DETROIT PUBLIC SCHOOLS 525 West Ottawa Street (EMPROP-01 THRU 61) Lansing, MI 48909 PROPOSAL from GOVERNING BODY of DETROIT PUBLIC SCHOOLS (GBPROP-01 THRU 21)

LOCAL EMERGENCY AGENDA

FINANCIAL ASSISTANCE (AGENDA-01)

LOAN BOARD MEETING

ALTERNATE DESIGNATIONS (AD-01 THRU 02) May 5, 2015

10:30 AM MINUTES-PRIOR MEETING (MIN-01 THRU 02)

G. Mennen Williams SUMMARY MEMO FOR RESTRUCTURING OF Building 2014 STATE AID NOTES AND 2012 OBLIGATION (SUM-01 THRU 02) Williams Auditorium, st 1 Floor PROPOSAL FROM EM OF DETROIT PUBLIC SCHOOLS 525 West Ottawa Street (EMPROP-01 THRU 61) Lansing, MI 48909 PROPOSAL FROM GOVERNING BODY OF DETROIT PUBLIC SCHOOLS (GBPROP-01 THRU 21)

DETROIT PUBLIC SCHOOLS EMERGENCY MANAGER PROPOSAL ORDER 2015-3 (2015-3_EMORDER-01 THRU 05)

DETROIT PUBLIC SCHOOLS GOVERNING BODY PROPOSAL ORDER 2015-3 (2015-3_GBORDER-01 THRU 05)

Local Emergency Financial Assistance Loan Board Tuesday, May 5, 2015 10:30 AM

G. Mennen Williams Building Williams Auditorium, 1st Floor 525 West Ottawa Street Lansing, MI 48909

I. CALL TO ORDER

II. APPROVAL OF MINUTES

A. Approval of Local Emergency Financial Assistance Loan Board (ELB) Minutes

1. April 29, 2015 Special Meeting Minutes

III. PUBLIC COMMENT

IV. NEW BUSINESS

A. Restatement of 2014 State Aid Notes and 2012 Multi-Year Repayment Obligation

1. Summary – Consideration of two proposals related to the Restatement of 2014 State Aid Notes and 2012 Multi-Year Repayment Obligation

2. Emergency Manager’s Proposal to the Detroit Public School Board

3. Detroit Public School Board Alternate Proposal

4. ELB Order 2015-3 a) Detroit Public Schools Emergency Manager Proposal b) Detroit Public School Board Alternate Proposal

V. ADJOURNMENT

AGENDA-01 89 (Rev. 04-15)

STA TE OF MICHIGAN

RICK SNYDER DEPARTMENT OF TREASURY NICK A. KHOURI GOVERNOR LANSING STATE TREASURER

ALTERNATE DESIGNATION

FOR MEETINGS OF THE

LOCAL EMERGENCY FINANCIAL ASSISTANCE LOAN BOARD

Members of the Board:

I am hereby designating the person named below as my representative at any meeting of the Local Emergency Financial Assistance Loan Board, and to sign on my behalf any Order of this Board.

Name: Thomas F. Saxton

Title: Chief Deputy State Treasurer

Office Name: Department of Treasury Executive Office

1l-.2~-1s Date N.

430 WEST ALLEGAN STREET• LANSING. MICHIGAN 48922 www .mlchlgan.gov/treasury • (517) 373-3200 AD-01 STATE OF MICHIGAN RICK SNYDER DEPARTMENT OF TECHNOLOGY, MANAGEMENT & BUDGET DAVID B. BEHEN GOVERNOR LANSING DIRECTOR

ALTERNATE DESIGNATION

FOR MEETINGS OF THE

LOCAL EMERGENCY FINANCIAL ASSISTANCE LOAN BOARD

Members of the Board:

I am hereby designating the person named below as my representative at any meeting of the Local Emergency Financial Assistance Loan Board, and to sign on my behalf any Order of this Board.

Name: John Roberts

Title: State Budget Director

Office Name: State Budget Office

David B. Behen

·,; . I. ii.{ Date

LEWIS CASS BUILDING, 2ND FLOOR • 302 $. WALNUT STREET • P.O. BOX 30026 • LANSING, Ml 48909 www.michigan.gov/dlmb • (517) 373-1004 AD-01AD-02 4425 (Rev.11-13)

STATE OF MICHIGAN RICK SNYDER DEPARTMENT OF TREASURY NICK A KHOURI GOVERNOR LANSING STATE TREASURER

LOCAL EMERGENCY FINANCIAL ASSISTANCE LOAN BOARD MINUTES

April 29, 2015 - 8:30 A.M.

Richard H. Austin Building, 1st Floor 430 W. Allegan Street, Lansing, Michigan 48922

Members Present: Thomas F. Saxton, Chief Deputy Treasurer

John Roberts, State Budget Director M Dept. of Technology, Management, and Budget

Mike Zimmer, Director M Dept. of Licensing and Regulatory Affairs

Others Present: Randall Byrne, Department ofTreasmy John Barton, Depm1ment of Treasury Eric Cline, Department of Treasury Shelbi Frayer, Depa11ment of Treasury Harlan Goodrich, Department of Treasmy Ed Koryzno, Department of Treasury Mike Krouse, Department of Treasury Shenique Moss, Office of the Attorney General Bill Sanders, Depm1ment of Treasury Suzanne Schafer, Department of Treasury Jeff Schwartz, Department of Treasury Terry Stanton, Depat1ment of Treasury Ann Storberg, Department of Treasury Drew Van de Grift, Department of Treasury Wayne Workman, Depm1ment of Treasury

I. Call to Order

Tom Saxton called the meeting to order at 8:30 a.m.

II. Approval of Minutes

A motion was made by John Robe11s to approve the minutes from the meeting of January 9, 2015 as presented. The motion was supported by Mike Zimmer. The minutes were unanimously approved as presented. M/S/P

P.O. BOX 30728 • LANSING, MICHIGAN 48909-8228 www.michigan.gov/lreasury • (517) 373-3227 MIN-01 Page 2

III. Public Comment

None.

IV. Order 2015-2 City of Flint Order of Approval of Emergency Loan

Wayne Workman gave a summary of the financial situation in the City of Flint. This $7,000,000 emergency loan eliminates the accumulated deficit, and is the final piece before the Emergency Manager is able to exit. Flint has had Emergency Managers since 2011. During this time, employee compensation has decreased 20%, retiree healthcare has been restructured, district courts and 911 have each been consolidated, and a new city administrator has been hired. However, challenges still remain. The City is currently involved with federal litigation regarding its retiree healthcare cuts and there -have been significant staffing cuts to both police and fire. In addition, its water system is transitioning from Detroit to the Karegnondi Water Authority while using the Flint River as an interim water source.

Emergency Manager Je1Ty Ambrose spoke briefly, indicating that he is satisfied with the infrastructure that now exists within the City.

Tom Saxton asked Shenique Moss, from the Office of the Attorney General, if her office had any comments. She stated that it was a standard emergency loan, with terms of 15 years at 2.09% interest.

Board discussion ensued.

Tom Saxton called for a motion regarding the proposal. A motion was made by Mike Zimmer to approve the Order of Approval as presented. The motion was suppo11ed by John Robe11s. The motion was unanimously approved by the Board. M/S/P

The meeting was adjourned by Tom Saxton at 8:42 a.m. ~ l:J. oJ~~J2. Harlan Goodrich, Secretary -. Local Emergency Financial Assistance Loan Board

Thomas F. Saxton, Chief Deputy Treasurer As Designee for Nick A. Khouri, State Treasurer Local Emergency Financial Assistance Loan Board

Date Approved: _S_-_S_--_/ :!;______

MIN•02

1443 (Rev. 04-15)

STATE OF MICHIGAN RICK SNYDER DEPARTMENT OF TREASURY NICK A. KHOURI GOVERNOR LANSING STATE TREASURER

DATE: May 1, 2015

TO: Local Emergency Financial Assistance Loan Board (ELB)

FROM: Jeanet Kulcsar, Michigan Department of Treasury

SUBJECT: Restructure of 2014 State Aid Notes and 2012 Obligation of Detroit Public Schools

Background

Detroit Public Schools (DPS) Emergency Manager (EM) Darnell Earley has proposed a restructure and restatement of the State Aid Notes issued in August 2014 (2014 SAN) and is also proposing to restructure and restate its long-term 2012 multi-year repayment obligation (2012 Obligation). In observance of Section 12(1)(u) and Section 19 of P.A. 436 of 2012, this proposal was submitted to the School Board. The School Board then disapproved the proposal and submitted an alternative plan. The ELB now has before it the original EM proposal as well as the School Board’s alternative.

Emergency Manager Earley’s Proposal

On April 8, 2015, EM Earley proposed two transactions to the School Board to allow the District to implement financial, operational and academic improvements and to generate cash flow relief through August 2015: 1) Restructure the District’s obligations under the 2014 SAN, by amending and restating the 2014 SAN and enter into a multi-year agreement for its repayment. The District anticipates approximately $82 million in near-term cash savings if the financing is completed by May 19, 2015 or approximately $66 million in savings if the financing is completed by June 19, 2015. 2) If market conditions allow, restructure the District’s long-term obligations under the 2012 Obligation, by amending and restating the 2012 Obligation and enter into a multi-year agreement for its repayment. The near-term cash savings assumed total approximately $3 million.

DPS Board’s Alternate Proposal The Board has proposed that the 2014 Note, the 2012 Obligations and any obligation that was incurred at any time while the Board did not have its full authority, be transferred and assumed by the State of Michigan.

430 W. ALLEGAN STREET • LANSING, MICHIGAN 48922 www.michigan.gov/treasury • 517-335-0994 SUM-01 Page 2

Analysis of Proposals

Section 19 of P.A. 436 of 2012 requires, among other things, that any alternative must “yield substantially the same financial result as the action proposed by the emergency manager.”

EM Earley’s proposal would result in very near-term cash savings to the District. The amount of near-term cash savings will be determined primarily by when the transaction is closed and funded. The remaining debt service payments under the 2014 Note total approximately $82 million, to be paid in full by August 2015. The proposed transaction would restructure the current obligation ($82 million as of May 19, and approximately $66 million as of June 19) so the first debt service payment on the restructured 2014 Note would occur in December 2015. This results in a decrease in debt service disbursements equal to the $82 million between May 20, 2015 and August 20, 2015 (and $66 million if the proposed transaction closes by June 19).

Similarly, the restructure of the 2012 Obligation would achieve near-term cash savings of approximately $3 million, equal to the debt service payment due in November 2015. Assuming closing and funding occurs prior to November 2015, the proposed transaction is structured so the first debt service payment on the restructured 2012 Obligation would occur in December 2016.

The School Board’s alternative proposal requests the State of Michigan to assume all debt incurred by the District at any time the Board did not have its full authority. Any savings would be driven by the timing the debt is assumed by the State, if any debt is assumed at all.

Status Update Since the submittal of the EM’s proposal, a number of events have occurred which impact the proposed transactions. The EM has been advised to reduce the total par amount and term of the debt introduced into the market, in order to mitigate risk and reduce the cost of borrowing. Therefore, at this time, only the 2014 SAN is contemplated to be restructured over a 13 month period. This is still within the parameters of the EM’s original proposal.

Timeline

Date Action

April 8, 2015 EM submits a proposal to restructure the 2014 and 2012 Obligations.

April 17, 2015 The DPS Board rejects the EM’s proposal.

April 23, 2015 The DPS Board passed an alternative proposal. The DPS Board submitted an alternative proposal to the ELB for the State to April 24, 2015 assume all debt incurred by the District.

SUM-02 DETROIT PUBLIC SCHOOLS Darnell Earley, ICMA-CM, MPA Emergency Manager

Fisher Building - 14'11 Floor Phone: (313) 870-3772 3011 W Grand Boulevard Fax: (313) 870-3726 Detroit, MI 48202-2710 www. detroitkl 2. org

April 8, 2015

Honorable Herman Davis, President Detroit Board of Education 6th floor Detroit, Michigan 48202

Re: School District of City of Detroit - Restatement of 2014 State Aid Notes and Possible Refunding and Restatement of 2012 Multi-Year Repayment Obligation (Limited Tax General Obligation)

Dear President Davis:

The District is in the process of refinancing and restating its State Aid Notes issued in August 2014 ("2014 State Aid Notes") and is also proposing to refund its long-term 2012 Multi-Year Repayment Obligation (Limited Tax General Obligation) ("2012 Obligation"). The restatement of the 2014 State Aid Notes would provide the District with cash-flow relief as result of not having to fund the state-aid set-asides remaining for the 2014 Notes. The District anticipates approximately $81.5 million in cash flow relief if the financing of the 2014 State Aid Notes is completed by May 19, 2015 or approximately $66 million in relief if the financing is completed by June 19, 2015, The restatement of the long-term 2012 Obligation would be consummated if the District determines that it would generate savings in accordance with the terms of the Order, which is dependent upon the ratings assigned to the proposed transaction by the rating agencies and the attendant interest rates received.

Pursuant to Public Act 436, the District must submit the Emergency Manager's recommendation to the District's Board of Education and obtain approval under Section 19 of such act received prior to the consummation of the financing transaction(s), Accordingly, the District respectfully is hereby requesting approval from the Board of Education as soon as possible within the time periods set forth in Section 19, and we have enclosed a proposed resolution, attached as Exhibit A hereto. We have also enclosed documents attached hereto as Exhibits B-D that will assist the Board in-its review of the transaction as noted below

In connection with the transactions proposed by the Emergency Manager to restate the 2014 State Aid Notes and to amend and restate the 2012 Obligation, the District is completing or has completed the following:

I. Reviewed its cashflow position and determined to restate the 2014 State Aid Notes to provide cashflow relief. Please see the presentation attached as Exhibit B hereto,

EMPROP-01 2. Obtained the approval of the Emergency Manager. Please see the EM order attached as Exhibit C hereto. 3. Submitted the required request for approval from the State Treasurer. Please see the application to issue Long-Term Securities attached as Exhibit D hereto.

4. Selected a transaction team consisting ofthe law firm of Miller, Canfield, Paddock and Stone, P .L.C. as bond counsel and Public Financial Management as financial advisor. Other members of the team will be JP Morgan Securities, the underwriter for the sale of the state issued bonds and its attorneys, and the requisite participants from the Michigan Finance Authority, and its counsel, as well as the State's Attorney General Office.

In addition to the material attached to this letter as Exhibits A through D for consideration by the members of the Board of Education, we have requested that representatives of the financial advisor, Public Financial Management, attend the Board Meeting on April 9, 2015 at which time they can present the information contained in Exhibit B to the Board and answer questions from the Board relating thereto. In addition, we have requested that representatives of Ernst & Young be available to answer any questions relating to the cash-flow summary and that bond counsel from Miller Canfield be available to respond to any legal questions.

If any additional information is required to facilitate your approval under Section 19 of Public Act 436, please contact Delores A. Brown at (313) 873-4013. Thank you for your cooperation.

Sincerely: CJ (}, ~~(-£-rj Darnell Earley, ICMA-CM, MI>Af- Emergency Manager

cc: Board Members Jean-Vierre Adams

EMPROP-02 Exhibit A Proposed Resolution

EMPROP-03 RESOLUTION OF THE BOARD OF EDUCATION OF THE SCHOOL DISTRICT OF THE CITY OF DETROIT APPROVING THE MULTI-YEAR REPAYMENT AGREEMENT AND RELATED ACTIONS (BORROWING THROUGH THE MICHIGAN FINANCE AUTHORITY)

A Special Meeting of the Board of Education of the School District of the City of Detroit was held at the Frederick Douglass Academy on Thursday, April 9, 2015, at 6:00 p.m.

Members present were: ------

The following preamble and resolution were offered by Member _____ and seconded by Member ______

WHEREAS, the Emergency Manager (the "Emergency Manager") for the School District of the City of Detroit (the "School District") has control over all fiscal matters of the School District and, pursuant to Section 12(u) of Act 436, can, subject to Section I 9 of Act No. 436, Public Acts of Michigan, 2012 ("Act 436"), authorize the borrowing of money by the School District as provided by law; and

WHEREAS, pursuant to Section 19 of Act 436, the Board of Education (the "Board") of the School District has the right to approve or disapprove any proposed action taken by the Emergency Manager to authorize the borrowing of money by the School District; and

WHEREAS, on August 29, 2014, the District issued its $107,800,000 State Aid Note, Series 2014 (Limited Tax General Obligation) (the "2014 District Note"), bearing interest at a rate of 2.85% per annum and payable as to both principal and interest on August 20, 2015; and WHEREAS, the 2014 District Note was acquired by the Michigan Finance Authority (the "Authority") on August 29, 2014, with a portion of the proceeds of the Authority's State Aid Revenue Notes, Series 2014E, pursuant to a Purchase Contract between the District and the Authority, dated August 27, 2014; and

WHEREAS, although the District has continued efforts to improve its financial condition, as of June 30, 2014, the District's cumulative deficit was $169,500,000 and the District does not currently have the ability to repay the 2014 District Note in accordance with the required schedule and also continue to implement financial, operational and academic improvements at the District; and

WHEREAS, in order to continue to implement financial, operational and academic improvements to the District and generate cash flow relief, the District has determined that it is in the District's best interests to restructure its obligations under the 2014 District Note; and

EMPROP-04 WHEREAS, in order to restructure its obligation under the 2014 District Note, the District intends to amend and restate the 2014 District Note (as amended and restated, the "Amended and Restated 2014 District Note") and enter into a multi-year agreement (the "2015A Multi-Year Agreement") for the repayment thereof; and WHEREAS, the District currently has outstanding a multi-year repayment agreement originally entered into in 2005 (the "2005 Multi-Year Agreement"), which was restructured in 2012 amending and restating the 2005 Multi-Year Agreement (as amended and restated, the "2012 Multi-Year Agreement"); and WHEREAS, the 2012 Multi-Year Agreement constitutes the District's obligation, evidenced by the 2012 Multi-Year Repayment Obligation in favor of the Authority pursuant to Section 1225(4) of the Revised School Code, to repay the Authority; and

WHEREAS, should market conditions allow further restructuring of the District's 2012 Multi-Year Repayment Obligation at a savings to the District, the District plans to rescind the notice of non-redemption provided to the 2011 MF A Bond Trustee on November 5, 2014 and exercise the extraordinary mandatory redemption provision in the 2012 Multi-Year Repayment Obligation; and

WHEREAS, if the District determines to restructure its obligation under the 2012 Multi-Year Agreement, the District intends to amend and restate the 20 I 2 Multi-Year Agreement (as amended and restated, the "2015B Multi-Year Agreement" and together with the 2015A Multi-Year Agreement, the "2015 Multi-Year Agreement"); and

WHEREAS, the 2015 Multi-Year Agreement will constitute the District's obligation under Section 1225(4) of the Revised School Code to repay the Authority; and

WHEREAS, in order to evidence its repayment obligations under the 2015 Multi Year Agreement, the District will enter into one or more obligations in favor of the Authority (the "2015 Multi-Year Repayment Obligations"); and WHEREAS, the Emergency Manager has authorized, subject to section 19 of Act 436, the execution, delivery and performance of one or more 2015 Multi-Year Agreements and 2015 Multi-Year Repayment Obligations with the Authority (the "2015 Multi-Year Repayment Transaction"). WHEREAS, the Board of the School District desires to consent to 2015 Multi Year Repayment Transaction under Section 19 of Act 436.

