25% Global fixed income 19% 0.99% Private equity 10% 6.83% Real estate 10% 4.50% Inflation sensitive 6% 0.45% Infrastructure and Forestland 2% 4.50% Liquidity 2% -0.55%

62 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

Discount Rate

The discount rate used to measure the total pension liability was 7.65 percent. The projection of cash flows used to determine the discount rate assumed the contributions from plan members and employers will be made at statutory contribution rates. Based on these assumptions, the School Employer Pool fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the long-term assumed investment rate of return was applied to all periods of projected benefit payments to determine total pension liability.

Net Pension Discount rate Liability 1% decrease (6.65%) $ 24,448,443 Current discount rate (7.65%) $ 15,021,316 1% increase (8.65%) $ 7,182,030

On Behalf Payments

The State of California makes contributions to CalSTRS and CalPERS on behalf of the District. These payments consist of State General Fund contributions to CalSTRS for the fiscal years ended June 30, 2016, 2015, and 2014, which amounted to $1,346,487, $1,067,991, and $864,330, respectively, (7.12589 percent) of salaries subject to CalSTRS. Contributions are no longer appropriated in the annual Budget Act for the legislatively mandated benefits to CalPERS. Therefore, there is no on behalf contribution rate for CalPERS. No contributions were made for CalPERS for the years ended June 30, 2016, 2015, and 2014. Under accounting principles generally accepted in the United States of America, these amounts are to be reported as revenues and expenditures. These amounts have been reflected in the basic financial statements as a component of nonoperating revenue and employee benefit expense.

APPLE

Active plan members are required to contribute 5.2 percent of their salary and the College of the Sequoias Community College District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the APPLE Board of Administration. The required employer contribution rate for fiscal year 2015-2016 was 2.3 percent of annual payroll. The contribution requirements of the plan members are established by State statute.

63 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

NOTE 15 - PARTICIPATION IN PUBLIC ENTITY RISK POOLS AND JOINT POWERS AUTHORITIES

The District is a member of the Tulare County Schools Insurance Group, Statewide Association of Community Colleges, and the California Valued Trust public entity risk pools. The District pays an annual premium to each entity for its health, property and liability and workers' compensation coverage. The relationships between the District and the pools are such that they are not component units of the District for financial reporting purposes.

These entities have budgeting and financial reporting requirements independent of member units and their financial statements are not presented in these financial statements; however, transactions between the entities and the District are included in these statements. Audited financial statements are available from the respective entities.

The District has appointed no Board members to the Governing Board of the Tulare County Schools Insurance Group or California Valued Trust. The Vice President of Administrative Services has been appointed to the Governing Board of the Statewide Association of Community Colleges.

The District's share of year-end assets, liabilities, or fund equity has not been calculated.

During the year ended June 30, 2016, the District made payments of $634,610, $571,999, and $7,361,224, to the Tulare County Schools Insurance Group, Statewide Association of Community Colleges, and the California Valued Trust, respectively.

NOTE 16 - COMMITMENTS AND CONTINGENCIES

Grants

The District receives financial assistance from Federal and State agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the District. However, in the opinion of management, any such disallowed claims will not have a material adverse effect on the overall financial position of the District at June 30, 2016.

Litigation

The District is not currently a party to any legal proceedings.

Operating Leases

The District has entered into various operating leases for equipment with lease terms in excess of one year. None of these agreements contain purchase options. All agreements contain a termination clause providing for cancellation after a specified number of days written notice to lessors, but it is unlikely that the District will cancel any of the agreements prior to the expiration date.

64 REQUIRED SUPPLEMENTARY INFORMATION

65 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS (OPEB) FUNDING PROGRESS FOR THE YEAR ENDED JUNE 30, 2016

Actuarial Accrued UAAL as a Liability Unfunded Percentage Actuarial (AAL) - AAL Funded of Covered Valuation Value of Entry Age (UAAL) Ratio Covered Payroll Date Assets (a) Normal (b) (b - a) (a / b) Payroll (c) ([b - a] / c) November 1, 2014 $ 6,056,322 $ 11,342,602 $ 5,286,280 53.4% $ 36,000,000 14.7% December 31, 2012 $ 5,357,242 $ 13,236,467 $ 7,879,225 40.5% $ 36,000,000 21.9% September 1, 2010 $ 4,569,691 $ 11,194,114 $ 6,624,423 40.8% $ 36,201,781 18.3%

See accompanying notes to required supplementary information.

66 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY FOR THE YEAR ENDED JUNE 30, 2016

2016 2015 CalSTRS

District's proportion of the net pension liability (asset) 0.0419% 0.0415%

District's proportionate share of the net pension liability (asset) $ 28,201,515 $ 24,273,400 State's proportionate share of the net pension liability (asset) associated with the District 14,915,493 14,657,327 Total $ 43,117,008 $ 38,930,727

District's covered - employee payroll $ 19,211,633 $ 18,895,418

District's proportionate share of the net pension liability (asset) as a percentage of its covered - employee payroll 146.79% 128.46%

Plan fiduciary net position as a percentage of the total pension liability 74% 77%

CalPERS

District's proportion of the net pension liability (asset) 0.1019% 0.0997%

District's proportionate share of the net pension liability (asset) $ 15,021,316 $ 11,321,616

District's covered - employee payroll $ 9,687,325 $ 9,094,691

District's proportionate share of the net pension liability (asset) as a percentage of its covered - employee payroll 155.06% 124.49%

Plan fiduciary net position as a percentage of the total pension liability 79% 83%

Note : In the future, as data become available, ten years of information will be presented.

See accompanying notes to required supplementary information.

67 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

SCHEDULE OF THE DISTRICT CONTRIBUTIONS FOR THE YEAR ENDED JUNE 30, 2016

2016 2015 CalSTRS

Contractually required contribution $ 2,200,906 $ 1,705,993 Contributions in relation to the contractually required contribution 2,200,906 1,705,993 Contribution deficiency (excess) $ - $ -

District's covered - employee payroll $ 20,511,705 $ 19,211,633

Contributions as a percentage of covered - employee payroll 10.73% 8.88%

CalPERS

Contractually required contribution $ 1,149,921 $ 1,140,295 Contributions in relation to the contractually required contribution 1,149,921 1,140,295 Contribution deficiency (excess) $ - $ -

District's covered - employee payroll $ 9,706,431 $ 9,687,325

Contributions as a percentage of covered - employee payroll 11.847% 11.771%

Note : In the future, as data become available, ten years of information will be presented.

See accompanying notes to required supplementary information.

68 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2016

NOTE 1 - PURPOSE OF SCHEDULES

Schedule of Other Postemployment Benefits (OPEB) Funding Progress

This schedule is intended to show trends about the funding progress of the District's actuarially determined liability for postemployment benefits other than pensions.

Schedule of the District's Proportionate Share of the Net Pension Liability

This schedule presents information on the District's proportionate share of the net pension liability (NPL), the plans' fiduciary net position and, when applicable, the State's proportionate share of the NPL associated with the District. In the future, as data becomes available, ten years of information will be presented.

Schedule of District Contributions

This schedule presents information on the District's required contribution, the amounts actually contributed, and any excess or deficiency related to the required contribution. In the future, as data becomes available, ten years of information will be presented.

NOTE 2 - CHANGES IN BENEFIT TERMS AND ASSUMPTIONS

Changes in Benefit Terms

There were no changes in benefit terms since the previous valuation for either CalSTRS and CalPERS.

Changes in Assumptions

The CalSTRS plan rate of investment return assumption was not changed from the previous valuation. The CalPERS plan rate of investment return assumption was changed from 7.50 percent to 7.65 percent since the previous valuation.

69 SUPPLEMENTARY INFORMATION

70 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

DISTRICT ORGANIZATION JUNE 30, 2016

The College of the Sequoias Community College District is located in Visalia, California. The College was established in 1926 and serves communities in Tulare and Kings Counties. There have been no changes to the District boundaries during the year. The District's main campus, Hanford Education Center and Tulare College Center are accredited by the Accrediting Commission for Community and Junior Colleges as part of the Sequoias Community College District.

BOARD OF TRUSTEES

MEMBER OFFICE TERM EXPIRES Mr. Kenneth Nunes President 2018 Mrs. Lori Cardoza Vice President 2020 Mr. Earl Mann Clerk 2020 Mr. Greg Sherman Trustee 2018 Mr. John A. Zumwalt Trustee 2018 Mr. Andres Flores Student Trustee 2016

ADMINISTRATION

Mr. Stan Carrizosa Superintendent/President Mrs. Jennifer Vega-LaSerna, Ph.D. Vice President, Academic Services Mr. Brent Calvin Vice President, Student Services Mrs. Christine Statton Vice President, Administrative Services

71 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2016

Federal Grantor/Pass-Through CFDA Program Grantor/Program or Cluster Title Number Expenditures U.S. DEPARTMENT OF EDUCATION Student Financial Aid Cluster: Supplemental Educational Opportunity Grants 84.007 $ 276,542 Supplemental Educational Opportunity Grants Administration 84.007 13,314 Federal Work Study 84.033 281,740 TANF 50% Federal Calworks 84.033 43,434 Federal Work Study Administration 84.033 13,314 Pell Grant 84.063 19,366,433 Pell Grant Administration 84.063 25,127 Total Student Financial Assistance Cluster 20,019,904 Title V - Higher Education Institutional Aid, Hispanic Serving Institute Sequoias 84.031S 177,051 Title V - Higher Education Institutional Aid, Hispanic Serving Institute PASEO 84.031S 385,056 TRIO Upward Bound Math/Science 84.047M 267,677 TRIO/SSS 84.047M 235,633 Math, Science, Engineering Improvement Program 84.120A 194,465 Vocational and Applied Technology Education Act (VTEA) Title II, Part C Student Support 84.048 381,695 Wildlife and Fish N/A 326 Subtotal U.S. Department of Education 1,641,903

U.S. DEPARTMENT OF VETERAN AFFAIRS Veteran's Education 64.112 6,989 Subtotal U.S. Department of Veteran Affairs 6,989 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Foster Care Education 93.658 121,073 Medi-Cal Administrative Activities 93.778 15,107 Subtotal U.S. Department of Health and Human Services 136,180

U.S. DEPARTMENT OF LABOR Workforce Investment Act 17.258 161,653 Trade Adjustment Assistance Community College and Career Training 17.282 96,842 Subtotal U. S. Department of Labor 258,495

See accompanying note to supplementary information.

72 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS, Continued FOR THE YEAR ENDED JUNE 30, 2016

Federal Grantor/Pass-Through CFDA Program Grantor/Program or Cluster Title Number Expenditures U.S. DEPARTMENT OF AGRICULTURE Schools and Roads Programs: Flood Control 10.665 $ 510 Forest Reserve 10.665 21,957 Total Schools and Roads Programs 22,467 Subtotal U.S. Department of Agriculture 22,467 Total Federal Expenditures $ 22,085,938

See accompanying note to supplementary information.

73 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

SCHEDULE OF EXPENDITURES OF STATE AWARDS FOR THE YEAR ENDED JUNE 30, 2016

Program Entitlements Current Prior Total Program Year Year Entitlement STATE PROJECTS BFAP Administration Allowance $ 461,205 $ - $ 461,205 Block Grant Instructional Materials 577,364 - 577,364 Basic Skills 122,455 116,693 239,148 Cal Works 379,824 - 379,824 Cal Grant 1,979,970 273 1,980,243 CARE 213,239 - 213,239 Career Technical Education - Transitions 45,119 - 45,119 Disabled Students Programs and Services 1,225,829 - 1,225,829 Department of Rehabilitation Workability III 113,372 - 113,372 Economic Development DSN/CTE Health Service 300,000 99,167 399,167 Economic Development DSN/CTE Advanced Manufacturing 300,000 172,830 472,830 Extended Opportunity Program and Services 1,165,763 - 1,165,763 Lottery Prop 20 481,067 462,438 943,505 Independent Living 22,500 - 22,500 Matriculation SSSP 2,400,000 299,884 2,699,884 Student Equity SEP 1,492,952 563,092 2,056,044 Part Time Faculty Office Hours 3,973 - 3,973 Part Time Faculty Parity 234,336 - 234,336 Staff Diversity 5,106 - 5,106 TANF 50% State 43,434 - 43,434 Scheduled Maintenance and Repair 577,364 - 577,364 YESS Transition Aged Foster Youth 3,750 - 3,750 AB86 Adult Ed Block Grant 252,284 - 252,284 Total State Programs $12,400,906 $ 1,714,377 $ 14,115,283

See accompanying note to supplementary information.

74 Program Revenues Cash Prior Year Accounts Unearned Total Program Received Carryforward Receivable Revenue Revenue Expenditures

$ 461,205 $ - $ - $ - $ 461,205 $ 461,205 577,364 - - - 577,364 577,364 122,455 116,693 - 107,843 131,305 131,305 376,927 - 2,897 - 379,824 379,824 1,979,970 273 - - 1,980,243 1,980,243 213,239 - - - 213,239 213,239 9,712 - 35,203 - 44,915 44,915 1,225,829 - - - 1,225,829 1,225,829 54,053 - 51,948 - 106,001 106,001 - 2,774 300,144 - 302,918 302,918

- 76,277 303,747 - 380,024 380,024 1,165,763 - - - 1,165,763 1,165,763 271,686 462,438 209,382 728,030 215,476 215,476 9,706 - 10,690 - 20,396 20,396 2,400,000 299,884 - 868,330 1,831,554 1,831,554 1,385,652 563,092 107,300 898,190 1,157,854 1,157,854 3,973 - - - 3,973 3,973 234,336 - - - 234,336 234,336 5,106 - - - 5,106 5,106 43,434 - - - 43,434 43,434 577,364 - - 82,354 495,010 495,010 2,177 - - - 2,177 2,177 252,284 - - 66,843 185,441 185,441 $ 11,372,235 $ 1,521,431 $ 1,021,311 $ 2,751,590 $ 11,163,387 $ 11,163,387

74 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

SCHEDULE OF WORKLOAD MEASURES FOR STATE GENERAL APPORTIONMENT FOR THE YEAR ENDED JUNE 30, 2016

Reported Audit Audited Data Adjustments Data CATEGORIES A. Summer Intersession (Summer 2015 only) 1. Noncredit** 11.74 - 11.74 2. Credit 173.77 - 173.77 B. Summer Intersession (Summer 2016 - Prior to July 1, 2016) 1. Noncredit** 3.72 - 3.72 2. Credit 450.85 - 450.85 C. Primary Terms (Exclusive of Summer Intersession) 1. Census Procedure Courses (a) Weekly Census Contact Hours 7,100.29 - 7,100.29 (b) Daily Census Contact Hours 215.02 - 215.02 2. Actual Hours of Attendance Procedure Courses (a) Noncredit** 497.79 - 497.79 (b) Credit 360.41 - 360.41 3. Alternative Attendance Accounting Procedure Courses (a) Weekly Census Contact Hours 521.70 - 521.70 (b) Daily Census Contact Hours 197.15 - 197.15 D. Total FTES 9,532.44 - 9,532.44

SUPPLEMENTAL INFORMATION (Subset of Above Information) E. In-Service Training Courses (FTES) - - - F. Basic Skills Courses and Immigrant Education 1. Noncredit** 441.04 - 441.04 2. Credit 362.03 - 362.03

** Including Career Development and College Preparation (CDCP) FTES.

See accompanying note to supplementary information.

75 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

RECONCILIATION OF EDUCATION CODE SECTION 84362 (50 PERCENT LAW) CALCULATION FOR THE YEAR ENDED JUNE 30, 2016

ECS 84362 A ECS 84362 B Instructional Salary Cost Total CEE AC 0100 - 5900 and AC 6110 AC 0100 - 6799 Object/TOP Audit Audit Codes Reported Data Adjustments Revised Data Reported Data Adjustments Revised Data Academic Salaries Instructional Salaries Contract or Regular 1100 $ 11,914,369 $ - $ 11,914,369 $ 11,914,369 $ - $ 11,914,369 Other 1300 6,189,212 - 6,189,212 6,189,212 - 6,189,212 Total Instructional Salaries 18,103,581 - 18,103,581 18,103,581 - 18,103,581 Noninstructional Salaries Contract or Regular 1200 - - - 3,728,736 - 3,728,736 Other 1400 - - - 230,641 - 230,641 Total Noninstructional Salaries - - - 3,959,377 - 3,959,377 Total Academic Salaries 18,103,581 - 18,103,581 22,062,958 - 22,062,958 Classified Salaries Noninstructional Salaries Regular Status 2100 - - - 7,706,114 - 7,706,114 Other 2300 - - - 458,919 - 458,919 Total Noninstructional Salaries - - - 8,165,033 - 8,165,033 Instructional Aides Regular Status 2200 436,864 - 436,864 436,864 - 436,864 Other 2400 269,213 - 269,213 269,213 - 269,213 Total Instructional Aides 706,077 - 706,077 706,077 - 706,077 Total Classified Salaries 706,077 - 706,077 8,871,110 - 8,871,110 Employee Benefits 3000 5,236,676 - 5,236,676 10,903,546 - 10,903,546 Supplies and Material 4000 - - - 874,358 - 874,358 Other Operating Expenses 5000 11,161 - 11,161 4,989,204 - 4,989,204 Equipment Replacement 6420 ------Total Expenditures Prior to Exclusions 24,057,495 - 24,057,495 47,701,176 - 47,701,176

See accompanying note to supplementary information.