NOW THEREFORE, BE IT RESOLVED BY THE BOARD THAT:

Pursuant to Section 19 of Act 436, the Board hereby consents to the 2015 Multi Year Repayment Transaction as recommended by the District's Emergency Manager and submitted to the State of Michigan Department of Treasury for approval, under the terms and conditions set forth by the Emergency Manager, and hereby approves any and all actions (including but not limited to the negotiation, execution and delivery of such other agreements and certificates, necessary and convenient to facilitate the sale of the 2015 Multi-Year Repayment Obligations) taken or to be taken by the Emergency Manager and

Page 2 of3 EMPROP-05 the employees and agents of the District (including, but not limited to, counsel, financial advisers and underwriters and other members of the financing team for the Multi-Year Repayment Obligations) to effectuate such 2015 Multi-Year Repayment Transaction or the provisions of this Resolution.

Approved by:

Ayes: ______

Nays: ______

Motion declared: ------

The undersigned duly qualified and acting Secretary of the Board of Education of the School District of the City of Detroit hereby certifies that the foregoing is a true and complete copy of the resolution adopted by the Board of Education at Special Meeting of the Board of Education of the School District of the City of Detroit, held at the Frederick Douglass Academy on Thursday, April 9, 2015, the original of which resolution is a part of the Board's minutes, and further certifies that notice of the meeting was given to the public under the Open Meetings Act, Act No. 267, Public Acts of Michigan, 1976.

Signed:

Joyce Zarrieff Secretary, Board of Education of the School District of the City of Detroit

Page 3 of3 EMPROP-06 Exhibit B Presentation

EMPROP-07 Detroit of Debt Cit)r SCHOOLS 2015 the PUBWC of April DETROIT Aid-Supported District State School

EMPROP-08 2 relief million flow 2015 aside cash million $107.8 set 2020 2021 for financing including: of August in in $53 of Notes monthly amount through maturity maturity Aid supported have 2015 payments final final Aid financings State possible with with State financings February supported 2011A-2 May term million, million, & maximum supported 2015. Aid from until long the 20, $20.7 $32.3 supported Aid State for of of 2005 2011A-1 Aid of October of payments term 2014 August Notes State State on from long aside payments payments Aid August term term set in Restatement Restatement annual matures long Annual Annual State long • •

requirements Issued Monthly Note The Total 2011 2012

• • • • • • • Two 2014

• •

EMPROP-09 3 set the from FY16 41,137 90,000 (55,5432 (88,158) (34,200) (26,003) (81,545) rash 171,000 119,491 837,178 305,687 (173,924) (484,775) (152,800) d!(fe,jivm $(892,720) $ $ $ relief Foremrted FY15 operate tlitlferialfy 48,273 25,495 (51,49I) (37,310) (26,003) 154,657 168,229 151,000 126,120 107,189 331,432 887,626 (175,611) (106,968) (506,236) (161,272) or 17/~ry $(939,124) $ $ flomr. $ to tt

District

The aside •

EMPROP-10 4 2014 the operations for on obligation asides impact set fund 2015 2015 2015 19, 19, Series minimize May remaining to general June by Proposed • the by End debt Notes Year term 2012) fund & Fiscal to Aid completed (2011 completed is existing long is Service Debt having LT State around not financing ExDebt • financing by the District's proposed if the 2014 if 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 $0 relief financing relief term the the relief in $10,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 with in of wrap i'i - Cl ,J:! -,l ·;;; to million DPS million financing increase $66 $81.5 year • •

15 Notes Proposing Provides

• • • Restatement Restatement Would

• •

EMPROP-11 5 2012 the of refunding possible the generated be can includes dependent: also savings be rates if will obligation Rating Interest include

term • • Savings To

• • long Authorization Authorization •

EMPROP-12 6 in meet to 2015 19, order in May relief 2015 than flow 13, later approval cash no May board by Statement application deadline maximum approval occur delivered Authority rating authorization the be Official must Treasury of closing bond Treasury State of th Finance must of of 19 provide and sale/pricing to following May

Bond Preparation Receipt Local Receipt Submittal Michigan

• • • • • • • Financing order The the

• •

EMPROP-13 Exhibit C Order

EMPROP-14 SCHOOL DISTRICT OF THE CITY OF DETROIT COUNTY OF WAYNE, STATE OF MICHIGAN ORDER AUTHORIZING AND APPROVING MULTI-YEAR REPAYMENT AGREEMENT AND RELATED ACTIONS

WHEREAS, pursuant to Act No. 436, Public Acts of Michigan, 2012 ("Act 436), and a Contract between the State of Michigan and Darnell Earley effective January 13, 2015 (the "Contract"), the undersigned Emergency Manager (the "Emergency Manager") for the School District of the City of Detroit (the "School District") has control over all aspects of the operation of the School District and, subject to Section 19 of Act 436, can exercise the authority and responsibilities affecting the financial condition of the School District that are prescribed by law to the school board and superintendent of the School District, including, but not limited to, the borrowing of money and issuance of obligations of the School District on behalf of the School District, subject to the conditions of the Revised Municipal Finance Act, Act No. 34, Public Acts of Michigan, 2001, as amended ("Act 34"); and

WHEREAS, Section 1225(4), of the Revised School Code (the "Revised School Code") provides:

A school district or intermediate school district that is not able to redeem its notes within 372 days after the date on which the notes were issued may enter into a multi-year agreement with a lending institution to repay its obligation. A repayment agreement shall not be executed without the prior approval of an authorized representative of the state board or, for notes sold to the Michigan Finance Authority only, without the approval of an authorized representative of the department of treasury; and

WHEREAS, despite efforts by the District to improve its financial condition, as of June 30, 2011, the District had a cumulative deficit that was $283,929,315 and the District did not have the ability to repay its State Aid Notes, Series 2011A-l and Series 201 lA-2 (the "2011 Notes") in accordance with the schedules required and also continue to implement financial, operational and academic improvements to the District, which led to the amendment and restatement of the 2011 Notes in October, 2011; and

WHEREAS, in connection with the amendment and restatement of the 2011 Notes, on October 13, 2011 (the "Amended and Restated 2011 District Note"), the District covenanted not to issue any future obligations secured by State Aid senior to or on parity with the Amended and Restated 2011 District Note; and

WHEREAS, the Authority acquired the Amended and Restated 2011 District Note with the proceeds of its Revenue Bonds (School District of the City of Detroit), Series 201 I (the "2011 MFA Bonds") under a trust indenture with The Bank of New York Mellon Trust Company, N.A. (in such capacity, the "2011 MFA Bond Trustee") (as supplemented, the "2011 MFA Bond Indenture"); and

EMPROP-15 WHEREAS, to continue to implement financial, operational and academic improvements to the District without the restrictions imposed by the insurer of the District's obligations under a multi-year repayment agreement entered into in 2005 (the "2005 Multi-Year Agreement"), the District detenuined in 2012 that it was in the District's best interests to further restructure that obligation by amending and restating its 2005 Multi-Year Agreement (as amended and restated, the "2012 Multi-Year Agreement") and redeemed the portion of its Amended and Restated 2004 District Note payable after June 1, 2012 through the use of extraordinary mandatory redemption; and

WHEREAS, the 2012 Multi-Year Agreement constitutes the District's obligation, evidenced by the 2012 Multi-Year Repayment Obligation (the "2012 Multi-Year Repayment Obligation"), in favor of the Authority pursuant to Section 1225(4) of the Revised School Code, to repay the Authority; and

WHEREAS, the 2012 Multi-Year Repayment Obligation is secured by State Aid on a basis subordinate to the Amended and Restated 2011 District Note pursuant to the 2012 Master State Aid Pledge Agreement dated as of May 1, 2012 among the Authority, the District and the State Treasurer of the State of Michigan, (the "2012 Master State Aid Pledge Agreement"); and

WHEREAS, in connection with the 2012 Multi-Year Agreement, the Authority issued bonds (the "2012 MFA Bonds") to acquire the 2012 Multi-Year Repayment Obligation to provide the District with funds to extraordinarily redeem the Amended and Restated 2004 District Note, enabling the Authority to refund the 2005 Authority Series B Bonds; and

WHEREAS, to facilitate the issuance of the 2012 MFA Bonds, the Authority and the 2011 MFA Bond Trustee entered into a Second Supplemental Indenture (the "Second Supplemental Indenture"), and the Authority and the District executed the Amended and Restated Financing Agreement, dated as of May 1, 2012 (the "2012 Financing Agreement"); and

WHEREAS, the 2014 District Note was acquired by the Authority on August 29, 2014, with a portion of the proceeds of the Authority's State Aid Revenue Notes, Series 2014E (the "2014 Authority Notes"), pursuant to a Purchase Contract between the District and the Authority, dated August 27, 2014 (the "2014 Purchase Contract"); and

WHEREAS, in the 2014 Purchase Contract, inter alia, the District (a) agreed to deposit various installment amounts (the "Installments") with The Bank of New York Mellon Trust Company, N.A., as depository (the "Depository"), on February 20, 2015, March 20, 2015, April 20, 2015, May 20, 2015, June 27, 2015, July 20, 2015 and August 20, 2015; (b) agreed that so long as the 2014 District Note remained outstanding, the District would neither pledge nor make any request for an advancement pursuant to Section 17b of Act 94, Public Acts of Michigan, 1979, as amended (the "State School Aid Act"), of any portion of its February 2015, March 2015, April 2015, May 2015, June 2015, July 2015 or August 2015 payments received under the State School Aid Act ("State Aid") without the prior written consent of Authority; and ( c)

2 EMPROP-16 i1Tevocably directed the State of Michigan (the "State") to pay to the Depository 100% of the State Aid to be distributed to the District in February, March, April, May, July and August 2015; and

WHEREAS, the 2014 Authority Notes were issued pursuant to a resolution adopted by the Authority (the "2014 Authority Resolution"), in which the Authority, inter alia, (a) pledged the 2014 District Note to the 2011 MFA Bond Trustee, as security for the payment of the 2014 Authority Notes, and (b) agreed to diligently take all reasonable steps, actions and proceedings necessary for the enforcement of the 2014 District Note; and

WHEREAS, in order to restructure its obligation under the 2014 District Note, the District intends to amend and restate the 2014 District Note (as amended and restated, the "Amended and Restated 2014 District Note") and enter into a multi-year agreement (the "2015A Multi-Year Agreement") for the repayment thereof; and

WHEREAS, should market conditions allow further restructuring of the 2012 Multi y ear Repayment Obligation at a savings to the District, the District plans to rescind the notice of non-redemption provided to the 2011 MFA Bond Trustee on November 5, 2014 and exercise the extraordinary mandatory redemption provision in the 2012 Multi-Year Repayment Obligation; and

WHEREAS, if the District determines to restructure its obligation under the 2012 Multi Year Agreement, the District intends to amend and restate the 2012 Multi-Year Agreement (as amended and restated, the "2015B Multi-Year Agreement" and together with the 2015A Multi Year Agreement, the "2015 Multi-Year Agreement"); and

WHEREAS, the 2015 Multi-Year Agreement will constitute the District's obligation under Section 1225(4) of the Revised School Code to repay the Authority; and

WHEREAS, in order to evidence its repayment obligations under the 2015 Multi-Year Agreement, the District will enter into one or more obligations in favor of the Authority (the "2015 Multi-Year Repayment Obligations"); and

WHEREAS, the 2015 Multi-Year Repayment Obligations will be secured by a pledge of State Aid on a basis subordinate to the Amended and Restated 2011 District Note pursuant to the 2011 Master State Aid Pledge Agreement, and unless the District restructures the 2012 Multi-

3 EMPROP-17 Year Agreement pursuant to the 2015B Multi-Year Agreement, subordinate to the 2012 Multi Year Agreement; and

WHEREAS, in connection with the 2015 Multi-Year Agreement, the Authority will issue bonds in one or more series (the "2015 MFA Bonds") to acquire the 2015 Multi-Year Repayment Obligations and thereby provide the District with funds to restructure the debt service payment schedules for the 2015 Multi-Year Repayment Obligations and the Amended and Restated 2014 District Note; and

WHEREAS, to facilitate the issuance of the 2015 MFA Bonds, the Authority and the 2011 MFA Bond Trnstee will enter into one or more Supplemental Indentures (the "Supplemental Indentures"), and the District and the Authority will enter into supplements to the Master State Aid Pledge Agreement (the "Master State Aid Pledge Agreement") and the Amended and Restated Financing Agreement (the "Amended and Restated Financing Agreement"), each dated as of May 1, 2012 between the Authority and the District; and

WHEREAS, the Authority and the District expect to receive an offer from certain underwriters or private purchasers to purchase the 2015 MFA Bonds pursuant to a purchase agreement or a private purchase agreement, respectively, or from certain placement agents to place the 2015 MFA Bonds pursuant to a placement agreement (such purchase agreement, private purchase agreement or placement agreement, each referred to herein as a "Purchase Agreement" and collectively as the "Purchase Agreements"); and

WHEREAS, in order to fulfill their responsibilities under Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12"), such underwriters will require a continuing disclosure undertaking (the "Continuing Disclosure Undertaking") of the District; and

WHEREAS, it is now appropriate to approve or provide a mechanism for approval of, the forms of the 2015 Multi-Year Agreements, the 2015 Multi-Year Repayment Obligations, the Purchase Agreements, the Continuing Disclosure Undertaking, the parameters for the terms of the 2015 Multi-Year Repayment Obligations, and the forms of the Supplemental Indenture, and supplements to the Amended and Restated Financing Agreement and the Master State Aid Pledge Agreement, and to confirm the application of the 2011 MF A Bond Indenture and the Master State Aid Pledge Agreement to the 2015 Multi-Year Repayment Obligations; and

NOW, THEREFORE IT IS ORDERED THAT:

1. The Emergency Manager or the District's Chief Financial Officer, Deputy Chief Financial Officer/Chief Accounting Officer, General Counsel or other officer of the District designated by the Emergency Manager (an "Authorized Officer") is hereby authorized to negotiate the terms of one or more 2015 Multi-Year Agreements with the Authority within the parameters set forth herein and in Exhibit A hereto, and to execute and deliver each 2015 Multi Year Agreement when the terms thereof are finalized, with such modifications as are necessary and desirable and not materially advt;rse to the District or outside the parameters of this Order.

4 EMPROP-18 2. The Amended and Restated 2014 District Notes and, if issued, the Amended and Restated 2012 Multi-Year Repayment Obligation (collectively, the "2015 Multi-Year Repayment Obligations"), shall be issued in the forms approved by the Emergency Manager and the Emergency Manager or an Authorized Officer will execute and deliver the 2015 Multi Year Repayment Obligations to the Authority when the terms thereof are finalized, with such modifications as are necessary and desirable and not materially adverse to the District or outside the parameters of this Order. The caption of the 2015 Multi-Year Repayment Obligations shall be designated in the supplement to the Amended and Restated Financing Agreement with such additional designations as are necessary and desirable to reflect the purpose thereof.

3. Each 2015 Multi-Year Repayment Obligation shall bear interest from the date(s) of delivery thereof, payable on June I and December 1, commencing December I, 2015, at a rate or rates which produce a true interest cost no higher than the maximum rates set forth in Exhibit A, and be due and payable on June I i.n the years and in the amounts to be determined at the time of sale of the 2015 MFA Bonds, provided that the final maturity of the 20 I 5 Multi Year Repayment Obligation shall occur no later than June I, 2030. The 2015 Multi-Year Repayment Obligation shall be payable in lawful money of the United States of America to the Depository or such other depository as shall be designated by the Authority, subject to the consent of the District. The 2015 Multi-Year Repayment Obligations shall be issued in the maximum aggregate principal amount of not to exceed $181,000,000, which will consist of the outstanding par amount of the Amended and Restated 2014 District Note of $85,000,000, plus, if the 2012 Multi-Year Repayment Obligation is restructured, the par amount of the 2012 Multi Year Repayment Obligation as restructured, of $96,000,000, such final amounts to be as approved by the Emergency Manager or an Authorized Officer. The 2015 Multi-Year Repayment Obligations shall be subject to redemption prior to maturity as provided in Exhibit A hereto, with such modifications as may be approved by the Emergency Manager or an Authorized Officer at the time of sale of the 2015 MF A Bonds. The restructuring of the 2012 Multi-Year Repayment Obligation shall produce a minimum net present value savings of at least $1.00.

4. The District hereby pledges all of the State Aid to be received by the District beginning the 20th day of the first month following delivery of the 2015 Multi-Year Repayment Obligations (the "Pledged State Aid") to repay the principal of and interest on the 2015 Multi Year Repayment Obligations. The pledge of Pledged State Aid shall be subordinate to its pledge to the Amended and Restated 2011 District Note. In addition, in the event the 2012 Multi-Year Repayment Obligation is not restructured, the pledge of Pledged State Aid shall be subordinate to the District's pledge in favor of the 2012 Multi-Year Repayment Obligation. In addition, the full faith and credit of the District is hereby irrevocably pledged for payment of principal of and interest on the 2015 Multi-Year Repayment Obligations and, in case of the insufficiency of the Pledged State Aid, the District shall pay the 2015 Multi-Year Repayment Obligations from any funds legally available therefor (including general funds or unencumbered funds), and, if necessary, levy sufficient taxes on all taxable property in the District for the payment thereof, subject to applicable constitutional and statutory tax rate limitations. Constitutional and statutory provisions prohibit the District from pledging its full faith and credit together with its power to levy ad valorem taxes on taxable property without limitation as to rate or amount as security for the 2015 Multi-Year Repayment Obligations.

5 EMPROP-19 5. Each of the Emergency Manager or an Authorized Officer, together with Miller, Canfield, Paddock and Stone, P.L.C. as Note Counsel, is authorized to negotiate the terms and approve the final fo1ms of (a) the supplement to the 2011 MF A Bond Indenture, (b) the 2015 supplement to the Amended and Restated Financing Agreement, and (d) the supplement to the 2012 Master State Aid Pledge Agreement, such document or agreement, whether or not on file with the District on the date hereof, and the Emergency Manager or an Authorized Officer may execute and deliver the supplements to the Amended and Restated Financing Agreement and the Master State Aid Pledge Agreement for and on behalf of the District. The District shall comply with all terms of the foregoing agreements and of the 2011 MFA Bond Indenture as supplemented.

6. Pursuant to Section 17a(3) of the State School Aid Act and the 2012 Master State Aid Pledge Agreement and subject to the 2012 Master State Aid Pledge Agreement, the District hereby irrevocably assigns to the Authority and directs the State Treasurer of the State to pay to the 2011 MFA Bond Trustee I 00% of the Pledged State Aid to be distributed to the District in each month commencing the 20th day of the first month following delivery of the 2015 Multi Year Repayment Obligations, and continuing each month thereafter as long as the 2015 Multi Year Repayment Obligations remain outstanding. The 2011 MFA Bond Trustee shall apply the Pledged State Aid payments received by it in each month as provided in the 2011 MF A Bond Indenture.

Monies to pay the principal of and interest on the 2015 Multi-Year Repayment Obligations when due shall be set aside in a separate fund with the 2011 MF A Bond Trustee at such times and in such amounts, with such modifications as provided in the 2011 MF A Bond Indenture and the supplement to the Amended and Restated Financing Agreement, which establishes the set aside requirements of the District for certain Pledged State Aid payments to the 2011 MFA Bond Trustee with respect to the 2015 Multi-Year Repayment Obligations. If, for any reason, the Pledged State Aid received is insufficient to pay the amount due under the supplement to the Amended and Restated Financing Agreement, then in that event the District pledges to use any and all other available funds to meet its obligations under the supplement to the Amended and Restated Financing Agreement.

7. Each of the Emergency Manager or an Authorized Officer, together with Miller, Canfield, Paddock and Stone, P.L.C, as Note Counsel, is authorized to negotiate the terms and approve the final forms of Purchase Agreements, whether or not on file with the District on the date hereof, and the Emergency Manager or an Authorized Officer shall execute and deliver one or more Purchase Agreements to reflect the terms under which the Authority agrees to restructure the District's payment obligations under the 2015 Multi-Year Agreement, within the parameters of this Order, and such additional documentation and take such steps as shall be necessary to effectuate the delivery of the 2015 Multi-Year Repayment Obligations and the performance of the District's obligations under the Purchase Agreements, the 2015 Multi-Year Agreement, the supplement to the Amended and Restated Financing Agreement, the supplement to the Master State Aid Pledge Agreement, and the 2015 Multi-Year Repayment Obligations.

6 EMPROP-20 8. The preparation and distribution of a preliminary official statement for the 2015 MFA Bonds is hereby authorized, and the participation of the District's Chief Financial Officer, Deputy Chief Financial Officer/Chief Accounting Officer and General Counsel and such other District officials and employees as the Chief Financial Officer, Deputy Chief Financial Officer/Chief Accounting Officer or General Counsel shall determine, in the preparation and delivery of the preliminary official statement for the 2015 MF A Bonds is hereby authorized and such District officials and employees are hereby authorized to participate in the preparation of the final official statement for the 2015 MF A Bonds. In the event that the 2015 MFA Bonds are sold through a private placement, references to preliminary official statement and official statement shall be deemed to refer to preliminary private placement memorandum and private placement memorandum or other applicable disclosure documents.

9. The District hereby covenants and agrees to make the following payments:

(a) on the third Business Day prior to each interest payment date on the 2015 MF A Bonds, the interest which is due and payable on the 2015 MF A Bonds on such interest payment date on the 2015 MFA Bonds.

(b) on the third Business Day prior to each principal payment date on the 2015 MFA Bonds, whether by maturity, redemption or otherwise, the principal which is due and payable on the 2015 MFA Bonds on such principal payment date.

(c) Any amount which may from time to time be required to enable the Authority to pay redemption premiums, if any, as and when 2015 MFA Bonds are called for redemption.

(d) Any amount necessary to make, or to make up any deficits in any set- aside requirements with respect to the 2015 MF A Bonds within seven calendar days after the date when due.

(e) Any payments for Costs oflssuance or Fees and Charges.

(f) Rebate payments as required pursuant to the 2011 MFA Bond Indenture or Collateral Documents.

The District shall have the right from time to time to make advance payments as provided in the supplement to the Amended and Restated Financing Agreement.

The foregoing payments shall be payable at the designated office of the 2011 MF A Bond Trustee in Detroit, Michigan or such other place as the 2011 MFA Bond Trustee may designate in writing.

10. The District reserves the right to issue additional obligations of subordinate standing to the 2015 Multi-Year Repayment Obligations, as the Emergency Manager or an Authorized Officer shall determine, subject to the limitations imposed by law and by the final forms of the 2015 Multi-Year Agreement, the supplement to the 2011 MFA Bond Indenture, and the supplement to the Master State Aid Pledge Agreement.

7 EMPROP-21 11. Unless the Emergency Manager or an Authorized Officer determines that it is in the best interests of the District to restructure its payment obligation under the Amended and Restated 2014 District Notes or the 2012 Amended and Restated Multi-Year Agreement on a federally taxable basis, the District covenants and agrees to take all actions necessary to maintain the exclusion of interest on the 2015 Multi-Year Repayment Obligations from gross income for federal income tax purposes and to take all action to maintain the exclusion of interest on the 20 I 5 MF A Bonds from gross income for federal income tax purposes, including, without limitation, complying with any extraordinary mandatory redemption provisions as shall be set forth in 2015 Multi-Year Repayment Obligations. In particular, the District covenants to comply with the requirements of the extraordinary mandatory redemption provision of the 2015 Multi-Year Repayment Obligation, including, on or before December I of each year, beginning December I, 2015, engaging nationally recognized bond counsel to provide an opinion to the effect that failure to redeem any portion of the 2015 Multi-Year Repayment Obligation which will remain outstanding after the next succeeding June 1 will not adversely affect the exemption of interest on the 2015 Multi-Year Repayment Obligation from gross income for Federal income tax purposes. In the event that bond counsel concludes that all or a portion of the 2015 Multi-Year Repayment Obligation must be redeemed on the next succeeding June 1 or the District fails to obtain the opinion, the District shall either (a) set aside 1/6 of the amount due for redemption on the next June 1 on the Set Aside Due Date each month beginning the December Set Aside Due Date preceding the June 1 redemption date or (b) take such other actions as approved by Note Counsel to maintain the interest exemption under the Internal Revenue Code of 1986, as amended and regulations promulgated thereunder. "Set Aside Due Date" means (a) the day in each month on which, pursuant to state law, regulation or policy, as applicable, State Aid payments, if any are scheduled to be made to the District, or (b) if in any month, no State Aid payments are scheduled to be made to the District, but State Aid payments have not been permanently terminated, the date in such month that corresponds numerically to the day referred to in (a), or ( c) if State Aid payments have been permanently terminated, the last Business Day (as defined in the 2011 MFA Bond Indenture) in such month.

12. The District hereby covenants to provide or cause to be provided, in accordance with the requirements of Rule 15c2-12, the information set forth in a Continuing Disclosure Undertaking as approved by the Emergency Manager or an Authorized Officer, as required by Rule I 5c2- l 2 prior to delivery of the 2015 MF A Bonds.

13. The Emergency Manager or an Authorized Officer is authorized to provide such notices as may be necessary to effectuate the restructuring of the 2014 District Note and/or the 2012 Multi-Year Repayment Obligation, including (a) to request acceptance of the Substitute Notice by the Authority and, upon receipt of such acceptance and consent, to provide the Substitute Notice to the Trustee, (c) to prepare a notice regarding its intent to provide the Notice and to direct the 2011 MFA Bond Trustee to provide such notice for publication through the Electronic Municipal Market Access (EMMA) system of the Municipal Securities Rulemaking Board. Any of the foregoing actions taken by the Emergency Manager or an Authorized Officer or their designated employees prior to the date hereof are hereby ratified.

8 EMPROP-22 14. The Emergency Manager or an Authorized Officer is authorized to make any required notification or application to the State Treasurer of the State of Michigan or to the Michigan Department of Treasury, as required by the Revised School Code or by other applicable law, and to take any additional actions and execute any additional documents, certificates, or agreements as the Emergency Manager or an Authorized Officer deems necessary or desirable to carry out the provisions of this Order and any such actions taken by the Emergency Manager or an Authorized Officer or their designated employees prior to the date hereof are hereby ratified.

15. All references in this Order to the District's Chief Financial Officer, Deputy Chief Financial Officer/Chief Accounting Officer and General Counsel and such other District Officials as the Chief Financial Officer, Deputy Chief Financial Officer/Chief Accounting Officer or General Counsel shall determine, shall also be deemed to refer to any person holding such position in an interim or acting capacity.

16. Defined terms which are not defined herein shall have the meanings assigned thereto in the 2012 Multi-Year Agreement or the 2011 MF A Bond Indenture.

17. All resolutions and executive orders of the District regarding the matters herein referenced, whether by or pursuant to actions of a Board of Education, a Chief Executive Officer, an Emergency Financial Manager, or an Emergency Manager, are hereby rescinded to the extent of any conflict with this Order.

[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

9 EMPROP-23 Signature Page to Order Authorizing and Approving Amendment and Restatement of Multi-Year Repayment Agreement and Related Actions

School District of the City of Detroit, County of Wayne, State of Michigan

Dated: April

EMPROP-24 EXHIBIT A 2015 MULTI-YEAR REPAYMENT OBLIGATION PARAMETERS

11 EMPROP-25 SCHOOL DISTRICT OF THE CITY OF DETROIT 2015 MULTI-YEAR REPAYMENT OBLIGATIONS TERMS

Payment Schedule

(a) The 2015A Multi-Year Repayment Obligation shall be issued in an aggregate principal amount not to exceed $85,000,000 and shall mature on June I of each year commencing not earlier than June I, 2016 with a final term not exceeding 15 years.

(b) The 2015B Multi-Year Repayment Obligation shall be issued in an aggregate principal amount not to exceed $96,000,000 and shall mature on June I of each of the years commencing not earlier than June I, 2016 with a final term not exceeding 15 years.

(d) The true interest cost for the 2015B Multi-Year Repayment Agreement shall not exceed 4% per annum.

( e) Interest is payable on each June I and December I, beginning not earlier than December I, 2015.

(f) The Emergency Manager or an Authorized Officer shall, at the time of sale of the 2015 MF A Bonds, provide for the optional, mandatory and extraordinary redemption of the 2015 Multi-Year Repayment Obligations prior to maturity. Unless the Emergency Manager or an Authorized Officer determines that it is in the best interests of the District to restructure its payment obligations through the 2015 Multi-Year Agreement on a federally taxable basis, the District shall covenant and agree to take all actions necessary to maintain the exclusion of interest on the 2015 Multi-Year Repayment Obligations from gross income for federal income tax purposes and to take all action to maintain the exclusion of interest on the 2015 MFA Bonds from gross income for federal income tax purposes, including, without limitation, complying with any extraordinary mandatory redemption provisions as shall be set forth in 2015 Multi-Year Repayment Obligations. In particular, the District covenants to comply with the requirements of the extraordinary mandatory redemption provision of the 2015 Multi-Year Repayment Obligation, including, on or before December I of each year, beginning December I, 20 I 5, engaging nationally recognized bond counsel to provide an opinion to the effect that failure to redeem any portion of the 2015 Multi-Year Repayment Obligation which will remain outstanding after the next succeeding June I will not adversely affect the exemption of interest on the 2015 Multi-Year Repayment Obligation from gross income for Federal income tax purposes. In the event that bond counsel concludes that all or a portion of the 2015 Multi-Year Repayment Obligation must be redeemed on the next succeeding June I or the District fails to obtain the opinion, the

12 EMPROP-26 District shall either (a) set aside 1/6 of the amount due for redemption on the next June 1 on the Set Aside Due Date each month beginning the December Set Aside Due Date preceding the June 1 redemption date or (b) take such other actions as approved by Note Counsel to maintain the interest exemption under the Internal Revenue Code of 1986, as amended and regulations promulgated thereunder. "Set Aside Due Date" means (a) the day in each month on which, pursuant to state law, regulation or policy, as applicable, State Aid payments, if any are scheduled to be made to the District, or (b) if in any month, no State Aid payments are scheduled to be made to the District, but State Aid payments have not been permanently • terminated, the date in such month that corresponds numerically to the day referred to in (a), or (c) if State Aid payments have been permanently terminated, the last Business Day (as defined in the 2011 MF A Bond Indenture) in such month.

24136538.3\088888-00256

13 EMPROP-27 Exhibit D Application to State Treasurer

EMPROP-28 Michigan Department of Treasury 1428 (Rev. 2-02) This form is issued under the authority of P.A. 34 of 2001. If your municipality does not have Application for State Treasurer's Approval qualified status, you must file this form to apply for approval of the State Treasurer before to Issue Long-Term Securities Long-term Municipal Securities can be issued. INSTRUCTIONS: Complete all parts of this application. The Department of Treasury may request add1t1onal information. FILE WITH: Local Audit & Finance Division, Michigan Department of Treasury, P.O. Box 30728, Lansing, Ml 48909-8228. Direct questions to (517) 373-0660 or e-mail to Treas [email protected]. The municipality identified below applies for permission to issue securities under authority of the statute(s) and resolution as follows: · ll] P.A. 34 of 2001, as amended IDateResoluUonWasAdopted Ill P.A. 451 of 1976, as amended . Legal Name of Municipality Legal Classification County (ies) School _District of the City of Detroit School District Wayne Title of.Security 2015 Multi-Year Repayment Obligations Amount of Security Date of Security

Not to exceed $181,000,000 To Be Determined . Chief Administrative Officer• Person Address and Telephone No. Darnell Earley, Emergency Manager 14th Floor, Fisher Building 3011 West Grand Blvd. Detroit, Ml 48202 (313) 870-3772

Bond Counsel - Person and Firm Address and Telephone No. Amanda Van Dusen Miller, Canfield, Paddock and Stone, P.L.C. Harold Bulger 150 West Jefferson, Suite 2500 Miller Canfield PLLC Detroit, Ml 48226 (313) 496-7512 (313) 496-7507 Local Attorney - Person and Firm Address and Telephone No. Jean-Vierre Adams 3011 W. Grand Blvd., 1oth floor General Counsel, Detroit Public Schools Detroit, MI 48202 (313) 873-4528 Carol H. Rodriguez Deputy General Counsel, Detroit Public Schools (313) 873-8515 Financial Consultant - Person and Firm Address and Telephone No. Kari L. Blanchett 305 East Eisenhower Parkway, Suite 112 Pubic Financial Management Ann Arbor, Ml 48108

(734) 994-9700

Undeiwriter- Person and Firm Address and Telephone No. T.J. Whitehouse, Executive Director 1450 Brickell Avenue, 33rd Floor J.P. Morgan Securities LLC Miami, FL 33131

(305) 579-9482

Engineer or Architect - Person and Firm Address and Telephone No. N/A

CERTIFICATION: I, the understgned, certify that this appltcation and the attachments were authorized by the governing body of this municipality, and that they are complete and accurate in all respects. I further certify that the funds on hand (if any) listed on page 4 of this application are on hand and available for use on this project. Chief Administrative Officer Name and Title (Typed or Printed) C~~~~~inlstratlve Officer's Sign~~- ~ Date 1 _/ ,;;· ,/ Darnell Earley, Emergency Manager < ,~;f;,,c_,,,,, 4:-,:c.-c--U;;,✓ (1: !{'I ,,,r ,., c,, -"/-e·:~ I

EMPROP-29 1428, Page2

Purpose To issue a Multi-Year Repayment Obligation, which includes the amendment and restatement of the District's 2014 State Aid Note into a long term obligation as well as the refinancing of the District's 2012 Multi-Year Repayment Obligation.

Maturity Schedule To be Determined • see attached preliminary maturity schedule.

Interest First Interest Payment Date Interest Payments

1 O.O % Maximum To be determined June 1 and December 1 Optional Securities Securities maturing 20 To Be I Determined are non-callable

Securities maturing 20 To Be J Determined are callable on any interest payment on or after ------

at par and accrued interest, plus a premium ranging from ______% to ______% in ______order.

SECURITY Full Faith and Credit Pledge

D Unlimlted Tax Full Faith and Credit Pledge Ill Limited Tax Full Faith and Credit Pledge 0 No Full Faith and Credit Pledge

Authorized by a Vote?

llJNO Votes For: Votes Against: Spoiled Ballots: D YES • Date of Election: Source of Revenues

D Rates and Charges D Michigan Transportation Fund Revenues GZJ Taxes Ill Other (Specify): D Special Assessments

Additional Security State Aid Pledge

EMPROP-30 1428, Page 3

TAX INFORMATION Fiscal Year ,• ate Taxes Due Date Taxes Delinquent July 1 through June 30 July 1 March 1

18.00 Maximum authorized statutory, constitutional or charter tax levy .... ················---- ····························· mills

Maximum estimated annual m111age requirement for this issue ...... ········· ...... 13.00 mills July 1, 2015 Date of first levy for thls issue (if tax supported) ...... , ...... ••••••••••••••••••nn• Tax Collection History for Last Four Completed Fiscal Years (See attached table with notes.I Flscal Year Ending Tax Levy Collections to Date Delinquent Percentage .

20 14 $ 79,156,165 $ 52,355,498 66.14 %

20 13 $ 82,004,053 $ 52,946,381 64.57 %

20 12 $ . 88,123,759 $ 56,332,392 63.92 %

20 n $ 86,088,762 $ 59,488,493 69.10 % .. Municipal Millage Rates Operating Debt Other for 20 14 I1a.oo I13.oo This municipauty is in compliance with the provisions of Article IX, Section 6, of the Michigan Constilution .of 1963 0 Yes 0 No

TV INFORMATION Breakdown of Current Year's Current Year 7,812,080,813 State Equalized Valuation STATE 2014 $ Prior Year 6.54 % EQUALIZED Industrial 2013 $ 8,981,538,055 VALUATION Prior Year Commercial 26.40 % 2012 $ 9,437,451,598 Current Year 5.38 % Utility 2014 $ 7,274,912,105 TAXABLE Prior Year Agricultural 0.00 % 8,301,190,480 VALUE 2013 $ Prior Year Residential 43.14 % 2012 $ 8,447,370,400 Census Personal 18.54 % Current 713,777 POPULATION Census TOTAL 100% 2000 951,270 Census 1990 1,027,974

SEV PER CAPITA Current Year $ 10,944.71

DEBT INFORMATION You must attach the following lists unless the Department of Treasury waives the requirement for this detail: 1. All outstanding securities or debt with no full failh and credit pledge. Include title and dale of issue and the amount outs\anding. 2. All outstanding securilies or debt with either a limited or unlimited full fa!th and credit pledge. Include title, date and type of issue, the amount outstanding, and the amount supported by taxes. 3. All ~utslandl~Q se_curities or debt with eithe_r a limited or unlimi\ed fU!l faith and credi_l pl~dge that has been issued by an overlappinQ municipality. Include the name of the issuin9 munic1pahly, the amount outstandmg, the share applicable to your munlcipabty, 1he n?I tax supported amount outstanding and the share applicable to your municipality. 4. All projects currently being planned for future indebtedness. Include an estimate of 1he amount of indeb1edness to be Incurred. REPAYMENT SCHEDULE Attach a schedule of revenues available for repayment of the proposed and outstanding securities and indicate coverage. Include operation and maintenance expenses and reserve requirements (when applic.able) in addition to principal and interest requirements. Begin with one year of actual revenues and expenses. Revenue supported securities need only project for a 7 to 10 year period. In lieu of this schedule, voted general obligation securities may submit a principal and interest schedule.