76 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

RECONCILIATION OF EDUCATION CODE SECTION 84362 (50 PERCENT LAW) CALCULATION, Continued FOR THE YEAR ENDED JUNE 30, 2016

ECS 84362 A ECS 84362 B Instructional Salary Cost Total CEE AC 0100 - 5900 and AC 6110 AC 0100 - 6799 Object/TOP Audit Audit Codes Reported Data Adjustments Revised Data Reported Data Adjustments Revised Data Exclusions Activities to Exclude Instructional Staff - Retirees' Benefits and Retirement Incentives 5900 $ 1,058,197 $ - $ 1,058,197 $ 1,058,197 $ - $ 1,058,197 Student Health Services Above Amount Collected 6441 ------Student Transportation 6491 - - - 35,345 - 35,345 Noninstructional Staff - Retirees' Benefits and Retirement Incentives 6740 - - - 663,949 - 663,949 Objects to Exclude Rents and Leases 5060 - - - 773,090 - 773,090 Lottery Expenditures - Academic Salaries 1000 ------Classified Salaries 2000 ------Employee Benefits 3000 ------Supplies and Materials 4000 ------Software 4100 ------Books, Magazines, and Periodicals 4200 ------Instructional Supplies and Materials 4300 ------Noninstructional Supplies and Materials 4400 - - - 78,846 - 78,846 Total Supplies and Materials - - - 78,846 - 78,846

See accompanying note to supplementary information.

77 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

RECONCILIATION OF EDUCATION CODE SECTION 84362 (50 PERCENT LAW) CALCULATION, Continued FOR THE YEAR ENDED JUNE 30, 2016

ECS 84362 A ECS 84362 B Instructional Salary Cost Total CEE AC 0100 - 5900 and AC 6110 AC 0100 - 6799 Object/TOP Audit Audit Codes Reported Data Adjustments Revised Data Reported Data Adjustments Revised Data Other Operating Expenses and Services 5000 $ - $ - $ - $ 1,307,958 $ - $ 1,307,958 Capital Outlay 6000 Library Books 6300 ------Equipment 6400 ------Equipment - Additional 6410 ------Equipment - Replacement 6420 ------Total Equipment ------Total Capital Outlay Other Outgo 7000 ------Total Exclusions 1,058,197 - 1,058,197 3,917,385 - 3,917,385 Total for ECS 84362, 50 Percent Law $ 22,999,298 $ - $ 22,999,298 $ 43,783,791 $ - $ 43,783,791 Percent of CEE (Instructional Salary Cost/Total CEE) 52.53% 52.53% 100.00% 100.00% 50% of Current Expense of Education $ 21,891,896 $ 21,891,896

See accompanying note to supplementary information.

78 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

PROPOSITION 30 EDUCATION PROTECTION ACT (EPA) EXPENDITURE REPORT FOR THE YEAR ENDED JUNE 30, 2016

Activity Classification Object Code Unrestricted EPA Proceeds: 8630 $ 8,137,022 Operating Salaries Expenses and Benefits (Obj 4000- Capital Outlay Activity Classification Activity Code (Obj 1000-3000) 5000) (Obj 6000) Total Instructional Activities 1000-5900 $ 8,137,022 - - $ 8,137,022 Total Expenditures for EPA $ 8,137,022 - - $ 8,137,022 Revenues Less Expenditures $ -

See accompanying note to supplementary information.

79 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT (CCFS-311) WITH FUND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2016

Summarized below are the fund balance reconciliations between the Unaudited Actual Financial Report (CCFS-311) and the audited financial statements.

Internal Service FUND BALANCE Balance, June 30, 2016, (CCFS-311) $ 1,316,812 Post closing adjustments Increase in: Accounts payable - prior years (857,848) Decrease in: Accounts payable - current year 14,784 Balance, June 30, 2016, Audited $ 473,748

See accompanying note to supplementary information.

80 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

RECONCILIATION OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2016

Amounts Reported in the Statement of Net Position are Different Because: Total Fund Balance - All District Funds $ 40,473,977 Capital assets used in governmental activities are not financial resources and, therefore, are not reported as assets in governmental funds. The cost of capital assets is $ 242,751,382 Accumulated depreciation is (46,256,602) 196,494,780 The Student Financial Aid Agency Fund is considered a major operating fund of the District and is therefore included in the Business Type financial statements. 94,696 Bond discounts associated with the District's debt issuances are reflected as expenditures in the governmental statements but are reflected as prepaid expenses and are amortized over the life of the debt. 34,403 In accordance with GASB 45, the amount funded by the District in excess of cumulative required contributions is reflected on the entity- wide statements as a Net Plan Asset - OPEB Trust but is not reported in the Fund financial statements. 6,723,521 Expenditures relating to contributions made to pension plans were recognized on the modified accrual basis, but are not recognized on the accrual basis. 3,350,827 Deferred outflows (inflows) of resources related to pensions are not recognized on the modified accrual basis, but are recognized on the accrual basis as an adjustment to pension expense. (2,813,224) The net change in proportionate share of net pension liability as of the measurement date is not recognized on the modified accrual basis, but are recognized on the the accrual basis as an adjustment to pension expense. 466,610 The differences between expected and actual experience in the measurement of the total pension liability are not recognized on the modified accrual basis, but are recognized on the accrual basis over the expected average remaining service life of members receiving pension benefits. 387,236 The changes of assumptions are not recognized as an expenditure under the modified accrual basis, but are recognized on the accrual basis over the expected average remaining service life of members receiving pension benefits. (922,951) Net pension liability is not due and payable in the current period and is not reported as a liability in the funds. (43,222,831)

See accompanying note to supplementary information.

81 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

RECONCILIATION OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION, Continued JUNE 30, 2016

Long-term obligations, including bonds payable, are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Long-term liabilities at year end consist of: Bonds payable $ 103,190,418 Certificates of participation 2,860,000 Capital leases payable 2,981,074 $ (109,031,492) Total Net Position $ 92,035,552

See accompanying note to supplementary information.

82 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTE TO SUPPLEMENTARY INFORMATION JUNE 30, 2016

NOTE 1 - PURPOSE OF SCHEDULES

District Organization

This schedule provides information about the District's governing board members and administration members.

Schedule of Expenditures of Federal Awards

The accompanying Schedule of Expenditures of Federal Awards includes the Federal grant activity of the District and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (Part 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. The District has not elected to use the ten percent de minimis cost rate as covered in Section 200.414 Indirect (F&A) costs of the Uniform Guidance.

The following schedule provides reconciliation between revenues reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances (Governmental Funds and Fiduciary Funds Statements), and the related expenditures reported on the Schedule of Expenditures of Federal Awards. The reconciling amount consists of the unspent portion of the Medi-Cal Administrative Assistance program.

CFDA Number Amount Total Federal Revenues From the Statement of Revenues, Expenditures, and Changes in Fund Balances: $ 22,108,818 Reconciling items: Medi-Cal Administrative Assistance 93.778 (22,880) Total Schedule of Expenditures of Federal Awards $ 22,085,938

Schedule of Expenditures of State Awards

The accompanying Schedule of Expenditures of State Awards includes the State grant activity of the District and is presented on the modified accrual basis of accounting. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. The information in this schedule is presented to comply with reporting requirements of the California State Chancellor's Office.

Schedule of Workload Measures for State General Apportionment

FTES is a measurement of the number of pupils attending classes of the District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of State funds, including restricted categorical funding, are made to community college districts. This schedule provides information regarding the annual attendance measurements of students throughout the District.

83 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTE TO SUPPLEMENTARY INFORMATION JUNE 30, 2016

Reconciliation of Education Code Section 84362 (50 Percent Law) Calculation

ECS 84362 requires the District to expend a minimum of 50 percent of the unrestricted General Fund monies on salaries of classroom instructors. This is reported annually to the State Chancellor's Office. This schedule provides a reconciliation of the amount reported to the State Chancellor's Office and the impact of any audit adjustments and/or corrections noted during the audit.

Proposition 30 Education Protection Act (EPA) Expenditure Report

This schedule provides the District's summary of receipts and uses of the monies received through the EPA.

Reconciliation of Annual Financial and Budget Report (CCFS-311) With Audited Financial Statements

This schedule provides the information necessary to reconcile the fund balance of all funds reported on the Form CCFS-311 to the District's internal fund financial statements.

Reconciliation of Governmental Funds to the Statement of Net Position

This schedule provides a reconciliation of the adjustments necessary to bring the District's internal fund financial statements, prepared on a modified accrual basis, to the entity-wide full accrual basis financial statements required under GASB Statements No. 34 and No. 35 business-type activities reporting model.

84 INDEPENDENT AUDITOR'S REPORTS

85 Vavrinek, Trine, Day & Co., LLP VALUE THE DIFFERENCE Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of Trustees College of the Sequoias Community College District Visalia, California

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the business-type activities, the aggregate discretely presented component units, and the aggregate remaining fund information of College of the Sequoias Community College District (the District) as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the District's basic financial statements, and have issued our report thereon dated December 27, 2016.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of the District's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

6051 N. Fresno Street, Suite 101 Fresno, CA 93710 Tel: 559.248.0871 www.vtdcpa.com Fax: 559.248.0875 Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of This Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Fresno, California December 27, 2016

87 Vavrinek, Trine, Day & Co., LLP VALUE THE DIFFERENCE Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

Board of Trustees College of the Sequoias Community College District Visalia, California

Report on Compliance for Each Major Federal Program

We have audited College of the Sequoias Community College District's (the District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the District's major Federal programs for the year ended June 30, 2016. The District's major Federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs.

Management's Responsibility

Management is responsible for compliance with the Federal statutes, regulations, and the terms and conditions of its Federal awards applicable to its Federal programs.

Auditor's Responsibility

Our responsibility is to express an opinion on compliance for each of the District's major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major Federal program. However, our audit does not provide a legal determination of the District's compliance.

6051 N. Fresno Street, Suite 101 Fresno, CA 93710 Tel: 559.248.0871 www.vtdcpa.com Fax: 559.248.0875 Opinion on Each Major Federal Program

In our opinion, the District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2016.

Report on Internal Control Over Compliance

Management of the District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the District's internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major Federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the District's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Fresno, California December 27, 2016

89 Vavrinek, Trine, Day & Co., LLP VALUE THE DIFFERENCE Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT ON STATE COMPLIANCE

Board of Trustees College of the Sequoias Community College District Visalia, California

Report on State Compliance

We have audited College of the Sequoias Community College District's (the District) compliance with the types of compliance requirements as identified in the California Community Colleges Chancellor's Office District Audit Manual issued in November 2015 that could have a direct and material effect on each of the District's programs as noted below for the year ended June 30, 2016.

Management's Responsibility

Management is responsible for compliance with the requirements of State laws and regulations, and the terms and conditions identified in the California Community Colleges Chancellor's Office District Audit Manual issued in November 2015.

Auditor's Responsibility

Our responsibility is to express an opinion on compliance of each of the District's State programs based on our audit of the types of compliance requirements referred to above. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the standards and procedures identified in the California Community Colleges Chancellor's Office District Audit Manual issued in November 2015. These standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above could have a material effect on the applicable programs noted below. An audit includes examining, on a test basis, evidence about the District's compliance with those requirements and performing such procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the District's compliance with those requirements.

Unmodified Opinion for Each of the Programs

In our opinion, the District complied, in all material respects, with the compliance requirements referred to above that are applicable to the programs noted below that were audited for the year ended June 30, 2016, except as described in the State Awards Findings and Questioned Costs section of the accompanying Schedule of Findings and Questioned Costs.

6051 N. Fresno Street, Suite 101 Fresno, CA 93710 Tel: 559.248.0871 www.vtdcpa.com Fax: 559.248.0875 In connection with the audit referred to above, we selected and tested transactions and records to determine the District's compliance with State laws and regulations applicable to the following:

Section 421 Salaries of Classroom Instructors (50 Percent Law) Section 423 Apportionment for Instructional Service Agreements/Contracts Section 424 State General Apportionment Funding System Section 425 Residency Determination for Credit Courses Section 426 Students Actively Enrolled Section 427 Concurrent Enrollment of K-12 Students in Community College Credit Courses Section 429 Student Success and Support Program (SSSP) Section 430 Schedule Maintenance Program Section 431 Gann Limit Calculation Section 435 Open Enrollment Section 438 Student Fees – Health Fees and Use of Health Fee Funds Section 439 Proposition 39 Clean Energy Section 440 Intersession Extension Programs Section 475 Disabled Student Programs and Services (DSPS) Section 479 To Be Arranged (TBA) Hours Section 490 Proposition 1D State Bond Funded Projects Section 491 Proposition 30 Education Protection Account Funds

The District did not participate in the Intersession Extension Program therefore the related compliance procedures were not required.

Additionally, no State bond funds were received or expended by the District during the year therefore the related compliance procedures were not required.

Fresno, California December 27, 2016

91 SCHEDULE OF FINDINGS AND QUESTIONED COSTS

92 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

SUMMARY OF AUDITOR'S RESULTS FOR THE YEAR ENDED JUNE 30, 2016

FINANCIAL STATEMENTS Type of auditor's report issued: Unmodified Internal control over financial reporting: Material weaknesses identified? No Significant deficiencies identified? None reported Noncompliance material to financial statements noted? No

FEDERAL AWARDS Internal control over major Federal programs: Material weaknesses identified? No Significant deficiencies identified? None reported Type of auditor's report issued on compliance for major Federal programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with Section 200.516(a) of the Uniform Guidance? No Identification of major Federal programs:

CFDA Number Name of Federal Program or Cluster 84.063 Student Financial Assistance Cluster

Dollar threshold used to distinguish between Type A and Type B programs: $ 750,000 Auditee qualified as low-risk auditee? No

STATE AWARDS Type of auditor's report issued on compliance for State programs: Unmodified

93 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

FINANCIAL STATEMENT FINDINGS AND RECOMMENDATIONS FOR THE YEAR ENDED JUNE 30, 2016

None reported.

94 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2016

None reported.

95 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

STATE AWARDS FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2016

None reported.

96 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2016

None reported.

97 UNAUDITED SUPPLEMENTARY INFORMATION

98 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

GOVERNMENTAL FUNDS BALANCE SHEETS JUNE 30, 2016

Other Bond Special Interest and General Revenue Redemption ASSETS Cash and cash equivalents $ 17,259,755 $ 416,263 $ 17,100,353 Accounts receivable 1,979,665 73,989 34,143 Student loans receivable 3,035,787 - - Due from other funds 54,635 1,387 - Prepaid expenses 405,370 - - Total Assets $ 22,735,212 $ 491,639 $ 17,134,496

LIABILITIES AND FUND BALANCE Liabilities Accounts payable $ 3,943,286 $ 36,910 $ - Due to other funds 82,170 16,122 - Unearned revenue 6,083,166 - - Total Liabilities 10,108,622 53,032 -

Fund Balances Restricted - 438,607 17,134,496 Unassigned 12,626,590 - - Total Fund Balance 12,626,590 438,607 17,134,496 Total Liabilities and Fund Balance $ 22,735,212 $ 491,639 $ 17,134,496

See accompanying note to unaudited supplementary information.

99 Total Governmental Capital Revenue Fund Outlay Bond Farm (Memorandum Projects Construction Construction Only)

$ 5,258,314 $ 693,891 $ 2,596,675 $ 43,325,251 - - - 2,087,797 - - - 3,035,787 77,489 - 604,142 737,653 - - - 405,370 $ 5,335,803 $ 693,891 $ 3,200,817 $ 49,591,858

$ 111,230 $ 1,995 $ 20,116 $ 4,113,537 - - 1,284 99,576 807,672 - - 6,890,838 918,902 1,995 21,400 11,103,951

4,416,901 691,896 3,179,417 25,861,317 - - - 12,626,590 4,416,901 691,896 3,179,417 38,487,907

$ 5,335,803 $ 693,891 $ 3,200,817 $ 49,591,858

99 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2016

Other Bond Special Interest and General Revenue Redemption REVENUES Federal revenues $ 2,465,843 $ - $ - State revenues 53,495,614 - - Local revenues 18,288,780 348,534 6,173,095 Total Revenues 74,250,237 348,534 6,173,095 EXPENDITURES Current Expenditures Academic salaries 24,180,613 137,040 - Classified salaries 13,082,683 140,187 - Employee benefits 14,422,103 74,126 - Books and supplies 1,536,472 9,486 - Services and operating expenditures 6,697,649 55,868 - Student financial aid 787,161 12 - Capital outlay 2,885,856 - - Debt service - principal 167,516 - 2,095,000 Debt service - interest and other issuance costs 233,092 - 3,027,100 Total Expenditures 63,993,145 416,719 5,122,100 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 10,257,092 (68,185) 1,050,995 OTHER FINANCING SOURCES (USES) Operating transfers in 131,353 - - Operating transfers out (4,811,642) - - Other sources - - 238,000 Total Other Financing Sources (Uses) (4,680,289) - 238,000 EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES 5,576,803 (68,185) 1,288,995 FUND BALANCE, BEGINNING OF YEAR 7,049,787 506,792 15,845,501 FUND BALANCE, END OF YEAR $ 12,626,590 $ 438,607 $ 17,134,496

See accompanying note to unaudited supplementary information.