EMPROP-31 1428, Page4

10 LARGEST PROPERTY TAXPAYERS Name TV 1_Marathon Oil/Ashland Petroleum LLC 1. $499,756,169 2_Detroit Edison 2. 434,069,845 3_vanguard Health systems - Hospitals 3. 275,814,550 4_MGM Grand Detroit LLC 4. 209,301,949 5_Riverfront Holdings Inc. 5. 127,311,974 5_Chrysler LLC 6. 97,381,954 7_Greektown Casino LLC 7. 65,928,741 8_Detroit Entertainment LLC 8. 61,968,988 9_General Motors LLC 9. 46,781,160 10. International Transmission Co. 10, 44,770,681 1 O LARGEST EMPLOYERS AND EMPLOYMENT DATA Name Number of Employees 1 _Detroit Medical Center 1. 11,497 2_City of Detroit 2. 9,591 3_Quicken Loans Inc 3. 9,192 4_Henry Ford Health System 4. 8,807 5_Detroit Public Schools 5. 7,272 6_u.s. Government 6. 6,308 7_Wayne State University 7, 6,023 8_Chrysler Group LLC 8. 5,426 9_ Blue Cross Blue Shield of Michigan 9. 5,415 1o. General Motors Corp. 10. 4,327

Jan. 2015 - 14.3% Local unemployment rate for the most recently available month

Seasonally adjusted unemployment rate for the preceding month Dec. 2014 - 11.9% ESTIMATED COSTS Project Category Estimated Costs 0 Con_struction cost (materials and labor) 0 Equipment ...... 0 Site acquisition and development 0 Arch_itect or engineer (including survey, design, inspection, etc.)

Issuance costs 0 Capitalized interest ( _o ___ months at ...:o:__ __%)

Other costs ....

Contingencies

Total projected cost 0 Less...... Funds on Hand

Grants 0

Other 0 NTE$181,000,000 BALANCE: Amount of the securitv

EMPROP-32 Operating Tax Levy and Collections

The School District's property taxes are levied on July 1 of each fiscal year and are payable in full without penalty either on or before August 31 or, at the taxpayer's option, one-half may be paid on or before August 15, with the other half paid on or before January 15. In accordance with State law, the Ci1y of Detroit collects school property taxes and turns them over to the District. The District does not expect the City of Detroit's bankruptcy proceedings to impair the abili1y of the City to collect school property taxes or the timeliness of the remittance of such taxes to the District.

The Ci1y of Detroit turns over all real property taxes remaining unpaid on March 1st of the year following the levy to the County Treasurer for collection. The District receives full funding for such taxes from the County's delinquent tax revolving fund, subject to the issuance of delinquent tax anticipation notes. If such delinquent real property taxes remain uncollected after three years from the date on which such taxes become delinquent, the County may charge the respective amounts of such taxes back to the District. Payments made to the District by the County are adjusted for prior year chargebacks, tax adjustments, and amounts the County deems as uncollectible.

A hist01y of the operating tax levies and collections for the District is as follows:

Levy Operating Collections to County Collections Plus Funding Year Tax Levi March l, Each Year Adjustment' to August 3 1, Each Year 2014 $73,369,6793 In Process of Collection NIA NIA 2013 79,156,165 $52,355,498 66.14% $18,238,866 $60,707,615 76.69% 2012 82,004,053 52,946,381 64.57 21,253,434 60,069,485 73.25 2011 88,123,759 56,332,392 63.92 21,651,243 66,302,081 75.24 2010 86,088,762 59,488,493 69.10 23,117,850 67,367,090 78.25 2009 94,153,588 67,078,765 71.24 14,556,242 81,179,291 86.22 2008 99,448,384 71,877,564 72.28 7,401,121 87,523,887 88.01

(I) Ad valorem only, IFT figures not included. (2) The amount received by the County for delinquent real property taxes was reduced by the amounts shown to offset tax adjustments, recoveries for prior year chargebacks, and amounts deemed uncollectible. (3) Estimated.

Source: Wayne County Treasurer's Office and the District.

Note: After August of each year, as ac!Justments are made to prior years' taxable values, the District receives acijustment fonds in its State Aid to reflect the change. These adjustments are reflected in the table under "General Fund Revenues and Expenditures-Sources ofSchool Operating Revenue State School Aid Revenue."

EMPROP-33 ...... 3 .... of Amt 1 Net Report Page 5J_,.9~5_•.~?.~ 35,785,000 '.~•.'.~5.•.0?.~ 49,630,000. 183,695_,.~?.~ 192,80~,.~oo. 470,735_,008. 145,664,992 312,595,008 ·············· -···················-· - 1s ...... Security a has or MAC OM ?..~ ?..~ ?..~ OM ?..~ ?..~ ?..~ OM ...... Portion MAC of, The ..... The Issue offering Escrowed . MAC an Statement/ the - M1ch·1gan. of ...... of ....••...... ···········• ..•...... •...... • .... M constitute M VleNS Municipality's State or Refunding Official not the ... o1 "s RF does $51,965M $35,785M $79,785M $49,630M opinrons, and $183,695M $470,735 $192,SOOM $145,664M $312,595 Outstanding agenc'ies below state ...... ········· ...... or assumptions, Report M M M M M M M M M descnbed county -·-··························-··-·············---············ MAC subjective 35,785 51,965 79,785 49,630 local, securities 183,695 192,800 470,735 145,664 312,595 any ~ the outstanding of various without by issuer the ...... Gross ...... ··············· provided ...... of prepared Michigan is M M M················· M M M M M M Shared entity. Michigan 48226-3699 records Amt of of statement Debt ~~•.~~5 90,000 information 49,630 388,995 pi.Ol1c 500,000 160,910 337,735 N N N N N N N www.mi-macsite.com The N government official N B'ji Michigan from Council an Original other not ...... ·········~~'.~~5 ··························································•·············································----················-· ·········200,000 .....•.. ·········· ·······-····················-·············· ...... Report Is a1d/or any It Detroit, or information. Shared Shared Shared Shared Shared Shared Shared Shared Shared Advisory Issue records such 04/30/2015 Council of members 1850- 313-963-0943 Michigan MAC its of of • oi Fax Site Site Suite Municipal accuracy [~)View State 5/1/13 agents, use 10/31/02 & & as or its the to & the Summary 3/1/96 for with & issuer, ESC Griswold, Debt o;olely the. 3J'27/2012A Building Building 10/1/01 C0'17pleteness - 800-337-0696 535 - by from associnted - Site the 7/1/92 Debt Site A 22/32) Ad·visory intended O.S. & not & ref is & Site Site Site obtained Credit & and See 18 10/31/02(14,16,17);. & Building 11/1/98b, guarantee & Series AFTER) been 17, not Purpose of & • Building Buhl has Building 16, 313-963-0420 - does - details (13,14,16) (the.MAC') Ref.11/1/98; Building and Const. report - (15, Building Building pr! QSCB-Tax (2003 (11/31) portions this 2002A A Ri::!fundina B - A; M1chIgan B - report 2005a in Sch. &Site of FSA FGIC FGIC this FSA Description 1n Municipal Redemption Counol Series ser.1998c series Ser-ies Series Qual. Series m1ormat,on Insur: Insur: Insur: Insur. Note 1-Series 1- Sub# 1- 1- For 1- 1- 1- 1- 10/1/01(ptns13,14,16); 1-Bldg. Financial of The information Adv1sor1 @ the TAX TAX securities Munrt1pal venfled the Type District or the UTXSEC INSXTD INSXTD INSXTD XEN by GOUTXSEC Debt QU QU QUINSXTD GO GOUTXSEC XUSARF GOUTXSEC XUSAXR XUSAXR XUSARF QU QU QUXENTAX QUXEN GOUTXSEC GOUTXSEC BABDPXR XUSAXR GOUTXSEC GOUTXSEC XUSAXR QUXENTAX BABDPXR QUXENXTD GOUTXSEC XUSARF purchase, confirmed to prepared Is School PM repDrt Cusip Dated independently 10/31/02 11/01/98 10/01/01 251129 251129 251129 12/30/09 251129 08/17/05 12/30/09 251130 251129 251130 10/28/10 10/28/10 251130 03/27/12 251130 Th>s not recommendat,on 4:51:05 @ DETROIT Sub , Municipal './ Report .... (ieJ~ [•:}~ i:"'J~ l't~ ["'1~ ["'J~ Os Os 05 '"''8 ["''i!I 417/2015 l;;;,~ 05 EMPROP-3405 _ .. of3 008 Amt 2 Net Page Report 1,821,910, 299,254,992 1,522,655,016 = : : = Security M M M O ~.~········183,804,992 0 0 Portion Issue Escrowed Statement/ • - - - ·················~·~········~·1~,.~~-.o~o ...... M M Municipality's Refunding Official 5 RF o $183,804M $115,450 $299,254M Outstanding $1,522,654M $1,821,908 ...... M M M M M Report MAC 299,254 115,450 183,804 1,522,654 @ 1,821,908 Outstanding ...... Gross M··············· .M Michigan Shared Total of Amt Subtotal Subtotal Debt 238,100 N N Grand GO Council ffi) REV Original ·········1·~'585 ...... ------Shared Shared Advisory Issue Aid) Municipal i"'JView (State Financial 2012 - Series (Ref"mance Purpose Bonds - 2011 Refunding Revenue Series - Description MFA, Financial - 1- Refunding 1-MFA Note Sub# of O XTD Type District NQXENXTD XUSARF NOXEN REVLTXSEC REVLTXSEC XUSAXR Debt School PM Cusip Dated NA NA 10/13/11 05/17/12 4:51:05 Sub DETROIT Report Municipal

EMPROP-35 4!7/2015 This report is prepared by the Municipal Advisory Council of Michigan (the'MAC') and is intended solely for lhe use ofilS members. It is not an official statement of the Issuer of the securities described below and aoes not constitute an offering of, or a recommendation to purchase, the securities. The information In this report has been obtained from the Issuer, Its agen1s, MAC records and/or from public records prepared by various local, county or siate age~cies oflh~ Stal~ of Michigan, .Th~ MAC has ~01 inde~e~denlly c?nfirmed or verified the infon:iiation in thi~ repo~ and does not guarantee the completeness or accuracy of such information. The Information Is provided Mlhou\any subJec\lVe assumptions, opinions, or views of the MAC. The MAC 1s not associated w11h 1he State of Michigan or any other government entity. Municipal Advisory Council of Michigan Buhl Building - 535 Griswold, Suite 1850 - Detroit, Michigan 48226-3699 @ 313-963-0420 800-337-0696 Fax 313-963-0943 www.mi-macsite.com SCHOOL DISTRICT· DETROIT (WAYNE)

Taxable Value State Loan Fund/Revolving Fund Year PoRulation 2014 6,468,987,869 01/31/2015 $165,001,035 2011 713,865 2013 7,345,494,722 12131/2014 $164,522,960 2010 713,865 2012 7,815,382,769 11130/2014 $164,044,847 2009 951,000 2011 8,101,058,209 10/31/2014 $163,581,317 2008 951,000 2010 8,938,781,553 09/30/2014 $163,102,335 2009 9,725,918,781 2007 951,000

Overlapping Debt as of 04/30/2015 NetTax % Munlclpallty Supported Debt Share City 100.00 DETROIT (WAYNE) 2,781,757,454 2,781,757,454 City Total: 2,781,757,454 County 16.54 WAYNE 331,673,386 54,858,778 County Total: 54,858,778 Intermediate School District 16.30 WAYNE I/SID 0 0 Intermediate School District Total: 0 Community College 27.16 WAYNE COMMUNITY COLLEGE 0 0 Community College Total: 0

2,836,616,232

4/7/20154:51:55 PM Municipal Advis()()' Council of Michigan Page1of1

EMPROP-36 DETROIT PUBLIC SCHOOLS GENERAL FUND BUDGET AMENDMENT# 3 YEAR ENDING JUNE 30, 2016

Budget Amendment# 3 Increase FY 2016 ~ Amended (Decrease} FY 2016 • Amended Revenue: Local sources Special education mlllage $ 40,731,764 $ $ 40,731,764 Property Taxes 71,780,507 71,780,607 Other 36,777,529 (7,431,884) 28,345,645 Total local sources 148,289,800 (7,431,884) 140,857,916 State sources 361,293, 154 19,2"32,345 380,525.499 Federal sources 169,167,740 4,420,858 173,588,598

Total Revenue 678,760,894 16,2211319 694,972,013

Expenditures:

Instruction 329,957,339 7,310,274 337,267,613

Support services Pupll sanAcas 60,363,229 3,763,283 64,126,492 lnstructlonal $taff support 61,130,797 6,653,741 66,764,538 General administration 6,344,968 76,914 8,421,882 School administration 37,076,845 1,155,987 38,232,832 Business office 12,525,701 995,855 13,621,556 Operations & maintenance 68,763,249 (2,779,625) 65,983,624 Transportation 26,453,052 2,663,779 29,116,831 Central support ser\lice 27,006,034 (905,071) 26,100,963 Other support seNce 1,583,946 (65,242) 1,518,704

Total eupport seNces 301,,247;821 10,559,601 311,807,422

Community seNce 4,643,169 209,362 4,752,531

Facilities acquisitions and improvement 455,346 455,346

Debt service 53,005,586 53,006,586

Total Expenditures &89,2091261 181079,237 707,288,498

Other Flnanclal Sources (Uses) sources Prooeeds from sale of capita! assets 10.436, 172 10,436,172 Transfer_$ In 87,160,335 120,599 87,280,934 Total Sources 97,596,607 120,699 97,717,106 Uses Transfers Out (84,760,335) 120,599 (84,880,934) Prior Year Adjustments 2,581,206 2,581,206 Total Uses (82,179,129) 120,599 (82,299,728)

Total Other Financial Sources (Uses) 113,417,378 15 417,378

Excess (deficiency) of Revenue and Other Sourc::.es Over (Under) Expenditures and Other Uses 4,958,811 (1,857,918) 3,100,993

Beginning Fund Balance (169,460,307) (169,460,307)

Ending Fund Balance $ !164,601,496! $ ~166,369,414~

EMPROP-37 J428,Page5 INSTRUCTIONS FOR SECURITIES PRIOR APPROVAL

I. The following constitutes a completed filing and other municipalities relating to the proposed shall be submitted in total at the time of filing the securities, or when a municipality other than the request: issuer shall have pledged revenues or its full faith a. · The completed application with a satisfactory and credit to secure repayment of the securities, response to all requested information. then each municipality shall file a separate application, completing the following sections: b. A fee payment (payable to the "State of Michigan") of .03% of securities not less than a. Certification $800 or greater than $2,000. b. Security c. Copies of all federal, state and local permits c. Tax information for the project(s). d. State equalized valuation information d. A certified copy ofthe resolution or ordinance e. Debt information adopted by the governing body authorizing the f. Ten largest property taxpayers issuance ofthe securities, specifying the secu g. Ten largest employers and employment data rities details (including the notice of sale, if 3. If municipal securities are to be qualified school any, and authorizing the utilization of a credit bonds, a school district shall file a letter of enhancement, if any). If a negotiated sale is preliminary qualification from the Department of chosen, the resolution indicating the reason a Treasury before the granting of a prior approval. negotiated sale was chosen. 4. The project cost sheet shall include the anticipated e. Certified copies of all other resolutions, ordi interest to be earned on the securities proceeds, nances, offer and acceptance forms on grants, including supporting documentation indicating or other legal documents as may be required. how the municipality arrived at the amount. f. A copy of the General Fund and applicable 5. All securities greater than $5 million shall be rated Enterprise Fund budget or proposed General by a nationally recognized rating agency unless Fund and applicable Enterprise Fund budget the securities will be purchased by a government for the current fiscal year (unless previously agency, or an exemption from this requirement submitted). has been granted by the State Treasurer prior to g. A copy of any credit enhancement the munici the sale. pality is authorized to enter into. 6. An official statement or preliminary official h. A feasibility study, if one has been prepared. statement shall not be mailed, or authorized to be i. Jfthe authorizing resolution or ordinance was mailed, or otherwise distributed as a sales adopted at a special meeting and if any member document to prospective purchasers before the of the governing body was absent, notarized issuance of an order of approval. proofs of call and posting of special meeting or a waiver or waivers of notice. J. If the security is voted, a copy of the ballot and election results. k. Qualifying statement ifnot previously filed and a $ I 00 late fee, if necessary. 2. When the issuer of the security is a municipality with a contractual agreement with one (I) or more

EMPROP-38 305 E. Eisentiower Parkway 734-994-9700 Suite 112 734-994-9710 rax Ann Arbor, Ml 48108 www.ptm.com

TABLE OF CONTENTS

Detroit Public Schools Proposed Revenue Bonds, Series 2015 (SAN 2014 Restatement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 2a .. Restatement of2014 SAN - 15 Year Bond Tenn - Level Debt Service

Repo1i Page

Sources and Uses of Funds

Bond Debt Service 2

Bond Pricing 3

Bond Summary Statistics 4

Proof of Arbitrage Yield 5

Escrow Requirements 7

Escrow Cost 8

Escrow Sufficiency 9

Escrow Statistics 10

Underwriter's Discount 11

Savings 12

Mar 13, 2015 11:19 am Prepared by Public Financial Management (NW) EMPROP-39 305 E. Eisenhower Parkway 734-994-9700 Suite 112 734-994-9710 lax Ann Arbor, Ml 48108 www.pfm.com

SOURCES AND USES OF FUNDS

Detroit Public Schools Proposed Revenue Bonds, Series 2015 (SAN 2014 Restatement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 2a - Restatement of2014 SAN - I 5 Year Bond Term - Level Debt Service

Sources:

Bond Proceeds: Par Amount 77,035,000.00 Premium 5,357,362.15 82,392,362.15

Other Sources of Funds: Funds Oil Hand (as of 4/20/2015) 29,250,000.00

111,642,362.15

Uses:

Refunding Escrow Deposits: Cash Deposit 110,795,492.50

Delivery Date Expenses: Cost of Issuance 500,000.00 Underwriter's Discount 346 657.50 846,657.50

Other Uses of Funds: Additional Proceeds 212.15

111,642,362.15

Mar 13, 2015 11:19 am Prepared by Public Financial Management (NW) Page I EMPROP-40 305 E. Eisenhower Parkway 734-994·9700 Suite 1 '12 734-994-97'10 fa)( Ann Amor, Ml 48108 www.pfm.com

BOND DEB'J: SERVICE

Detroit Public Schools Proposed Revenue Bonds, Series 2015 (SAN 2014 Restatement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 2a - Restatement of 2014 SAN - 15 Year Bond Tern1 - Level Debt Service

Period Annual Ending Principal Coupon Interest Debt Service Debt Service

12/01/2015 1,950,962.22 1,950,962.22 06/01/2016 3,645,000 2.000% 1,791,700.00 5,436,700.00 7,387,662.22 ]2/01/2016 1,755,250.00 1,755,250.00 06/01/2017 3,875,000 3.000% 1,755,250.00 5,630,250.00 7,385,500.00 12/01/2017 1,697,125.00 1,697,125.00 06/01/2018 3,995,000 4.000% 1,697,125.00 5,692,125.00 7,389,250.00 12/01/2018 1,617,225.00 1,617,225.00 06/01/2019 4,155,000 4.000% 1,617,225.00 5,772,225.00 7,389,450.00 12/01/2019 1,534,125.00 1,534,125.00 06/01/2020 4,320,000 5.000% 1,534,125.00 5,854,125.00 7,388,250.00 12/01/2020 1,426,125.00 1,426,125.00 06/01/2021 4,535,000 5.000% 1,426,125.00 5,961,125.00 7,387,250.00 12/01/2021 1,312,750.00 1,312,750.00 06/01/2022 4,760,000 5.000% 1,312,750.00 6,072,750.00 7,385,500.00 12/01/2022 1,193,750.00 1,193,750.00 06/01/2023 5,000,000 5.000% 1,193,750.00 6,193,750.00 7,387,500.00 12/01/2023 1,068,750.00 1,068,750.00 06/01/2024 5,250,000 5.000% 1,068,750.00 6,318,750.00 7,387,500.00 12/01/2024 937,500.00 937,500.00 06/01/2025 5,515,000 5.000% 937,500.00 6,452,500.00 7,390,000.00 12/01/2025 799,625.00 799,625.00 06/01/2026 5,790,000 5.000% 799,625.00 6,589,625.00 7,389,250.00 12/01/2026 654,875.00 654,875.00 06/01/2027 6,080,000 5.000% 654,875.00 6,734,875.00 7,389,750.00 12/01/2027 502,875.00 502,875.00 06/01/2028 6,380,000 5.000% 502,875.00 6,882,875.00 7,385,750.00 '),I') ')"7(Cf\{\ 12/01/2028 J'1".J,.J/J.VV 343,375.00 06/01/2029 6,700,000 5.000% 343,375.00 7,043,375.00 7,386,750.00 12/01/2029 175,875.00 175,875.00 06/01/2030 7,035,000 5.000% 175,875.00 7,210,875.00 7,386,750.00

77,035,000 33,781,112.22 110,816,112.22 110,816,112.22

Mar 13, 2015 1I :19 am Prepared by Public Financial Management (NW) Page 2 EMPROP-41 305 E. EisenhOwer Parkvmy 734-994-9700 a::::: PJ'M suite 1·12 734-994-9710 fax Ann Arbor. Ml 48108 - :::= The PFM Group Mvw.prm.com -~ flnMuir! a IM»11vrnt M11•~01i

BOND PRICING

Detroit Public Schools Proposed Revenue Bonds, Series 2015 (SAN 2014 Restatement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 2a- Restatement of2014 SAN - 15 Year Bond Tenn - Level Debt Service

Maturity Yield to Bond Component Date Amount Rate Yield Price Maturity

Serial Bonds: 06/01/2016 3,645,000 2.000% 1.570% 100.443 06/01/2017 3,875,000 3.000% 2.090% 101.811 06/01/2018 3,995,000 4.000% 2.660% 103.892 06/01/2019 4,155,000 4.000% 2.930% 104.051 06/01/2020 4,320,000 5.000% 3.130% 108.662 06/01/2021 4,535,000 5.000% 3.300% 109.245 06/01/2022 4,760,000 5.000% 3.530% 109.095 06/01/2023 5,000,000 5.000% j,660% 109.263 06/01/2024 5,250,000 5.000% 3.770% 109.350 06/01/2025 5,515,000 5.000% 3.850% 109.503 06/01/2026 5,790,000 5.000% 3.950% 108.634 C 4.024% 06/01/2027 6,080,000 5.000% 4.050% 107.774 C 4.172% 06/01/2028 6,380,000 5.000% 4.160% 106.837 C 4.309% 06/01/2029 6,700,000 5.000% 4.220% 106.330 C 4.391% 06/01/2030 7,035,000 5.000% 4.280% 105.826 C 4.464%

77,035,000

Dated Date 05/15/2015 Delivery Date 05/15/2015 First Coupon 12/01/2015

Par Amount 77,035,000.00 Premium 5,357,362.15

Production 82,392,362.15 106.954452% Underwritds Discount (346,657.50) (0.450000%)

Purchase Price 82,045,704.65 106.504452% Accrued Interest

Net Proceeds 82,045,704.65

Mar 13, 2015 11:19 am Prepared by Public Financial Management (NW) Page 3 EMPROP-42 305 E. Eisenhower Park.Wily 734-994-9700 Suite 112 734-994-9710 fax AnnAroor, Ml 48108 www.pfrn.com

BOND SUMMARY STATISTICS

Detroit Public Schools Proposed Revenue Bonds, Series 2015 (SAN 2014 Restatement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 2a • Restatementof2014 SAN - 15 Year Bond Tenn - Level Debt Service

Dated Date 05/15/2015 Delivery Date 05/l 5/2015 Last Maturity 06/01/2030

Arbitrage Yield 3.812399% True Interest Cost (TIC) 3.998441% Net Interest Cost (NJC) 4.188632% All-In TIC 4.084913% Average Coupon 4.918132%

Average Life (years) 8.916 Duration oflssue (years) 7.220

Par Amount 77,035,000.00 Bond Proceeds 82,392,362.15 Total Interest 33,781,112.22 Net Interest 28,770,407.57 Total Debt SerVice 110,816,112.22 Maximum Annual Debt Service 7,390,000.00 Average Annual Debt Service 7,365,915.88

Underwriter's Fees (per $1000) Average Takedown Other Fee 4.500000

Total Underwriter's Discount 4.500000

Bid Price 106.504452

Par Average Average PVofl bp Bond Component Value Price Coupon Life change

Serial Bonds 77,035,000.00 106.954 4.918% 8.916 51,589.85

77,035,000.00 8.916 51,589.85

All-In Arbitrage TIC TIC Yield

Par Value 77,035,000.00 77,035,000.00 77,035,000.00 + Accrued Interest + Premium (Discount) 5,357,362.15 5,357,362.15 5,357,362.15 - Underwriter's Discount (346,657.50) (346,657.50) - Cost of Issuance Expense (500,000.00) - Other Amounts

Target Value 82,045,704.65 81,545,704.65 82,392,362.15

Target Date 05/15/2015 05/15/2015 05/15/2015 Yield 3.998441% 4.084913% 3.812399%

Mar 13, 2015 11 :19 am Prepared by Public Financial Management (NW) Pagc4 EMPROP-43 305 E. Ersenhower Parl

PROOF OF ARBITRAGE YIELD

Detroit Public Schools Proposed Revenue Bonds, Series 2015 (SAN 2014 Restatement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund on Hand Contribution of Set Asides through April 20, 20 J5 Option 2a - Restatement of2014 SAN - 15 Year Bond Term - Level Debt Service

Present Value to 05/15/2015 Date Debt Service @ 3.8123988%

12/01/2015 1,950,962.22 1,911,257.98 06/01/2016 5,436,700.00 5,226,430.95 12/01/2016 1,755,250.00 1,655,801.32 06/01/2017 5,630,250.00 5,211,902.92 12/01/2017 1,697,125.00 1,541,636.07 06/01/2018 5,692,125.00 5,073,899.46 12/01/2018 1,617,225.00 1,414,611.78 06/01/2019 5,772,225.00 4,954,609.95 12/01/2019 1,534,125.00 1,292,189.96 06/01/2020 5,854,125.00 4,838,681.10 12/01/2020 1,426,125.00 1,156,703.36 06/01/2021 5,961,125.00 4,744,517.23 12/01/2021 1,312,750.00 1,025,286.46 06/01/2022 6,072,750.00 4,654,231.62 12/01/2022 1,193,750.00 897,791.25 96/01/2023 6,193,750.00 4,571,040.32 12/01/2023 1,068,750.00 773,992.77 06/01/2024 6,318,750.00 4,490,465.29 12/01/2024 937,500.00 653,778.81 06/01/2025 38,437,500.00 26,303,533.54

l05,862,862.22 82,392,362.15

Proceeds Summary

Delivery date 05/15/2015 Par Value 77,035,000.00 Premium (Discount) 5,357,362.15

Target for yield calculation 82,392,362.15

Mar 13, 2015 11:19 am Prepared by Public Financial Management (NW) Page 5 EMPROP-44 305 E. Eisenhower PmKway 734-994-9700 Suite 112 734-994-9710 tax Ann Arbor, Ml 48108. www.pfm.com

PROOF OF ARBITRAGE YIELD

Detroit Public Schools Proposed Revenue Bonds, Series 2015 (SAN 2014 Restatement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 2a- Restatement of2014 SAN - 15 Year Bond Tenn - Level Debt Service

Assumed Call/Computation Dates for Premium Bonds

Net Present Value (NPV) Bond Maturity Call Call to 05/15/2015 Component Date Rate Yield Date Price @ 3.8123988%

SERIAL 06/01/2026 5.000% 3.950% 06/01/2025 100.000 69,336.52 SERIAL 06/01/2027 5.000% 4.050% 06/01/2025 100.000 125,097.33 SERIAL 06/01/2028 5.000% 4.160% 06/01/2025 100.000 191,050.49 SERIAL 06/01/2029 5.000% 4.220% 06/01/2025 100.000 234,601.96 SERIAL 06/01/2030 5.000% 4.280% 06/01/2025 100,000 281,788.46

Rejected Call/Comti:utation Dates for Premium Bonds

Net Present Value (NPV) Bond Maturity Call Call to 05/15/2015 Increase Component Date Rate Yield Date Price @ 3.8123988% toNPV

SERIAL 06/01/2026 5.000% 3.950% 115,079.72 45,743.20 SERIAL 06/01/2027 5.000% 4.050% 219,385.77 94,288.44 SERIAL 06/01/2028 5.000% 4.160% 336,728.91 145,678.42 SERIAL 06/01/2029 5.000% 4.220% 434,849.91 200,247.95 SERIAL 06/01/2030 5.000% 4.280% 539,835,53 258,047.07

Mar 13, 2015 I J:19 am Prepared by Public Financial Management (NW) Page 6 EMPROP-45 305 E. Eisenhower Parkway 734-994-9700 Suite 112 134.994.97-101m:: Ann Arbor, Ml 48108 www.pfm.com

ESCROW REQUIREMENTS

Detroit Public Schools Proposed Revenue Bonds, Series 2015 (SAN 2014 RestRtement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 2a - Restatement of2014 SAN - 15 Year Bond Term - Level Debt Servfoe

Period Ending Principal Interest Total

12/01/2015 107,800,000.00 2,995,492.50 110,795,492.50

J07,800,000.00 2,995,492.50 110,795,492.50

Mar 13, 2015 11:19 am Prepared by Public Financial Management (NW) Page 7 EMPROP-46 305 E. Efsenhov.

ESCROW COST

Detroit Public Schools Proposed Revenue Bonds, Series 2015 (SAN 2014 Restatement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 2a • Restatement of2014 SAN~ 15 Year Bond Tenn• Level Debt Service

Purchase Cost of Cash Total Date Securities Deposit Escrow Cost

05/15/2015 110,795,492.50 110,795,492.50

0 110,795,492.50 110,795,492.50

Mar 13, 2015 11: 19 am Prepared by Public Financial Management (NW) Page 8 EMPROP-47 305 E. Else11hower Pmkwny 734-994-9700 suite 112 734-994-9710 tax Ann Arbor, Ml 48108 WWW.pfm.com

ESCROW SUFFICIENCY

Detroit Public Schools Proposed Revenue Bonds, Series 2015 (SAN 20 l 4 Restatement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund.on Hand Contribution of Set Asides through April 20, 2015

Option 2a M Restatement of 2014 SAN M 15 Year Bond Term M Level Debt Service

Escrow Net Escrow Excess Excess Date Requirement Receipts Receipts Balance

05/15/2015 110,795,492.50 110,795,492.50 110,795,492.50 08/20/2015 ll0,795,492.50 (110,795,492.50)

ll0,795,492.50 110,795,492.50 0.00

Mar 13, 2015 l 1:19 am Prepared by Public Financial Management (NW) Page 9 EMPROP-48 :mo E. Eisenhower Parkway 734-994-9700 Stlite 112 734-994-97"!0 fax Ann Arbor. Ml 48108 WWW.pfm.com

ESCROW STATISTICS

Detroit Public Schools Proposed Revenue Bonds, Series 2015 (SAN 2014 Restatement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 2a-Restatement of2014 SAN• 15 Year Bond Term - Level Debt Service

Modified Yield to Yield to Perfect Value of Total Duration Receipt Disbursement Escrow Negative Cost of Escrow Cost (years) Date Date Cost Arbitrage Dead Time

1I 0,795,492.50 109,696,809.22 1,098,683.28

110,795,492.50 !09,696,809.22 0.00 1,098,683.28

Delivery date 05/15/2015 Arbitrage yield 3.812399%

Mar 13, 2015 11:19 am Prepared by Public Financial Management (NW) Page JO EMPROP-49 305 E. Ersenhower Parkway 734-9~14-9700 Suite ·1•12 734-994-9710 fax -M:: The PFM Group Ann Arbor, Ml 48108 www.pfm.com .. ,a- V,nrmi;r,1 & !nfMlmeAIA

UNDERWRITER'S DISCOUNT

Detroit Public Schools Proposed Revenue Bonds, Series 2015 (SAN 2014 Restatement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 2a- Restatement of2014 SAN - 15 Year Bond Term - Level Debt Service

Underwriter's Discount $/1000 Amount

Other Undenvl'ifor's Discount 4.50 346,657.50

4.50 346,657.50

Mar 13, 2015 11:19 am Prepared by Public Financial Management (NW) Page II EMPROP-50 305 E. Eisentmwer Pmkway 734-994-9700 Suite 112 734-994-~!710 Im:: Ann Amor, Ml 48106 www.pfm.com

SAVINGS

Detroit Public Schools Proposed Revenue Bonds, Se des 2015 (SAN 2014 Restatement) Refunds the Michigan Finance Authority Revenue (DPS), State Aid Notes, Series 2014 Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 2a- Restatement of2014 SAN - 15 Year Bond Term - Level Debt Service

Present Value Prior Refunding Annual to 05/15/2015 Date Cash Flow Debt Service Savings Savings @ 3.8123988%

05/15/2015 (29,250,000.00) (29,250,000.00) (29,250,000.00) (29,250,000.00) 08/20/2015 110,795,492.50 110,795,492.50 109,696,809.22 12/01/2015 1,950,962.22 (1,950,962.22) (1,911,257.98) 06/01/2016 5,436,700.00 (5,436,700.00) 103,407,830.28 (5,226,430.95) 12/01/2016 1,755,250.00 (1,755,250.00) (1,655,801.32) 06/01/2017 5,630,250.00 (5,630,250.00) (7,385,500.00) (5,211,902.92) 12/01/2017 1,697,125.00 (1,697,125.00) (1,541,636.07) 06/01/2018 5,692,125.00 (5,692,125.00) (7,389,250.00) (5,073,899.46) 12/01/2018 1,617,225.00 (1,617,225.00) (1,414,611.78) 06/01/2019 5,772,225.00 (5,772,225.00) (7,389,450.00) (4,954,609.95) 12/01/2019 1,534,125.00 (1,534,125.00) (1,292,189.96) 06/01/2020 5,854,125.00 (5,854,125.00) (7,388,250.00) (4,838,681.10) 12/01/2020 1,426,125.00 (1,426,125.00) (1,156,703.36) 06/01/2021 5,961,125.00 (5,961,125.00) (7,387,25~0.00) (4,744,517.23) 12/01/2021 1,312,750.00 (I ,312,750.00) (1,025,286.46) 06/01/2022 6,072,750.00 (6,072,750.00) (7,385,500.00) (4,654,231.62) 12/01/2022 1,193,750.00 (1,193,750.00) (897,791.25) 06/01/2023 6,193,750.00 (6,193,750.00) (7,387,500.00) (4,571,040.32) 12/01/2023 1,068,750.00 (1,068,750.00) (773,992.77) 06/01/2024 6,318,750.00 (6,318,750.00) (7,387,500.00) (4,490,465.29) 12/01/2024 937,500.00 (937,500.00) (653,778.81) 06/01/2025 6,452,500.00 (6,452,500.00) (7,390,000.00) (4,415,572.04) 12/01/2025 799,625.00 (799,625.00) (536,963.44) 06/01/2026 6,589,625.00 (6,589,625.00) (7,389,250.00) (4,342,286.28) 12/01/2026 654,875.00 (654,875.00) (423,463.09) 06/01/2027 6,734,875.00 (6,734,875.00) (7,389,750.00) (4,273,523.35) 12/01/2027 502,875.00 (502,875.00) (313,123.73) 06/01/2028 6,882,875.00 (6,882,875.00) (7,385,750.00) (4,205,573.38) 12/01/2028 343,375.00 (343,375.00) (205,884.38) 06/01/2029 7,043,375.00 (7,043,375.00) (7,386,750.00) (4,144,144.92) 12/01/2029 175,875.00 (175,875.00) (101,544.79) 06/01/2030 7,210,875.00 (7,210,875.00) (7,386,750.00) (4,085,459.22)

81,545,492.50 110,816,112.22 (29,270,619.72) (29,270,619.72) (2,689,558.00)

Savings Summary

PV of savings from cash flow (2,689,558.00) Plus: Refunding funds on hand 212.15

Net PV Savings (2,689,345.85)

Mar 13, 2015 11 :19 am Prepared by Public Financial Management (NW) Page 12 EMPROP-51 305 E. Eisenhower Parkway 734-994-9700 suite 1'12 734-994-9710131< Ann Amor. Ml 48108 www.ptm.com

TABLE OF CONTENTS

Detroit Public Schools Proposed Revenue Refunding Bonds, Series 2015 (2012 LTGO) Refunds the Michigan Finance Authority Revenue (DPS) Revenue Bonds, Series 2012 Assumes All Outstanding Maturities are Refunded / Defeased Assumes the use of the Extraordinary Mandatory Redemption Feature Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 1 - Refunding of2012 LTGO Bonds

Report Page

Savings

Summary of Refunding Results 2

Sources and Uses of Funds 3

Bond Prid_ng 4

Bond Summary Statistics 5

Bond Debt Service 6

Summa1y of Bonds Refunded 7

Escrow Requirements 8

Escrow Statistics 9.