100 Total Governmental Capital Revenue Fund Outlay Bond Farm (Memorandum Projects Construction Construction Only)

$ - $ - $ - $ 2,465,843 1,463,592 - - 54,959,206 287,764 43,338 30,022 25,171,533 1,751,356 43,338 30,022 82,596,582

- - - 24,317,653 - - - 13,222,870 - - - 14,496,229 - 1,374 - 1,547,332 617,710 1,210,063 - 8,581,290 - - - 787,173 3,392,966 582,511 60,874 6,922,207 - 5,276,844 - 7,539,360 - 243,156 - 3,503,348 4,010,676 7,313,948 60,874 80,917,462

(2,259,320) (7,270,610) (30,852) 1,679,120

3,200,000 - 23,317 3,354,670 - - (248,850) (5,060,492) 2,078,004 3,707,465 - 6,023,469 5,278,004 3,707,465 (225,533) 4,317,647

3,018,684 (3,563,145) (256,385) 5,996,767 1,398,217 4,255,041 3,435,802 32,491,140 $ 4,416,901 $ 691,896 $ 3,179,417 $ 38,487,907

100 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

PROPRIETARY FUNDS BALANCE SHEETS JUNE 30, 2016

Internal Enterprise Funds Service Bookstore Cafeteria Farm Total Fund ASSETS Cash and cash equivalents $ - $ 25,335 $ - $ 25,335 $ 1,316,812 Investments - 5,533 1,147,722 1,153,255 - Accounts receivable - 8,989 23,078 32,067 - Due from other funds - - 4,578 4,578 - Inventories - - 60,429 60,429 - Note receivable - - 76,710 76,710 - Furniture and equipment (net) - 305,147 542,652 847,799 - Total Assets $ - $ 345,004 $1,855,169 $ 2,200,173 $ 1,316,812

LIABILITIES AND FUND EQUITY Liabilities Accounts payable $ - $ 2,115 $ 42,484 $ 44,599 $ 843,064 Due to other funds 29,808 8,543 604,142 642,493 - Unearned revenue - - 759 759 - Total Liabilities 29,808 10,658 647,385 687,851 843,064

Fund Equity Retained earnings (29,808) 334,346 1,207,784 1,512,322 473,748 Total Liabilities and Fund Equity $ - $ 345,004 $1,855,169 $ 2,200,173 $ 1,316,812

See accompanying note to unaudited supplementary information.

101 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS FOR THE YEAR ENDED JUNE 30, 2016

Enterprise Funds Bookstore Cafeteria Farm Total OPERATING REVENUES Sales revenues $ - $ 705,887 $ - $ 705,887

OPERATING EXPENSES Classified salaries 135 360,612 83,033 443,780 Employee benefits - - 25,690 25,690 Books and supplies - 280,218 90,256 370,474 Services and other operating expenditures - 50,542 547,973 598,515 Capital outlay - 18,744 - 18,744 Total Operating Expenses 135 710,116 746,952 1,457,203

Operating Income/(Loss) (135) (4,229) (746,952) (751,316)

NONOPERATING REVENUES (EXPENSES) Interest income - 70 4,763 4,833 Miscellaneous revenues 30,419 156,792 449,070 636,281 Operating transfers in - - 248,850 248,850 Operating transfers out - - (23,317) (23,317) Other uses - - - - Total Nonoperating Revenues (Expenses) 30,419 156,862 679,366 866,647

NET INCOME (LOSS) 30,284 152,633 (67,586) 115,331 RETAINED EARNINGS, BEGINNING OF YEAR (60,092) 181,713 1,275,370 1,396,991 RETAINED EARNINGS, END OF YEAR $ (29,808) $ 334,346 $ 1,207,784 $ 1,512,322

See accompanying note to unaudited supplementary information.

102 Internal Service Fund

$ -

(14,784) - - - - (14,784)

14,784

16,012 - 1,000,000 (22,188) (1,000,000)

(6,176)

8,608 465,140 $ 473,748

102 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

FIDUCIARY FUNDS BALANCE SHEETS JUNE 30, 2016

Agency Funds Scholarship Total Associated and Agency Students Loan Funds ASSETS Cash and cash equivalents $ 570,687 $ 72,964 $ 643,651 Accounts receivable 82 19,866 19,948 Student loans receivable, net - - - Total Assets $ 570,769 $ 92,830 $ 663,599

LIABILITIES AND NET POSITION Liabilities Accounts payable $ 15,180 $ 120 $ 15,300 Due to other funds 162 - 162 Unearned revenue 129,040 - 129,040 Total Liabilities 144,382 120 144,502

Net Position Restricted 426,387 92,710 519,097 Total Net Position 426,387 92,710 519,097 Total Liabilities and Net Position $ 570,769 $ 92,830 $ 663,599

See accompanying note to unaudited supplementary information.

103 Total Trust Fiduciary Funds Funds

$ 1,234,970 $ 1,878,621 16,504 36,452 220,176 220,176 $ 1,471,650 $ 2,135,249

$ 1,470 $ 16,770 - 162 192,223 321,263 193,693 338,195

1,277,957 1,797,054 1,277,957 1,797,054

$ 1,471,650 $ 2,135,249

103 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

FIDUCIARY FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN NET POSITION FOR THE YEAR ENDED JUNE 30, 2016

Agency Funds Scholarship Total Associated and Agency Students Loan Funds REVENUES Local revenues $ 348,607 $ 311 $ 348,918 Total Revenues 348,607 311 348,918 EXPENDITURES Current Expenditures Classified salaries 63,785 - 63,785 Employee benefits 37,235 - 37,235 Books and supplies 163,333 - 163,333 Services and operating expenditures 1,047 - 1,047 Debt service - principal - - - Debt service - interest and other - - - Total Expenditures 265,400 - 265,400 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 83,207 311 83,518 OTHER FINANCING SOURCES (USES) Operating transfers in 67,655 - 67,655 Operating transfers out (67,693) - (67,693) Other uses - - - Total Other Financing Sources (Uses) (38) - (38) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES 83,169 311 83,480 NET POSITION, BEGINNING OF YEAR 343,218 92,399 435,617 NET POSITION, END OF YEAR $ 426,387 $ 92,710 $ 519,097

See accompanying note to unaudited supplementary information.

104 Total Trust Fiduciary Funds Funds

$ 409,941 $ 758,859 409,941 758,859

535 64,320 64 37,299 45,054 208,387 240,437 241,484 27,484 27,484 37,516 37,516 351,090 616,490

58,851 142,369

38 67,693 (15,000) (82,693) (500) (500) (15,462) (15,500)

43,389 126,869 1,234,568 1,670,185 $ 1,277,957 $ 1,797,054

104 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

NOTE TO UNAUDITED SUPPLEMENTARY INFORMATION JUNE 30, 2016

NOTE 1 - PURPOSE OF SCHEDULES

Fund Financial Statements

The accompanying financial statements report the governmental, proprietary, and fiduciary fund activities of the District and are presented on the modified accrual basis of accounting. Therefore, some amounts presented in these financial statements may differ from amounts presented in, or used in, the preparation of the basic financial statements. The information is not a required component of the financial statements in accordance with GASB Statements No. 34 and No. 35 and is presented at the request of the District management.

105

APPENDIX C

FORM OF CONTINUING DISCLOSURE CERTIFICATE FOR THE BONDS

This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the College of the Sequoias Community College District (the “District”) in connection with the issuance of (i) $______College of the Sequoias Community College District 2017 General Obligation Refunding Bonds, Series C (Hanford Campus Improvement District No. 1) (Tulare and Kings Counties, California) (the “Series C Bonds”), (ii) $______College of the Sequoias Community College District 2017 General Obligation Refunding Bonds, Series D (Visalia Area Improvement District No. 2) (Tulare County, California) (The “Series D Bonds”), and (iii) $______College of the Sequoias Community College District 2017 General Obligation Refunding Bonds, Series E (Tulare Area Improvement District No. 3) (Tulare and Kings Counties, California) (the “Series E Bonds” and, collectively with the Series C Bonds and the Series D Bonds, the “Bonds”). The Bonds are being issued pursuant to resolutions of the Board of Trustees of the District dated May 15, 2017 (such resolutions referred to, together, herein, as the “Resolution”). The District covenants and agrees as follows:

SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the District for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5).

SECTION 2. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes.

“Dissemination Agent” shall mean initially Dale Scott & Company, Inc., or any successor Dissemination Agent designated in writing by the District (which may be the District) and which has filed with the District a written acceptance of such designation.

“Holders” shall mean registered owners of the Bonds.

“Improvement District No. 1” shall means the College of the Sequoias Community College District Hanford Campus Improvement District No. 1.

“Improvement District No. 2” shall mean the College of the Sequoias Community College District Visalia Area Improvement District No. 2.

“Improvement District No. 3” shall mean the College of the Sequoias Community College District Tulare Area Improvement District No. 3.

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“Improvement Districts” means, collectively, Improvement District No. 1, Improvement District No. 2 and Improvement District No. 3.

“Listed Events” shall mean any of the events listed in Section 5(a) or Section 5(b) of this Disclosure Certificate.

“Participating Underwriter” shall mean any of the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.

“Repository” shall mean the Municipal Securities Rulemaking Board, which can be found at http://emma.msrb.org/, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.

“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

“State” shall mean the State of California.

SECTION 3. Provision of Annual Reports.

(a) The District shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the District’s fiscal year (presently ending June 30), commencing with the report for the 2016-17 Fiscal Year, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the District may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the District’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c).

(b) Not later than thirty (30) days (nor more than sixty (60) days) prior to said date the Dissemination Agent shall give notice to the District that the Annual Report shall be required to be filed in accordance with the terms of this Disclosure Certificate. Not later than fifteen (15) Business Days prior to said date, the District shall provide the Annual Report in a format suitable for reporting to the Repository to the Dissemination Agent (if other than the District). If the District is unable to provide to the Repository an Annual Report by the date required in subsection (a), the District shall send a notice to the Repository in substantially the form attached as Exhibit A with a copy to the Dissemination Agent. The Dissemination Agent shall not be required to file a Notice to Repository of Failure to File an Annual Report.

(c) The Dissemination Agent shall file a report with the District stating it has filed the Annual Report in accordance with its obligations hereunder, stating the date it was provided and listing all the Repository to which it was provided.

SECTION 4. Content and Form of Annual Reports. (a) The District’s Annual Report shall contain or include by reference the following:

1. The audited financial statements of the District for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If

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the District’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

2. Material financial information and operating data with respect to the District and the Improvement Districts of the type included in the Official Statement in the following categories (to the extent not included in the District’s audited financial statements):

(a) adopted budget for current fiscal year; and

(b) full time equivalent student enrollment of the District for the last completed fiscal year.

(i) assessed valuation of property within Improvement District No. 1 for the current fiscal year

(ii) secured tax charges and delinquencies within Improvement District No. 1 for the last completed fiscal year.

(d) So long as the Series D Bonds remain Outstanding:

(i) assessed valuation of property within Improvement District No. 2 for the current fiscal year

(ii) secured tax charges and delinquencies within Improvement District No. 2 for the last completed fiscal year.

(e) So long as the Series E Bonds remain Outstanding:

(i) assessed valuation of property within Improvement District No. 3 for the current fiscal year

(ii) secured tax charges and delinquencies within Improvement District No. 3 for the last completed fiscal year.

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which have been submitted to the Repository or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The District shall clearly identify each such other document so included by reference.

(b) The Annual Report shall be filed in an electronic format accompanied by identifying information prescribed by the Municipal Securities Rulemaking Board.

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SECTION 5. Reporting of Significant Events.

(a) Pursuant to the provisions of this Section 5(a), the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not in excess of 10 business days after the occurrence of the event:

1. principal and interest payment delinquencies.

2. tender offers.

3. defeasances.

4. rating changes.

5. adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, or Notices of Proposed Issue (IRS Form 5701-TEB).

6. unscheduled draws on the debt service reserves reflecting financial difficulties.

7. unscheduled draws on credit enhancement reflecting financial difficulties.

8. substitution of the credit or liquidity providers or their failure to perform.

9. bankruptcy, insolvency, receivership or similar event (within the meaning of the Rule) of the District. For the purposes of the event identified in this Section 5(a)(9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the District in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District.

(b) Pursuant to the provisions of this Section 5(b), the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:

1. non-payment related defaults.

2. modifications to rights of Bondholders.

3. optional, contingent or unscheduled bond calls.

4. unless described under Section 5(a)(5) above, material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds.

5. release, substitution or sale of property securing repayment of the Bonds.

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6. the consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms.

7. Appointment of a successor or additional trustee or paying agent with respect to the Bonds or the change of name of such a trustee or paying agent.

(c) Whenever the District obtains knowledge of the occurrence of a Listed Event under Section 5(b) hereof, the District shall as soon as possible determine if such event would be material under applicable federal securities laws.

(d) If the District determines that knowledge of the occurrence of a Listed Event under Section 5(c) hereof would be material under applicable federal securities laws, the District shall (i) file a notice of such occurrence with the Repository in a timely manner not in excess of 10 business days after the occurrence of the event or (ii) provide notice of such reportable event to the Dissemination Agent in format suitable for filing with the Repository in a timely manner not in excess of 10 business days after the occurrence of the event. The Dissemination Agent shall have no duty to independently prepare or file any report of Listed Events. The Dissemination Agent may conclusively rely on the District’s determination of materiality pursuant to Section 5(c).

SECTION 6. Termination of Reporting Obligation. The District’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give notice of such termination in the same manner as for a Listed Event under Section 5(a) or Section 5(b), as applicable.

SECTION 7. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent (or substitute Dissemination Agent) to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign upon fifteen (15) days written notice to the District. Upon such resignation, the District shall act as its own Dissemination Agent until it appoints a successor. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the District pursuant to this Disclosure Certificate and shall not be responsible to verify the accuracy, completeness or materiality of any continuing disclosure information provided by the District. The District shall compensate the Dissemination Agent for its fees and expenses hereunder as agreed by the parties. Any entity succeeding to all or substantially all of the Dissemination Agent’s corporate trust business shall be the successor Dissemination Agent without the execution or filing of any paper or further act.

SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:

(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, 5(a) or 5(b), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;

(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule

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at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances;

(c) The amendment or waiver does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds; and

(d) No duties of the Dissemination Agent hereunder shall be amended without its written consent thereto.

In the event of any amendment or waiver of a provision of this Disclosure Certificate, the District shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the District. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(b), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the District shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

SECTION 10. Default. In the event of a failure of the District to comply with any provision of this Disclosure Certificate any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default under the Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the District to comply with this Disclosure Certificate shall be an action to compel performance.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate. The Dissemination Agent acts hereunder solely for the benefit of the District; this Disclosure Certificate shall confer no duties on the Dissemination Agent to the Participating Underwriter, the Holders and the Beneficial Owners. The District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney’s fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s gross negligence or willful misconduct. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. The Dissemination Agent shall have no liability for the failure to report any event or any financial information as to which the District has not provided an information report in format suitable for filing

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with the Repository. The Dissemination Agent shall not be required to monitor or enforce the District’s duty to comply with its continuing disclosure requirements hereunder.

SECTION 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Dissemination Agent, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. Dated: ______, 2017 COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

By: Vice President, Administrative Services

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EXHIBIT A

NOTICE TO REPOSITORY OF FAILURE TO FILE ANNUAL REPORT

Name of District: COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

Name of Bond Issue: 2017 General Obligation Refunding Bonds, Series C (Hanford Campus Improvement District No. 1) (Tulare and Kings Counties, California)

2017 General Obligation Refunding Bonds, Series D (Visalia Area Improvement District No. 2) (Tulare County, California)

2017 General Obligation Refunding Bonds, Series E (Tulare Area Improvement District No. 3) (Tulare and Kings Counties, California)

Date of Issuance: ______, 2017

NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate relating to the Bonds. The District anticipates that the Annual Report will be filed by ______.

Dated:______

COLLEGE OF THE SEQUOIAS COMMUNITY COLLEGE DISTRICT

By [form only; no signature required]

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APPENDIX D

GENERAL ECONOMIC AND DEMOGRAPHIC INFORMATION FOR KINGS COUNTY, TULARE COUNTY, THE CITY OF TULARE, THE CITY OF VISALIA AND THE CITY OF HANFORD

The following economic data for the City of Tulare, the City of Visalia and the City of Hanford (collectively, the “Cities”), and Kings County and Tulare County (together, the “Counties”), is included only for the purpose of supplying general information regarding the local community and economy. The Bonds are not a debt of the Cities or of the Counties. This material has been prepared by or excerpted from the sources noted herein and has not been reviewed for accuracy by the District, the Financial Advisor or Bond Counsel.

General

The City of Tulare. Tulare is located in central California between the cities of Fresno and Bakersfield, approximately 175 miles north of Los Angeles and 200 miles southeast of San Francisco. The City was incorporated as a general law city in 1988 and became a charter city in 1923. The City operates under a council-manager form of government and is composed of a five member city council who are elected by voters to four year terms. The City Council appoints a city manager who is responsible for the day-to-day operations of the City under the policy directions of the council.

The City of Visalia. Located in the San Joaquin Valley, Visalia is approximately 185 miles north of Los Angeles and 220 miles south of San Francisco. The City was incorporated in 1874 and became a charter city in 1923 with voter approved revisions made to the charter in 1969 and 1974. The City operates under the council-manager form of government and is composed of a five-member city council who are elected by voters to four year terms. The council selects a mayor and vice mayor from their members. The Council is responsible for appointing a city manager, providing financing for city services and policy direction for the city manager.

The City of Hanford. Hanford is situated in the San Joaquin Valley midway between San Francisco 215 miles to the north and Los Angeles 215 miles to the south and has an area of 12.3 square miles. The City was incorporated on in 1891 as a general law city with a council-manager form of government with the city manager appointed by the city council. The city manager is the chief administrative officer of the city and is responsible for the daily operations of the city. The council is composed of five elected members serving four-year terms. The Mayor and Vice-Mayor are elected annually from among the council members.

Kings County. Founded in 1893, Kings County encompasses 1,396 square miles of land in the Central Valley of California. A substantial portion of the County is dedicated to agriculture. Kings County is bordered on the north and northwest by Fresno County, on the east by Tulare County, on the south by Kern County and a small part of San Luis Obispo County and on the west by Monterey County. The County’s major population centers are the cities of Hanford, Lemoore, Corcoran and Avenal. The City of Hanford is the County seat and the largest city in the County.

Tulare County. Founded in 1852, Tulare County is located in California's San Joaquin Valley, a large agriculturally rich basin that runs through the center of the State. The County is the second top agricultural producing county in the nation. It is surrounded by Fresno County to the north, Inyo County to the east, Kern County to the south and Kings County to the west. Almost half the entire county area is devoted to national parks and forests, including the famous Sequoia and Kings Canyon National Parks, Inyo and Sequoia National Forests. These natural resources provide year-round recreational opportunities D-1

for hiking, fishing, skiing and camping. The County has eight incorporated cities, of which the City of Visalia, the County Seat, is the largest in terms of population.

Population

The following table shows historical population figures for the Cities, the Counties and the State from 2007 through 2016.

POPULATION ESTIMATES 2007 through 2016 City of Tulare, City of Visalia, City of Hanford, Kings County, Tulare County and the State of California

City of Tulare State of Year(1) City of Tulare City of Visalia Hanford Kings County County California 2007 55,017 115,243 50,534 148,933 419,842 36,399,676 2008 56,692 118,848 51,922 151,106 427,531 36,704,375 2009 58,013 121,885 52,970 151,816 434,933 36,966,713 2010(2) 59,278 124,442 53,967 152,982 442,179 37,253,956 2011 59,793 125,374 54,146 151,322 445,662 37,536,835 2012 60,711 126,088 54,541 151,330 450,672 37,881,357 2013 61,402 126,634 54,513 150,422 455,045 38,239,207 2014 62,102 127,572 54,727 149,707 458,765 38,567,459 2015 62,726 128,447 55,337 149,738 461,589 38,907,642 2016 63,515 130,231 55,840 150,373 466,339 39,255,883

(1) As of January 1. (2) As of April 1. Source: 2010: U.S. Department of Commerce, Bureau of the Census, for April 1. 2007-09, 2011-16 (2000 and 2010 DRU Benchmark): California Department of Finance for January 1.

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Income

The following table shows the per capita personal income for the Counties, the State, and the United States for the past 10 years.

PER CAPITA PERSONAL INCOME 2006 through 2015 Kings County, Tulare County, State of California and the United States

Year Kings County Tulare County State of California United States 2006 $23,199 $26,357 $42,334 $38,144 2007 26,026 29,009 43,692 39,821 2008 25,930 28,823 44,162 41,082 2009 24,772 27,933 42,224 39,376 2010 26,641 29,936 43,315 40,277 2011 29,696 31,928 45,820 42,453 2012 29,496 31,920 48,312 44,267 2013 30,127 33,508 48,471 44,462 2014 32,648 35,887 50,988 46,414 2015 33,126 36,551 53,741 48,112

Note: Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S. Bureau of the Census. All dollar estimates are in current dollars (not adjusted for inflation). Source: U.S. Department of Commerce, Bureau of Economic Analysis.

Principal Employers

The following tables show the 10 principal employers located in the City of Tulare, the City of Visalia and the Counties.

PRINCIPAL EMPLOYERS 2015 City of Tulare

Employer Name Industry Number of Employees Land O’Lakes Inc. Manufacturing: Natural, Processed, and Imitation 530 Cheese Haagen-Dazs Manufacturing: Ice Cream and Frozen Desserts 350 Wal-Mart Retail Trade: Department Stores 225 Southern CA Edison Company Utilities: Electric Services 120 Saputo Cheese USA, Inc. Manufacturing: Natural, Processed, and Imitation 550 Cheese US Cold Storage Refrigerated Warehousing and Storage 200 Ruan Inc. Transportation: Trucking 180 Kraft USA Tulare Manufacturing: Natural, Processed, and Imitation 180 Cheese J.D. Heiskell & Company Agriculture: Cash Grains 350 Morris Levin & Sons Hardware Retail Trade: Hardware Stores 200 ______Source: City of Tulare Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2015. Fiscal Year 2016 data is not yet available. D-3

PRINCIPAL EMPLOYERS 2016 City of Visalia

Employer Name Industry Number of Employees County of Tulare Public Administration 4,892 Visalia Unified School District Educational Services 2,527 Kaweah Delta Health Care District Services: Healthcare 2,132 College of the Sequoias Educational Services 1,160 CIGNA HealthCare Services: Healthcare 700 City of Visalia Public Administration 591 VF Outdoor Inc. Retail Trade: Apparel 450 Wal-Mart Retail Trade: Department Stores 400 International Paper Manufacturing: Paper Mills 350 Jostens Manufacturing: Jewelry 320 ______Source: City of Visalia Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2016.

PRINCIPAL EMPLOYERS 2016 Kings County

Industry Number of Employer Employees Lemoore Naval Air Station National Security 9,200 California State Prisons Public Administration: Correctional Institution 5,144 Kings County School Districts Educational Services 3,928 Adventist Medical Center Services: Healthcare 1,948 County of Kings Public Administration 1,471 Tachi Palace Hotel & Casino Services: Coin-Operated Amusement 1,340 JG Boswell Co. Manufacturing: Fabric Mills 1,300 Del Monte Corp Manufacturing: Canned Fruits and Vegetables 1,100 Manufacturing: Natural, Processed, and Imitation Leprino Foods 1,015 Cheese Olam West Coast Inc. Agriculture: Crop Preparation Services 1,000

Source: County of Kings “Comprehensive Annual Financial Report” for the year ending June 30, 2016.

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PRINCIPAL EMPLOYERS 2015 Tulare County

Industry Number of Employer Employees County of Tulare Public Administration 4,776 Kaweah Delta Healthcare District Services: Healthcare 2,000 Sierra View District Hospital Services: Healthcare 1,800 Ruiz Food Products Manufacturing: Frozen Specialties 1,800 Wal-Mart Distribution Retail Trade: Department Stores 1,692 Porterville Developmental Center Services: Skilled Nursing Care Facility 1,300 College of the Sequoias Educational Services 1,160 Jostens Manufacturing: Jewelry 720 CIGNA HealthCare Services: Healthcare 700 Monrovia Nursery Wholesale Trade: Flowers, Nursery 600

Source: County of Tulare “Comprehensive Annual Financial Report” for the year ending June 30, 2015. Fiscal Year 2016 data is not yet available.

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Employment

The following table summarizes the labor force, employment and unemployment figures for the years 2011 through 2016 for the Cities, the Counties, the State, and the United States.

CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT 2011 through 2016(1) City of Tulare, City of Visalia, City of Hanford, Kings County, Tulare County, the State of California and the United States

Unemployment Year and Area Labor Force Employment(2) Unemployment(3) Rate (%) 2011 City of Tulare 27,200 23,200 4,000 14.6 City of Visalia 60,900 52,400 8,000 14.0 City of Hanford 24,300 20,800 3,500 14.5 Kings County 59,100 49,700 9,400 15.9 Tulare County 203,500 168,700 34,800 17.1 State of California 18,415,100 16,258,100 2,157,000 11.7 United States 153,617,000 139,869,000 13,747,000 8.9

2012(4) City of Tulare 27,200 23,500 3,800 13.8 City of Visalia 60,400 52,400 8,000 13.2 City of Hanford 24,400 21,100 3,300 13.5 Kings County 58,900 50,100 8,800 14.9 Tulare County 201,600 169,000 32,600 16.2 State of California 18,551,400 16,627,800 1,923,600 10.4 United States 154,975,000 142,469,000 12,506,000 8.1

2013(4) City of Tulare 27,300 23,900 3,300 12.2 City of Visalia 60,700 53,600 7,100 11.7 City of Hanford 24,400 21,400 3,000 12.2 Kings County 58,300 50,500 7,800 13.4 Tulare County 201,500 172,600 28,900 14.4 State of California 18,670,100 17,001,000 1,669,000 8.9 United States 155,389,000 143,929,000 11,460,000 7.4

2014(4) City of Tulare 27,100 24,100 3,000 11.1 City of Visalia 60,400 54,000 6,400 10.6 City of Hanford 24,500 21,800 2,600 10.8 Kings County 57,800 50,900 6,900 11.9 Tulare County 199,300 173,200 26,100 13.1 State of California 18,827,900 17,418,000 1,409,900 7.5 United States 155,922,000 146,305,000 9,617,000 6.2

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2015(4) City of Tulare 27,700 25,000 2,700 9.9 City of Visalia 61,800 56,000 5,800 9.4 City of Hanford 24,700 22,400 2,300 9.5 Kings County 58,400 52,200 6,100 10.5 Tulare County 203,400 179,700 23,700 11.7 State of California 18,981,800 17,798,600 1,183,200 6.2 United States 157,130,000 148,834,000 8,296,000 5.3

2016(4) City of Tulare n/a n/a n/a n/a City of Visalia n/a n/a n/a n/a City of Hanford n/a n/a n/a n/a Kings County 57,200 51,500 5,700 10.0 Tulare County 205,900 183,300 22,600 11.0 State of California 18,981,800 17,798,600 1,183,200 6.2 United States 157,130,000 148,834,000 8,296,000 5.3

Note: Data is not seasonally adjusted. (1) Annual averages, unless otherwise specified. (2) Includes persons involved in labor-management trade disputes. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table. (4) Figures are from calendar year 2016. Calendar year 2016 data is not available for the Cities. Source: U.S. Department of Labor – Bureau of Labor Statistics, California Employment Development Department. March 2016 Benchmark

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Industry

The Counties are included in the following Metropolitan Statistical Area (the “MSA”): Hanford Corcoran MSA (Kings County) and Visalia Porterville MSA (Tulare County). The distribution of employment in each MSA is presented in the following table for the calendar years 2012 through 2016. These figures are multi county-wide statistics and may not necessarily accurately reflect employment trends in each County.

INDUSTRY EMPLOYMENT & LABOR FORCE ANNUAL AVERAGES 2012 through 2016 Kings County (Hanford Corcoran MSA)

Type of Employment 2012 2013 2014 2015 2016 Total Farm 6,500 6,900 6,900 7,400 7,200 Total Nonfarm 36,700 37,100 37,600 38,500 38,700 Total Private 22,200 22,800 23,300 24,000 24,100 Goods Producing 5,200 5,300 5,400 5,800 5,800 Mining, Logging, and Construction 800 800 800 900 900 Manufacturing 4,400 4,500 4,600 4,900 4,900 Service Providing 31,500 31,800 32,200 32,700 32,900 Private Service Providing 17,000 17,500 17,900 18,200 18,300 Trade, Transportation & Utilities 5,500 5,700 5,800 5,800 6,000 Wholesale Trade 600 600 600 600 600 Retail Trade 4,000 4,200 4,200 4,200 4,300 Transportation, Warehousing & Utilities 800 900 900 1,000 1,100 Information 200 200 200 200 200 Financial Activities 1,000 900 1,000 1,000 900 Professional & Business Services 1,300 1,300 1,400 1,300 1,300 Educational & Health Services 5,700 5,900 6,000 6,100 5,900 Leisure & Hospitality 2,800 2,900 3,100 3,300 3,300 Other Services 600 600 600 600 700 Government 14,600 14,300 14,300 14,500 14,600 Total All Industries 43,200 43,900 44,500 45,900 45,900

Note: The “Total, All Industries” data is not directly comparable to the employment data found herein. Source: State of California, Employment Development Department, Labor Market Information Division, Hanford Corcoran MSA Industry Employment & Labor Force by Annual Average. March 2016 Benchmark.

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INDUSTRY EMPLOYMENT & LABOR FORCE ANNUAL AVERAGES 2012 through 2016 Tulare County (Visalia Porterville MSA)

Type of Employment 2012 2013 2014 2015 2016 Total Farm 36,400 33,700 35,100 34,900 39,100 Total Nonfarm 109,300 111,400 114,500 115,800 119,800 Total Private 78,600 80,800 84,600 86,300 89,500 Goods Producing 15,100 15,400 15,800 16,500 17,200 Mining, Logging, and Construction 3,900 4,000 4,200 4,500 4,900 Manufacturing 11,200 11,300 11,600 12,000 12,300 Durable Goods 2,400 2,500 2,600 2,700 2,900 Nondurable Goods 8,700 8,800 9,000 9,300 9,300 Service Providing 94,200 96,000 98,800 99,200 102,600 Private Service Providing 63,500 65,500 68,800 69,800 72,300 Trade, Transportation & Utilities 24,200 25,500 26,700 27,100 28,100 Wholesale Trade 3,600 3,700 3,900 3,800 3,900 Retail Trade 15,100 15,700 16,500 16,900 17,300 Transportation, Warehousing & Utilities 5,600 6,100 6,400 6,400 6,900 Information 1,000 900 900 900 1,000 Financial Activities 3,800 3,800 3,800 3,900 4,000 Professional & Business Services 10,200 10,600 10,900 10,300 10,900 Educational & Health Services 12,400 12,100 13,300 13,700 13,800 Leisure & Hospitality 8,900 9,500 10,000 10,600 11,100 Other Services 3,100 3,100 3,200 3,300 3,400 Government 30,600 30,600 30,000 29,500 30,300 Total, All Industries 145,600 145,100 149,600 150,700 158,900

Note: The “Total, All Industries” data is not directly comparable to the employment data found herein. Source: State of California, Employment Development Department, Labor Market Information Division, Visalia Porterville MSA Industry Employment & Labor Force by Annual Average. March 2016 Benchmark.

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Commercial Activity

Summaries of annual taxable sales for the Cities and the Counties from 2011 through 2015 are shown in the following tables.

ANNUAL TAXABLE SALES 2011 through 2015 City of Tulare (Dollars in Thousands)

Retail Stores Taxable Total Taxable Year Retail Permits Transactions Total Permits Transactions 2011 813 602,422 1,156 757,245 2012 863 641,503 1,208 812,978 2013 839 664,971 1,184 847,033 2014 843 683,285 1,179 886,971 2015 (1) 675,755 (1) 870,389

Note: Beginning in 2015, the outlet counts in these reports show the number of outlets that were active during the reporting period. Retailers that operate part-time are now tabulated with store retailers. Retail Permits not tabulated for 2015. Industry-level data for 2015 are not comparable to that of prior years. (1) Data not available for 2015. Source: “Taxable Sales in California (Sales & Use Tax),” California State Board of Equalization. Calendar Year 2016 data is not yet available.