Mar 13, 2015 11:08 am Prepared by Public Financial Management (NW) EMPROP-52 305 E. Ersennower Pa11

SAVINGS

Detroit Public Schools Proposed Revenue Refunding Bonds, Series 2015 (2012 LTGO) Refunds the Michigan Finance Authority Revenue (DPS) Revenue Bonds, Series 2012 Assumes All Outstanding Maturities are Refunded / Defeased Assumes the use of the Extraordinary Mandatory Redemption Feat_ure Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option I - Refunding of2012 LTGO Bonds

Present Value Prior Refunding Annual to 05/15120 I 5 Date Cash Flow Debt Service Savings Savings @ 2.5354366%

05/15/2015 (15,543,215.18) (15,543,215.18) (15,543,215.18) 06/0112015· 18,136,250.00 18,136,250.00 2,593,034.82 18,115,952.80 12/01/2015 2,223,125.00 1,849,777.22 373,347.78 368,261.43 06/0112016 18,523,125.00 19,153,775.00 (630,650.00) (257,302.22) (614,271.03) 12/01/2016 1,815,625.00 1,524,225.00 291,400.00 280,278.74 06/0112017 18,935,625.00 19,484,225.00 (548,600.00) (257,200.00) (521,057.19) 12/0112017 1,412,625.00 1,254,825.00 157,800.00 148,001.31 06/0112018 19,337,625.00 19,754,825.00 (417,200.00) (259,400.00) (386,395.30) 12/0112018 964,500.00 884,825.00 79,675.00 72,868.29 06/01/2019 19,784,500.00 20,119,825.00 (335,325.00) (255,650.00) (302,838.73) 12/01/2019 494,000.00 500,125.00 (6,125.00) (5,462.36) 06/01/2020 20,254,000.00 20,505,125.00 (251,125.00) (257,250.00) (221,153.28)

106,337,784.82 105,031,552.22 1,306,232.60 1,306,232.60 1,390,969.49

Savings Summaiy

PV of savings from cash flow 1,390,969.49 Plus: Refunding funds on hand 911.68

Net PV Savings 1,391,881.17

Mar 13, 2015 11:08 am Prepared by Public Financial Management (NW) Page I EMPROP-53 300 E. Eisenhower Park.way 734-994-9700 Suite 112 734-994-9710 Jax Ann Arbor, Ml 48108 www.J)fm.com

SUMMARY OF REFUNDING RESULTS

Detroit Public Schools Proposed Revenue Refunding Bonds, Series 2015 (2012 LTGO) Refunds the Michigan Finance Authority Revenue (DPS) Revenue Bonds, Series 2012 Assumes All Outstanding Maturities are Refunded/ Defeased Assumes the use of the Extraordinary Mandatory Redemption Feature · Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 1 - Refunding of 2012 LTGO Bonds

Dated Date 05/15/2015 Delivery Date 05/15/2015 Arbitrage yield 2.535437% Escrow yield

Bond Par Amount 93,155,000.00 True Interest Cost 2.682898% Net Interest Cost 2.772941% All-In TIC 2.842193% Average Coupon 4.095642% Average Life 3.113

Par amount of refunded bonds 105,450,000.00 Average coupon of refunded bonds 4.963889% Average life of refunded bonds 2.685

PV of prior debt to 05/15/2015 @2.535437% 114,343,953.67 Net PV Savings 1,391,881.17 Percentage savings of refunded bonds 1.319944%

Mar 13, 2015 11 :08 am Prepared by Public Financial Management (NW) Page 2 EMPROP-54 305 E, Eisenhower Parkway 734-994-9700 ~PF'-i. Suite 112 734-994-9710 lax Ann Arllor, Ml <'18108 -=-- The PFM Group WWW.pfm.com ~ f,11~1/,,~•n! ~ lnl'l.il~11r.!Mia1.Grs

SOURCES AND USES OF FUNDS

Detroit Public Schools Proposed Revenue Refunding Bonds, Series 2015 (2012 LTGO) Refunds the Michigan Finance Authority Revenue (DPS) Revenue Bonds, Series 2012 Assumes All Outstanding Maturities are Refunded/ Defeased Assumes the use of the Extraordinary Mandatory Redemption Feature Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option I - Refunding of2012 LTGO Bonds

Sources:

Bond Proceeds: Par Amount 93,155,000.00 Premium 4,254,769.00 97,409,769.00

Other Sources of Funds: Funds on Hand (as of 4/20/2015) 15,543,215.18

112,952,984.18

Uses:

Refunding Escrow Deposits: Cash Deposit 112,082,875.00

Delivery Date Expenses: Cost oflssuance 450,000.00 Underwriter's Discount 419 197.50 869,197.50

Other Uses of Funds: Additional Proceeds 911.68

112,952,984.18

Notes: Cost of Issuance is estimated Underwriter's Discount is estimated Escrow proceeds are invested in Cash Estimated Non Bank Qualified rates as of March 12, 2015 (as_suming a A+ rating)

Mar J 3, 2015 11 :08 am Prepared by Public Financial Management (NW) Page 3 EMPROP-55 305 E. Eisenhower Pmkway 734-994-9700 Suite 112 734-994-97'{0 i'ax _:: The PFM Group Ann Amor, Ml 48108 w·ww.prm.cam Hnnoi1.~1 & tm'r.ilm

BOND PRICING

Maturity Bond Component Date Amount Rate Yield Price

Serial Bonds: 06/01/2016 17,455,000 2,000% 1.370% 100.650 06/01/2017 17,960,000 3.000% 1.890% 102.215 06/01/2018 18,500,000 4.000% 2.360% 104.789 06/01/2019 19,235,000 4.000% 2.730% 104.830 06/01/2020 20,005,000 5.000% 2.930% 109.640

93,155,000

Dated Date 05/15/2015 Delivery Date 05/1-5/20 I 5 First Coupon 12/01/2015

Par Amount 93,155,000.00 Premium 4,254,769.00

Production 97,409,769.00 104.567408% Underwriter's Discount (419,197.50) (0.450000%)

Purchase Price 96,990,571.50 104.117408% Accrued Interest

Net Proceeds 96,990,571.50

Mar 13, 2015 11:08 am Prepared by Public Financial Management (NW) Page 4 EMPROP-56 305 E. Eisenhower Parkway 734-994-9700 Suite 112 • 734-994-9710 fax Ann Ar'.lOf, Ml 4810$ www.prm.com

BOND SUMMARY STATISTICS

Detroit Public Schools Proposed Revenue Refunding Bonds, Series 2015 (2012 LTGO) Refunds the Michigan Finance Authority Revenue (DPS) Revenue Bonds, Series 2012 Assumes All Outstanding Maturities are Refunded/ Defeased Assumes the use of the Extraordinary Mandatory Redemption Feature Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 1 • Refunding of2012 LTGO Bonds

Dated Date 05/15/2015 Delive1y Date 05/15/2015 Last Maturity 06/01/2020

Arbitrage Yield 2.535437% True Interest Cost (TIC) 2.682898% Net Interest Cost (NIC) 2.772941% A!HnTIC 2,842193% Average Coupon 4,095642%

Average Life (years) 3.1 l3 Duration·oflssue (years) 2,961

Par Amount 93,155,000.00 Bond Proceeds 97,409,769.00 Total Interest 11,876,552.22 Net Interest 8,040,980, 72 Total Debt Service 105,031,552.22 Maximum Annual Debt Service 21,009,650.00 Average Annual Debt Service 20,821,232.82

Underwriter's Fees (per $1000) Average Takedown Other Fee 4.500000

Total Underwriter's Discount 4.500000

Bid Price 104.117408

Par Average Average PVofl bp Bond Component Value Price Coupon Life change

Serial Bonds 93,155,000.00 104.567 4.096% 3.113 28,571.25

93,155,000.00 3.113 28,571.25

All-In Arbitrage TIC TIC Yield

Par Value 93,155,000.00 93,155,000.00 93,155,000.00 + Accrued Jnterest + Premium (Discount) 4,254,769.00 4,254,769.00 4,254,769.00 - Underwriter's Discount (419,197.50) (419,197.50) - Cost oflssuance Expense (450,000.00) - Other Amounts

Target Value 96,990,571.50 96,540,571.50 97,409,769.00

Target Date 05/15/2015 05/15/2015 05/15/2015 Yield 2.682898% 2.842193% 2.535437%

Mar 13, 2015 11:08 am Prepared by Public Financial Management (NW) Page 5 EMPROP-57 305 E. Eisenhower Parlr.v1ay 734-994-9700 Suite 112 734-9.94-9710 fa)( Ann Arbor, Ml 48108- WWW,pfm,com

BOND DEBT SERVICE

Detroit Public Schools Proposed Revenue Refunding Bonds, Series 2015 (2012 LTGO) Refunds the Michigan Finance Authority Revenue (DPS) Revenue Bonds, Series 2012 · Assumes All Outstanding Maturities are Refunded/ Defeased Assumes the use of the Extraordinary Mandatory Redemption Feature Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 Option 1 - Refunding of2012 LTGO Bonds

Period Annual Ending Principal Coupon Interest Debt Service Debt Service

12/01/2015 1,849,777.22 1,849,777.22 06/01/2016 17,455,000 2.000% 1,698,775.00 19,153,775.00 21,003,552.22 12/01/2016 1,524,225.00 1,524,225.00 06/01/2017 17,960,000 3.000% 1,524,225.00 19,484,225.00 21,008,450.00 12/01/2017 1,254,825.00 1,254,825.00 06/01/2018 18,500,000 4.000% 1,254,825.00 19,754,825.00 21,009,650.00 12/01/2018 884,825.00 884,825.00 06/01/2019 19,235,000 4.000% 884,825.00 20,!19,825.00 21,004,650.00 12/01/2019 500,125.00 500,125.00 06/01/2020 20,005,000 5.000% 500,125.00 20,505,125.00 21,005,250.00

93,155,000 11,876,552.22 105,031,552.22 105,031,552.22

Mar 13, 2015 11 :08 am Prepared by Public Financial Management (NW) Page 6

EMPROP-58 305 E. Eisenhower Parkway 734-994-9700 suite 1'12 734-994-97'!0 Jax Aon Arbor, Ml 48108 www.pfm.com

SUMMARY OF BONDS REFUNDED

Detroit Public Schools Proposed Revenue B,efunding Bonds, Series 20 J 5 (2012 LTGO) Refunds the Michigan Finance Authority Revenue (DPS) Revenue Bonds, Series 2012 Assumes All Outstanding Maturities are Refunded / Defeased Assumes the use of the Extraordinary Mandatory Redemption Feature Assumes a Fund on Hand Contribution of Set Asides through April 20, 2015 · Option 1 - Refunding of2012 LTGO Bonds

Maturity Interest Par Call Call Bond Date Rate Amount Date Price

Revenue Bonds (School District of the City of Detroit), Series 2012: SERIAL! 06/01/2015 5.000% 15,525,000.00 06/01/2016 5.000% 16,300,000.00 12/01/2015 102.000 06/01/2017 4.000% 5,000,000.00 12/01/2015 102.000 SERIAL2 06/01/2017 5.000% 12,120,000.00 12/01/2015 102.000 SERIAL! 06/01/2018 5.000% 17,925,000.00 12/01/2015 102.000 06/01/2019 5.000% 18,820,000.00 12/01/2015 102.000 06/01/2020 5.000% 19,760,000.00 12/01/2015 102.000

105,450,000.00

Mar 13, 2015 11:08 am Prepared by Public Financial Management (NW) Page 7

EMPROP-59 305 E. Eisenhower Paik.way 734-994-9700 Suite 112 734-994-9710 tax Ann Arbor, Ml -18108 www.pfm.com

ESCROW REQUJREMENTS

Period Principal Redemption Ending Principal Interest Redeemed Premiwn Total

06/01/2015 15,525,000.00 2,611,250.00 18,136,250.00 12/01/2015 2,223,125.00 89,925,000.00 1,798,500.00 93,946,625.00

15,525,000.00 4,834,375.00 89,925,000.00 1,798,500.00 112,082,875.00

Mar 13, 2015 11 ;08 am Prepared by Public Financial Management (NW) Page 8

EMPROP-60 305 E. Eisenhower Parkvmy 734-994-9700 ~M Suite 112 734-994-97·!0 lax ···::~ The PFM GronJ> Ann Arbor, Ml 48108 www.pfm.com ~ fiMni:lli\l ~ IMtWllLJ\11\1.l\t!r,,;ir~

ESCROW STATISTICS

Detroit Public Schools Proposed Revenue Refunding Bonds, Series 2015 (2012 LTGO) Refunds the Michigan Finance Authority Revenue (DPS) Revenue Bonds, Series 2012 Assumes All Outstanding Maturities are Refunded/ Defeased Assumes the use of the Extraordinary Mandatory Redemption Feat me Assuines a Fund on Hand Contribution of Set Asides through April 20, 2015 Option I - Refunding of2012 LTGO Bonds

Modified Yield to Yield to Perfect Valrie of Total Duration Receipt Disbursement Escrow Negative Cost of Escrow Cost (years) Date Date Cost Arbitrage Dead Time

112,082,875.00 I 10,782,684.23 1,300,190.77

112,082,875.00 110,782,684.23 0.00 1,300,190.77

Delivery date 05/15/2015 Arbitrage yield 2.535437%

Mar 13, 2015 11:08 am Prepared by Public Financial Management (NW) Page 9

EMPROP-61 Resolution for Alternative Proposal to the Emergency manager's Proposed

, ' Multi-Year Loan Repayment Agreement and Related Actions "

Whereas, it is under our most vehement protest and our collective objection, that we, the duly elected members of the Detroit Board of Education, (The Board), do not recommend any proposal without the normal and required due diligence necessary to make recommendations on issues of this magnitude, complexity and consequence ~ 1 Whereas, the impact of these decisions have the potential for grave, horrendous, and catastrophic consequences on the children, citizens and tax payers of the City of Detroit, ~

Whereas, the Emergency Manager has refused the Board's repeated requests for the necessary funding which enables the Board to hire the requisite experts and consultants to review and recommend potential alternatives for consideration by the Board, ~

Whereas, Section 19, of P.A. 436 does mandate with a time certain, ten days, to approve or disapprove any proposed action taken by the emergency Manager to authorize the borrowing of money by the school district~seven days in which to submit an alternative,~ w~ f

Whereas, it is nearly impossible for the Board, a group of trustees restricted and limited in its ability to meet, deliberate, and take action to comply with su~ onerous, formidable and complicated task without the assistance of exper~

Whereas, at the time of the State of Michigan's initial intervention under P.A. 10, of 1999, the so called "State Reform Experiment", the Detroit Public School district did at the end of the 1998-1999 fiscal year have a one hundred fourteen million dollar ($114,000,000) surpl©nd

Whereas, the Det~·Public School district did have over one hundred sixty-nine thousand (169,00 .00 students at the time the State ill-fated reform commenced in1999,~ ~

GBPROP-01 Whereas, the Detroit Public School district students tested at the mid-point among school districts across the State of Michigan, and those test scores were rising, cw/4.i ·

Whereas, the Emergency Manager is ever so cognizant that by withholding the funding necessary for the Board to hire experts and consultants, the Board's ability to provide a viable and corxipeting alternative proposal is greatly hampered, if not impossible, ~

Whereas, despite the tremendous handicap of having no staff, no consultants, no experts, or funding for such research and analysis, the Board is compelled and mandated by law to offer an alternative under these circumstances or concede that Emergency manager's proposal is the best, if not the only viable proposal, cwJ,

Whereas, nowhere else in the State, municipal, local or school governance are such imbalanced conditions created and endured by public officials, ~

Whereas, nevertheless, the Board, is compelled by law to act until such time said governance can be adjudicated, J

Whereas, the State of Michigan's operation of the Detroit Public School district from March of 1999 to January 1, 2006, under P.A. 10 of 1999, the so called "Reform Effort or experiment" has proven to be a total and utter failure causing irreparable educational harm to the students, harm to families and community, tax payers of the school district and the citizens of the City of Detroit, ~

Whereas, the fiscal mismanagement of the Detroit Public School District led to the unprecedented necessity of 2005 multi-year financial agreement referenced in the Emergency manager's proposal, J Whereas, this Agreement (2005 Multi-Year) was made between the then Governor Jennifer Granholm and the Detroit Public School Reform CEO, Kenneth Burnley, the agent of the State, J Whereas, the 2005 multi-year borrowing and debt was created by the State of Michigan and, therefore, should be assumed by the Statea not the Detroit Public School District or the citizens of Detroit's tax payers, ~

Whereas, in 2007, the citizens of the City of Detroit did by ballot referendum overwhelmingly voted to request that the State of Michigan assume all debt

GBPROP-02 accrued during the operation of Detroit Public Schools under P.A. 10 of 1999, the so called "Reform Experime~nc;l(_~ Whereas the State of Michl an dlf?ot res ond or assume the State created debt as requested by the citizens of Detroit,

Whereas, the duly elected Detroit Board of Education did request the State's assistance in rectifying the State created debt_,~

Whereas, the State rewonded by appointing an Emergency Financial Manager, Mr. Robert Bobb, ~

Whereas, Mr. Robert Robb's managerial overreach and financial Ineffectiveness led to an Increased deficit, and, ultimately, Honorable Judge Wendy Baxter's 2010 ·ud ment of irre arable harm a ainst the students school distri families, community, tax payers, and citizens of the City of Detroit,

Therefore, be it resolved, that on April 23, 2015, that we, the duly elected Detroit Board of Education, do hereby submit as an alternative to the Emergency Manager's proposals. both Multi-Year Arrangements and the Multi Year bonding adjustments and obligations that accrued under any governance other than a fully empowered Detroit Board of Education, be transferred and assumed by the State of Michigan in accordance with the Constitution t>f the State of Michigan's Headlee Amendments and all other applicable Statutes.

GBPROP-03 In accordance with PA 436, any action taken by the Board shall not be valid and is not binding on the District unless such action is taken in accordance with Section 19 of said Act or authorized in writing by Order of the Emergency Manager of the District.

DETROIT BOARD OF EDUCATION REGULAR BOARD MEETING

THURSDAY, April 9, 2015 – 6:00 P.M.

Frederick Douglass Academy 2011 W. Warren Detroit, MI

MINUTES

CALL TO ORDER

The Regular Board Meeting of the Detroit Board of Education of the School District of the City of Detroit was called to order at 6:05 p.m. by President Herman Davis.

ROLL CALL

Board Secretary Joyce Zarrieff called the roll:

Present: Members Hawkins-Williams, Herrada, Singleton, Lemmons, Murray, Redmond, Simpson, Vice President Short and President Davis

Absent/Excused: Members Carter and Summers

**The Board has requested that Jonathan Kinloch be referred to as an appointee by the Emergency Manager and not as a Member of the elected Board.

****Member Carter requested that Ms. Gay-Dagnogo’s name be stricken from the records as a member of the Board and that all of Ms. Gay-Dagnogo’s votes be removed from the Board minutes.

*****President Lemmons stated that Ms. Gay-Dagnogo was the elected choice made by this body; we could note that Judge Berry reversed the will of the duly elected body by replacing our elected person, Sherry Gay-Dagnogo with the Emergency Manager appointee, Jonathan Kinloch.

MOMENT OF SILENCE

President Davis called for the moment of silence.

GBPROP-04 In accordance with PA 436, any action taken by the Board shall not be valid and is not binding on the District unless such action is taken in accordance with Section 19 of said Act or authorized in writing by Order of the Emergency Manager of the District.

APPROVAL OF AGENDA

Member Murray moved to approve the agenda as presented; supported by Member Murray.

The motion carried. Approval of Minutes

President Davis called for the approval of the minutes from the Regular Board Meeting of March 12, 2015; moved by Member Murray with any additional and necessary corrections; supported by Member Hawkins-Williams.

The motion carried.

Public Comment Cards will no longer be accepted beyond this point

President Davis informed the audience to turn in their comment cards to be acknowledged.

Member Lemmons moved for the adoption of the stated resolution; supported by Vice President Short.

The motion carried unanimously by all members present.

President’s Report

President Davis stated there are a number of things going on; we want to make sure that the public is aware that there are a lot of things happening and we want make sure the public is aware.

Mr. Davis shared with the audience his telephone number for those that wish to receive any information from the Board.

Restatement of the Bond Presentation by PFM and Ernst & Young

President Davis called on the presenters: Nate Watson, Public Financial Management; he stated that he was there to present the information provided to the Board by the Emergency Manager, Darnell Earley; Mr. Watson introduced the other presenters from Ernst & Young and Miller Canfield.

Mr. Watson informed the Board that currently the Board has three obligations that require debt service: payments from the district’s general fund; two long-term issues and one short term note.

He informed the Board that in the near future the district has a near term loan coming due; he stated in the State of Michigan the district has an option of turning a short term obligation into a long term obligation which could free-up near term State revenue; he stated that the current emergency manager wishes to use this strategy at this time…he stated that this action needs to occur by the date of May 20, 2015. He informed the Board that there are several task the must be completed by now and that time.

GBPROP-05 In accordance with PA 436, any action taken by the Board shall not be valid and is not binding on the District unless such action is taken in accordance with Section 19 of said Act or authorized in writing by Order of the Emergency Manager of the District.

Board Members informed the presenters that they were not able to make a decision on the presented Bond information this evening because they only received the presented material earlier in the day.

The Board requested that the Emergency Manager he authorize and come to a Board Meeting; the Board requested that the presenters come back before the Board next week to answer their questions at a scheduled Special Board Meeting to be held on Friday, April 17, 2015…

Member Hawkins-Williams read the following:

Thursday, April 9, 2015 at 3:34 p.m.

In accordance with section 19 of P.A 436 of 2012, it is the understanding of the duly elected Detroit Board of Education [DBE] that we have ten days in which to take action on proposals from the Emergency Manager, [EM] over [$50,000] fifty thousand dollars. As such, it would require that the DBE hold one or more special meetings in order to take action.

Unfortunately, we have been told by the Emergency Manager that our special meetings are a violation of and in defiance of the Emergency Manager and Judge Berry's order. At issue appears to be the DBE'S common/legal interpretation of and or definition of "consultation" , consult, conjunction, coordinated with and authorized duties. The EM has not responded to the DBE's attempt to use email communications or the collective and unanimous action of the DBE as adequate to serve as consultation and coordination. The EM has instead, reiterated his position that the DBE has not complied with Judge Berry's stipulated order to coordinate without defining his or the DPS's legal counsel's definition.

The EM has stripped the DBE of all funds, consultants and legal and other staff except the use of his assigned secretary to monthly meetings of the DBE and other very limited low priority functions as determined by him. The DBE is using its best judgment as to our collective lay understanding as to what coordinate means.

The DBE is required to take action by a majority of its members and the EM can act individually. Therefore, we are asking the EM to appear in person at a special meeting to resolve once and for all a mutually agreed definition of coordinate and any and all contested definitions. We propose Friday, April 17, 2015 at 6:30pm as a date for this clarification and possible action on other EM proposals.

Respectfully submitted LaMar Lemmons Chair of the Governance Committee Detroit Board of Education

Action Items Communications to the Emergency Manager

Member Lemmons stated that he would add that the communication serve as coordination and consultation with the Emergency Manager; that we send the communication to him as one of our 52- meetings as stipulated by Judge Berry, I do so move; supported by Vice President Short.

The motion carried.

Public Act 436 of 2012 and other related matters

No items discussed.

GBPROP-06 In accordance with PA 436, any action taken by the Board shall not be valid and is not binding on the District unless such action is taken in accordance with Section 19 of said Act or authorized in writing by Order of the Emergency Manager of the District.

Tribute Resolution for the American Human Rights Council (AHRC)

President Davis recommended that the Board adopt a resolution; he stated that he has drafted a resolution and it will be presented on Friday, April 10 at the event; he asked for a motion to allow him to present a resolution to the AHRC; Member Lemmons moved that the Board adopt a resolution even though we don’t have a copy of the resolution we do have trust in our Members; supported by Vice President Short.

Member Williams asked for a copy of the resolution to be read into the record; President Davis indicated that he does not have the resolution prepared but shared with the Board a sample of what the resolution would look like.

The motion carried unanimously by all members present.

Superintendent Search Reports

Member Lemmons stated that the Board would like to be prepared with the term of the emergency ends; we do not want to be caught unprepared by not having a Superintendent in place when we gain authority. He stated that the emergency manager has indicated on numerous occasions that he will be the last emergency manger…

We need to begin our search so that moment we regain our authority that we our superintendent in place. We want to have list of names of potential candidates that fit; thus, we’ve come with the following names: Dr. Boyce Watkins; Dr. Claude Anderson and Dr. Julianne Malveaux. Further, I’ve spoken with former City Council Woman Joann Watson and she will be making contact with Dr. malveaux, she was the President of Bennett College, of the stated names are Ivy League…they are committed of the general mindset of this body…we want to begin the superintendent search work now so that prospectively we have someone in mind when we regain our authority.

Member Lemmons moved that the President assigned and/or come up with a procedure to put members on the Policy and Superintendent Search Committee.

President Davis asked for volunteers for the Superintendent Search Committee: Members Lemmons, Simpson, Murray and Vice President Short; he added as advisors: Dr. John Telford, Helen Moore, Yolanda Peoples, Journey for Justice, Dr. Jeffrey Robinson, Tom Pedroni, Russ Bellant…

President Davis stated that the State Superintendent will be coming to the Board Meeting in May.

Public Comment Cards

GBPROP-07 In accordance with PA 436, any action taken by the Board shall not be valid and is not binding on the District unless such action is taken in accordance with Section 19 of said Act or authorized in writing by Order of the Emergency Manager of the District.

ADJOURNMENT

The meeting was adjourned at approximately 7:25 p.m.

______Certified: Joyce D. Zarrieff, M.P.A., Secretary of the Board

GBPROP-08

BOARD OF EDUCATION SPECIAL BOARD MEETING Friday, April 17, 2015 6:30 p.m.

Fisher Building 6th Floor, Board Conference Room 3011 W. Grand Boulevard Detroit, MI

CALL TO ORDER

President Davis called the meeting to order at 6:30 p.m. President Davis called the roll.

ROLL CALL

Board Secretary Joyce Zarrieff, MPA, called the roll:

Present: Lemmons, Singleton, Short, *Simpson, Davis, Herrada

Absent: Carter, Redmond, Murray, Hawkins-Williams and Summers

There being a quorum the meeting was declared to be in session.

**The Board has requested that Jonathan Kinloch be referred to as an appointee by the Emergency Manager and not as a Member of the elected Board.

****Member Carter requested that Ms. Gay-Dagnogo’s name be stricken from the records as a member of the Board and that all of Ms. Gay-Dagnogo’s votes be removed from the Board minutes.

MOMENT OF SILENCE

President Davis called for a moment of silence.

Page 1 of 6

GBPROP-09

CALL FOR SPECIAL MEETING

A SPECIAL MEETING OF THE CITY OF DETROIT BOARD OF EDUCATION WILL BE HELD AT The Fisher Building, 6th Floor, Board Conference Room, DETROIT MICHIGAN ON Friday, April 17, 2015, AT 6:30 P.M. THE PURPOSE OF THIS MEETING WILL BE TO DISCUSS AND TAKE ACTION, IF NECESSARY ON THE FOLLOWING: a. PA 436 of 2012, and other related matters b. Restatement of the Bond Presentation by RFM and Ernst & Young c. Communications to Governor Snyder's EM d. Follow up on Loan Board and EM Law suits e. Headlee violations in lack of Board's resource allocations f. Irreparable harm resolution g. Title 6 violation resolution h. Clarify the EM’s interpretation of Judge Berry’s Stipulated Order i. Funding for the Superintendent’s Search/ Transition j. Schedule tentative Meeting for 4-18-15, @ 10:00 am if needed

CERTIFICATION OF MEETING

Board Secretary, Joyce Zarrieff read the certification of the meeting.

APPROVAL OF AGENDA

President Davis entertained a motion for the approval of the agenda; Member Lemmons moved that the Action Items D; F; G and J be moved for future consideration at a subsequent meeting; supported by Vice President Short.

The motion carried.

PUBLIC COMMENT ON AGENDA ITEMS ONLY

Mr. Russ Bellant informed the Board that the ISD Board of Ingram County will be putting together a service of approximately 44 busses that will travel to each school in the County and offer free full service dental to the students. Everyone that attends the various schools will be allowed to receive full dental service.

Page 2 of 6

GBPROP-10

CONSULTATION REPORTS

Ms. Linda Taylor stated that she submit the Board’s/District Single Audit Report and then if they were federal funds that should be shared with the Office of the OIG…Mr. Davis indicated that any additional information should be shared when we come together on April 28…

Action Items: a. Section 19 of 436 and other related matters

Member Lemmons requested that this item be moved to the end of the agenda as we may need to address that later in the meeting.

b. Restatement of the Bond Received April 9, 2015

The presenters introduced themselves: Nate Watson, from Public Financial; Amanda Van Dusen from Miller Canfield, Paddock and Stone; Dan Jursick from Ernst & Young, each stated that they have been retained by the DPS Emergency Manager.

Member Lemmons asked each of them how they were being paid; were they being paid the DPS or the State of Michigan; each presenter responded.

Discussion ensued between the Board and the above stated presenters.

Member Lemmons stated that the Board did request that the emergency manager come before the Board to discuss the Bond issue and to answer questions of the Board.

Member Lemmons recommended that the Board deny the Bond proposal submitted by the emergency manger and that we further request that he provide this body with the necessary funding so that we can hire personnel to vet this proposal and to see if we can come up with something better within the best interest of the District and that we have a very short time period to do this; also, that we meet again on next Thursday, April 23, 2015@ 6:30 p.m., Fisher Building, 6th Floor, to offer our alternative or to take whatever action necessary; supported by Vice President Short.

The motion carried unanimously by all Members present.

a. Communications to Governor Snyder’s Emergency Manager

Member Lemmons introduced a resolution (read into the record by Member Herrada, see next page)

Page 3 of 6

GBPROP-11

Resolution to require the Emergency Manager to remit the necessary funding to the Detroit Board of Education in order that they may comply with the mandated provisions of section 19 of PA 436 of 2012.

Whereas, the Emergency Manager (the "Emergency Manager") for the Detroit Public School District (the "School District") has control over all fiscal matters of the School District and, pursuant to Section 12(u) of Act 436 of 2012, can subject to Section 19 of Act No.436, public Acts of Michigan, 2012 ("Act 436"), authorize the borrowing of money by the School District as provided by law; and

Whereas, pursuant to Section 19 of P.A. 436 of 2012, the Detroit Board of • Education (the "Board") of the School District has the right to approve or disapprove any proposed action taken by the Emergency Manager to authorize the borrowing of money by the School District; and

Whereas, the Board is further required to provide an alternative proposal to that of the Emergency Manager whenever the Board deems the Emergency Manager's proposal is not in the best interest of the School District.

Whereas, the Emergency Manager has denied the Board any funds in which to comply with the mandated responsibilities under P.A. 436 of 2012.

Whereas, without the necessary funding in which to hire expert consultants, the Detroit Board of Education has no ability to comply with the mandate responsibilities of Section 19 of P.A. 436 of 2012.

Whereas, the Detroit Board of Education is further hampered from performing its sworn constitutionally mandated responsibilities by the Emergency Manager's withholding of all operational funds to the Detroit Board of Education.

Therefore, let it be resolved, on this day, April 17, 2015, that we, the duly elected members of the Detroit Board of Education, do once again request the necessary funds in order to properly perform our due diligence and vet the Emergency Manager's proposal for possible acceptance or to provide a viable alternative.

Member Lemmons moved for the adoption of the resolution; supported by Vice President Short

Page 4 of 6

GBPROP-12

The motion carried unanimously.

e. Headlee Violations in lack of Board’s Resource Allocations

Member Lemmons moved on behalf of the Board they believe there is a Headlee Violations for the Emergency Manager to withhold funds necessary for this body (the Board) to perform its constitutionally mandated as well as those mandated responsibilities under PA 436 of 2012; therefore, he moved that we seek a legal remedy and demand that the resource allocations necessary for us to perform our constitutional those duties outlined in PA 436 of 2012; supported by Member Herrada.

The motion carried.

h. Clarify the EM’s interpretation of Judge Berry’s Stipulated Order

Member Lemmons stated the since the Emergency Manager was not present he called on DPS Legal Counsel, Jean-Vierre Adams to answer questions of the Board; Ms. Adams informed the Board that the Emergency Manager did not grant her the authority to speak on his behalf in his absence.

Discussion ensued.

The Board requested that they send a letter to the Emergency Manager; State Legislature, the Attorney General…all parties. Mr. Davis stated that they will be sending will be regarding the Board’s understanding of Judge Berry’s order…

Member Lemmons asked Ms. Adams could she elaborate on behalf of the letter under she signature regarding the superintendent search; Ms. Adams replied that she did not have a copy of the letter in her possession.

Member Lemmons indicated that the letter essentially informed the Board to cease and desist to not to continue with the superintendent search. He stated that the superintendent would take place post the emergency manger. We received a ruling in Judge Murphy’s court that we could take such actions, prospectively, and that’s how we got Dr. Telford.

Other discussions ensued.

Member Lemmons stated for the record that the Legal Counsel left the meeting without answering the questions of the Board.

i. Funding for the Superintendent’s Search/Transition

President Davis indicated that the Board has formed a committee and this committee holding meetings has nothing to do with district as it is not costing the district any money; therefore we will continue to meet.

Page 5 of 6

GBPROP-13

Public Comment:

1. Mr. James Hare stated that not allowing the Board to search for a superintendent are on the same lines as what is outlined in the Great Lakes Education plan.

2. Ms. Helen Moore asked the Board if they recrived the package of information that she provided to Tawanna Simpson; she stated she delivered it to her about 3:00 p.m. today…it’s regarding the Title VI Compliant...

3. Mr. Wayne Bernard asked with is Mr. Schrupp doing why is he still with the District

4.Ms. Heather Sullivan asked for a copy of the letter Vice President Short indicated was sent to all DPS employees stated that the Emergency Manager told employees that they were not allowed to attend Board Meetings.

Adjournment

President Davis adjourned the meeting at approximately 7:20 p.m.

______Joyce D. Zarrieff, MPA Secretary of the Board

Page 6 of 6

GBPROP-14

BOARD OF EDUCATION SPECIAL BOARD MEETING Friday, April 23, 2015 6:30 p.m.

Fisher Building 6th Floor, Board Conference Room 3011 W. Grand Boulevard Detroit, MI

CALL TO ORDER

President Davis called the meeting to order at 6:57 p.m. President Davis called the roll.

ROLL CALL

Board Secretary Joyce Zarrieff, MPA, called the roll:

Present: Carter, Lemmons, Singleton, Short, *Simpson, Davis, Murray

Absent: Redmond, Hawkins-Williams and Summers

There being a quorum the meeting was declared to be in session.

**The Board has requested that Jonathan Kinloch be referred to as an appointee by the Emergency Manager and not as a Member of the elected Board.

****Member Carter requested that Ms. Gay-Dagnogo’s name be stricken from the records as a member of the Board and that all of Ms. Gay-Dagnogo’s votes be removed from the Board minutes.

MOMENT OF SILENCE

President Davis called for a moment of silence.

Page 1 of 7

GBPROP-15

CALL FOR SPECIAL MEETING

A SPECIAL MEETING OF THE CITY OF DETROIT BOARD OF EDUCATION WILL BE HELD AT The Fisher Building, 6th Floor, Board Conference Room, DETROIT MICHIGAN ON Friday, April 23, 2015, AT 6:30 P.M. THE PURPOSE OF THIS MEETING WILL BE TO DISCUSS AND TAKE ACTION, IF NECESSARY ON THE ADOPTED AGENDA.

CERTIFICATION OF MEETING

Board Secretary, Joyce Zarrieff read the certification of the meeting.

APPROVAL OF AGENDA

Member Lemmons moved to approve the agenda as presented; supported by Vice President Short.

The motion carried.

PUBLIC COMMENT ON AGENDA ITEMS ONLY

1. Ms. Tracy Peters questioned the agreement of the owned vs leased space that the Detroit Public Schools has with the Farbman Group…

2. Ms. Helen Moore asked how does the Bond issued before the Board have to do with recent report from the governor’s office that there will be two or more school districts in the City of Detroit and how does this affect tax payers.

CONSULTATION REPORTS No report provided.

Action Items: a. Section 19 of 436 and other related matters

Member Lemmons that the Board would like get clarification on many issues; he stated that the District’s owns four floors in the Fisher Building.

He stated that as a member of the Education Coalition Committee he was part of a conference call this morning; he stated that it was shared that…is very closely aligned to what has been reported in the news; he stated that there are very slight differences; he stated that they are counting on Detroit Legislators and

Page 2 of 7

GBPROP-16

In accordance with PA 436, any action taken by the Board shall not be valid and is not binding on the District unless such action is taken in accordance with Section 19 of said Act or authorized in writing by Order of the Emergency Manager of the District democrats giving them the majority to enact the Old Co/New Co, this is not new, this idea was presented by former EFM Rebert Bobb…

b. Alternative Restatement of the Bond Received April 9, 2015

Member Lemmons stated that he composed and alternative to the presented Emergency Managers proposal. He requested that Member Short or Member Singleton read the resolution into the record:

Resolution for Alternative Proposal to the Emergency manager’s Proposed Multi-Year Loan Repayment Agreement and Related Actions

Whereas, the impact of these decisions have the potential for grave, horrendous, and catastrophic consequence on the children, citizens and tax payers of the City of Detroit, and

Whereas, the Emergency Manager has refused the Board’s repeated requests for the necessary funding which enables the Board to hire the requisite experts and consultants to review and recommend potential alternatives for consideration by the Board, and

Whereas, Section 19, of P.A. 436 does mandate with a time certain, ten days, to approve or disapprove any proposed action taken by the emergency Manager to authorize the borrowing of money by the school district with? Seven days in which to submit an alternative, and

Whereas, it is nearly impossible for the Board, a group of trustees restricted and limited in its ability to meet, deliberate, and take action to comply with such an onerous, formidable and complicated task without the assistance of experts, and

Whereas, at the time of the State of Michigan’s initial intervention under P.A. 10, of 1999, the so called “State Reform Experiment”, the Detroit Public School district did at the end of the 1998-1999 fiscal year have a one hundred fourteen million dollar ($114,000,000) surplus, and

Whereas, the Detroit Public School district did have over one hundred sixty-nine thousand (169,000) students at the time the State ill-fated reform commenced in 1999, and

Whereas, the Detroit Public School district students tested at the mid-point among school districts across the State of Michigan, and those test scores were rising, and

Whereas, the Emergency Manager is ever so cognizant that by withholding the funding necessary for the Board to hire experts and consultants, the Board’s ability to provide a viable and competing alternative proposal is greatly hampered, if not impossible, and

Page 3 of 7

GBPROP-17

Whereas, despite the tremendous handicap of having no staff, no consultants, no experts, or funding for such research and analysis, the Board is compelled and mandated by law to offer an alternative under these circumstances or concede that Emergency manager’s proposal is the best, if not the only viable proposal, and

Whereas, nowhere else in the State, municipal, local or school governance are such imbalanced conditions created and endured by public officials, and

Whereas, nevertheless, the Board, is compelled by law to act until such time said governance can be adjudicated, and

Whereas, the State of Michigan’s operation of the Detroit Public School district form March of 1999 of 1999 to January 1, 2006, under P.A. of 1999, the so called “Reform Effort or experiment” has proven to be a total and utter failure causing irreparable educational harm to the students, harm to families and community, tax payers of the school district and the citizens of the City of Detroit, and

Whereas, the fiscal mismanagement of the Detroit Public School District led to the unprecedented necessity of multi-year financial agreement referenced in the Emergency manager’s proposal, and

Whereas, this Agreement (2005 Multi-year) was made between the then Governor Jennifer Granholm and the Detroit Public School Reform CEO, Kenneth Burnley, the agent of the State, and

Whereas, the 2005 multi-year borrowing and debt was created by the State of Michigan and, therefore, should be assumed by the State, not the Detroit Public School District or the citizens of Detroit’s tax payers, and

Whereas, in 2007, the citizens of the City of Detroit did by ballot referendum overwhelmingly voted to request that the State of Michigan assume all debt accrued during the operation of Detroit Public Schools under P.A. 10 of 1999, the so called “Reform Experiment’, and

Whereas, the State of Michigan did not respond or assume the State created debt as requested by the citizens of Detroit, and

Whereas, the duly elected Detroit Board of Education did request the State’s assistance in rectifying the State created debt, and

Whereas, the State responded by appointing an Emergency Financial Manager, Mr. Robert Bobb, and

Whereas, Mr. Robert Bobb’s managerial overreach and financial ineffectiveness led to an increased deficit, and, ultimately, Honorable Judge Wendy Baxter’s 2010 judgment of irreparable harm against the students, school district, families, community, tax payers, and citizens of the City of Detroit,

Therefore, be it resolved, that on April 23, 2015, that we, the duly elected Detroit Board of Education, do harshly submit as an alternative to the Emergency Manager’s proposals, both Multi-Year Arrangements and the Multi-Year bonding adjustments and obligations that accrued under any governance other than a

Page 4 of 7

GBPROP-18

In accordance with PA 436, any action taken by the Board shall not be valid and is not binding on the District unless such action is taken in accordance with Section 19 of said Act or authorized in writing by Order of the Emergency Manager of the District fully empowered Detroit Board of Education, be transferred and assumed by the State of Michigan in accordance with the Constitution of the assumed of Michigan’s Headlee Amendments and all other applicable Statutes.