ANNUAL TAXABLE SALES 2011 through 2015 City of Visalia (Dollars in Thousands)

Retail Stores Taxable Total Taxable Year Retail Permits Transactions Total Permits Transactions 2011 1,743 1,393,623 2,691 2,020,452 2012 1,782 1,511,795 2,748 2,281,600 2013 1,783 1,585,997 2,740 2,449,280 2014 1,834 1,630,265 2,785 2,534,004 2015 (1) 1,700,271 (1) 2,604,693

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ANNUAL TAXABLE SALES 2011 through 2015 City of Hanford (Dollars in Thousands)

Retail Stores Taxable Total Taxable Year Retail Permits Transactions Total Permits Transactions 2011 816 599,904 1,116 700,301 2012 903 624,073 1,199 735,089 2013 834 653,160 1,104 766,981 2014 855 667,643 1,122 793,052 2015 (1) 717,026 (1) 859,756

ANNUAL TAXABLE SALES 2011 through 2015 Kings County (Dollars in Thousands)

Retail Stores Taxable Total Taxable Year Retail Permits Transactions Total Permits Transactions 2011 1,480 910,423 2,139 1,324,038 2012 1,528 930,699 2,173 1,385,862 2013 1,438 986,740 2,032 1,459,712 2014 1,482 1,013,786 2,098 1,564,920 2015 1,857 1,133,556 2,320 1,697,560

Note: Beginning in 2015, the outlet counts in these reports show the number of outlets that were active during the reporting period. Retailers that operate part-time are now tabulated with store retailers. Industry-level data for 2015 are not comparable to that of prior years. Source: “Taxable Sales in California (Sales & Use Tax),” California State Board of Equalization. Calendar Year 2016 data is not yet available.

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ANNUAL TAXABLE SALES 2011 through 2015 Tulare County (Dollars in Thousands) Retail Stores Taxable Total Taxable Year Retail Permits Transactions Total Permits Transactions 2011 5,891 3,440,634 8,448 5,053,721 2012 5,949 3,622,196 8,525 5,499,361 2013 5,816 3,746,171 8,334 5,788,584 2014 5,869 3,902,553 8,351 6,150,669 2015 6,595 4,700,780 9,284 6,275,434

Note: Beginning in 2015, the outlet counts in these reports show the number of outlets that were active during the reporting period. Retailers that operate part-time are now tabulated with store retailers. Industry-level data for 2015 are not comparable to that of prior years. Source: “Taxable Sales in California (Sales & Use Tax),” California State Board of Equalization. Calendar Year 2016 data is not yet available.

Construction Activity

The annual building permit valuations and number of permits for new dwelling units issued from 2012 through 2015 for the Cities and the Counties are shown in the following tables.

BUILDING PERMITS AND VALUATIONS 2012 through 2015 City of Tulare (Dollars in Thousands)

2012 2013 2014 2015 Valuation Residential $18,103 $24,584 $29,074 $27,140 Non-Residential 29,127 101,254 23,538 69,604 Total $47,230 $125,838 $52,612 $96,744 Residential Units: Single Family 87 112 140 105 Multiple Family 3 2 24 3 Total 90 114 164 108

Note: Totals may not add to sum due to rounding. Source: Construction Industry Research Board. Calendar Year 2016 data is not yet available.

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BUILDING PERMITS AND VALUATIONS 2012 through 2015 City of Visalia (Dollars in Thousands)

2012 2013 2014 2015 Valuation Residential $47,394 $109,453 $111,577 $154,751 Non-Residential 44,201 46,326 44,964 48,054 Total $91,595 $155,779 $156,541 $202,805 Residential Units: Single Family 226 428 398 524 Multiple Family 0 0 18 96 Total 226 428 416 620

Note: Totals may not add to sum due to rounding. Source: Construction Industry Research Board. Calendar Year 2016 data is not yet available.

BUILDING PERMITS AND VALUATIONS 2012 through 2015 City of Hanford (Dollars in Thousands)

2012 2013 2014 2015 Valuation Residential $18,856 $21,359 $27,236 $70,355 Non-Residential 13,277 13,607 12,511 37,460 Total $32,133 $34,966 $39,747 $107,815 Residential Units: Single Family 118 127 121 215 Multiple Family 0 6 72 112 Total 118 133 193 327

Note: Totals may not add to sum due to rounding. Source: Construction Industry Research Board. Calendar Year 2016 data is not yet available.

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BUILDING PERMITS AND VALUATIONS 2012 through 2015 Kings County (Dollars in Thousands)

2012 2013 2014 2015 Valuation Residential $44,026 $43,438 $61,003 $96,908 Non-Residential 33,718 24,275 31,429 48,601 Total $77,745 $67,713 $92,432 $145,509 Residential Units: Single Family 247 232 265 387 Multiple Family 0 6 160 128 Total 247 238 425 515

Note: Totals may not add to sum due to rounding. Source: Construction Industry Research Board. Calendar Year 2016 data is not yet available.

BUILDING PERMITS AND VALUATIONS 2012 through 2015 Tulare County (Dollars in Thousands)

2012 2013 2014 2015 Valuation Residential $108,531 $190,394 $215,636 $270,781 Non-Residential 107,928 213,587 125,459 148,963 Total $216,459 $403,981 $341,095 $419,744 Residential Units: Single Family 504 843 847 1,129 Multiple Family 129 60 296 132 Total 633 903 1,143 1,261

Note: Totals may not add to sum due to rounding. Source: Construction Industry Research Board. Calendar Year 2016 data is not yet available.

D-14

APPENDIX E

TULARE COUNTY INVESTMENT POOL

The following information concerning the Tulare County Investment Pool (the “Investment Pool”) has been provided by the Treasurer-Tax Collector (the “Treasurer-Tax Collector”) of Tulare County (the “County”), and has not been confirmed or verified by the District or the Financial Advisor. Neither the District nor the Financial Advisor have made an independent investigation of the investments in the Investment Pool and have made no assessment of the current County investment policy. The value of the various investments in the Investment Pool will fluctuate on a daily basis as a result of a multitude of factors, including generally prevailing interest rates and other economic conditions. Additionally, the Treasurer-Tax Collector, with the consent of the County Board of Supervisors, may change the County investment policy at any time. Therefore, there can be no assurance that the values of the various investments in the Investment Pool will not vary significantly from the values described herein. Finally, neither the District nor the Financial Advisor make any representation as to the accuracy or adequacy of such information or as to the absence of material adverse changes in such information subsequent to the date hereof, or that the information contained or incorporated hereby by reference is correct as of any time subsequent to its date. Additional information regarding the Investment Pool may be obtained from the Treasurer-Tax Collector at http://tularecounty.ca.gov/treasurertaxcollector/index.cfm/tax-collector/; however, the information presented on such website is not incorporated herein by any reference.

[REMAINDER OF PAGE LEFT BLANK]

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1 Tulare County Investment Report April 30, 2017

A listing of Tulare County investments is shown below. Portfolio Composition Book Value Market Value* % of Portfolio** Permitted by Policy U.S. Treasuries $285,330,825 $284,868,847 20% 100% Federal Agencies 277,144,355 275,685,266 19% 75% U.S. Instrumentalities-Supranationals 48,216,007 48,242,426 3% 30% Negotiable CDs 86,817,102 87,038,194 6% 30% Bank CD 15,000,000 15,000,000 1% 30% Medium-Term Corporate Notes 265,026,534 265,370,747 18% 30% Municipal Obligations 13,745,000 13,752,913 1% 30% Agency Mortgage Backed Securities (MBS) 17,639,180 17,430,019 1% 20% Asset Backed Securities 80,754,188 80,703,948 6% Commercial Paper 49,854,926 49,853,125 4% 40% Local Agency Investment Fund (LAIF) 65,000,000 65,000,000 5% $65 million California Asset Management Program (CAMP) 60,553,462 60,553,462 4% 50% Money Market Funds 6,660,055 6,660,055 <1% 15% Money Market Accounts 50,035 50,035 <1% 50% Cash 166,592,872 166,592,872 12% 100% Total $1,438,384,541 $1,436,801,907 100% * Market Prices were provided by the Union Bank of California. ** Percentages may not add up to 100% due to rounding. Portfolio Composition Federal Agencies 19% U.S. Treasuries U.S. Instrumentalities- 20% Supranationals Cash 3% 12% Negotiable CDs Money Market Accounts Bank CD 6% <1% 1% Medium-Term Corporate Notes Money Market Funds 18% <1% California Asset Municipal Obligations Management Program 1% (CAMP) Local Agency Investment Agency Mortgage Backed 4% Fund (LAIF) Securities (MBS) 5% Commercial Paper Asset Backed Securities 1% 4% 6%

2 Tulare County Investment Report April 30, 2017

The Tulare County portfolio is invested primarily in high-quality investments as shown below:

Credit Ratings Book Value % of Portfolio AAA $167,748,087 12%

A-1+/A-1 (Short-Term Rating) 73,154,961 5%

AA 750,993,452 52%

A 163,864,643 11%

Collateralized CD 15,000,000 1%

Not Rated* 101,030,525 7%

Cash** 166,592,872 12%

Total $1,438,384,541 100% Includes all ratings in this category (e.g., A-, A, A+). * The portion of the portfolio that is invested in LAIF, the State of California pooled investment fund, is not rated. The remaining portion not rated comprises individual securities with ratings by Moody's of A3 or Fitch of A-, or better. ** Union Bank account; fully collateralized in accordance with California government code. Credit Rating Distribution

A-1+/A-1 (Short- Term Rating) 5% AA 52%

AAA 12%

Cash 12%

Not Rated 7% Collateralized CD A 1% 11% Standard & Poor's Ratings

3 Tulare County Investment Report April 30, 2017

The portfolio has a high degree of liquidity.

Maturity Distribution $500 $477 $450 $400 $350 $300 $257 $244 $244 $250 $215 Millions $200 $150 $100 $50 $0 $0 1 Year and 1-2 Years 2-3 Years 3-4 Years 4-5 Years 5+ Years Under

Maturity Distribution

1 Year and Under 33%

4-5 Years 17% 1-2 Years 15%

3-4 Years 17% 2-3 Years 18%

* Maturity Distribution values represent Book Valuation and are rounded to the nearest million.

4 Tulare County Investment Report April 30, 2017

Other Portfolio Characteristics

Average daily balance: $1,415,639,676

Weighted average number of days to maturity: 758 Days

Weighted average years to maturity: 2.08 Years

Effective rate of return: 1.46%

5 6 LIP ACCOUNT

Portfolio Management Page 1 Portfolio Details - Investments April 30, 2017

Average Purchase Stated YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate S&P 365 Maturity Date Cash SYS0002 0002 UNION BANK - CHECKING 166,542,000.66166,542,000.66 166,542,000.66 0.448 0.454 1 SYS0002A 0002A BANK OF THE SIERRA 07/01/201634,265.00 34,265.00 34,265.00 0.000 1 SYS0001 0001 CASH IN VAULT 07/01/201616,606.66 16,606.66 16,606.66 0.000 1 Subtotal and Average 158,529,126.32 166,592,872.32 166,592,872.32 166,592,872.32 0.454 1

Money Market Accounts SYS3174A 3174A UNION BANK OF CA. 50,034.5350,034.53 50,034.53 0.100 A-1 0.100 1

Subtotal and Average 50,034.53 50,034.53 50,034.53 50,034.53 0.100 1 Certificates of Deposit - Bank SYS5318C 5318-C SUNCREST BANK 01/23/201710,000,000.00 10,000,000.00 10,000,000.000.954 0.954 267 01/23/2018 SYS5579 5579 SUNCREST BANK 05/10/20165,000,000.00 5,000,000.00 5,000,000.000.853 0.853 9 05/10/2017

Subtotal and Average 15,000,000.00 15,000,000.00 15,000,000.00 15,000,000.00 0.921 181 Negotiable CD's 94989RGQ5 5683 WELLS FARGO BANK NA 02/13/20175,000,000.00 4,999,800.00 5,000,000.001.070 1.085 105 08/14/2017

Subtotal and Average 5,000,000.00 5,000,000.00 4,999,800.00 5,000,000.00 1.085 105 Commercial Paper Disc. -Amortizing

36164JWR1 5712 GE Capital Treasury LLC 04/26/20175,000,000.00 4,974,050.00 4,979,379.171.010 1.028 147 09/25/2017 46640PU35 5699 JP MORGAN SECURITIES LLC 03/06/20175,000,000.00 4,990,400.00 4,990,375.001.100 1.119 63 07/03/2017 89233GTW6 5629 TOYOTA MOTOR CREDIT CORP 10/04/20165,000,000.00 4,991,400.00 4,990,000.001.200 1.242 60 06/30/2017

Subtotal and Average 10,805,592.83 15,000,000.00 14,955,850.00 14,959,754.17 1.130 90 Agency Issues - Fixed Coupon

Subtotal and Average 499,999.31

Corporte Notes & Bonds 369604BC6 5710 GENERAL ELECTRIC CO 04/21/20175,000,000.00 5,214,587.50 5,219,105.065.250 1.180 219 12/06/2017 24422ESB6 5711 JOHN DEERE CAPITAL CORP 04/24/20175,000,000.00 5,005,833.33 5,012,962.261.300 1.174 315 03/12/2018 48126EAA5 5632 JP MORGAN CHASE 10/06/20165,000,000.00 5,009,600.00 5,012,718.962.000 1.112 106 08/15/2017 64952WBF9 5630 NEW YORK LIFE GLOBAL FDG 10/05/20163,614,000.00 3,615,084.20 3,614,919.931.650 0.991 14 05/15/2017 94974BFD7 5694 WELLS FARGO SECURITIES LLC 03/16/20175,000,000.00 5,037,933.33 5,038,165.252.100 1.234 7 05/08/2017 Subtotal and Average 16,580,500.37 23,614,000.00 23,883,038.36 23,897,871.46 1.147 140

Promissory Notes SYS4824 4824A TULARE COUNTY TRANSPORTATION A 10,000,000.0010,000,000.00 10,000,000.00 1.860 1.860 1

Portfolio CNTY Data Updated: FUNDSNAP: 05/04/2017 16:04 NL! AC Run Date: 05/04/2017 - 16:04 PM (PRF_PM2) 7.3.0

7 Report Ver. 7.3.6.1 LIP ACCOUNT

Portfolio Management Page 2 Portfolio Details - Investments April 30, 2017

Average Purchase Stated YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate S&P 365 Maturity Date

Subtotal and Average 10,000,000.00 10,000,000.00 10,000,000.00 10,000,000.00 1.860 1 Managed Investment Pools SYS4339-A 4339-A CALIFORNIA ASSET MANAGEMENT PR 60,553,461.6160,553,461.61 60,553,461.61 0.960 AAA 0.960 1 SYS9980 9980 LOCAL AGCY INVESTMENT FD 65,000,000.0065,000,000.00 65,000,000.00 0.780 0.780 1

Subtotal and Average 122,217,082.48 125,553,461.61 125,553,461.61 125,553,461.61 0.867 1

Total and Average 338,682,335.83 360,810,368.46 361,035,056.82 361,053,994.09 0.738 23

Portfolio CNTY Data Updated: FUNDSNAP: 05/04/2017 16:04 NL! AC Run Date: 05/04/2017 - 16:04 PM (PRF_PM2) 7.3.0

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Portfolio Management Page 1 Portfolio Details - Investments April 30, 2017

Average Purchase Stated YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate S&P 365 Maturity Date Money Market Fund 60934N10S 3521B FEDERATED GOVT OBLIG 5,458,989.695,458,989.69 5,458,989.69 0.660 AAA 0.660 1

Subtotal and Average 4,440,561.12 5,458,989.69 5,458,989.69 5,458,989.69 0.660 1 Negotiable CD's

06427KRC3 5682 BANK OF MONTREAL CHICAGO 02/09/201712,000,000.00 12,092,040.00 12,000,000.001.880 1.905 647 02/07/2019 06417GUE6 5706 BANK OF NOVA SCOTIA 04/06/2017 10,500,000.00 10,503,990.00 10,500,000.00 1.910 1.910 704 04/05/2019 13606A5Z7 5646 CANADIAN IMP BK COMM NY 12/05/2016 9,460,000.00 9,517,895.20 9,454,117.32 1.760 1.824 578 11/30/2018 65558LWA6 5645 NORDEA BANK FINLAND NY 12/05/2016 9,460,000.00 9,517,895.20 9,460,000.00 1.760 1.783 578 11/30/2018 78009NZZ2 5561 ROYAL BANK OF CANADA NY 03/15/2016 6,755,000.00 6,766,213.30 6,755,000.00 1.700 1.700 312 03/09/2018 83050FBG5 5541 SKANDINAV ENSKILDA BK NY 11/17/2015 11,250,000.00 11,250,000.00 11,250,000.00 1.480 1.521 199 11/16/2017 86958JHB8 5654 SVENSKA HANDELSBANKEN NY 01/12/2017 12,000,000.00 11,979,960.00 12,000,000.00 1.890 1.890 619 01/10/2019 90333VPF1 5412 US BANK N.A. 09/11/2014 10,400,000.00 10,410,400.00 10,397,984.52 1.375 AA 1.430 133 09/11/2017

Subtotal and Average 81,816,729.45 81,825,000.00 82,038,393.70 81,817,101.84 1.750 480 Commercial Paper Disc. -Amortizing

06538BUK7 5660 BANK OF TOKYO-MITSUBISHI 01/20/20175,000,000.00 4,987,950.00 4,985,406.941.330 1.357 79 07/19/2017 22533TX27 5708 CREDIT AGRICOLE CIB NY 04/18/20175,000,000.00 4,971,350.00 4,971,552.781.330 1.357 154 10/02/2017 4497W0UH9 5659 ING (US) FUNDING LLC 01/20/20175,000,000.00 4,988,250.00 4,986,097.221.300 1.327 77 07/17/2017

Subtotal and Average 14,946,513.66 15,000,000.00 14,947,550.00 14,943,056.94 1.347 103 Treasury Securities - Coupon 912828ND8 5498 U.S. TREASURY NOTE 05/29/20153,050,000.00 3,233,122.00 3,227,616.793.500 AAA 1.503 1,110 05/15/2020 912828NT3 5520 U.S. TREASURY NOTE 09/03/20157,450,000.00 7,709,856.00 7,703,450.792.625 1.547 1,202 08/15/2020 912828VF4 5546 U.S. TREASURY NOTE 12/04/201510,185,000.00 10,150,371.00 10,129,002.391.375 AAA 1.560 1,126 05/31/2020 912828WC0 5550 U.S. TREASURY NOTE 01/11/20168,275,000.00 8,320,595.25 8,293,610.111.750 1.683 1,279 10/31/2020 912828K58 5551 U.S. TREASURY NOTE 02/03/20166,750,000.00 6,731,572.50 6,775,179.131.375 1.247 1,095 04/30/2020 912828H52 5558 U.S. TREASURY NOTE 03/04/20163,280,000.00 3,265,535.20 3,281,262.411.250 AAA 1.236 1,005 01/31/2020 912828XM7 5563 U.S. TREASURY NOTE 03/31/20168,600,000.00 8,626,574.00 8,708,065.131.625 AAA 1.227 1,187 07/31/2020 912828A42 5578 U.S. TREASURY NOTE 05/06/20168,300,000.00 8,413,461.00 8,525,551.172.000 1.218 1,309 11/30/2020 912828N89 5582 U.S. TREASURY NOTE 05/27/201614,400,000.00 14,258,880.00 14,409,019.741.375 1.358 1,371 01/31/2021 912828J84 5588 U.S. TREASURY NOTE 06/27/20161,360,000.00 1,357,076.00 1,372,939.211.375 1.041 1,065 03/31/2020 912828J84 5589 U.S. TREASURY NOTE 06/27/20161,905,000.00 1,900,904.25 1,923,817.061.375 1.029 1,065 03/31/2020 912828J84 5590 U.S. TREASURY NOTE 06/28/20164,204,000.00 4,194,961.40 4,241,094.651.375 1.065 1,065 03/31/2020 912828Q78 5595 U.S. TREASURY NOTE 07/08/2016 2,940,000.002,904,514.20 2,986,188.501.375 0.972 1,460 04/30/2021 912828B90 5631 U.S. TREASURY NOTE 10/05/2016 6,375,000.00 6,458,895.00 6,577,049.59 2.000 1.150 1,399 02/28/2021 912828XH8 5637 U.S. TREASURY NOTE 11/02/2016 5,420,000.00 5,439,457.80 5,497,674.16 1.625 1.161 1,156 06/30/2020 912828WY2 5642 U.S. TREASURY NOTE 11/23/2016 5,490,000.00 5,606,882.10 5,595,821.27 2.250 1.775 1,552 07/31/2021 912828D72 5644 U.S. TREASURY NOTE 12/05/2016 9,250,000.00 9,347,957.50 9,279,756.31 2.000 1.922 1,583 08/31/2021

Portfolio CNTY Data Updated: FUNDSNAP: 05/04/2017 16:04 NL! AC Run Date: 05/04/2017 - 16:05 PM (PRF_PM2) 7.3.0

9 Report Ver. 7.3.6.1 PFM

Portfolio Management Page 2 Portfolio Details - Investments April 30, 2017

Average Purchase Stated YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate S&P 365 Maturity Date Treasury Securities - Coupon 912828Q78 5647 U.S. TREASURY NOTE 12/07/20164,575,000.00 4,526,209.39 4,508,600.201.375 1.790 1,460 04/30/2021 912828F96 5652 U.S. TREASURY NOTE 01/05/20177,500,000.00 7,599,723.07 7,542,946.662.000 1.951 1,644 10/31/2021 912828WN6 5658 U.S. TREASURY NOTE 01/20/20175,000,000.00 5,074,560.99 5,034,315.272.000 1.896 1,491 05/31/2021 912828J43 5696 U.S. TREASURY NOTE 03/17/201715,230,000.00 15,194,794.70 14,968,494.331.750 2.144 1,764 02/28/2022 912828F96 5705 U.S. TREASURY NOTE 04/05/20177,345,000.00 7,479,184.22 7,453,214.072.000 1.857 1,644 10/31/2021

Subtotal and Average 154,070,638.38 146,884,000.00 147,795,087.57 148,034,668.94 1.557 1,373 Agency Issues - Fixed Coupon 3130A8DB6 5594 FED HOME LOAN BANK 07/08/20163,800,000.00 3,779,822.00 3,827,580.921.125 0.781 781 06/21/2019 3130ABY72 5611 FED HOME LOAN BANK 08/04/201611,570,000.00 11,432,548.40 11,553,272.410.875 0.940 826 08/05/2019 3130AA3R7 5641 FED HOME LOAN BANK 11/17/20167,935,000.00 7,914,527.70 7,933,452.601.375 1.383 928 11/15/2019 3137EADZ9 5562 FED. HOME LOAN MTG. CORP. 03/21/2016540,000.00 537,894.00 539,886.371.125 1.136 714 04/15/2019 3137EAEF2 5709 FED. HOME LOAN MTG. CORP. 04/20/201711,140,000.00 11,082,963.20 11,102,289.241.375 1.492 1,085 04/20/2020 3135G0N82 3622 FED. NAT'L. MTG. ASSN. 09/02/20169,115,000.00 8,900,615.20 9,066,685.291.250 1.378 1,569 08/17/2021 3135G0ZY2 5427 FED. NAT'L. MTG. ASSN. 12/03/2014 6,850,000.00 6,899,388.50 6,873,076.25 1.750 AAA 1.613 939 11/26/2019 3135G0A78 5468 FED. NAT'L. MTG. ASSN. 03/30/2015 3,235,000.00 3,245,772.55 3,244,303.94 1.625 1.515 995 01/21/2020 3135G0ZY2 5544 FED. NAT'L. MTG. ASSN. 11/25/2015 4,825,000.00 4,859,788.25 4,841,879.97 1.750 AAA 1.609 939 11/26/2019 3135G0H63 5549 FED. NAT'L. MTG. ASSN. 01/08/2016 8,445,000.00 8,452,262.70 8,442,015.54 1.375 1.396 637 01/28/2019 3135G0H63 5552 FED. NAT'L. MTG. ASSN. 02/16/2016 1,340,000.00 1,341,152.40 1,349,548.94 1.375 0.959 637 01/28/2019 3135G0J53 5554 FED. NAT'L. MTG. ASSN. 02/23/2016 6,615,000.00 6,573,325.50 6,605,558.20 1.000 1.080 666 02/26/2019 3135G0H55 5596 FED. NAT'L. MTG. ASSN. 07/08/2016 5,350,000.00 5,391,783.50 5,505,492.30 1.875 1.059 1,337 12/28/2020 3135G0N33 5609 FED. NAT'L. MTG. ASSN. 08/02/2016 9,240,000.00 9,127,918.80 9,228,343.23 0.875 0.932 823 08/02/2019 3135G0N82 5617 FED. NAT'L. MTG. ASSN. 08/19/2016 11,160,000.00 10,897,516.80 11,121,136.76 1.250 1.334 1,569 08/17/2021 3135G0N82 5618 FED. NAT'L. MTG. ASSN. 08/19/2016 3,440,000.00 3,359,091.20 3,429,881.15 1.250 1.321 1,569 08/17/2021 3135G0S38 5657 FED. NAT'L. MTG. ASSN. 01/20/2017 5,000,000.00 5,027,705.56 4,980,555.06 2.000 2.102 1,710 01/05/2022 3135G0S38 5679 FED. NAT'L. MTG. ASSN. 02/03/2017 3,370,000.00 3,391,107.43 3,364,180.83 2.000 2.069 1,710 01/05/2022 3135G0T29 5684 FED. NAT'L. MTG. ASSN. 02/28/2017 6,490,000.00 6,482,536.50 6,486,088.69 1.500 1.522 1,033 02/28/2020

Subtotal and Average 112,834,187.96 119,460,000.00 118,697,720.19 119,495,227.69 1.336 1,089 Supranationals

00828ECA5 5695 AFRICAN DEVELOPMENT BANK 03/16/20173,775,000.00 3,800,179.25 3,769,645.791.875 1.926 1,050 03/16/2020 458182DX7 5572 INTER-AMERICAN DEVEL BK 04/12/2016 6,300,000.00 6,239,520.00 6,287,547.43 1.000 1.099 742 05/13/2019

Subtotal and Average 10,682,900.77 10,075,000.00 10,039,699.25 10,057,193.22 1.409 857 Corporte Notes & Bonds

037833CK4 5681 APPLE INC 02/09/20179,245,000.00 9,294,645.65 9,240,814.541.900 1.917 1,012 02/07/2020 0258M0DP1 5530 AMERICAN EXPRESS 10/06/20154,500,000.00 4,533,615.00 4,511,665.922.250 2.131 836 08/15/2019 037833AX8 5454 APPLE INC. 02/26/20151,535,000.00 1,529,673.55 1,523,866.191.550 1.825 1,012 02/07/2020

Portfolio CNTY Data Updated: FUNDSNAP: 05/04/2017 16:04 NL! AC Run Date: 05/04/2017 - 16:05 PM (PRF_PM2) 7.3.0

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Portfolio Management Page 3 Portfolio Details - Investments April 30, 2017

Average Purchase Stated YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate S&P 365 Maturity Date Corporte Notes & Bonds 0258M0DJ5 5665 AMERICAN EXPRESS CREDIT 01/24/20175,000,000.00 5,028,850.00 5,022,135.732.125 1.761 452 07/27/2018 0258M0EE5 5688 AMERICAN EXPRESS CREDIT 03/03/20171,750,000.00 1,759,275.00 1,748,277.742.200 2.236 1,037 03/03/2020 084664BW0 5242 BERKSHERE HATHAWAY FIN 05/15/20131,030,000.00 1,028,609.50 1,029,875.871.300 AA 1.312 379 05/15/2018 084664BY6 5313 BERKSHERE HATHAWAY FIN 01/10/20141,030,000.00 1,037,364.50 1,030,667.072.000 AA 1.947 471 08/15/2018 084664CG4 5560 BERKSHERE HATHAWAY FIN 03/15/2016655,000.00 656,591.65 654,689.341.700 1.726 683 03/15/2019 06406HDB2 5499 BANK OF NEW YORK MELLON 05/29/20159,000,000.00 9,002,610.00 8,999,712.391.600 1.603 386 05/22/2018 12189TBC7 5585 BURLINGTN NORTH SANTA FE 06/08/2016 2,250,000.00 2,407,050.00 2,420,481.35 4.700 1.475 883 10/01/2019 084664CK5 5616 BERKSHIRE HATHAWAY FIN 08/15/2016 1,950,000.00 1,937,968.50 1,948,556.86 1.300 1.333 836 08/15/2019 166764BS8 5687 CHEVRON CORP 03/03/2017 1,470,000.00 1,471,661.10 1,470,000.00 1.686 1.693 668 02/28/2019 166764AE0 5251 CHEVRON FUNDING 06/24/2013 5,210,000.00 5,227,453.50 5,210,000.00 1.718 AA 1.718 419 06/24/2018 17275RAU6 5504 CISCO SYSTEMS INC. 06/17/2015 3,630,000.00 3,640,418.10 3,629,768.73 1.650 1.656 410 06/15/2018 36962G5J9 5669 GENERAL ELECTRIC CO 01/27/2017 5,000,000.00 5,529,650.00 5,468,101.76 4.650 2.416 1,630 10/17/2021 36962G4D3 5481 G.E. CAPITAL CORP. 04/08/2015 6,800,000.00 7,446,000.00 7,406,381.69 6.000 1.884 828 08/07/2019 02665WAH4 5409 HONDA/AMERICAN HONDA 09/09/2014 3,900,000.00 3,940,131.00 3,896,652.50 2.250 A 2.290 836 08/15/2019 40434CAC9 5521 HSBC USA INC 09/04/2015 5,000,000.00 5,022,000.00 4,997,405.99 2.250 2.275 783 06/23/2019 459200JQ5 5677 IBM CORP. 01/31/2017 5,000,000.00 5,063,138.89 5,013,784.94 2.500 2.444 1,732 01/27/2022 46625HQJ2 5587 JP MORGAN CHASE 06/15/2016 6,150,000.00 6,179,151.00 6,218,906.83 2.550 2.240 1,400 03/01/2021 46625HQJ2 5653 JP MORGAN CHASE 01/05/2017 2,745,000.00 2,758,011.30 2,740,796.63 2.550 2.592 1,400 03/01/2021 68389XBK0 5664 ORACLE CORP 01/24/2017 5,000,000.00 4,949,100.00 4,886,871.69 1.900 2.450 1,598 09/15/2021 89236TCP8 5510 TOYOTA MOTOR CREDIT 07/13/2015 2,150,000.00 2,150,709.50 2,149,269.00 1.550 1.579 438 07/13/2018 89236TBP9 5528 TOYOTA MOTOR CREDIT 10/06/2015 6,000,000.00 6,043,260.00 6,031,212.91 2.125 1.880 808 07/18/2019 949746SA0 5610 WELLS FARGO COMPANY 08/04/2016 9,000,000.00 8,873,820.00 9,033,929.55 2.100 2.006 1,547 07/26/2021

Subtotal and Average 106,337,256.05 105,000,000.00 106,510,757.74 106,283,825.22 1.985 969 Municipal Bonds

605581FY8 5448 STATE OF MISSISSIPPI GO BOND 02/18/2015770,000.00 771,085.70 770,000.001.472 1.472 518 10/01/2018 605581ER4 5449 STATE OF MISSISSIPPI GO BOND 02/18/2015 90,000.00 90,126.90 90,000.00 1.472 1.472 518 10/01/2018 605581FZ5 5450 STATE OF MISSISSIPPI GO BOND 02/18/2015 1,680,000.00 1,680,470.40 1,680,000.00 1.679 1.679 883 10/01/2019 91412GSZ9 5267 UNIVERSITY OF CALIFORNIA 10/02/2013 1,205,000.00 1,211,229.85 1,205,000.00 2.054 AA 1.591 379 05/15/2018 Subtotal and Average 3,745,000.00 3,745,000.00 3,752,912.85 3,745,000.00 1.603 637

GNMA/ FNMA Mortgage Backed 3137BNN26 5575 FED. HOME LOAN MTG. CORP. 04/28/20167,652,039.66 7,614,238.58 7,728,376.411.780 1.060 815 07/25/2019 3136AMKW8 5439 FED. NAT'L. MTG. ASSN. 01/30/20151,645,335.55 1,646,141.76 1,661,776.571.626 0.879 300 02/25/2018 3136ANJY4 5486 FED. NAT'L. MTG. ASSN. 04/30/20152,136,018.19 2,134,373.46 2,157,370.681.550 0.792 359 04/25/2018 3136AQDQ0 5537 FED. NAT'L. MTG. ASSN. 10/30/20154,066,287.22 4,067,710.42 4,107,006.621.646 1.037 877 09/25/2019 3136AQSW1 5545 FED. NAT'L. MTG. ASSN. 11/30/20151,965,000.00 1,967,554.50 1,984,649.801.898 1.144 634 01/25/2019 Subtotal and Average 18,105,855.73 17,464,680.62 17,430,018.72 17,639,180.08 1.015 705

Portfolio CNTY Data Updated: FUNDSNAP: 05/04/2017 16:04 NL! AC Run Date: 05/04/2017 - 16:05 PM (PRF_PM2) 7.3.0

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Portfolio Management Page 4 Portfolio Details - Investments April 30, 2017