Member Lemmons for the adoption of the said resolution with the necessary grammatical adjustments; supported by Vice President Short.

Member Lemmons stated that the State has caused this financial hardship to the students and to own community and they should be the ones to fix it; the State has caused irreparable harm to the students…

The Board requested a roll call vote:

Ayes: Members Johnson-Singleton; Lemmons, Murray, Simpson, Short, Davis Abstained: Member Carter

The motion carried.

a. Communications to Governor Snyder’s Emergency Manager

Member Lemmons moved that it is the position of the Detroit Board of Education that we be made whole and that we want no other State or experiment or interference we only want our school district to operate like every other school district in the State of Michigan i.e. Livonia, Farmington, Grosse Point and Bloomfield Hills where some of members of the Coalition reside…we want the same type of equal governance. We request non-further interference from the governor of the State of Michigan; supported by Member Simpson.

Member Carter asked if there was copy of the communication that would be sent to the Governor; Member Lemmons replied “no” that he made a motion.

The Board requested a roll call vote:

Ayes: Members Johnson-Singleton; Lemmons, Murray, Simpson, Short, Davis Nays: Member Carter

The motion carried.

I. Interrogatories the Emergency Manager’s assigned Secretary to the Board

Member Lemmons moved that we take this item at this time; supported by Vice President Short.

The motion carried.

Member Lemmons asked the Board Secretary, “when you submitted the Board Resolution in January for refunding of the Bond where you submitted the draft minutes of the meeting, was that something previously or was that something done unique to that occasion”; the Board Secretary responded that all

Page 5 of 7

GBPROP-19

In accordance with PA 436, any action taken by the Board shall not be valid and is not binding on the District unless such action is taken in accordance with Section 19 of said Act or authorized in writing by Order of the Emergency Manager of the District questions regarding the role and responsibilities of the Board Secretary should be sent to the Office of the Emergency Manager.

Member Lemmons asked additional questions; the Board Secretary responded that all questions regarding the role and responsibilities of the Board Secretary should be sent to the Office of the Emergency Manager.

Additional discussion ensued.

Member Lemmons stated that the Board Secretary has stated that she reports to the Emergency Manager; the Board Secretary reminded Member Lemmons and the Board that all District employees report to the Emergency Manager in accordance with PA 436.

Discussion ensued.

e. Headlee Violations in lack of Board’s Resource Allocations

Member Lemmons moved for injunctive relief and that we seek legal remedy for the lack of funding to this Body in order for us to perform our constitutional duties as elected officials as well as our mandated duties outlined under Section 19 of PA 436 of 2012; supported by Vice President Short.

The motion carried.

f. Irreparable Harm Resolution

Member Lemmons stated that this resolution is yet to be prepared.

g. Title 6 Violation Resolution

President Davis stated the many of the audience members should have a copy; he stated on the bottom; he asked that they take a pen and change the time from 10 a.m. to 3:30 p.m. that will some of the school staff present. He said that they are looking to have 200-300 plaintiffs at the Federal Building 447 Michigan Ave, on April 28 we are going to the 26 Floor in the office of Barbara McQuade. We also have someone going to Washington and they are going to the Department of Justice because we need them to declare this situation a disaster and we need them to cover up with a plan; there has been irreparable harm and voter rights violations…

h. Clarify the EM’s interpretation of Judge Berry’s Stipulated Order

Member Lemmons stated the Board has requested that the Emergency Manager attend and to date he has not attend, per our request.

Page 6 of 7

GBPROP-20

In accordance with PA 436, any action taken by the Board shall not be valid and is not binding on the District unless such action is taken in accordance with Section 19 of said Act or authorized in writing by Order of the Emergency Manager of the District j. Resolution to hold the Detroit Citizens harmless in the re-financing of the 2015 refunding Unlisted Tax-General Obligation Bonds

Member Lemmons stated that the resolution for item is not ready; therefore, we will deal with this at a later time.

k. Resolution demanding the return of the 77 properties confiscated by the City of Detroit Public Schools

Member Lemmons stated that the resolution for item is not ready; therefore, we will deal with this at a later time.

President Davis stated that within the next 30-days the District will no longer have access to the 6th Floor of the Fisher Building; he stated the Board’s legal staff will be looking at the contract with…Member Lemmons stated that Board Members don’t need offices.

Public Comment 1. Michelle George she shared informed that she sent to the Dept of Justice…she told the School Board not to lose sight of freedom… fight to the end. 2. Crystal Bonner shared that she is parent and employee…she stated that she is concerned and when she speaks out it is because she’s concerned. She asked when are we going to be free, Detroit is like being in bondage…what will the schools look like 3. Keith January asked what are going to do…our City is suffering; he stated that we’ve lost an entire generation of students we cannot sit back and watch our children be destroyed… 4. Russ Bellant asked that the Board go back to library to hold its meetings…he stated the a bill passed today to take emergency manger supervision away from the State Board of Education and move it under the Treasurer Department 5. Tijana Moore informed the audience that Annie Carter has been appointed to represent the School Board at the 13th District… 6. Gloria Jones (inaudible) she said she asked the City Council when did the head became the tail… 7. Helen Moore informed all that they will be traveling the New Jersey regarding Elementary Secondary Education Act… she stated that critical to the act is the concentration of Charter Schools and the money…she encourage all that could attend to please join them in traveling to New Jersey. 8. Dawn Derose she asked when will we stop having separate and unequal schools; we need to get in the schools because the Governor is underfunding our schools.

Adjournment

President Davis adjourned the meeting at approximately 8:20 p.m.

______Joyce D. Zarrieff, MPA Secretary of the Board

Page 7 of 7

GBPROP-21 89 (Rev. 04-15)

STATE OF MICHIGAN RICK SNYDER DEPARTMENT OF TREASURY NICK A. KHOURI GOVERNOR LANSING STATE TREASURER

LOCAL EMERGENCY FINANCIAL ASSISTANCE LOAN BOARD

ORDER 2015-3

DETERMINATION THAT.AMENDMENT AND RESTATEMENT OF STATE AID NOTE AND OTHER OBLIGATIONS PROPOSED BY EMERGENCY MANAGER BEST SERVES INTEREST OF THE PUBLIC

FOR THE DETROIT PUBLIC SCHOOL DISTRICT COUNTY OF WAYNE STATE OF MICHIGAN

WHEREAS, Section 12(1) of Public Act 436 of 2012, the Local Financial Stability and

Choice Act ("the Act"), authorizes an Emergency Manager to take additional actions with respect

to a local government that is in receivership, including rejecting, modifying, or terminating one

or more terms and conditions of an existing collective bargaining agreement pursuant to Section

12(l)(k); selling, leasing, conveying, assigning, or othetwise using or transferring the assets, lia

bilities, functions, or responsibilities of the local government pursuant to Section 12(1 )(r); and

authorizing the borrowing of money by the local government as provided by law pursuant to

Section 12(1)(u); And

WHEREAS, Section 1225 of Public Act 451 of 1976, the Revised School Code, author-

izes a school district to bonow money, to issue notes of the school district as evidences of in

debtedness, and requires the school district to pledge for the repayment of the money borrowed

State school aid payments to be received by the school district; And

WHEREAS, Section 14 of the Act authorizes an Emergency Manager for a school district

to take additional actions with respect to a school district that is in receivership including, pursu-

2015-3_EMORDER-01 ant to Section l 4(b ), receiving and disbursing on behalf of the school district all federal, state, and local funds earmarked for the school district and, pursuant to Section 14(e), approving or disapproving the issuance of obligations of the school district; And

WHEREAS, Section 19(1) of the Act provides that before an Emergency Manager exe cutes an action under Section 12(l)(k), (r), or (u), or Section 14(d) the Emergency Manager must submit his or her proposed action to the governing body of the local government for its approval or disapproval within 10 days after submission; And

WHEREAS, if the governing body of the local government disapproves the action pro posed by the Emergency Manager within 10 days after submission, the governing body of the local government must within seven days of its disapproval submit to the Local Emergency Fi nancial Assistance Loan Board an alternative proposal that would yield substantially the same financial result as the action proposed by the Emergency Manager; And

WHEREAS, on April 8, 2015, the Emergency Manager for the Detroit Public School

District ("the Emergency Manager") submitted to the Detroit Public School District Board of Ed ucation ("the School Board") an action proposed to amend and restate a 2014 State aid note in an amount not to exceed $85,000,000 and for a term not to exceed 15 years, and to amend and re state a 2012 limited tax general obligation in an amount not to exceed $96,000,000 (together

"the existing obligations"), which amended and restated obligations are to be evidenced by the issuance of one or more 2015 multi-year repayment obligations; And

WHEREAS, on April 17, 2015, the School Board disapproved the action proposed by the

Emergency Manager and, on April 23, 2015, approved an alternative proposal that responsibility for the existing obligations be transferred to this State and submitted the alternative proposal to

2015-3_EMORDER-02 the Local Emergency Financial Assistance Loan Board, which alternative proposal was received on April 24, 2015; And

WHEREAS, Section 19(2) of the Act requires that the Local Emergency Financial Assis tance Loan Board "shall have 30 days to review both the alternative proposal submitted by the governing body of the local government and the action proposed by the emergency manager and to approve either the alternative proposal submitted by the governing body of the local govern ment or the action proposed by the emergency manager. The local emergency financial assis tance loan board shall approve the proposal that best serves the interest of the public in that local government"; And

WHEREAS, on May 5, 2015, at a duly noticed public meeting, the Local Emergency Finan cial Assistance Loan Board reviewed and considered both the action proposed by the Emergency

Manager and the alternative proposal by the School Board, which review and consideration in cluded an opportunity for a presentation by the Emergency Manager and by representatives of the

School Board, and the Local Emergency Financial Assistance Loan Board is fully advised in the premises; And

WHEREAS, Section 2 of Public Act 243 of 1980, the Emergency Municipal Loan Act, es tablished the Local Emergency Financial Assistance Loan Board and enumerates its powers, among which is the power "to act by an order issued in the name of the board and signed by the members of the board."

NOW THEREFORE, be it ordered by the Local Emergency Financial Assistance Loan Board as follows:

I. That, having reviewed and considered both the action proposed by the Emergency Manager

to amend and restate a 2014 State aid note in an amount not to exceed $85,000,000 and for a

2015·3_EMORDER-03 term not to exceed 15 years, and to amend and restate a 2012 limited tax general obligation in

an amount not to exceed $96,000,000, which amended and restated obligations are to be evi

denced by the issuance of one or more 2015 multi-year repayment obligations, and having

reviewed the alternative proposal by the School Board that responsibility for the existing ob

ligations be transferred to this State, and being fully advised in the premises, the Local

Emergency Financial Assistance Loan Board determines pursuant to Section 19(2) of the

Act, that the action proposed by the Emergency Manager best serves the interest of the public

of the Detroit Public School District.

2. This Order shall have immediate effect.

2015-3_EMORDER-04 TN WITNESS WHEREOF, the members of the Board, or their designees, have signed and exe cuted this Order of Approval.

LOCAL EMERGENCY FINANCIAL ASSISTANCE LOANBOARD

By 4_,f£c Thomas F. Saxton, Chief Deputy Treasmer As Designee for Nick A. Kh uri, State Treasurer

By_~'7f7'~.,,...... ~~------ Jol\.l-\-l<-erts, State Budget Director, As ~ ignee for David Behen, Director Depa1tment ofTechn logy, Management, and Budget

By-+------ Mike Zimmer, Direc Depaitment of Lie

Date: 5-5 -JS Lansing, Michigan

2015-3_EMORDER-05 89 (Rev. 04-15)

STATE OF MICHIGAN RICK SNYDER DEPARTMENT OF TREASURY NICK A. KHOURI GOVERNOR LANSING STATE TREASURER

LOCAL EMERGENCY FINANCIAL ASSISTANCE LOAN BOARD

ORDER 2015-3

DETERMINATION THAT AMENDMENT AND RESTATEMENT OF STATE AID NOTE AND OTHER OBLIGATIONS PROPOSED BY BOARD OF EDUCATION BEST SERVES INTEREST OF THE PUBLIC

FOR THE DETROIT PUBLIC SCHOOL DISTRICT COUNTY OF WAYNE STATE OF MICHIGAN

WHEREAS, Section 12(1) of Public Act 436 of 2012, the Local Financial Stability and

Choice Act (“the Act”), authorizes an Emergency Manager to take additional actions with respect

to a local government that is in receivership, including rejecting, modifying, or terminating one

or more terms and conditions of an existing collective bargaining agreement pursuant to Section

12(1)(k); selling, leasing, conveying, assigning, or otherwise using or transferring the assets, lia-

bilities, functions, or responsibilities of the local government pursuant to Section 12(1)(r); and

authorizing the borrowing of money by the local government as provided by law pursuant to

Section 12(1)(u); And

WHEREAS, Section 1225 of Public Act 451 of 1976, the Revised School Code, author-

izes a school district to borrow money, to issue notes of the school district as evidences of in-

debtedness, and requires the school district to pledge for the repayment of the money borrowed

State school aid payments to be received by the school district; And

WHEREAS, Section 14 of the Act authorizes an Emergency Manager for a school district

to take additional actions with respect to a school district that is in receivership including, pursu-

430 WEST ALLEGAN STREET • LANSING, MICHIGAN 48922 www.michigan.gov/treasury • (517) 373-3200 2015-3_GBORDER-01 ant to Section 14(b), receiving and disbursing on behalf of the school district all federal, state,

and local funds earmarked for the school district and, pursuant to Section 14(e), approving or

disapproving the issuance of obligations of the school district; And

WHEREAS, Section 19(1) of the Act provides that before an Emergency Manager exe-

cutes an action under Section 12(1)(k), (r), or (u), or Section 14(d) the Emergency Manager must

submit his or her proposed action to the governing body of the local government for its approval

or disapproval within 10 days after submission; And

WHEREAS, if the governing body of the local government disapproves the action pro-

posed by the Emergency Manager within 10 days after submission, the governing body of the local government must within seven days of its disapproval submit to the Local Emergency Fi- nancial Assistance Loan Board an alternative proposal that would yield substantially the same financial result as the action proposed by the Emergency Manager; And

WHEREAS, on April 8, 2015, the Emergency Manager for the Detroit Public School

District (“the Emergency Manager”) submitted to the Detroit Public School District Board of Ed- ucation (“the School Board”) an action proposed to amend and restate a 2014 State aid note in an amount not to exceed $85,000,000 and for a term not to exceed 15 years, and to amend and re-

state a 2012 limited tax general obligation in an amount not to exceed $96,000,000 (together

“the existing obligations”), which amended and restated obligations are to be evidenced by the

issuance of one or more 2015 multi-year repayment obligations; And

WHEREAS, on April 17, 2015, the School Board disapproved the action proposed by the

Emergency Manager and, on April 23, 2015, approved an alternative proposal that responsibility for the existing obligations be transferred to this State and submitted the alternative proposal to

2015-3_GBORDER-02 the Local Emergency Financial Assistance Loan Board, which alternative proposal was received on April 24, 2015; And

WHEREAS, Section 19(2) of the Act requires that the Local Emergency Financial Assis- tance Loan Board “shall have 30 days to review both the alternative proposal submitted by the governing body of the local government and the action proposed by the emergency manager and to approve either the alternative proposal submitted by the governing body of the local government or the action proposed by the emergency manager. The local emergency financial assistance loan board shall approve the proposal that best serves the interest of the public in that local government”; And

WHEREAS, on May 5, 2015, at a duly noticed public meeting, the Local Emergency Finan- cial Assistance Loan Board reviewed and considered both the action proposed by the Emergency

Manager and the alternative proposal by the School Board, which review and consideration included an opportunity for a presentation by the Emergency Manager and by representatives of the

School Board, and the Local Emergency Financial Assistance Loan Board is fully advised in the premises; And

WHEREAS, Section 2 of Public Act 243 of 1980, the Emergency Municipal Loan Act, es- tablished the Local Emergency Financial Assistance Loan Board and enumerates its powers, among which is the power “to act by an order issued in the name of the board and signed by the members of the board.”

NOW THEREFORE, be it ordered by the Local Emergency Financial Assistance Loan Board as follows:

1. That, having reviewed and considered both the action proposed by the Emergency Manager

to amend and restate a 2014 State aid note in an amount not to exceed $85,000,000 and for a

2015-3_GBORDER-03 term not to exceed 15 years, and to amend and restate a 2012 limited tax general obligation in

an amount not to exceed $96,000,000, which amended and restated obligations are to be evi-

denced by the issuance of one or more 2015 multi-year repayment obligations, and having

reviewed the alternative proposal by the School Board that responsibility for the existing ob-

ligations be transferred to this State, and being fully advised in the premises, the Local

Emergency Financial Assistance Loan Board determines pursuant to Section 19(2) of the

Act, that the alternative proposed by the School Board best serves the interest of the public of

the Detroit Public School District.

2. This Order shall have immediate effect.

2015-3_GBORDER-04 IN WITNESS WHEREOF, the members of the Board, or their designees, have signed and executed this Order of Approval.

LOCAL EMERGENCY FINANCIAL ASSISTANCE LOAN BOARD

By Thomas F. Saxton, Chief Deputy Treasurer As Designee for Nick A. Khouri, State Treasurer

By John Roberts, State Budget Director, As Designee for David Behen, Director Department of Technology, Management, and Budget

By Mike Zimmer, Director Department of Licensing and Regulatory Affairs

Date: ______Lansing, Michigan

2015-3_GBORDER-05