Average Purchase Stated YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate S&P 365 Maturity Date Asset Backed 02007LAC6 5583 ALLY AUTO RECEIVABLES TRUST 05/30/2016970,000.00 969,010.60 969,905.811.440 1.449 1,204 08/17/2020 02007PAC7 5678 ALLY AUTO RECEIVABLES TRUST 01/31/20171,745,000.00 1,745,261.75 1,744,847.491.700 1.710 1,506 06/15/2021 02007HAC5 5703 ALLY AUTO RECEIVABLES TRUST 03/29/20174,245,000.00 4,250,263.80 4,244,499.511.780 1.792 1,568 08/16/2021 14314EAB7 5605 CARMAX AUTO OWNER TRUST 07/20/20162,255,662.07 2,253,609.42 2,255,478.001.170 1.178 836 08/15/2019 43814KAB7 5438 HONDA AUTO RECEIVABLES TRUST 01/28/20150.01 0.01 0.010.700 AAA 0.705 45 06/15/2017 43813NACO 5496 HONDA AUTO RECEIVABLES TRUST 05/20/20151,312,258.87 1,310,342.97 1,312,057.441.040 1.051 661 02/21/2019 43814TAC6 5701 HONDA AUTO RECEIVABLES TRUST 03/28/2017 2,435,000.00 2,436,290.55 2,434,855.12 1.720 1.729 1,542 07/21/2021 44891EAC3 5625 HYUNDAI AUTO RECEIVABLES TRUST 09/21/2016 2,490,000.00 2,473,317.00 2,489,664.85 1.290 1.300 1,445 04/15/2021 44931PAD8 5704 HYUNDAI AUTO RECEIVABLES TRUST 03/29/2017 2,285,000.00 2,287,216.45 2,284,815.14 1.760 1.770 1,568 08/16/2021 47788NAC2 5607 JOHN DEERE OWNER TRUST 07/28/2016 970,000.00 964,820.20 969,922.79 1.250 1.258 1,141 06/15/2020 47787XAC1 5686 JOHN DEERE OWNER TRUST 03/02/2017 1,280,000.00 1,281,446.40 1,279,817.73 1.780 1.794 1,445 04/15/2021 65477UAC4 5483 NISSAN AUTO RECEIVABLES OWNERS 04/14/2015 2,778,235.92 2,772,818.36 2,777,651.93 1.050 AAA 1.062 897 10/15/2019 65475WAD0 5512 NISSAN AUTO RECEIVABLES OWNERS 07/22/2015 4,265,000.00 4,260,393.80 4,264,660.93 1.340 AAA 1.347 1,050 03/16/2020 89236WAB4 5459 TOYOTA AUTO RECEIVABLES TRUST 03/04/2015 0.00 0.00 0.00 0.710 AAA 0.712 0 07/17/2017 89238MAD0 5693 TOYOTA AUTO RECEIVABLES TRUST 03/15/2017 1,350,000.00 1,352,524.50 1,349,841.11 1.730 1.742 1,387 02/16/2021 Subtotal and Average 28,738,800.19 28,381,156.87 28,357,315.81 28,378,017.86 1.483 1,266

Asset Backed (Semi-annual Payment) 17305EGA7 5668 CITIBANK CREDIT CARD ISSUANCE 01/26/20174,270,000.00 4,278,838.90 4,269,291.561.740 1.750 626 01/17/2019

Subtotal and Average 4,269,274.88 4,270,000.00 4,278,838.90 4,269,291.56 1.750 626

Total and Average 540,010,636.07 537,563,827.18 539,307,284.42 540,121,553.04 1.584 999

Portfolio CNTY Data Updated: FUNDSNAP: 05/04/2017 16:04 NL! AC Run Date: 05/04/2017 - 16:05 PM (PRF_PM2) 7.3.0

12 CHANDLER

Portfolio Management Page 1 Portfolio Details - Investments April 30, 2017

Average Purchase Stated YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate S&P 365 Maturity Date Money Market Fund 60934N10S 3522B FEDERATED GOVT OBLIG 1,201,065.321,201,065.32 1,201,065.32 0.660 AAA 0.660 1

Subtotal and Average 3,637,506.38 1,201,065.32 1,201,065.32 1,201,065.32 0.660 1 Commercial Paper Disc. -Amortizing

06538BU76 5690 BANK OF TOKYO-MITSUBISHI 03/07/201710,725,000.00 10,703,013.75 10,701,446.711.180 1.201 67 07/07/2017 21687AX24 5702 COOPERATIEVE ROBOBANK UA 03/28/2017 9,300,000.00 9,246,711.00 9,250,668.63 1.240 1.293 154 10/02/2017

Subtotal and Average 19,942,373.15 20,025,000.00 19,949,724.75 19,952,115.34 1.244 107 Treasury Securities - Coupon

912828SH4 5354 U.S. TREASURY NOTE 03/26/20145,350,000.00 5,361,288.50 5,316,269.611.375 AAA 1.736 668 02/28/2019 912828SH4 5384 U.S. TREASURY NOTE 06/27/2014 500,000.00 501,055.00 498,441.45 1.375 AAA 1.552 668 02/28/2019 912828SH4 5431 U.S. TREASURY NOTE 12/19/2014 650,000.00 651,371.50 648,273.86 1.375 AAA 1.525 668 02/28/2019 912828H52 5476 U.S. TREASURY NOTE 03/31/2015 9,000,000.00 8,960,310.00 8,968,224.31 1.250 AAA 1.383 1,005 01/31/2020 912828SH4 5497 U.S. TREASURY NOTE 05/27/2015 550,000.00 551,160.50 551,265.67 1.375 AAA 1.246 668 02/28/2019 912828VF4 5509 U.S. TREASURY NOTE 07/13/2015 9,000,000.00 8,969,400.00 8,935,891.60 1.375 AAA 1.616 1,126 05/31/2020 912828SH4 5513 U.S. TREASURY NOTE 07/30/2015 300,000.00 300,633.00 300,514.81 1.375 AAA 1.279 668 02/28/2019 912828XM7 5517 U.S. TREASURY NOTE 08/27/2015 2,000,000.00 2,006,180.00 2,009,586.97 1.625 AAA 1.471 1,187 07/31/2020 912828L32 5526 U.S. TREASURY NOTE 09/30/2015 9,100,000.00 9,048,494.00 9,101,948.15 1.375 1.368 1,218 08/31/2020 912828XM7 5535 U.S. TREASURY NOTE 10/26/2015 5,500,000.00 5,516,995.00 5,538,705.19 1.625 AAA 1.400 1,187 07/31/2020 912828L99 5542 U.S. TREASURY NOTE 11/24/2015 8,100,000.00 8,040,870.00 8,010,014.75 1.375 1.707 1,279 10/31/2020 912828N89 5559 U.S. TREASURY NOTE 03/11/2016 9,000,000.00 8,911,800.00 8,993,280.11 1.375 1.396 1,371 01/31/2021 912828XM7 5565 U.S. TREASURY NOTE 03/31/2016 1,500,000.00 1,504,635.00 1,518,808.40 1.625 AAA 1.228 1,187 07/31/2020 912828B90 5576 U.S. TREASURY NOTE 04/28/2016 6,000,000.00 6,078,960.00 6,133,436.05 2.000 1.398 1,399 02/28/2021 912828B90 5601 U.S. TREASURY NOTE 07/18/2016 2,500,000.00 2,532,900.00 2,582,579.25 2.000 1.113 1,399 02/28/2021 912828R85 5608 U.S. TREASURY NOTE 07/29/2016 8,650,000.00 8,573,274.50 8,659,987.69 0.875 0.820 775 06/15/2019 912828T34 5638 U.S. TREASURY NOTE 11/10/2016 9,850,000.00 9,582,966.50 9,699,480.00 1.125 1.485 1,613 09/30/2021 912828Q37 5649 U.S. TREASURY NOTE 12/14/2016 10,100,000.00 9,938,198.00 9,886,664.46 1.250 1.813 1,430 03/31/2021 912828L99 5650 U.S. TREASURY NOTE 12/29/2016 1,100,000.00 1,094,435.12 1,086,475.28 1.375 1.807 1,279 10/31/2020 912828B90 5651 U.S. TREASURY NOTE 12/29/2016 1,000,000.00 1,013,160.00 1,003,880.89 2.000 1.894 1,399 02/28/2021 912828F96 5656 U.S. TREASURY NOTE 01/20/2017 10,600,000.00 10,749,726.46 10,649,810.50 2.000 1.994 1,644 10/31/2021 912828SH4 5670 U.S. TREASURY NOTE 01/30/2017 3,500,000.00 3,507,385.00 3,507,831.57 1.375 AAA 1.251 668 02/28/2019 912828H52 5671 U.S. TREASURY NOTE 01/30/2017 2,000,000.00 1,991,180.00 1,986,753.05 1.250 AAA 1.497 1,005 01/31/2020 912828K58 5672 U.S. TREASURY NOTE 01/30/2017 10,500,000.00 10,507,628.16 10,476,114.61 1.375 1.572 1,095 04/30/2020 912828J43 5691 U.S. TREASURY NOTE 03/15/2017 11,425,000.00 11,397,503.63 11,231,917.66 1.750 2.136 1,764 02/28/2022 Subtotal and Average 140,003,982.63 137,775,000.00 137,291,509.87 137,296,155.89 1.558 1,260

Portfolio CNTY Data Updated: FUNDSNAP: 05/04/2017 16:04 NL! AC Run Date: 05/04/2017 - 16:06 PM (PRF_PM2) 7.3.0

13 Report Ver. 7.3.6.1 CHANDLER

Portfolio Management Page 2 Portfolio Details - Investments April 30, 2017

Average Purchase Stated YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate S&P 365 Maturity Date Agency Issues - Fixed Coupon 313378A43 5259 FED HOME LOAN BANK 08/14/20137,250,000.00 7,270,010.00 7,239,968.471.375 AA 1.543 312 03/09/2018 313378A43 5285 FED HOME LOAN BANK 10/16/2013510,000.00 511,407.60 509,683.461.375 AA 1.450 312 03/09/2018 313378A43 5353 FED HOME LOAN BANK 03/26/2014580,000.00 581,600.80 579,996.231.375 AA 1.376 312 03/09/2018 3130A4GJ5 5469 FED HOME LOAN BANK 03/31/20158,500,000.00 8,497,535.00 8,510,068.161.125 AAA 1.002 359 04/25/2018 3130A7CV5 5553 FED HOME LOAN BANK 02/18/20167,740,000.00 7,647,274.80 7,716,252.481.375 1.459 1,389 02/18/2021 3130A7CV5 5603 FED HOME LOAN BANK 07/20/20162,000,000.00 1,976,040.00 2,011,778.761.375 1.215 1,389 02/18/2021 3130A8QS5 5633 FED HOME LOAN BANK 10/06/2016 9,150,000.00 8,911,917.00 9,075,542.43 1.125 1.325 1,535 07/14/2021 3137EADP1 5249 FED. HOME LOAN MTG. CORP. 06/12/2013 2,200,000.00 2,195,050.00 2,192,912.65 0.875 AAA 1.267 310 03/07/2018 3137EADP1 5253 FED. HOME LOAN MTG. CORP. 06/27/2013 575,000.00 573,706.25 571,764.19 0.875 AAA 1.564 310 03/07/2018 3137EADG1 5388 FED. HOME LOAN MTG. CORP. 07/31/2014 3,740,000.00 3,769,059.80 3,736,221.52 1.750 AAA 1.801 759 05/30/2019 3137EADK2 5407 FED. HOME LOAN MTG. CORP. 09/08/2014 8,650,000.00 8,621,109.00 8,541,584.05 1.250 AAA 1.835 822 08/01/2019 3137EADG1 5419 FED. HOME LOAN MTG. CORP. 10/30/2014 4,660,000.00 4,696,208.20 4,672,903.68 1.750 AAA 1.611 759 05/30/2019 3137EADM8 5424 FED. HOME LOAN MTG. CORP. 11/25/2014 8,600,000.00 8,553,388.00 8,495,080.15 1.250 AAA 1.778 884 10/02/2019 3137EADM8 5473 FED. HOME LOAN MTG. CORP. 03/31/2015 500,000.00 497,290.00 498,100.56 1.250 AAA 1.413 884 10/02/2019 3137EADK2 5474 FED. HOME LOAN MTG. CORP. 03/31/2015 500,000.00 498,330.00 498,842.12 1.250 AAA 1.356 822 08/01/2019 3137EADP1 5475 FED. HOME LOAN MTG. CORP. 03/31/2015 1,700,000.00 1,696,175.00 1,699,128.07 0.875 AAA 0.936 310 03/07/2018 3137EAEC9 5621 FED. HOME LOAN MTG. CORP. 08/31/2016 7,250,000.00 7,040,982.50 7,188,461.67 1.125 1.331 1,564 08/12/2021 3137EADP1 5623 FED. HOME LOAN MTG. CORP. 07/18/2016 4,000,000.00 3,991,000.00 4,003,366.52 0.875 AAA 0.775 310 03/07/2018 3137EAEC9 6326 FED. HOME LOAN MTG. CORP. 09/27/2016 2,605,000.00 2,529,897.85 2,588,165.08 1.125 1.281 1,564 08/12/2021 3135G0N82 3644 FED. NAT'L. MTG. ASSN. 10/06/2016 5,800,000.00 5,663,584.00 5,772,310.97 1.250 1.365 1,569 08/17/2021 3135G0WJ8 5255 FED. NAT'L. MTG. ASSN. 07/24/2013 1,600,000.00 1,594,992.00 1,590,034.68 0.875 AAA 1.489 385 05/21/2018 3135G0WJ8 5280 FED. NAT'L. MTG. ASSN. 10/16/2013 600,000.00 598,122.00 596,069.58 0.875 AAA 1.520 385 05/21/2018 3135G0WJ8 5344 FED. NAT'L. MTG. ASSN. 03/21/2014 650,000.00 647,965.50 645,663.67 0.875 AAA 1.530 385 05/21/2018 3135G0ZG1 5418 FED. NAT'L. MTG. ASSN. 10/30/2014 8,400,000.00 8,459,052.00 8,409,261.91 1.750 AAA 1.701 864 09/12/2019 3135G0WJ8 5477 FED. NAT'L. MTG. ASSN. 03/31/2015 500,000.00 498,435.00 499,374.51 0.875 AAA 0.996 385 05/21/2018 3135G0D75 5527 FED. NAT'L. MTG. ASSN. 09/30/2015 8,900,000.00 8,885,671.00 8,903,193.65 1.500 1.488 1,148 06/22/2020 3135G0F73 5548 FED. NAT'L. MTG. ASSN. 12/17/2015 9,300,000.00 9,248,478.00 9,172,929.04 1.500 1.900 1,309 11/30/2020 3135G0J20 5566 FED. NAT'L. MTG. ASSN. 03/31/2016 4,500,000.00 4,442,985.00 4,490,471.60 1.375 1.433 1,397 02/26/2021 3135G0J20 5577 FED. NAT'L. MTG. ASSN. 04/28/2016 5,000,000.00 4,936,650.00 4,979,984.18 1.375 1.484 1,397 02/26/2021 3135G0K69 5593 FED. NAT'L. MTG. ASSN. 06/30/2016 9,300,000.00 9,129,996.00 9,326,168.90 1.250 1.178 1,466 05/06/2021 3135G0N82 5628 FED. NAT'L. MTG. ASSN. 09/29/2016 4,000,000.00 3,905,920.00 3,994,582.84 1.250 1.283 1,569 08/17/2021 3135G0S38 5713 FED. NAT'L. MTG. ASSN. 04/27/2017 10,500,000.00 10,614,765.00 10,601,234.18 2.000 1.918 1,710 01/05/2022 880591EQ1 5291 TENNESSEE VALLEY AUTH. 10/29/2013 3,060,000.00 3,079,675.80 3,066,607.68 1.750 AAA 1.595 532 10/15/2018 880591EQ1 5293 TENNESSEE VALLEY AUTH. 10/31/2013 4,060,000.00 4,086,105.80 4,070,386.77 1.750 AAA 1.566 532 10/15/2018 880591EQ1 5299 TENNESSEE VALLEY AUTH. 11/27/2013 600,000.00 603,858.00 601,276.91 1.750 AAA 1.597 532 10/15/2018 880591EQ1 5355 TENNESSEE VALLEY AUTH. 03/26/2014 600,000.00 603,858.00 599,756.38 1.750 AAA 1.779 532 10/15/2018 Subtotal and Average 148,453,998.09 158,080,000.00 157,058,094.90 157,649,127.70 1.496 1,068

Portfolio CNTY Data Updated: FUNDSNAP: 05/04/2017 16:04 NL! AC Run Date: 05/04/2017 - 16:06 PM (PRF_PM2) 7.3.0

14 CHANDLER

Portfolio Management Page 3 Portfolio Details - Investments April 30, 2017

Average Purchase Stated YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate S&P 365 Maturity Date Supranationals 4581X0CW6 5655 INTER-AMERICAN DEVEL BK 01/18/20179,700,000.00 9,784,778.00 9,688,751.722.125 2.151 1,723 01/18/2022 4581X0CX4 5707 INTER-AMERICAN DEVEL BK 04/12/20178,955,000.00 8,949,179.25 8,934,139.931.625 1.704 1,107 05/12/2020 459058EJ8 5487 INTL BK RECON & DEVELOP 04/30/20159,000,000.00 8,970,570.00 8,994,473.281.000 AAA 1.056 410 06/15/2018 459058ER0 5532 INTL BK RECON & DEVELOP 10/07/201510,550,000.00 10,498,199.50 10,541,448.431.000 1.058 522 10/05/2018

Subtotal and Average 41,032,380.16 38,205,000.00 38,202,726.75 38,158,813.36 1.486 938 Corporte Notes & Bonds

037833AJ9 5245 APPLE INC. 05/23/20134,500,000.00 4,488,840.00 4,491,452.331.000 AA 1.195 367 05/03/2018 037833AJ9 5286 APPLE INC. 10/21/2013500,000.00 498,760.00 496,233.601.000 AA 1.783 367 05/03/2018 037833AJ9 5349 APPLE INC. 03/25/2014400,000.00 399,008.00 397,238.221.000 AA 1.714 367 05/03/2018 06406HCW7 5411 BANK OF NEW YORK MELLON 09/11/2014 3,510,000.00 3,543,380.10 3,509,685.07 2.300 A 2.304 863 09/11/2019 06406HCW7 5413 BANK OF NEW YORK MELLON 09/11/2014 1,750,000.00 1,766,642.50 1,751,272.64 2.300 A 2.267 863 09/11/2019 06406HCW7 5619 BANK OF NEW YORK MELLON 08/24/2016 1,500,000.00 1,514,265.00 1,530,195.53 2.300 A 1.426 863 09/11/2019 084664CK5 5615 BERKSHIRE HATHAWAY FIN 08/15/2016 2,860,000.00 2,842,353.80 2,857,883.39 1.300 1.333 836 08/15/2019 00440EAT4 5680 CHUBB INA HOLDINGS INC 02/09/2017 6,085,000.00 6,151,590.18 6,149,233.06 2.300 2.168 1,282 11/03/2020 166764BG4 5602 CHEVRON CORP 07/20/2016 3,000,000.00 2,991,510.00 3,060,043.89 2.100 1.583 1,476 05/16/2021 166764AA8 5187 CHEVRON FUNDING 12/05/2012 1,280,000.00 1,278,451.20 1,280,000.00 1.104 AA 1.104 218 12/05/2017 166764AA8 5203 CHEVRON FUNDING 01/15/2013 825,000.00 824,001.75 825,347.08 1.104 AA 1.031 218 12/05/2017 166764AA8 5262 CHEVRON FUNDING 08/30/2013 1,325,000.00 1,323,396.75 1,320,548.17 1.104 AA 1.692 218 12/05/2017 166764AA8 5263 CHEVRON FUNDING 08/30/2013 280,000.00 279,661.20 279,051.43 1.104 AA 1.697 218 12/05/2017 166764AA8 5302 CHEVRON FUNDING 12/05/2013 440,000.00 439,467.60 439,251.95 1.104 AA 1.399 218 12/05/2017 17275RAR3 5327 CISCO SYSTEMS INC. 03/04/2014 1,490,000.00 1,505,272.50 1,494,093.40 2.125 AA 1.967 669 03/01/2019 17275RAR3 5328 CISCO SYSTEMS INC. 03/07/2014 1,490,000.00 1,505,272.50 1,492,872.36 2.125 AA 2.014 669 03/01/2019 17275RAR3 5329 CISCO SYSTEMS INC. 03/11/2014 1,490,000.00 1,505,272.50 1,490,851.55 2.125 AA 2.092 669 03/01/2019 17275RAR3 5332 CISCO SYSTEMS INC. 03/12/2014 585,000.00 590,996.25 584,635.27 2.125 AA 2.161 669 03/01/2019 17275RAR3 5346 CISCO SYSTEMS INC. 03/25/2014 245,000.00 247,511.25 244,711.38 2.125 AA 2.193 669 03/01/2019 22160KAG0 5447 COSTCO WHOLESALE CORP. 02/17/2015 3,480,000.00 3,487,273.20 3,477,959.61 1.750 1.772 1,020 02/15/2020 30231GAV4 5557 EXXON MOBIL CORPORATION 03/03/2016 2,190,000.00 2,204,651.10 2,190,000.00 2.222 2.222 1,400 03/01/2021 30231GAV4 5580 EXXON MOBIL CORPORATION 05/19/2016 4,075,000.00 4,102,261.75 4,132,247.36 2.222 1.837 1,400 03/01/2021 36962G7G3 5314 G.E. CAPITAL CORP. 01/14/2014 2,050,000.00 2,076,281.00 2,050,195.48 2.300 AA 2.294 623 01/14/2019 36962G7G3 5315 G.E. CAPITAL CORP. 01/14/2014 2,865,000.00 2,901,729.30 2,863,165.70 2.300 AA 2.340 623 01/14/2019 36962G7G3 5343 G.E. CAPITAL CORP. 03/21/2014 250,000.00 253,205.00 251,312.31 2.300 AA 1.975 623 01/14/2019 36962G7G3 5525 G.E. CAPITAL CORP. 09/15/2015 500,000.00 506,410.00 503,041.99 2.300 AA 1.929 623 01/14/2019 02665WAC5 5305 HONDA/AMERICAN HONDA 12/11/2013 2,585,000.00 2,605,007.90 2,590,863.30 2.125 A 1.959 527 10/10/2018 02665WAC5 5423 HONDA/AMERICAN HONDA 11/20/2014 440,000.00 443,405.60 441,435.41 2.125 A 1.889 527 10/10/2018 02665WAQ4 5429 HONDA/AMERICAN HONDA 12/11/2014 3,695,000.00 3,702,907.30 3,694,300.00 1.550 A 1.582 224 12/11/2017 02665WAC5 5523 HONDA/AMERICAN HONDA 09/04/2015 300,000.00 302,322.00 301,070.09 2.125 A 1.869 527 10/10/2018 459200HZ7 5444 IBM CORP. 02/06/2015 5,595,000.00 5,589,852.60 5,590,654.81 1.125 1.229 281 02/06/2018

Portfolio CNTY Data Updated: FUNDSNAP: 05/04/2017 16:04 NL! AC Run Date: 05/04/2017 - 16:06 PM (PRF_PM2) 7.3.0

15 CHANDLER

Portfolio Management Page 4 Portfolio Details - Investments April 30, 2017

Average Purchase Stated YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate S&P 365 Maturity Date Corporte Notes & Bonds 458140AL4 5189 INTEL CORP. 12/17/20122,785,000.00 2,786,643.15 2,786,120.691.350 A 1.350 228 12/15/2017 458140AL4 5190 INTEL CORP. 12/17/20121,765,000.00 1,766,041.35 1,765,571.711.350 A 1.296 228 12/15/2017 458140AL4 5287 INTEL CORP. 10/21/2013350,000.00 350,206.50 349,454.241.350 A 1.610 228 12/15/2017 458140AL4 5348 INTEL CORP. 03/25/2014400,000.00 400,236.00 399,548.661.350 A 1.537 228 12/15/2017 24422ESF7 5306 JOHN DEERE CAPITAL CORP 12/13/20131,520,000.00 1,527,402.40 1,518,953.181.950 A 1.995 591 12/13/2018 24422ETL3 5700 JOHN DEERE CAPITAL CORP 03/27/20171,585,000.00 1,614,263.06 1,600,105.852.650 2.568 1,711 01/06/2022 594918BG8 5538 MICROSOFT CORP. 11/03/2015 2,345,000.00 2,356,162.20 2,343,684.72 2.000 2.017 1,282 11/03/2020 594918BP8 5612 MICROSOFT CORP 08/08/2016 3,030,000.00 2,969,854.50 3,027,283.35 1.550 1.572 1,560 08/08/2021 594918BP8 5613 MICROSOFT CORP 08/08/2016 1,220,000.00 1,195,783.00 1,218,406.13 1.550 1.582 1,560 08/08/2021 68389XBK0 5643 ORACLE CORP 12/02/2016 6,140,000.00 6,077,494.80 6,014,413.44 1.900 2.397 1,598 09/15/2021 68389XBK0 5663 ORACLE CORP 01/24/2017 600,000.00 593,892.00 586,379.39 1.900 2.452 1,598 09/15/2021 69371RN44 5673 PACCAR FINANCIAL CORP 01/30/2017 6,500,000.00 6,319,950.00 6,258,679.83 1.650 2.575 1,563 08/11/2021 713448CR7 5488 Pepsi Co 04/30/2015 2,110,000.00 2,109,113.80 2,109,915.83 1.250 1.254 364 04/30/2018 713448CR7 5489 Pepsi Co 05/01/2015 2,700,000.00 2,698,866.00 2,699,443.03 1.250 1.271 364 04/30/2018 717081DJ9 5370 PFIZER 05/15/2014 1,705,000.00 1,705,051.15 1,704,980.55 1.100 AA 1.130 14 05/15/2017 74005PBH6 5435 Praxair Inc 01/13/2015 5,397,000.00 5,374,764.36 5,363,264.51 1.250 A 1.677 555 11/07/2018 74005PBH6 5492 Praxair Inc 05/13/2015 785,000.00 781,765.80 781,811.06 1.250 A 1.526 555 11/07/2018 747525AD5 5502 QUALCOMM INC 06/16/2015 2,710,000.00 2,727,127.20 2,691,717.26 2.250 2.486 1,115 05/20/2020 747525AD5 5503 QUALCOMM INC 06/16/2015 2,710,000.00 2,727,127.20 2,691,096.08 2.250 2.494 1,115 05/20/2020 747525AD5 5662 QUALCOMM INC 01/24/2017 1,200,000.00 1,212,384.00 1,206,575.31 2.250 2.199 1,115 05/20/2020 857477AV5 5581 STATE STREET CORP 05/19/2016 3,185,000.00 3,147,862.90 3,183,658.48 1.950 1.961 1,479 05/19/2021 857477AV5 5667 STATE STREET CORP 01/25/2017 2,155,000.00 2,137,576.83 2,118,404.90 1.950 2.488 1,479 05/19/2021 89236TCA1 5433 TOYOTA MOTOR CREDIT 01/12/2015 1,470,000.00 1,472,175.60 1,469,531.95 1.450 AA 1.497 256 01/12/2018 89236TCA1 5461 TOYOTA MOTOR CREDIT 03/11/2015 990,000.00 991,465.20 990,640.09 1.450 AA 1.355 256 01/12/2018 89236TCA1 5507 TOYOTA MOTOR CREDIT 06/25/2015 510,000.00 510,754.80 510,152.16 1.450 AA 1.406 256 01/12/2018 91159HHE3 5322 US BANK N.A. 02/18/2014 407,000.00 409,258.85 407,280.03 1.950 A 1.903 563 11/15/2018 91159HHE3 5323 US BANK N.A. 02/18/2014 207,000.00 208,148.85 207,142.42 1.950 A 1.903 563 11/15/2018 91159HHH6 5365 US BANK N.A. 05/01/2014 1,445,000.00 1,458,048.35 1,443,947.57 2.200 A 2.239 724 04/25/2019 91159HHH6 5366 US BANK N.A. 05/01/2014 2,023,000.00 2,041,267.69 2,021,752.03 2.200 A 2.233 724 04/25/2019 91159HHH6 5379 US BANK N.A. 06/13/2014 892,000.00 900,054.76 894,453.76 2.200 A 2.053 724 04/25/2019 91159HHH6 5394 US BANK N.A. 08/07/2014 200,000.00 201,806.00 200,613.08 2.200 A 2.037 724 04/25/2019 91159HHP8 5666 US BANK N.A. 01/24/2017 3,000,000.00 3,025,200.00 2,995,118.07 2.625 2.662 1,729 01/24/2022 913017BU2 5121 UNITED TECHNOLOGIES CORP 06/01/2012 350,000.00 350,178.50 349,994.98 1.800 A 1.818 31 06/01/2017 94974BGF1 5441 WELLS FARGO SECURITIES LLC 02/02/2015 4,400,000.00 4,413,948.00 4,396,708.47 2.150 2.179 1,004 01/30/2020 94974BGF1 5442 WELLS FARGO SECURITIES LLC 02/02/2015 1,105,000.00 1,108,502.85 1,105,000.00 2.150 2.150 1,004 01/30/2020 94974BGF1 5604 WELLS FARGO SECURITIES LLC 07/20/2016 1,000,000.00 1,003,170.00 1,012,646.74 2.150 1.674 1,004 01/30/2020 931142DF7 5227 WAL-MART STORES 04/11/2013 2,640,000.00 2,636,462.40 2,639,541.23 1.125 AA 1.144 345 04/11/2018

Subtotal and Average 134,840,622.67 135,116,000.00 135,180,969.88 134,844,837.16 1.887 885

Portfolio CNTY Data Updated: FUNDSNAP: 05/04/2017 16:04 NL! AC Run Date: 05/04/2017 - 16:06 PM (PRF_PM2) 7.3.0

16 CHANDLER

Portfolio Management Page 5 Portfolio Details - Investments April 30, 2017

Average Purchase Stated YTM Days to Maturity CUSIP Investment # Issuer Balance Date Par Value Market Value Book Value Rate S&P 365 Maturity Date Asset Backed 161571GC2 5524 CHASE ISSUANCE TRUST 09/03/20150.00 0.00 0.001.010 0.887 0 10/15/2018 161571HH0 5624 CHASE ISSUANCE TRUST 09/13/20166,215,000.00 6,209,592.95 6,214,464.271.060 1.068 868 09/16/2019 161571HH0 5675 CHASE ISSUANCE TRUST 01/31/2017600,000.00 599,478.00 599,390.621.060 1.102 868 09/16/2019 43814GAC4 5308 HONDA AUTO RECEIVABLES TRUST 05/21/2014321,214.53 321,025.01 321,175.920.770 AAA 0.777 322 03/19/2018 43814HAC2 5401 HONDA AUTO RECEIVABLES TRUST 08/20/2014634,268.33 633,818.00 634,145.980.880 AAA 0.892 410 06/15/2018 43813NAC0 5495 HONDA AUTO RECEIVABLES TRUST 05/20/20153,172,323.94 3,167,692.35 3,171,836.991.040 1.051 661 02/21/2019 43814QAC2 5584 HONDA AUTO RECEIVABLES TRUST 05/30/2016 2,530,000.00 2,526,407.40 2,529,950.92 1.390 1.395 1,080 04/15/2020 43814RAB2 5635 HONDA AUTO RECEIVABLES TRUST 10/25/2016 4,984,999.99 4,976,326.09 4,984,860.91 1.040 1.044 717 04/18/2019 43814TAB8 5698 HONDA AUTO RECEIVABLES TRUST 03/28/2017 3,175,000.00 3,175,730.25 3,174,924.12 1.420 1.426 812 07/22/2019 47787VAC5 5358 JOHN DEERE OWNER TRUST 04/09/2014 330,572.12 330,466.34 330,519.16 0.920 AAA 0.930 350 04/16/2018 477877AD6 5405 JOHN DEERE OWNER TRUST 09/03/2014 1,187,815.47 1,186,841.46 1,187,556.05 1.070 AAA 1.083 563 11/15/2018 477879AC4 5490 JOHN DEERE OWNER TRUST 05/05/2015 -0.06 -0.06 -0.06 0.870 AAA 0.735 106 08/15/2017 477879AC4 5491 JOHN DEERE OWNER TRUST 05/05/2015 -0.08 -0.08 -0.08 0.870 AAA 0.735 106 08/15/2017 477877AD6 5493 JOHN DEERE OWNER TRUST 05/13/2015 91,841.40 91,766.09 92,020.78 1.070 AAA 0.913 563 11/15/2018 47788MAC4 5556 JOHN DEERE OWNER TRUST 03/02/2016 3,495,000.00 3,488,429.40 3,494,449.89 1.360 1.372 1,080 04/15/2020 47788NAB4 5606 JOHN DEERE OWNER TRUST 07/28/2016 4,375,000.00 4,371,850.00 4,374,733.13 1.090 1.097 655 02/15/2019 47787XAB3 5685 JOHN DEERE OWNER TRUST 03/02/2017 2,150,000.00 2,149,978.50 2,149,991.40 1.500 1.505 897 10/15/2019 65478WAB1 5614 NISSAN AUTO RECEIVABLES OWNERS 08/10/2016 2,809,324.18 2,806,233.92 2,809,213.49 1.070 1.075 744 05/15/2019 654747AB0 5697 NISSAN AUTO RECEIVABLES OWNERS 03/28/2017 2,300,000.00 2,300,874.00 2,299,988.27 1.470 1.475 989 01/15/2020 89231MAC9 5335 TOYOTA AUTO RECEIVABLES TRUST 03/19/2014 0.00 0.00 0.00 0.670 AAA 0.681 0 12/15/2017 89236WAC2 5458 TOYOTA AUTO RECEIVABLES TRUST 03/04/2015 2,178,649.85 2,176,645.49 2,178,320.44 1.120 AAA 1.131 655 02/15/2019 89231TAB6 5516 TOYOTA AUTO RECEIVABLES TRUST 08/26/2015 0.00 0.00 0.00 0.920 AAA 0.928 0 02/15/2018 89231LAB3 5634 TOYOTA AUTO RECEIVABLES TRUST 10/12/2016 4,020,000.00 4,013,929.80 4,019,678.40 1.060 1.068 744 05/15/2019 89238MAB4 5692 TOYOTA AUTO RECEIVABLES TRUST 03/15/2017 3,540,000.00 3,540,708.00 3,539,658.39 1.420 1.432 868 09/16/2019 Subtotal and Average 48,976,916.07 48,111,009.67 48,067,792.91 48,106,878.99 1.194 801

Total and Average 536,946,704.35 538,513,074.99 536,951,884.38 537,208,993.76 1.571 1,000

Portfolio CNTY Data Updated: FUNDSNAP: 05/04/2017 16:04 NL! AC Run Date: 05/04/2017 - 16:06 PM (PRF_PM2) 7.3.0